As filed with the Securities and Exchange Commission on September 12, 2025.
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Alliance Laundry Holdings Inc.
(Exact name of registrant as specified in its charter)
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Delaware | 3582 | 98-0444708 |
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
221 Shepard Street
Ripon, WI 54971
(920) 748-3121
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Samantha Hannan
Chief Legal and Compliance Officer
221 Shepard Street
Ripon, WI 54971
(920) 748-3121
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
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Nicholas A. Dorsey Kelly M. Smercina Virginia M. Anderson Cravath, Swaine & Moore LLP Two Manhattan West 375 Ninth Avenue New York, NY 10001 (212) 474-1000 | Michael Kaplan Pedro J. Bermeo Meaghan Kennedy Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 (212) 450-4000 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☐ |
| | Emerging Growth Company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to Completion, dated September 12, 2025
Preliminary Prospectus
Shares
Alliance Laundry Holdings Inc.
Common Stock
This is an initial public offering of shares of the common stock of Alliance Laundry Holdings Inc. We are offering shares of our common stock, and our principal stockholder, BDT Capital Partners, LLC and its affiliated investment funds (collectively, “BDTCP” or our “principal stockholder”), is offering shares of our common stock to be sold in this offering. We will not receive any proceeds from the sale of stock by our principal stockholder. Our principal stockholder is an affiliate of BDT & MSD Partners, LLC (“BDT & MSD”), one of the underwriters in this offering. Certain of our directors may be allocated shares in this offering at the initial public offering price. Any such allocations will be made at the discretion of the underwriters, and there is no assurance as to the number of shares, if any, that may be allocated to such persons.
Prior to this offering, there has been no public market for shares of our common stock. We estimate that the initial public offering price per share will be between $ and $ . We intend to apply to list our shares of common stock on the New York Stock Exchange (“NYSE”) under the symbol “ALH”.
Upon completion of this offering, we will be a “controlled company” as defined in the corporate governance rules of the NYSE, and, therefore, will qualify for, but do not intend to rely on, exemptions from certain governance requirements. See “Management—Controlled Company.” After the closing of this offering, our principal stockholder will own approximately % of our outstanding common stock (or approximately % if the underwriters exercise their option to purchase additional shares in full). See “Risk Factors—Risks Relating to this Offering and Ownership of Our Common Stock—Upon the listing of our common stock on the NYSE, we will be a “controlled company” within the meaning of the corporate governance standards of the NYSE. As a result, we will qualify for, and may in the future rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.” Investing in shares of our common stock involves risks. See “Risk Factors” beginning on page 22 to read about factors you should consider before buying shares of our common stock. Neither the Securities and Exchange Commission nor any state securities commission or other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
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| Per Share | | Total |
Initial public offering price | $ | | | | $ | | |
Underwriting discounts and commissions(1) | $ | | | | $ | | |
Proceeds to us, before expenses | $ | | | | $ | | |
Proceeds to our principal stockholder, before expenses | $ | | | | $ | | |
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(1)See “Underwriting (Conflicts of Interest)” for a description of compensation to be paid to the underwriters. To the extent that the underwriters sell more than shares of our common stock, the principal stockholder has granted to the underwriters the option for a period of 30 days to purchase up to an additional shares of our common stock at the initial public offering price less the underwriting discounts and commissions.
The underwriters expect to deliver the shares of common stock against payment on or about , 2025 through the book-entry facilities of The Depository Trust Company.
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| BofA Securities | J.P. Morgan |
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| Baird | BDT & MSD | BMO Capital Markets | Citigroup | Goldman Sachs & Co. LLC | UBS Investment Bank |
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CIBC Capital Markets | | Fifth Third Securities |
Prospectus dated , 2025.
Table of Contents
We, the principal stockholder and the underwriters have not authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by us. We, the principal stockholder and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so.
The information contained in this prospectus is current only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.
For investors outside of the United States, we, the principal stockholder and the underwriters have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, this offering of the shares of our common stock and the distribution of this prospectus outside the United States.
Through and including , 2025 (25 days after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This delivery is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.
MARKET, INDUSTRY AND OTHER DATA
This prospectus includes estimates regarding market and industry data. Unless otherwise indicated, information concerning our industry and the markets in which we operate, including our general expectations, market position, market opportunity and market size, are based on our management’s knowledge and experience in the markets in which we operate, together with currently available information obtained from various sources, including publicly available information, industry reports and publications, surveys, our customers, trade and business organizations and other contacts in the markets in which we operate. Certain information is based on management estimates, which have been derived from third-party sources, as well as data from our internal research, and are based on certain assumptions that we believe to be reasonable.
In presenting this information, we have made certain assumptions that we believe to be reasonable based on such data and other similar sources and on our knowledge of, and our experience to date in, the markets in which we operate. While we believe the estimated market and industry data included in this prospectus are generally reliable, such information, which is derived in part from management’s estimates and beliefs, is inherently uncertain and imprecise.
Market and industry data are subject to change and may be limited by the availability of raw data, the voluntary nature of the data gathering process and other limitations inherent in any statistical survey of such data. In addition, projections, assumptions and estimates of the future performance of the markets in which we operate and our future performance are necessarily subject to uncertainty and risk due to a variety of factors, including those described in the “Risk Factors” and “Special Note Regarding Forward-Looking Statements” sections of this prospectus. These and other factors could cause results to differ materially from those expressed in the estimates made by third parties and by us. Accordingly, you are cautioned not to place undue reliance on such market and industry data or any other such estimates. Neither we nor the underwriters have independently verified any third-party information and data from our internal research has not been verified by any independent source. The sources of certain statistical data, estimates and forecasts contained in this prospectus include the Cambridge Group, US Commercial Laundry Sizing and Assessment Strategic Narrative, April 2, 2025, an independent industry publication, and other independent third-party reports.
The information contained on, or that can be accessed through, the websites referenced in this prospectus is not part of, and is not incorporated by reference into, this prospectus, and you should not rely on any such information in making the decision whether to purchase shares of our common stock. We have included the website addresses referenced in this prospectus only as inactive textual references and do not intend them to be active links to such website addresses.
TRADEMARKS AND TRADE NAMES
We own or have rights to certain trademarks, service marks, logos and trade names that we use in conjunction with the operations of our business, including but not limited to Speed Queen, UniMac, Huebsch, IPSO and Primus. Each trademark, service mark, logo or trade name of any other company appearing in this prospectus belongs to its holder. Solely for convenience, trademarks, service marks, logos and trade names referred to in this prospectus may appear without the “®” or “™” symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent possible under applicable law, our rights or the rights of the applicable licensor to these trademarks, service marks, logos and trade names. We do not intend our use or display of other companies’ trademarks, service marks, logos or trade names to imply a relationship with, or endorsement or sponsorship of us by, such other companies.
PRESENTATION OF FINANCIAL INFORMATION
The consolidated financial statements in this prospectus were prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, which requires us to make estimates and use assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. It is possible that actual results could differ materially from those estimates. The information reflects all normal recurring adjustments that we believe are necessary to present fairly the financial position and results of operations for all periods included. Totals and percentages may be affected by rounding.
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider before deciding to invest in shares of our common stock. Before investing in shares of our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes thereto and the information set forth under the sections “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in each case included in this prospectus. Unless the context otherwise requires, we use the terms “Alliance Laundry Holdings,” the “Company,” the “Issuer,” “we,” “us” and “our” in this prospectus to refer to Alliance Laundry Holdings Inc. (formerly known as ALH Holding Inc.) and our consolidated subsidiaries. Effective August 8, 2025, ALH Holding Inc. amended its certificate of incorporation to change its name to “Alliance Laundry Holdings Inc.” The amendment was approved by our Board of Directors and was effected by the filing of a Certificate of Amendment with the Delaware Secretary of State. Share information presented below and elsewhere in this prospectus, other than our historical financial information, reflects a -for-1 forward stock split of our common stock to occur after the effectiveness of this registration statement, of which this prospectus is a part, and prior to the closing of this offering. Our Company
Every Day is Laundry Day.
We are the world’s largest designer and manufacturer of commercial laundry systems, serving a diverse and resilient range of global end markets. We believe we engineer and produce the highest quality and one of the most reliable commercial laundry systems in the industry. We leverage our pure play focus on the commercial laundry industry and over 100 years of engineering excellence to drive innovation and design our equipment to deliver outstanding performance in the most demanding applications. We believe the need for clean laundry is universal and growing, and our premium machines meet this fundamental human need, all day, every day.
According to a third-party market study, the total addressable market for commercial, residential and industrial laundry systems was approximately $82 billion in 2023. Within this market, the commercial laundry systems industry generated nearly $7.4 billion in revenues during the same year. We are focused on this large and attractive commercial laundry market where our systems’ quality, durability and reliability are key strategic advantages with our channel partners, customers and end users. End users of our systems include healthcare facilities, fire stations, hotels, laundromats, communal laundry facilities and many other commercial applications where hygiene is critical. We believe the criticality of laundry equipment to these users’ operations creates a discerning customer base that appreciates the quality and economic attractiveness of highly effective and reliable equipment. We leverage our scale and focus to deliver a compelling total value proposition to this diverse customer base.
We estimate that we hold approximately 40% of the commercial laundry market in North America and have leading positions in growing markets around the world. The commercial laundry market benefits from a regular replacement cycle driven by a large base of installed machines, which provides us with an advantage as the largest incumbent manufacturer and offers us a high level of revenue consistency to support our growth ambitions. In addition, residential customers are increasingly demanding commercial-quality products for the home, and our machines represent a compelling fit for this select but growing segment of the residential market.
Commercial laundry customers view laundry systems as infrastructure to support core business operations or as revenue-generating assets. Avoidance of downtime and repair costs, as well as effective processing of large volumes of laundry, are important drivers of machine economics and help our end-customers run their businesses effectively. As such, customers focus on total cost of ownership when making purchasing decisions, which often involve investments of hundreds of thousands of dollars.
Our systems are known for their use of high-quality materials in their construction, their build quality and the extensive testing regimen they undergo, resulting in best-in-class performance. Our culture of operational excellence and continuous improvement supports the maintenance of these exceptionally high-quality standards. As a result, we believe we offer an attractive total cost of ownership, and our customers purchase our machines because of their reliability, durability and effectiveness. This dynamic allows us to sell our products at a price premium versus competitor offerings while securing a high degree of loyalty from our customers when they need to replace a machine.
We sell our systems through an extensive global network of approximately 600 distributors and through direct sales channels in certain key markets. Distributors are a critical part of the commercial laundry market as they are frequently the first point of contact for end-customers and are highly influential in educating those customers about equipment features and highlighting the key factors in making a purchasing decision. We have valuable and difficult-to-replicate relationships with our distributors that have been built over decades. Approximately 94% of our North American distributors have been with the Company for ten years or more. Our distribution partners often see us as the vendor of choice given our focus on quality, insights into customer needs, the attractive economics of our machines and our support teams staffed with highly trained personnel. Our direct sales channel complements our distribution network by bringing us closer to end-customers and enhancing strategic flexibility, particularly in select markets that we believe represent significant growth opportunities.
We operate through two geographic reporting segments with our North America segment representing 74% of 2024 revenue and our International segment representing the remaining 26%. Our historical financial performance has benefited from consistent and predictable growth at attractive margins, and we have a strong cash generation profile accompanied by minimal capital expenditure requirements given our well-invested manufacturing footprint. For the twelve-month period ended December 31, 2024, our net revenue was $1.5 billion, net income was $98 million (with a net income margin of approximately 7%), Adjusted EBITDA was $383 million (with an Adjusted EBITDA Margin of approximately 25%) and capital expenditures were approximately 3% of net revenue. For the six months ended June 30, 2025, our net revenue was $837 million, net income was $48 million (with a net income margin of approximately 6%), Adjusted EBITDA was $219 million (with an Adjusted EBITDA Margin of approximately 26%) and capital expenditures were approximately 2% of net revenue. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures and Key Operating Metrics” regarding our use of Adjusted EBITDA and Adjusted EBITDA Margin, which are non-GAAP financial measures, and a reconciliation of these measures to their most directly comparable financial measure calculated in accordance with GAAP.
Our Industry
The commercial laundry systems industry, which, according to a third-party market study, generated nearly $7.4 billion in revenues in 2023, is comprised of three core end markets that cover the products and services the Company provides:
•On-Premise Laundry (“OPL”): Businesses or institutions that process large volumes of laundry in support of their core business, including healthcare facilities, fire stations and hotels;
•Vended: Businesses, such as laundromats and communal laundry operators, that operate commercial systems for end users who pay for use; and
•Commercial In-Home: Residential consumers who pay a premium to have the reliability and effectiveness of commercial systems in their homes.
In addition to the replacement of equipment where we believe we have an advantage as the largest incumbent equipment manufacturer, customers across these three core end markets require aftermarket replacement parts, accessories, consumables and service, which are all sold separately, to maintain their laundry systems throughout their useful lives, representing an attractive source of recurring revenue. While accessories and consumables, estimated at $1.6 billion, are not included in our $7.4 billion market, these areas represent opportunities for future growth and expansion of our business.
Our industry is highly fragmented with few global players and many small regional players. Alliance is the global market leader and the only scaled player focused exclusively on commercial laundry systems.
According to a third-party market study, the global commercial laundry systems market is expected to grow at approximately 5% per year from 2023 through 2028. Growth in the commercial laundry systems market is supported by end-market tailwinds—such as hospitality sector growth and the ongoing evolution of the laundromat industry—and macro-level drivers, such as increasing GDP growth, population growth, rising incomes and increasing urbanization. Growth in developed markets, primarily North America and Europe, is benefitting from professionalization and digitization of laundromats, as well as increasing demand from consumers for commercial machines in their homes. Demand in emerging markets (e.g., Latin America, Southeast Asia, the Middle East and Africa) is supported by demographic trends, including population growth, growth in communal laundry facilities in apartment complexes, and increasing laundromat penetration. We expect the highly diversified set of end markets and growth drivers will support consistent, long-term growth across economic cycles.
Across both developing and emerging markets, customers of commercial laundry systems depend on their laundry systems as essential equipment supporting the efficient operation of their core business or home. The systems simply need to work, reliably and effectively, always to ensure customers are able maintain operations. The cost of failure to end users is high and purchasing decisions tend to be more focused on reliability and total cost of
ownership rather than the up-front cost of the machine. Relatively few occurrences of equipment downtime or technician service calls can easily offset the difference in cost of a less expensive, yet less reliable, piece of equipment.
End Markets
On-Premise Laundry
OPLs are operated by end users in a wide range of distinct sectors, including healthcare facilities, fire stations, hotels and any other sector where clean laundry is critical to supporting the end user’s core business. Ultimately, if the laundry systems of OPL customers are not functioning, their businesses cannot operate.
User requirements in this segment vary significantly in terms of load capacities, cycle times, water efficiency and other features, some of which can be driven by regulation or other policies. For example, the ability to sterilize large volumes of linens in healthcare and the ability to wash highly specialized firefighting gear are both critical to health and safety but also require distinct capabilities. OPLs choose commercial laundry systems based on ability to meet these specific industry requirements, as well as total cost of ownership, manufacturer reputation and reliability.
Vended
The Vended market includes laundromat businesses and communal laundry operators, which manage laundry facilities in apartments, universities and other institutions. Both laundromats and communal laundry operators utilize a pay-per-use model to generate revenue, meaning if their laundry systems are down, they lose the ability to generate revenue and will need to incur additional costs to get back up and running. As such, reliability and durability are key purchasing criteria to minimize equipment downtime and the need for costly repair visits.
The laundromat market in North America represents a large installed base, estimated to be 1.1 million machines in the United States alone, according to a third-party market study. A significant portion of the installed base is replaced each year, generating a large and attractive recurring revenue stream where market position, scale, incumbency, product reliability and brand reputation are important to retain and gain market share as machines are replaced.
In developed laundromat markets there is a secular shift away from traditional sole proprietor models to professionalized operators managing multi-site operations. These professional operators are upgrading and expanding store formats, adding higher capacity machines and leveraging digital tools to earn more revenue per store. In addition to the shifting operating models for laundromats in developed markets, many emerging economies are in the early stages of laundromat penetration, representing a significant opportunity for future growth.
Communal laundry facilities are managed primarily by operators who purchase, own, install and service the equipment under contracts with property owners or management companies. Sophisticated route operators with multiple locations are increasingly seeking technology, such as remote monitoring and digital control, to unlock cost savings and other operating efficiencies. Internationally, high-density metropolitan regions are seeing growth in multi-unit housing with small sized living units, driving demand for communal laundry facilities.
Commercial In-Home
The Commercial In-Home market is comprised of households and individual users who purchase commercial units to meet their reliability, quality and heavy-duty laundry needs.
In-home customers have become increasingly frustrated with traditional residential machines, which are typically sold based on lowest price or most features, but have lower-quality construction mainly comprised of plastic materials. Frustration with traditional residential machines is generating strong demand for commercial systems from customers who are willing to pay a premium for high quality, durable, reliable and long-lasting laundry systems.
Our Competitive Strengths
We Offer a Premier Portfolio of Commercial Laundry Systems
In commercial laundry, product and service quality are critical. Our systems are engineered for efficiency, reliability and long-lasting performance to ensure these high standards are met. This starts in our engineering department where we have designed and developed features that improve the durability, reliability and utility of our systems, and extends through to the quality of our materials and manufacturing. Our services are comprehensive and add value to customer operations, starting with site selection, design and financing, and extending through the lifecycle with genuine parts, technical support and warranties. As a result, we have tremendous customer allegiance and brand loyalty.
Our Unparalleled Scale is Advantageous
In our commercial end markets, we are approximately two times larger than the next competitor, and in total have an estimated installed base of eight million units, which we calculate assuming a ten-year average useful life of our products, across approximately 150 countries. As a result, there is a sizeable ecosystem of operators, technicians and users of our equipment who interact with our systems every day, resulting in highly sticky relationships. Our installed base also helps to generate sizeable replacement cycle tailwinds as customers upgrade their Alliance systems over time. Moreover, it allows us to support a scaled research and development and manufacturing effort, investing in engineering advancements that meaningfully improve the customer value proposition.
We Have a Global Manufacturing Footprint and Rigorous Testing Capabilities
We operate six strategically located facilities globally and we believe we are the only manufacturer that produces commercial equipment across North America, Europe and Asia Pacific. This “local for local” strategy delivers supply chain resiliency and strengthens our cost position. Our manufacturing footprint spans approximately 2.7 million square feet and our facilities have significant vertical integration, which enables greater control over the manufacturing process. The quality control process within our facilities is world-class and includes AI-powered defect monitoring, tests on 100% of machines produced and randomized audits, including full teardowns of finished
products. We maintain approximately 800 dedicated testing bays, and we have ‘24x7’ testing capability across the globe, a critical capability that supports our mission to offer the highest quality products in the industry.
We Employ a Tailored Go-to-Market Strategy with Established Channel Relationships
Our success is enabled by our global channel partner network and direct sales channels. We have built a hard-to-replicate network of approximately 600 independent distributors worldwide that sell into approximately 4,000 independent retail locations. Our relationships with many of our distributors and their sales teams and technicians are long-standing, and we continue to invest in resources to assist them with training, which results in a deep understanding of our technology and trust in our systems. Our channel partners are also structurally incentivized to sell our systems because end-consumers value our products’ superior total cost of ownership metrics and our partners benefit from our products’ attractive economics. We supplement our expansive independent distribution and retail network with our direct sales offices and direct sales to communal laundry operators to enhance strategic flexibility and access underpenetrated markets.
We Have a Proven Track Record of Innovation and Application Engineering Expertise
Innovation is a core focus of our business and we have history of developing industry-leading products and digital tools that address the specific needs of our customers. For example, our recently introduced ProCapture Cyclonic Filtration technology captures over 90% of lint on first-run drying cycles—compared to approximately 63% in traditional machines—helping reduce maintenance frequency, lower labor costs, and mitigate operational risks from lint buildup in high-usage environments. We complement our equipment innovation with a proprietary suite of digital tools that simplify operations and maximize profitability for multi-store laundromat owners and communal laundry room operators. Our integrated platform enables customers to remotely adjust pricing, process payments, monitor machine usage and identify maintenance needs in real time. Ultimately, these innovations,
tailored to the distinct application requirements of our customers, strengthen relationships and drive long-term value across our ecosystem.
We Have Demonstrated Consistent Best-in-Class Financial Performance
Alliance has demonstrated exceptional performance over time, with a revenue compound annual growth rate of approximately 9.5% over our fifteen most recent fiscal years, as well as a net income margin of approximately 7% in 2024 and an Adjusted EBITDA Margin of approximately 25% in 2024. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures and Key Operating Metrics” regarding our use of Adjusted EBITDA Margin, which is a non-GAAP financial measure, and a reconciliation to its most directly comparable financial measure calculated in accordance with GAAP. Our consistent financial performance through economic cycles is due to the mission-critical nature of our products, our focus on operational excellence, the reliability of replacement cycle revenue and the benefits of a diversified end market and customer base. Our operational teams drive continuous improvement and efficiency to enhance profitability, while our sales teams focus on winning high-margin customers. Our business model is capital efficient, with capital expenditures equaling on average approximately 2% of net revenue over the last three years. We Have a Seasoned and Experienced Management Team
We are led by a team of industry veterans with decades of combined experience in the commercial laundry space. The team has fostered a customer-focused culture that has delivered exceptional and consistent financial performance through the cycle. Our leadership team has executed a number of strategic initiatives, including: new product and technology launches, expansion into new international markets, acquisitions and integrations of complementary businesses and the implementation of lean manufacturing processes throughout our operations to drive greater efficiency, among others.
Our Growth Strategies
We have a long track record of growth because of the strength of our business model and organization. We intend to extend our leadership position in the market by leveraging the following growth strategies:
Maintain Relentless Focus on Product Quality to Drive Share Gains
Demand in the commercial laundry systems market is driven by the replacement cycle. We expect existing customers to continue to purchase our machines and new customers to migrate to us from our competitors at the time of replacement. Our existing customers return and we win new customers due to the performance of our machines over their life cycles, which require fewer expensive maintenance events and offer greater uptime over a longer operating life. In a poll of industry customers, equipment performance was ranked as the most important purchasing factor.
Continue to Develop Innovative Products to Accelerate the Replacement Cycle
Given our scale and focus, we have been able to make significant investments in the development of new technologies and capabilities that accelerate the replacement cycle of our machines. Between 2020 and 2024, we spent over $100 million on research and development. The engineering advancements resulting from this investment have real utility to our customers, improving performance and accelerating the replacement of existing systems.
Support the Ongoing Evolution of the Laundromat Market
We believe there is a compelling shift underway in the laundromat industry as sophisticated, commercially-focused investors revamp store designs and the laundromat user experience. Leveraging our unparalleled scale, we will continue to support this new class of entrepreneurs to build and expand their businesses across multi-site operations with larger store footprints and larger capacity machines. We are well positioned to capitalize on this trend, offering a full suite of set-up services, including site selection, design, operator training and equipment financing, which enable operators to scale faster. Additionally, our comprehensive digital platform enables management of multi-site operations and lowers operational cost through remote monitoring, digital payments and data-driven decision making.
Recent industry data highlights several key trends that reflect this shift in the laundromat industry. The average number of machines per laundromat has increased as operators seek to maximize returns, and is expected to grow further in the coming years, from 56.0 machines per location in 2024 to 60.1 machines per location by 2030. Operators are also replacing older machines sooner to access newer, faster equipment with enhanced features, resulting in a projected decrease in estimated equipment life from 8.7 years in 2024 to 8.4 years by 2030. There is a growing preference for larger machines, as operators aim to improve efficiency, speed and the overall user experience. Reflecting this, annual installations of large machines are expected to grow at a compound annual growth rate of 5.3% between 2024 and 2030, outpacing the estimated 2.5% compound annual growth rate of installation of all machines across the same period.
Serve Growing Demand for Commercial Machines from Commercial In-Home Customers
We believe there is an exciting opportunity to significantly expand our share in the residential market, as demand for our commercial laundry systems is growing from users who are becoming increasingly frustrated with lower quality residential machines. We serve this market with commercial machines, generating commercial-like margins and satisfying the demands of homeowners that are focused on reliability and total cost of ownership.
Penetrate and Develop High-Potential International Markets
The global commercial laundry industry remains underpenetrated in many regions, presenting meaningful long-term growth opportunities. We focus on high-potential geographies where structural trends—such as rising GDP, population growth, urbanization, increasing household income, and evolving lifestyles—point to growing demand for commercial laundry solutions. In these markets, our local teams help to establish and scale the commercial laundry ecosystem. For example, in Thailand, we provided operational training, digital tools and other support to local laundromat entrepreneurs to accelerate the creation of the laundromat industry and have grown our Thailand revenue at a compound annual growth rate of approximately 50% since we began operations there in 2017. Additionally, in Brazil, we established our own operator business in 2016, which we later sold to a multinational consumer products company, to foster growth in the local commercial laundry market. As a result, we have grown our Brazil revenue at a compound annual growth rate of approximately 30% since 2017.
Drive Consistent Operational Improvements to Further Expand Margins
We intend to further expand margins through the continued implementation of cost-down initiatives and an ongoing focus on operational excellence. We will build on our demonstrated track record of durable margin improvement through several initiatives, including: monitoring our global supply chain to identify raw material cost saving opportunities, enhancing labor efficiency by optimizing plant operations, further automating our manufacturing facilities to improve productivity, leveraging our engineering capabilities to develop more cost effective products and eliminating component redundancy.
Recent Developments
On August 21, 2025, we amended our existing Credit Agreement to further reduce the interest rate margins applicable to our Term Facility and Revolving Facilities (each as defined below). Following the effectiveness of the August Repricing Amendments, borrowings under the Term Facility and Revolving Facilities will bear interest at reduced rates, subject to certain step-downs based on our credit ratings and leverage ratio. All other material terms of the Credit Agreement remain unchanged. See “Description of Certain Indebtedness.”
Summary of Risk Factors
Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition and results of operations, which could cause the trading price of our common stock to decline and could result in a partial or total loss of your investment. You should consider these risks before making a decision to invest in shares of our common stock. These risks are discussed more fully in “Risk Factors” in this prospectus. The following is a summary of some of the principal risks we face: •the high degree of competition in the markets in which we operate;
•our reliance on the performance of distributors, route operators, suppliers, retailers and servicers;
•our ability to achieve and maintain a high level of product and service quality;
•fluctuations in the cost and availability of raw materials;
•our exposure to international markets, particularly emerging markets;
•our exposure to costs and difficulties of acquiring and integrating complementary businesses and technologies;
•our exposure to worldwide economic conditions and potential global economic downturns;
•the impact of potential adverse relations with employees;
•the impact of tariffs and exchange rate fluctuations;
•the potentially significant costs of complying with environmental, health and safety (“EHS”) laws, including those relating to energy and water usage and efficiency;
•our reliance on information technology systems and proprietary software;
•compliance with data privacy and security laws;
•our potential exposure to data security incidents;
•our substantial indebtedness;
•compliance with trade and export control laws;
•our principal stockholder will continue to have significant influence over us after this offering; and
•upon the listing of our common stock on the NYSE, we will be a “controlled company” within the meaning of its corporate governance standards.
Our History
Our business began in 1908 in Ripon, Wisconsin when we introduced a hand-operated washer to the marketplace. Industry leading features were introduced under the Speed Queen brand with the introduction of stainless steel wash tubs in 1938 and automatic washers and dryers in 1952. The spirit of innovation, quality and
reliability persists to this day. We manufacture durable products with high-quality steel that are meticulously tested and augmented by novel technologies. More recently, we introduced our pioneering ProCapture lint capture technology in 2023 and have developed our digital platform that can be leveraged across our brands to monitor product performance, business revenues and provide fleet management efficiencies, among other benefits. We sell our highly engineered products across a portfolio of five strategic brands: Speed Queen (which, according to a third-party market study, has the highest Net Promoter Score in North America), Huebsch, UniMac, IPSO and Primus.
Principal Stockholder
On August 31, 2015, our principal stockholder, members of our management and certain other institutional investors (the “Minority Investment Institutional Co-Investors”) indirectly acquired 100% of the outstanding equity interests in Alliance Laundry Holdings (the “BDTCP Transaction”). Since the BDTCP Transaction, our principal stockholder has continued to consist of funds affiliated with BDT & MSD, a merchant bank with an advisory and investment platform built to serve the distinct needs of business owners and strategic, long-term investors. Its funds are managed by its affiliated investment advisers, BDTCP and MSD Partners, L.P.
After the closing of this offering, our principal stockholder will own approximately % of our outstanding common stock (or approximately % if the underwriters exercise their option to purchase additional shares in full).
Corporate Information and Structure
Our principal executive office is located at 221 Shepard Street, Ripon, Wisconsin 54971 and our telephone number is (920) 748-3121. Our website address is www.alliancelaundry.com. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated into, this prospectus, and you should not rely on any such information in making the decision whether to purchase shares of our common stock.
The following chart shows our simplified organizational structure immediately following the completion of this offering, assuming no exercise of the underwriters’ option to purchase additional shares:
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*Our principal stockholder holds its interest in Alliance Laundry Holdings through BDT Badger Holdings, LLC (“BDTBH”). The Minority Investment Institutional Co-Investors also hold their interests in Alliance Laundry Holdings through BDTBH (“Co-Investment Shares”). Our principal stockholder has sole voting power and investment power with respect to all shares of Alliance Laundry Holdings held by BDTBH, including the Co-Investment Shares.
**Management includes current directors, executive officers and employees as well as certain former directors, executive officers and employees.
The Offering
This summary highlights information presented in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all the information you should consider before investing in our common stock. You should carefully read this entire prospectus before investing in our common stock, including “Risk Factors” and our consolidated financial statements. Share information presented below and elsewhere in this prospectus, other than our historical financial information, reflects a -for-1 forward stock split of our common stock to occur after the effectiveness of this registration statement, of which this prospectus is a part, and prior to the closing of this offering. | | | | | | | | |
Issuer in this offering | | Alliance Laundry Holdings Inc. |
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Common stock offered by us | | shares. |
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Common stock offered by the principal stockholder | | shares (or shares if the underwriters exercise in full their option to purchase additional shares from the principal stockholder). |
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Underwriters’ option to purchase additional shares of common stock | | The principal stockholder has granted to the underwriters a 30-day option from the date of this prospectus to purchase up to an additional shares of our common stock. Such shares are offered by the principal stockholder at the initial public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. |
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Common stock to be outstanding immediately after this offering | | shares. |
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Common stock to be held by the principal stockholder after this offering | | shares (or shares if the underwriters exercise in full their option to purchase additional shares from the principal stockholder). |
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Use of proceeds | | We estimate that the net proceeds to us from this offering will be approximately $ million based on an assumed initial public offering price of $ per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Certain of the shares of common stock offered by this prospectus are being sold by the principal stockholder. We will not receive any of the proceeds from the sale of shares by the principal stockholder in this offering, including any such proceeds received by the principal stockholder from any exercise by the underwriters of their option to purchase additional shares. For information about the principal stockholder, see “Principal Stockholders.” We intend to use a portion of the net proceeds to us from this offering to repay outstanding indebtedness under the Term Facility (as defined in “Description of Certain Indebtedness”) and the remainder of the net proceeds for general corporate purposes. See “Use of Proceeds.” |
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Controlled company | | Upon the completion of this offering, our principal stockholder will control approximately % of the combined voting power of our outstanding common stock (or % if the underwriters exercise in full their option to purchase additional shares from the principal stockholder). As a result, we will be a “controlled company” under the corporate governance standards of the NYSE. Under these standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance standards. See “Management—Controlled Company” and “Risk Factors—Risks Relating to this Offering and Ownership of Our Common Stock—Upon the listing of our common stock on the NYSE, we will be a “controlled company” within the meaning of the corporate governance standards of the NYSE. As a result, we will qualify for, and may in the future rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.” |
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Dividend Policy | | We currently intend to retain all available funds and future earnings, if any, to fund the development and expansion of our business, and we do not anticipate declaring or paying any cash dividends in the near term. The declaration and payment by us of any future dividends to holders of shares of our common stock will be at the sole discretion of our Board of Directors and will depend on our financial condition, earnings, cash needs, capital requirements (including requirements of our subsidiaries), contractual, legal, tax and regulatory restrictions, and any other factors that our Board of Directors deems relevant in making such a determination. Additionally, we are a holding company and do not conduct any business operations of our own. As a result, our ability to pay cash dividends on shares of our common stock is dependent upon cash dividends, distributions and other transfers from our subsidiaries. Our Credit Agreement imposes restrictions on certain of our subsidiaries’ ability to pay dividends or other distributions to us. We may also enter into other credit agreements or borrowing arrangements in the future that could restrict our ability to declare or pay cash dividends. Therefore, we cannot assure you that we will pay any cash dividends or other distributions to holders of shares of our common stock, or as to the amount of any such cash dividends or other distributions. See “Dividend Policy.” |
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Conflict of Interest | | BDT & MSD, a participant in the underwriting syndicate for this offering, is an affiliate of our principal stockholder. In addition, BDT & MSD has previously provided placement and other financial advisory services to Alliance Laundry Holdings, for which BDT & MSD has received customary fees. BDT & MSD may, in the future, provide similar services to the Company and may receive customary fees for such services. As a result, BDT & MSD is deemed to have a “conflict of interest” under Rule 5121(f)(5) of the Conduct Rules of the Financial Industry Regulatory Authority, Inc. (“FINRA”). Accordingly, this offering is being made in compliance with Rule 5121(a)(1) of FINRA’s Conduct Rules. Pursuant to that rule, the appointment of a “qualified independent underwriter” is not required in connection with this offering as the member primarily responsible for managing the public offering does not have a conflict of interest, is not an affiliate of any member that has a conflict of interest and meets the requirements of paragraph (f)(12)(E) of Rule 5121. Further, a prominent disclosure of this conflict of interest has been included in this prospectus. BDT & MSD will not confirm sales of the shares of our common stock to any account over which it exercises discretionary authority without the specific written approval of the account holder. See “Underwriting (Conflicts of Interest).” |
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Director Participation | | Certain of our directors may be allocated shares in this offering at the public offering price. Any such allocations will be made at the discretion of the underwriters, and there is no assurance as to the number of shares, if any, that may be allocated to such persons. |
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Risk factors | | You should read the “Risk Factors” section and the other information included in this prospectus for a discussion of the factors to consider before deciding to invest in shares of our common stock. |
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Proposed listing and symbol | | We intend to apply to list our common stock on the NYSE under the trading symbol “ALH”. |
The number of shares of our common stock that will be outstanding after this offering is based on shares of common stock outstanding as of , 2025 which gives effect to the Assumed Share Events (as defined below), and excludes:
• shares of our common stock issuable upon exercise of options to purchase shares of our common stock outstanding under the Alliance Laundry Holdings Inc. 2015 Stock Option Plan (the “2015 Stock Option Plan”) as of , 2025, with a weighted-average exercise price of $ per share;
• shares of our common stock reserved for future issuance under the Alliance Laundry Holdings Inc. 2025 Omnibus Incentive Compensation Plan (the “2025 Plan”); and
• shares of our common stock reserved for future issuance under the Alliance Laundry Holdings Inc. 2025 Employee Stock Purchase Plan (the “ESPP”).
Unless otherwise indicated, all information in this prospectus assumes (collectively, the “Assumed Share Events”):
•an initial public offering price of $ per share of common stock, which is the midpoint of the estimated price range set forth on the cover page of this prospectus;
•no exercise of outstanding options subsequent to except as described above;
•the -for-1 forward stock split of our common stock. The purpose of the stock split is to target an appropriate initial price per share of the common stock in connection with the pricing of this offering; and
•no exercise by the underwriters of their option to purchase up to an additional shares of our common stock.
The financial statements and the related notes thereto included elsewhere in this prospectus, including the share and per share information, are presented only on a historical basis and therefore do not reflect the -for-1 forward stock split.
SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary consolidated financial data as of December 31, 2024 and 2023 and for each of the years ended December 31, 2024, 2023 and 2022 are derived from audited consolidated financial statements of ALH Holding Inc. and the accompanying notes that are included elsewhere in this prospectus. On August 8, 2025, ALH Holding Inc. filed a Certificate of Amendment to its Certificate of Incorporation to change its name to Alliance Laundry Holdings Inc. The following summary interim consolidated financial data as of June 30, 2025 and for each of the six months ended June 30, 2025 and 2024 are derived from our unaudited interim consolidated financial statements of Alliance Laundry Holdings Inc. and the accompanying notes that are included elsewhere in this prospectus.
The unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal, recurring nature that are necessary for a fair presentation of the unaudited interim consolidated financial statements.
The historical results presented below are not necessarily indicative of financial results to be achieved in future periods, and our interim results are not necessarily indicative of the results that may be expected for the full year or any other period. The summary consolidated financial data should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus. Unless otherwise indicated, the information in this section does not give effect to the -for-1 forward stock split.
Consolidated statements of operations data:
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| For the Six Months Ended | | For the Year Ended |
(in thousands, except share data) | June 30, 2025 | | June 30, 2024 | | Dec. 31, 2024 | | Dec. 31, 2023 | | Dec. 31, 2022 |
| Net revenues | $ | 836,757 | | | $ | 729,009 | | | $ | 1,508,440 | | | $ | 1,365,154 | | | $ | 1,376,277 | |
Costs and expenses | 517,547 | | | 459,280 | | | 957,189 | | | 892,062 | | | 956,872 | |
| Gross profit | 319,210 | | | 269,729 | | | 551,251 | | | 473,092 | | | 419,405 | |
| Total operating expenses | 150,877 | | | 124,974 | | | 267,238 | | | 237,408 | | | 239,241 | |
| Operating income | 168,333 | | | 144,755 | | | 284,013 | | | 235,684 | | | 180,164 | |
| Interest expense, net | 84,288 | | | 58,431 | | | 132,001 | | | 123,397 | | | 58,099 | |
Other expenses/(income), net | 20,908 | | | (230) | | | 28,563 | | | 7,832 | | | 6,041 | |
| Income before taxes | 63,137 | | | 86,554 | | | 123,449 | | | 104,455 | | | 116,024 | |
| Provision for income taxes | 14,874 | | | 18,977 | | | 25,130 | | | 16,226 | | | 16,374 | |
| Net income | $ | 48,263 | | | $ | 67,577 | | | $ | 98,319 | | | $ | 88,229 | | | $ | 99,650 | |
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| Net income per share attributable to common stockholders: | | | | | | | | | |
Basic | $ | 40.16 | | | $ | 56.26 | | | $ | 81.84 | | | $ | 73.23 | | | $ | 81.56 | |
Diluted | $ | 39.22 | | | $ | 55.30 | | | $ | 80.08 | | | $ | 72.15 | | | $ | 79.97 | |
| Weighted average number of common shares outstanding | | | | | | | | | |
| Basic | 1,202 | | | 1,201 | | | 1,201 | | | 1,205 | | | 1,222 | |
| Diluted | 1,231 | | | 1,222 | | | 1,228 | | | 1,223 | | | 1,246 | |
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As further adjusted net income per share attributable to common stockholders | | | | | | | | | |
| Basic | | | | | | | | | |
| Diluted | | | | | | | | | |
As further adjusted weighted average number of common shares outstanding | | | | | | | | | |
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| Diluted | | | | | | | | | |
Consolidated balance sheets data:
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| As of |
| (in thousands) | June 30, 2025 | | Dec. 31, 2024 | | Dec. 31, 2023 |
Assets |
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Total current assets | $ | 800,375 | | | $ | 668,157 | | | $ | 693,711 | |
Total assets | 2,964,882 | | | 2,832,105 | | | 2,854,998 | |
| Liabilities and Stockholders’ Equity | | | | | |
Current liabilities | 509,202 | | | 478,665 | | | 471,579 | |
Long-term debt, net | 2,035,732 | | | 2,034,545 | | | 1,237,554 | |
Asset backed borrowings - owed to securitization investors | 387,898 | | | 382,910 | | | 347,959 | |
Total liabilities | 3,141,377 | | | 3,109,433 | | | 2,304,068 | |
Stockholders’ equity/(deficit) | (176,495) | | | (277,328) | | | 550,930 | |
Total liabilities and stockholders’ equity/(deficit) | $ | 2,964,882 | | | $ | 2,832,105 | | | $ | 2,854,998 | |
Non-GAAP Financial Measures
We regularly review non-GAAP measures to evaluate our business, measure our performance and manage our operations, including identifying trends affecting our business, formulating business plans and making strategic decisions. We believe that non-GAAP measures provide an additional way of viewing aspects of our operations that, when viewed together with our GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business. These non-GAAP financial measures are also used by our management to evaluate financial results and to plan and forecast future periods. Non-GAAP financial measures should be considered a supplement to, and not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Non-GAAP financial measures used by us may differ from the non-GAAP measures used by other companies, including our competitors.
“Adjusted EBITDA” represents net income before provision for income taxes, interest expense, depreciation and amortization and is further adjusted to exclude certain expenses not representative of our ongoing operations and other charges not involving cash outlays and “Adjusted EBITDA Margin” represents Adjusted EBITDA divided by net revenues. Management utilizes Adjusted EBITDA and Adjusted EBITDA Margin as measures of operating performance. Management believes that these non-GAAP financial measures are useful to investors for period-to-period comparisons of the Company’s business and in understanding and evaluating the Company’s operating results. In evaluating these metrics, investors should be aware that in the future we may incur expenses similar to those eliminated in this presentation. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures and Key Operating Metrics—Adjusted EBITDA and Adjusted EBITDA Margin” for further information on our use of non-GAAP financial measures. Non-GAAP Reconciliation
The following table presents a reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA Margin for the periods presented:
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| For the Six Months Ended June 30, | | For the Year Ended December 31, |
| (in thousands except for percentages) | 2025 | | 2024 | | 2024 | | 2023 | | 2022 | | 2021 | | 2020 | | 2019 |
| Net income | $ | 48,263 | | | $ | 67,577 | | | $ | 98,319 | | $ | 88,229 | | $ | 99,650 | | $ | 81,976 | | | $ | 36,901 | | | $ | 87,466 | |
| Provision for income taxes | 14,874 | | | 18,977 | | | 25,130 | | 16,226 | | 16,374 | | 9,610 | | | 16,956 | | | 7,734 | |
| Interest expense | 84,288 | | | 58,431 | | | 132,001 | | 123,397 | | 58,099 | | 60,770 | | | 76,735 | | | 74,599 | |
| Depreciation and amortization | 45,958 | | | 44,909 | | | 90,169 | | 88,704 | | 87,284 | | 87,464 | | | 85,310 | | | 81,368 | |
| EBITDA | 193,383 | | | 189,894 | | | 345,619 | | 316,556 | | 261,407 | | 239,820 | | | 215,902 | | | 251,167 | |
Refinancing and debt related costs (1) | 1,054 | | | — | | | 33,217 | | — | | 223 | | — | | | | | — | |
Shared-based compensation (2) | 1,771 | | | 1,776 | | | 3,263 | | 3,343 | | 3,144 | | 4,230 | | | 1,668 | | | 1,941 | |
Pension termination costs (3) | — | | | — | | | — | | 7,011 | | 4,619 | | — | | | — | | | — | |
Strategic transaction costs (4) | 3,044 | | | 4,668 | | | 5,803 | | 1,083 | | 437 | | — | | | — | | | — | |
Foreign exchange (gain)/loss on intercompany loans (5) | 19,854 | | | (230) | | | (4,654) | | 484 | | 1,931 | | 6,364 | | | 3,414 | | | (1,978) | |
Union agreement bonus (6) | — | | | — | | | — | | — | | — | | 2,819 | | | — | | | — | |
Acquisition earnouts (7) | — | | | — | | | — | | — | | — | | 5,272 | | | — | | | — | |
| Adjusted EBITDA | $ | 219,106 | | | $ | 196,108 | | | $ | 383,248 | | $ | 328,477 | | $ | 271,761 | | $ | 258,505 | | | $ | 220,984 | | | $ | 251,130 | |
| Net revenues | $ | 836,757 | | | $ | 729,009 | | | $ | 1,508,440 | | $ | 1,365,154 | | $ | 1,376,277 | | $ | 1,214,028 | | $ | 937,794 | | $ | 1,074,521 |
| Net income margin | 5.8 | % | | 9.3 | % | | 6.5 | % | | 6.5 | % | | 7.2 | % | | 6.8 | % | | 3.9 | % | | 8.1 | % |
| Adjusted EBITDA Margin | 26.2 | % | | 26.9 | % | | 25.4 | % | | 24.1 | % | | 19.7 | % | | 21.3 | % | | 23.6 | % | | 23.4 | % |
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(1)Represents fees in connection with the Credit Agreement and predecessor credit facilities.
(2)Non-cash expenses related to equity awards granted to management.
(3)Expenses related to the termination and settlement of pension obligations, including settlement charges and amortization of net actuarial losses.
(4)Comprised of professional fees, advisory services and other expenses related to acquisitions and other strategic initiatives.
(5)Foreign exchange (gains)/losses on intercompany loans where the lender or borrower’s functional currency differs from the loan denomination currency.
(6)Bonus paid to members of the United Steelworkers union upon ratification of a five-year contract in December 2021.
(7)Contingent consideration payable to former owners of acquired businesses based on the achievement of predetermined financial targets during specified post-acquisition measurement periods.
RISK FACTORS
An investment in our common stock involves risks. You should carefully consider the following risks, together with the other information contained in this prospectus, before investing in shares of our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial also may affect our business, prospects, operating results or financial condition. If any of these risks actually occurs, our business, prospects, operating results or financial condition could suffer materially, the trading price of our common stock could decline and you could lose all or part of your investment.
This prospectus also contains forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements” elsewhere in this prospectus. Our actual results could differ materially and adversely from those anticipated in the forward-looking statements as a result of certain factors, including the risks facing us. Risks Relating to Our Business
We design, manufacture and service products that incorporate innovative technologies. The introduction of new products and technologies involves risks, and we may not realize the degree or timing of benefits initially anticipated.
Our future success depends on designing, developing, producing, selling and supporting innovative products with innovative technologies and anticipating industry changes. The regulations and policies applicable to our products, as well as our customers’ product and service needs, change from time to time. Moreover, regulatory and policy changes, including those relating to energy infrastructure, consumption and efficiency, as well as those aimed at addressing climate change and other events and their impacts, may render our products and technologies non-compliant or non-competitive and may subject us to operational, compliance, business and reputational risks and increased costs. See “Risks Relating to Government Regulation and Litigation—Energy efficiency, water usage standards and other product-related standards could adversely affect our industry.” Our ability to realize the anticipated benefits of our technological advancements or product improvements—including those associated with regulatory or policy changes—depends on a variety of factors, including: meeting development, production and regulatory approval schedules; meeting performance plans and expectations; the availability of raw materials and parts; our suppliers’ performance; our distributors’ performance; the hiring, training and deployment of qualified personnel; achieving efficiencies; identifying emerging regulatory and technological trends; validating innovative technologies; the level of customer interest in new technologies and products; and the costs and customer acceptance of our new or improved products.
Our research and development efforts, including those aimed at advancing the environmental sustainability of our products, such as reducing product water and energy consumption, may not culminate in new technologies or timely products, or may not meet the needs or expectations of our customers as effectively as competitive offerings. Our competitors may develop competing technologies that gain market acceptance before or instead of our products. In addition, we may not be successful in anticipating or reacting to changes in the regulatory environments in which our products are sold, and the markets for our products may not develop or grow as we anticipate.
Additionally, our products and services also may incorporate technologies developed or manufactured by third parties, which, when combined with our technology or products, creates additional risks and uncertainties. As a result, the performance and market acceptance of these third-party products and services could affect the level of customer interest and acceptance of our own products in the marketplace.
We operate in a competitive market.
We have several large competitors within the markets in which we operate. There can be no assurance that significant new competitors or increased competition from existing competitors will not have a material adverse effect on our business, financial condition, results of operations and cash flows. There can be no assurance that we will not encounter increased competition in the future, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
In addition, we may face competition from companies outside of the U.S. that may have lower costs of production (including labor or raw materials). These companies may pass along these lower production costs to customers, resulting in a lower price for products like ours. As a result, our revenues and profits could be adversely affected. Certain of our competitors have more experience than we do in the international markets we compete in. As a result, certain of our competitors may have preexisting relationships with customers and may have obtained regulatory approvals in foreign jurisdictions, which may negatively affect our ability to compete successfully in these international markets.
Our business depends on the performance of our third-party distributors, route operators and suppliers who are subject to additional risks that are beyond our control, including those that could harm our business, financial condition and results of operations.
We utilize third-party distributors to sell our products into international end-markets and route operators with global delivery systems in order to manage the delivery of our products to such distributors. We rely on over 600 distributors worldwide who provide services from design and installation to aftermarket. Additionally, though our strategy generally involves sourcing inputs from the same or nearby geographic regions as our manufacturing facilities, we continue to face risks associated with supply disruptions or delays in shipments and supply chains regionally and globally. As a result of our international operations, we are subject to risks associated with doing business in multiple jurisdictions, including retailer and consumer boycotts due to actual or perceived ethical, environmental, social or political issues in certain countries in which we do business and where our products are distributed, including reputational harm related to substantiated or unsubstantiated human rights and labor concerns; the need to navigate and difficulty ensuring compliance with existing and new laws and regulations in many jurisdictions, including those relating to labor conditions and workplace safety, environmental protection, chemical regulations, water and energy usage, quality and safety standards, imports, duties, taxes and other changes on imports; reduced protection for intellectual property rights in some countries; disruptions or delays in shipments and supply chains globally; and changes in local economic conditions where distributors, suppliers, route operators, retailers and customers are located. If our internal controls and compliance programs do not adequately monitor, deter or prevent our employees as well as our distributors, route operators, suppliers and other third parties with whom we do business from violating anti-bribery, anti-corruption or trade laws and regulations, we may incur defense costs, fines, penalties, reputational harm, business disruptions and damage to our business.
In particular, compliance with sanctions and customs trade orders could affect the sourcing and availability of raw materials used by our suppliers in the manufacturing of certain of our products. Our ability to successfully import such materials may be adversely affected by changes in laws across jurisdictions. There are also increasing requirements and expectations in various jurisdictions that companies proactively monitor the environmental and social performance of their value chain, including compliance with a variety of labor practices and human rights considerations, as well as consideration of a wider range of environmental and social matters, including the end-of-life considerations for products. For example, various jurisdictions have adopted, or are considering adopting, regulations that would require organizations to, among other things, conduct due diligence to identify certain environmental and human rights risks in their supply chains and take steps to mitigate any such risks identified. We have been and may continue to be subject to costs associated with such regulations, as well as any future regulations on the source of products or their component parts or materials, including for the diligence pertaining to these matters and the cost of remediation and other changes to products, processes or sources of supply as a consequence of such verification activities. The impact of such regulations may result in a limited pool of acceptable suppliers, and we cannot guarantee that we will be able to obtain products in sufficient quantities at competitive prices and of similar quality. Additionally, because our supply chain is complex, we may face regulatory challenges in complying with applicable sanctions and trade regulations and reputational challenges with our consumers and other stakeholders if we are unable to sufficiently verify the origins of the materials used in the products we sell. See “Risks Relating to Our Business—Tariffs and other trade restrictions could adversely affect our business and financial results, and we may not be able to raise prices sufficiently to offset increased costs caused by any such tariffs.” for more information on tariff-related risks. Even if we comply with applicable regulations, we may be subject to additional expectations and scrutiny from investors, business partners, wholesale partners, consumers or other stakeholders on our environmental and human rights practices. These expectations are evolving quickly, and, as a result, certain of our actions or decisions, either currently or in the future, may be perceived to not align with
best practices or as otherwise inconsistent with stakeholder expectations, which could damage our reputation and adversely impact our business. See “Risks Relating to Government Regulation and Litigation—We are subject to risks related to environmental, social and governance (“ESG”) and sustainability laws, regulations, policies and initiatives.”
Further, if any distributors, route operators, suppliers, retailers or servicers are unable or unwilling to perform according to the negotiated terms and timetable of its respective agreement for any reason or if any terminates its agreement, we would be required to engage a substitute distributor, supplier, retailer or servicer. This would likely result in significant project delays and increased costs, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We do not have long-term purchase commitments from our distributors, suppliers and retailers and may have to rely on distributor, supplier and retailer forecast in making production decisions, and any cancellation of purchase commitments or orders may result in the waste of raw materials or work in process associated with those orders, reducing both our revenues and profitability.
A variety of conditions, both specific to our distributors and generally affecting the demand for these products, may cause our distributors to cancel, reduce or delay orders. Cancellations, reductions or delays by a significant distributor or a number of distributors would result in a material reduction in our revenue. Those distributor decisions could also result in excess and obsolete inventory or unabsorbed manufacturing capacity, which could reduce our profits or impair our cash flow. On occasion, distributors require rapid increases in production, which could strain our resources, leading to a potential reduction in our margins because of the additional costs necessary to meet those demands.
Our distributors generally do not make firm, long-term volume purchase commitments. In addition, industry trends over the past five years have led to dramatically shortened lead times on purchase orders, as rapid product cycles have become the norm. Although we sometimes enter manufacturing contracts with our customers, these contracts principally clarify order lead times, inventory risk allocation and similar matters, rather than providing for firm, long-term commitments to purchase a specified volume of products at a fixed price. As a result, distributors can generally cancel purchase commitments or reduce or delay orders at any time. The large percentage of our sales to distributors in the industry, which is subject to severe competitive pressure, rapid technological change and product obsolescence, increases our inventory and overhead risks, among others, as we must maintain inventories of raw materials, work in process and finished goods to meet customer delivery requirements, and those inventories may become obsolete if the anticipated market demand does not materialize. Additionally, there has been consolidation of distributors in our industry. Increased consolidation may result in fewer alternatives for distributors, which in turn could decrease our bargaining power as it relates to pricing and purchase order terms.
We also make significant decisions, including determining the levels of business that we will seek and accept, production schedules, component and raw material procurement commitments, facility requirements, personnel need, and other resource requirements, based upon our estimates of distributor requirements. The short-term nature of our distributors’ commitments and the possibility of rapid changes in demand for these products reduce our ability to estimate accurately their future requirements. Because many of our costs and operating expenses are fixed, a reduction in customer demand can reduce our gross margins and operating results. To transact business, we assess the integrity and creditworthiness of our distributors and suppliers and we may, based on this assessment, incur design and development costs that we expect to recoup over several orders produced for the customer. Such assessments are not always accurate and expose us to potential costs, including the write off costs incurred and inventory obsolescence if the orders anticipated do not materialize. We may also occasionally place orders with suppliers based on a customer’s forecast or in anticipation of an order that is not realized. Additionally, from time to time, we may purchase quantities of supplies and materials greater than required by customer orders to secure more favorable pricing, delivery or credit terms. These purchases can expose us to losses from cancellation costs, inventory carrying costs or inventory obsolescence, and hence adversely affect our business and operating results.
Our business depends on our customers and their continued engagement with us.
Our business depends upon the financial viability of our customers and the preservation of our relationships with them. Some of our sales arrangements with these customers are by purchase order and are terminable at will at the option of either party, rather than long-term contracts. For customers with long-term contracts, these customers have no obligation to renew their contracts after their initial contract is satisfied, and in the normal course of business, some customers will elect not to pursue additional contracts for our products. Any material cancellation, reduction or delay in purchases by these customers could have a material adverse effect on our business, financial condition, results of operations and cash flows. Additionally, certain of our contractual arrangements with customers limit our ability to raise our prices during the term of the contract. These limitations may restrict our ability to respond to inflationary pressures, resulting in a negative impact to our business, financial condition, results of operations and cash flows.
Moreover, our continued success depends in part on our ability to sell additional products, updated products replacing pre-existing products or enhancements to pre-existing products to our current customers. This may require increasingly sophisticated and costly sales efforts. Similarly, the rate at which our customers purchase new products depends on a number of factors, including general economic conditions and customer receptiveness to any price changes related to these additional features and services.
Price fluctuations or shortages of raw materials could adversely affect our operations.
The major raw materials and components we purchase for our production process are carbon and stainless steel, motors, aluminum castings, electronic controls, corrugated boxes and plastics. The price and availability of these raw materials and components are subject to market conditions affecting supply. Many of the commodities that affect our raw material and component costs have fluctuated significantly over the past several years, due to supply and demand trends, government regulations and tariffs, currency exchange rates, transportation costs and global economic factors. We take steps to contain such cost fluctuations by using hedge instruments or contracts, implementing price increases, increasing our inventory or entering into fixed-price contracts. However, there can be no assurance that any such mitigation efforts, including holding excess inventory, will be effective, or that any such price increases would not negatively impact customer demand, such that increases in raw material or component costs (to the extent we are unable to pass on such higher costs to customers) will not have a material adverse effect on our business, financial condition, results of operations and cash flows.
We purchase a portion of these raw materials and component parts from foreign suppliers using foreign currency, and as a result, we are subject to exchange rate fluctuations. Complex global political and economic dynamics can affect exchange rate fluctuations. For example, the implementation of tariffs, quotas, duties or other measures related to the level of trade between the United States and other markets could impact the value of the U.S. dollar. It is difficult to predict future fluctuations and the effect these fluctuations may have on our business, financial condition, results of operations and cash flows. Our reliance on suppliers to secure the raw materials and components used in our products, and on service providers to deliver our products, also exposes us to volatility in the prices and availability of these services. Because we maintain limited raw material and component inventories, even brief unanticipated delays in delivery by suppliers, including those due to capacity constraints, labor disputes, impaired financial condition of suppliers, weather emergencies or natural or man-made disasters, may impair our ability to satisfy our customers’ needs and could adversely affect our business and financial performance.
We face inventory risk caused by inherent uncertainty in inventory forecasting and production planning.
We are exposed to inventory risks that may adversely affect our operating results as a result of new product launches, changes in product pricing, defective products and associated product liability and changes in consumer demand and spending patterns. We endeavor to accurately predict these changes and avoid overstocking or understocking products we manufacture or sell. Demand for products, however, can change significantly between the time we order major raw materials and components we purchase for our production process and the date of sale of our resulting inventory. In addition, when we begin selling or manufacturing a new product, it may be difficult to establish third-party distributor relationships for sale of such new product, determine appropriate product or component selection, or accurately forecast demand. The acquisition of raw materials and components we purchase
for our production process requires significant lead-time and prepayment, and they may not be returnable. We carry a broad selection and significant inventory levels of certain products, and at times we are unable to sell products in sufficient quantities or meet consumer demand. If our inventory forecasting and production planning processes result in higher inventory levels exceeding the levels demanded by customers or should our customers decrease their orders with us, our operating results could be adversely affected due to costs of carrying the inventory and additional inventory write-downs for excess and obsolete inventory.
We depend on suppliers, including single-source suppliers and, in certain cases, sole-source suppliers, to consistently supply us with components for our products, and any failure to procure such components could have a material adverse effect on our product inventories, sales, operating results and cash flows.
We rely on single-source suppliers for certain proprietary component parts in our products. A single-source supplier is a supplier from which we make all purchases of a particular component used in our products even though other suppliers of the component exist. A sole-source supplier is a supplier from which we make all purchases of a particular component used in our product, and the supplier is the only source of that particular component in the market. If these single-source or sole-source suppliers were to cease or interrupt production or otherwise fail to supply these components to us, we would be unable to obtain these proprietary component parts for an indeterminate period of time, which could adversely affect our product inventories, sales, operating results and cash flows. These single-source and sole-source suppliers also expose us to pricing risk.
Establishing additional or replacement suppliers for any of these materials or components, if required, could limit our ability to manufacture our products, result in production delays and increased costs and adversely affect our ability to deliver products to our customers on a timely basis or at all. Delays related to supplier changes could also arise due to increased shipping times if new suppliers are located farther away from our markets or from other participants in our supply chain. In addition, freight capacity issues continue to persist worldwide as there is much greater demand for shipping and reduced capacity and equipment. If we are not able to identify alternate sources of supply for the components, we might need to modify our product to use substitute components, which could cause delays in shipments, increase design and manufacturing costs and increase prices for our products. Any such modified product might not be as effective as the predecessor product or might not gain market acceptance. This could lead to customer or consumer dissatisfaction and damage to our reputation and could materially and adversely affect our product inventories, sales, operating results and cash flows.
Operations at any of our suppliers’ facilities are subject to disruption for a variety of reasons, including, but not limited to, work stoppages, labor relations, intellectual property claims against suppliers, information technology failures, cybersecurity incidents, data breaches and hazards such as fire, earthquakes, flooding or other natural or man-made disasters. Such disruptions could interrupt our ability to manufacture certain products, which could negatively impact our revenue and earnings performance. It may be difficult or impossible for us to obtain insurance to protect against any such disruptions at an adequate coverage level or at all.
Global economic downturns could negatively impact our suppliers and customers.
Our suppliers and customers are subject to some of the same risks regarding worldwide economic conditions, and therefore could be negatively affected by global economic downturns. Such downturns may tighten credit markets and lower liquidity levels and there can be no assurance that conditions will improve. Lower credit availability may increase borrowing costs for our customers and suppliers. In addition, some of our customers and suppliers may experience financial problems due to reduced access to credit and lower revenues. Financial duress may prompt some of our suppliers to seek to renegotiate supply terms with us, eliminate or reduce production of certain components we purchase or file for bankruptcy protection. In addition, some of our customers may be unable to obtain financing to purchase products or meet their payment obligations to us. Further, negative economic conditions could result in the insolvency of one or more of our customers or suppliers.
Failure to achieve and maintain a high level of product and service quality could damage our reputation with customers, increase our costs or otherwise negatively impact our results and market share.
Product and service quality issues could harm customer confidence in our products, company and our brands. If certain of our product and service offerings do not meet applicable safety standards or our customers’ expectations
regarding safety or quality, or if we fail to obtain or maintain applicable product safety certifications, we can experience lost sales or increased costs and we can be exposed to legal, financial and reputational risks, including due to poor reviews on consumer review platforms and through social media. Our ability to satisfy customer expectations and respond to any negative feedback quickly and effectively may impact our results. Actual, potential or perceived product safety concerns could also expose us to litigation as well as government enforcement actions. In addition, when our products fail to perform as expected, we may be exposed to warranty, product liability, personal injury and other claims in the future.
While we maintain strict quality controls and procedures, we cannot be certain that these controls and procedures will reveal defects in our products or their raw materials, which may not become apparent until after the products have been placed in use in the market. Accordingly, there is a risk that products will have defects, which could require a product recall or field corrective action. Product recalls and field corrective actions can be expensive to implement and may damage our reputation, customer relationships and market share.
We provide our customers a warranty covering workmanship and, in some cases, materials in products we manufacture, and we have in the past faced, and may in the future face, potential warranty or safety breaches in products we manufacture. Certain of our product warranties also include coverage for the labor cost of the servicing company. If a product fails to comply with the warranty, we may be obligated, at our expense, to correct any defect by repairing or replacing the defective component, and we have in the past been, and may in the future be, required to incur such expense to resolve warranty or safety claims. We maintain warranty reserves in an amount based primarily on the number of units shipped and on historical and anticipated warranty claims. However, there can be no assurance that future warranty claims will follow historical patterns or that we can accurately anticipate the level of future warranty claims. An increase in the rate of warranty claims or the occurrence of unexpected warranty claims could materially and adversely affect our business, financial condition, results of operations and cash flows.
In many jurisdictions, product liability claims are not limited to any specified amount of recovery. Personal injury or property damage lawsuits resulting from product liability risks may involve individual and purported class actions. We cannot be sure that our existing insurance or any additional insurance will provide adequate coverage against potential liabilities and any such liabilities could adversely affect our business, financial condition, results of operations and cash flows. In addition to direct expenditures for damages, settlements and defense costs, there is also a possibility of adverse publicity as a result of product liability claims.
A recall or claim could require us to review our entire product portfolio to assess whether similar issues are present in other products, which could result in a significant disruption to our business and which could have a further adverse impact on our business, financial condition, results of operations and cash flows. There can be no assurance that we will not experience any material warranty or product liability claims in the future, that we will not incur significant costs to defend such claims or that we will have adequate reserves or insurance to cover any recall, repair and replacement costs.
Product installation also frequently depends on third-party distributors or other service providers. Our inability to find qualified technicians to perform these installation services, or any of these service providers damaging or failing to properly install any of our products, could also expose us to warranty, product liability, personal injury or other claims in the future. Moreover, as customers often see these downstream service providers as an extension of the Alliance business despite their independence as third parties, any such issues could damage our reputation, customer relationships and market share.
Our financing programs to end-customers expose us to additional risks which could adversely affect our operations.
We offer an extensive financing program to end-customers, primarily laundromat owners, to assist them in their purchases of new equipment from our distributors or, in the case of route operators, from us. Typical terms for equipment financing receivables range from two years to twelve years. As of June 30, 2025, the average principal loan balance is approximately $0.1 million. We fund these financing programs through our $500.0 million Asset Backed Equipment Facility. In the case of a rapid amortization event or an event of default under our Asset Backed Equipment Facility, we will not be permitted to request new borrowings thereunder. In this case, or if certain limits
in the size of our Asset Backed Equipment Facility are reached (either overall size or certain sublimits) or upon termination of our Asset Backed Equipment Facility, we would be required to obtain additional funding to support our customer financing program. Our inability to obtain such additional funding or our inability to securitize our equipment financing pursuant to the Asset Backed Equipment Facility could limit our ability to provide our end-customers with financing, which could result in the loss of sales and have a material adverse effect on our business, financial condition, results of operations and cash flows. See “Description of Certain Indebtedness—Asset Backed Facilities” for further information regarding our Asset Backed Equipment Facility. Our financing program also subjects us to additional regulatory requirements and compliance obligations. In particular, the program requires that the Company be licensed as a lender in certain jurisdictions in which the Company operates. The Company has been subject to, and in the future may be subject to, potential supervision, examinations or enforcement actions by federal and state licensing and regulatory agencies or penalties for violations of financial services, consumer protections and other applicable laws and regulations. If any proceedings or investigations are determined adversely to us or result in legal actions, claims, regulatory proceedings, enforcement actions, or judgments, fines or settlements involving a payment of material amounts, or if injunctive relief is issued against us, our business, financial condition, results of operations and cash flows could be materially adversely affected.
Past growth may not be indicative of future growth.
Historically, we have experienced substantial sales growth through organic market share gains, geographic expansion, technological innovation, new product offerings, increased demand and acquisitions that have increased our size, scope and geographic footprint. However, our various business strategies and initiatives, including our growth initiatives, are subject to business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond our control. For example, delays in laundromat construction or increased permitting requirements may adversely impact our ability to expand our business. In certain prior periods, our results in a particular period have been impacted by unanticipated delays in construction. If we are not able to continue to compete in our markets, expand into new markets and grow our existing business, our business, financial condition, results of operations and cash flows could be adversely affected.
We may encounter certain risks and incur certain expenses when implementing our business strategy to continue to grow our international business, particularly in emerging markets.
The continued execution of our strategy to grow our international business could cause us to incur unforeseen capital expenditures or significant start-up expenses related to growth initiatives and cause us to incur losses on assets devoted to the strategy. In addition, expansion of international marketing and advertising efforts could lead to a significant increase in our marketing and advertising expenses and could increase our customer acquisition costs. Furthermore, certain international markets may not be receptive to our products and services or we may face increased competition from lower cost manufacturers. Any failure to continue to successfully execute this strategy could adversely affect our business, financial condition, results of operations and cash flows.
Further, we expect that sales to emerging markets will continue to account for a meaningful portion of our sales as developing nations and regions around the world increase their demand for our products. Emerging markets are subject to different risks as compared to more developed markets, and operating a business in an emerging market can involve a greater degree of risk than operating a business in more developed markets, including, in some cases, increased political, economic and legal risks. There is no guarantee that future political or economic instability will not occur in countries in which we operate, and the risks we may face with respect to these countries include the risk of unforeseen government actions, acts of god, terrorism, hostage taking, military repression, extreme fluctuations in currency exchange rates, high rates of inflation, labor unrest, war or civil unrest, expropriation and nationalization, renegotiation or nullification of existing concessions, licenses, permits and contracts, changes in taxation policies, and restrictions on foreign exchange and repatriation, as well as changing political conditions, currency controls, export controls and governmental regulations that favor or require the awarding of contracts to local contractors or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction or other events. Moreover, emerging market governments and judiciaries often exercise broad, unchecked discretion and are susceptible to abuse and corruption. Additionally, financial turmoil in any emerging market country tends to
adversely affect the value of investments in all emerging market countries as investors move their money to more stable, developed markets. Financial problems or an increase in the perceived risks associated with investing in companies in emerging economies could dampen foreign investment and adversely affect local economies in which we operate. While these factors and their impact are difficult to predict, any one or more of them could have a material adverse effect on our competitive position, results of operations, cash flows or financial condition.
We are exposed to the risk of foreign currency fluctuations.
Because a portion of our revenue is attributable to the sale of our products outside of the United States, we are exposed to adverse as well as beneficial movements in exchange rates between the U.S. dollar and the relevant foreign currency. Moreover, some of our operations are or will be conducted by subsidiaries organized in foreign countries. The results of operations and financial position of these subsidiaries will be reported in the relevant foreign currencies and then translated into U.S. dollars at the applicable exchange rates for inclusion in our consolidated financial statements, which are stated in U.S. dollars. In addition, our balance sheet reflects non-U.S. dollar denominated assets and liabilities, including intercompany balances eliminated in consolidation. Accordingly, fluctuations in exchange rates may give rise to gains or losses when financial statements of non-U.S. operating subsidiaries are translated into U.S. dollars. The exchange rates between many of these currencies, including the euro, Czech koruna, Thai baht and U.S. dollar, have fluctuated significantly in recent years and may fluctuate significantly in the future. Such fluctuations may have a material adverse effect on our results of operations and financial position and may significantly affect the comparability of our results between financial periods.
Additionally, currency fluctuations may affect the prices we pay for the materials used in our products, and as a result, our operating margins may be negatively impacted by higher costs for certain cross border transactions.
We also incur currency transaction risk whenever one of our operating subsidiaries enters into a transaction using a different currency than its functional currency. While we attempt to reduce currency transaction risk by matching cash flows and payments in the same currency and entering into foreign exchange contracts for hedging purposes, we cannot provide assurance that we will be successful in reducing or hedging our exposure.
Our international operations expose us to worldwide economic conditions; unfavorable global economic conditions could lead to reduced revenues and negatively impact our results of operations.
We compete in various geographic regions and markets around the world and increasingly manufacture and sell our products outside of the United States. For the six-month period ended June 30, 2025, approximately 26% of our net revenue was attributable to products sold outside of the United States. Beyond our locations in the U.S., we have manufacturing facilities located in the Czech Republic, Thailand and China, and sales offices in nine different countries. We also export our products to other foreign countries, and expanding international sales is part of our growth strategy.
International operations generally are subject to various risks, including political, military, religious and economic instability, local labor market conditions, the imposition of tariffs, the impact of government regulations, foreign national priorities, government budgets, the effects of income and withholding tax, foreign exchange controls, repatriation of earnings, investments, governmental expropriation and differences in business practices. We may incur increased costs and experience delays or disruptions in product deliveries and receipt of payments in connection with international manufacturing and sales that could result in a loss of revenue. Unfavorable changes in the political, regulatory and business climate of various foreign jurisdictions in which we operate could have a material adverse effect on our business, financial condition, results of operations and cash flows. Additionally, government policies on international trade and investments such as import quotas, capital controls, taxes or tariffs or similar trade barriers, whether imposed by individual governments or regional trade blocs, can affect demand for our products and services, impact the competitive position of our products or services or encumber our ability to manufacture or sell products in certain countries.
In addition, we may also be affected by broader macroeconomic trends. We have experienced, and expect to continue to experience, fluctuations in sales and results of operations due to economic and business cycles. Several economic factors, including, but not limited to, gross domestic product, availability of consumer credit, interest rates, consumer sentiment and debt levels, fiscal and credit market uncertainty and foreign currency exchange rates,
generally affect demand for our products. Higher unemployment rates, higher fuel and other energy costs, higher deficit spending and debt levels and higher tax rates adversely affect demand. A decline in economic activity and conditions in the markets in which we operate has had an adverse effect on our financial condition and results of operations in recent years, and future declines and adverse conditions could have a similar adverse effect.
The occurrence or continuation of any or all of these events could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Our business, financial condition and results of operations could be adversely affected by ongoing international conflicts and related disruptions in the global economy.
The global economy has been negatively impacted by the military conflict between Russia and Ukraine, and the ongoing conflict between Israel and Hamas has caused political, economic and military instability in Israel and surrounding regions. Our business may indirectly be adversely affected by these conflicts and their respective effects, including as a result of financial and economic sanctions imposed by governments in the U.S., United Kingdom and European Union, among others, on certain industry sectors and parties in Russia.
We are unable to predict the impact of either the Russia-Ukraine conflict or the Israel-Hamas conflict on our business or the global economy. The impact of further escalation of geopolitical tensions related to these conflicts or other unforeseen conflicts, including increased trade barriers or restrictions on global trade, is unknown and could result in heightened cybersecurity threats, protracted or further increased inflation, lower consumer demand, fluctuations in interest and foreign exchange rates and increased volatility in financial markets, among other things, any of which could adversely affect our business, financial condition, results of operations and cash flows.
The costs and difficulties of acquiring and integrating complementary businesses and technologies could impede our future growth, diminish our competitiveness and harm our operations.
As part of our growth strategy, from time to time we consider selective acquisitions of complementary businesses. We might not be able to identify suitable acquisition candidates or business relationships, negotiate acceptable terms for such acquisitions or relationships or obtain necessary financing on acceptable terms for such acquisitions or relationships. Even if we consummate acquisitions, such acquisitions could be dilutive to earnings. Moreover, the margins for these companies might differ from our historical gross and operating margins, resulting in a material adverse effect on our results of operations.
Additionally, we are responsible for liabilities associated with businesses that we acquire to the extent we are not entitled to receive indemnification from the relevant sellers or coverage under our insurance policies. Our due diligence reviews may not identify all of the material issues necessary to accurately estimate the cost and potential loss contingencies of a particular transaction.
Acquisitions also involve numerous other risks, including:
•problems implementing adequate financial reporting and disclosure controls and procedures for the newly acquired business;
•the challenges in achieving strategic objectives, cost savings and other anticipated benefits;
•unanticipated liabilities, costs or expenses, including post-closing impairment charges as well as expenses associated with eliminating duplicate facilities;
•difficulties in integrating acquired businesses with our operations, including with respect to technological integration, applying our internal controls to these acquired businesses, or in managing strategic investments;
•diversion of management’s attention and other resources;
•failure to retain existing, key personnel of the acquired business; and
•the ability to obtain the financing necessary to complete acquisitions on attractive terms, or at all.
Our ability to attract, develop and retain key executives and other qualified employees is crucial to our results of operations and future growth.
We are dependent on the continued services and performance of our senior management team and certain other key employees. An inability to hire, develop, engage and retain a sufficient number of qualified employees or to effectively manage succession planning could materially hinder our business, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. We do not currently maintain life insurance policies with respect to key employees.
Additionally, we are dependent on a labor force with technical and manufacturing industry experience to operate our businesses successfully. From time to time there may be shortages of skilled labor which may make it more difficult or more expensive for us to attract and retain qualified employees. An inability to attract and retain qualified individuals or increases in our costs to do so could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Adverse relations with employees could harm our business.
As of June 30, 2025, 1,722 of our employees at our Wisconsin facilities are represented by the United Steelworkers union and subject to a collective bargaining agreement, all of our employees at our Guangzhou, China facility are represented by a workers’ union and subject to a collective bargaining agreement, and all of our employees at our facility in Pribor, Czech Republic are subject to a collective bargaining agreement, with certain of those employees represented by a worker’s union. The Wisconsin collective bargaining agreement requires certain minimum full-time hourly employment levels, unless deviations from those levels are caused by specified events, such as sales fluctuations or events beyond our reasonable control. However, there can be no assurance that we can successfully maintain such employment levels at our Wisconsin facilities. In many cases, before we take significant actions with respect to these production facilities, such as workforce reductions or closures, we must reach agreement with the relevant union or employee works council, which may result in operational inefficiencies or impede our ability to carry out our cost reduction efforts. Additionally, these agreements have historically been renewed for two to five year terms, and are therefore subject to periodic renegotiation, and the terms of future agreements may impose additional costs and operating inefficiencies on our business.
Although we have not experienced any recent labor disruptions, strikes or other forms of labor unrest in connection with our personnel, there can be no assurance that labor disruptions by employees will not occur in the future. Such activity could result in the incurrence of additional costs, as well as limitations on our ability to operate or provide products and services to our customers, which may materially affect our business, financial condition, results of operations and cash flows.
In addition, the transportation and delivery of raw materials to our manufacturing facilities and of our products to our customers by workers employed by third parties that are members of labor unions is critical to our business. Any work stoppages by these workers could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We may not realize expected benefits from our cost reduction efforts, and our profitability or our business otherwise might be adversely affected.
We continue to focus on our cost reduction efforts in order to drive improvement across direct material procurement, labor efficiency and product design optimization. However, these activities are complex and may involve or require changes to our operations. If we do not successfully manage these activities, expected efficiencies and benefits might be delayed or not realized. Additionally, risks associated with these actions and other workforce management issues include: unfavorable political responses and reputational harm; unforeseen delays in the implementation of the restructuring activities; additional costs; unforeseen negative impact on product quality; adverse effects on employee morale; the failure to meet operational targets due to the loss of employees or work stoppages; and difficulty managing our operations during or after facility consolidations, any of which may impair
our ability to achieve anticipated cost reductions, harm our business or reputation, or have a material adverse effect on our competitive position, business, financial condition, results of operations or cash flows.
Unexpected events, including natural or man-made disasters or telecommunications failures, may increase our cost of doing business or disrupt our operations.
The occurrence of one or more unexpected events or natural or man-made disasters, including fires, tornadoes, tsunamis, hurricanes, earthquakes, floods and other forms of severe weather, telecommunications failures or other disruptions impacting information technology systems in the U.S. or in other countries in which we operate or in which our suppliers, distributors or customers are located could adversely affect our operations and financial performance. Natural or man-made disasters, pandemic illness, equipment failures, power outages or other unexpected events could result in physical damage to, and complete or partial closure of, one or more of our manufacturing facilities or distribution centers, temporary or long-term disruption in the supply of component products from some local and international suppliers, disruption in the transport of our products to distributors and end-users, delay in the delivery of our products to our distribution centers or our inability to communicate with our distributors, customers or suppliers. Existing insurance arrangements may not provide protection for all costs and disruption that may arise from such events. The occurrence of any of these events could also increase our insurance and other operating costs.
Our goodwill and other intangible assets represent a substantial amount of our total assets. A decline in future operating performance could result in impairment of goodwill or other intangible assets, which could have a material adverse effect on our business, financial condition, results of operations or cash flows.
As of June 30, 2025, goodwill and other intangible assets totaled $1.5 billion, or approximately 49% of our total assets. The recognition of goodwill is due to the purchase price of the BDTCP Transaction and subsequent acquisitions exceeding the fair value of acquired net assets. We assess annually whether there has been impairment in the value of our goodwill and other intangible assets. If future operating performance at one or more of our reporting units were to fall significantly below current levels, we could be required to recognize a non-cash charge to operating earnings for goodwill or record an impairment charge related to other intangible assets. Significant negative industry or economic trends, disruptions to our business, planned or unexpected significant changes in the use of the assets, and sustained market capitalization declines may result in recognition of impairments to goodwill or certain other intangible assets. Any significant goodwill or intangible asset impairment could reduce earnings in such period and have a material adverse effect on our business, financial condition, results of operations or cash flows.
We have identified a material weakness in our internal control over financial reporting. If our remediation efforts are not effective, or if we experience additional material weaknesses or otherwise fail to maintain an effective system of internal controls in the future, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock.
We have identified a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
In connection with the preparation and audit of our financial statements as of December 31, 2024, management and our independent registered public accounting firm determined that the Company had not maintained appropriately designed controls to prevent or detect material misstatements to our consolidated financial statements. Specifically, a material weakness was identified relating to our failure to design, implement and maintain an adequate review and approval process with respect to manual or non-routine journal entries.
To remediate this material weakness, we are in the process of implementing measures designed to improve our internal management review controls, including review and approval of journal entries. We cannot assure you that the measures we have taken to date, and are continuing to implement, will be sufficient to remediate the material weakness we have identified or avoid potential future material weaknesses. If the steps we take do not correct the
material weakness in a timely manner, we may be unable to conclude that we maintain effective internal control over financial reporting. Accordingly, there could continue to be a reasonable possibility that a material misstatement of our financial statements would not be prevented or detected on a timely basis.
If we fail to remediate our existing material weakness or identify new material weaknesses in our internal controls over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) in a timely manner, if we are unable to conclude that our internal controls over financial reporting are effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected. As a result of such failures, we could also become subject to investigations by the NYSE, the SEC or other regulatory authorities, and become subject to litigation from investors and stockholders, which could harm our reputation and financial condition or divert financial and management resources away from our regular business activities.
Risks Relating to Government Regulation and Litigation
Our international operations require us to comply with applicable trade, export controls and foreign anti-corruption laws and regulations of the U.S. government and various other countries.
Doing business on a worldwide basis requires us and our subsidiaries to comply with the trade and sanctions laws and regulations of the U.S. government and various other countries, and our failure to successfully comply with these laws and regulations may expose us to liabilities. These laws and regulations apply to companies, individual directors, officers and employees, and to the activities of agents acting on our behalf, and may restrict our operations, trade practices and partnering activities.
For example, we cannot provide products or services to certain countries or individuals subject to U.S. economic sanctions or export controls restrictions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of Commerce. In addition, our international operations are subject to U.S. and non-U.S. anti-corruption laws and regulations, such as the U.S. Foreign Corrupt Practices Act (the “FCPA”). The FCPA prohibits us from directly or indirectly offering or providing anything of value to a “foreign official” for the purpose of improperly influencing official decisions or obtaining or retaining business or otherwise obtaining an improper business advantage, and requires us to maintain adequate record-keeping and internal accounting practices to accurately reflect the transactions of the company. In addition, some of the countries in which we operate have a high degree of corruption. As a result of the above activities, we are exposed to the risk of violating the FCPA and other anti-corruption laws. Recent years have seen a substantial increase in anti-bribery law enforcement activity, including increased enforcement activity by non-U.S. regulators and increases in criminal and civil proceedings brought against companies and individuals. While we have established certain safeguards and policies designed to promote compliance with applicable laws, these safeguards and policies may prove to be less than effective and our employees or agents may engage in conduct for which we might be held responsible. Violations of these laws or regulations could result in significant sanctions including fines, onerous compliance requirements, the denial of export privileges, criminal fines and imprisonment, civil penalties, disgorgement of profits, injunctions, as well as remedial measures, and can also subject us to reputational damage and loss of authorizations needed to conduct aspects of our international business, which could adversely affect our reputation, business, financial condition, results of operations and cash flows.
Tariffs and other trade restrictions could adversely affect our business and financial results, and we may not be able to raise prices sufficiently to offset increased costs caused by any such tariffs.
Our business is impacted by international or cross-border trade, including the import and export of products and goods into and out of the U.S., and trade tensions among nations. We purchase key parts and components from international suppliers and use these parts and components in many of our products. Any country in which our products are produced or sold may eliminate, adjust or impose new quotas, duties, tariffs, safeguard measures, anti-dumping duties, cargo restrictions to prevent terrorism, restrictions on transfer of currency, or other charges or restrictions, any of which could have an adverse effect on our business, financial condition, results of operations and
cash flows. See “Risks Relating to Our Business—Price fluctuations or shortages of raw materials could adversely affect our operations.” Further, any emerging protectionist or nationalist trends in the U.S. or any of the countries in which our products are produced or sold could affect the trade environment. The U.S. government has implemented or proposed implementing significant tariffs on various goods, which could significantly increase our costs, especially with respect to imports from China and Mexico. Relatedly, we sell our products globally, and if other countries enact retaliatory tariffs in response to U.S. trade policy, our sales into such countries may be adversely impacted.
To date, tariffs have not materially impacted our business or financial results, in large part due to our “local for local” production approach, by which our manufacturing plants in each region fulfill the majority of the volume requirements in their respective regions. Currently, our largest import exposure arises out of Mexico; however, the majority of our imported goods from Mexico currently originate under the U.S.-Mexico-Canada Agreement (“USMCA”) and thus enter the U.S. tariff-free. We carry some exposure arising from export of materials from China, but this has historically been an immaterial part of our cost base. Any amendment to, or the United States’ withdrawal from, the USMCA or other trade agreements or organizations could result in increased tariffs or other new trade restrictions on imports from Mexico, Canada, China and other countries. We thus cannot ensure that tariffs will not materially impact on our business or financial results in the future.
In order to mitigate the impacts that various tariffs may have on the cost and availability of our manufacturing inputs, we have taken, and in the future may take, various actions, including increasing prices to our customers through permanent price increases or surcharges, increasing inventory levels on hand in advance of tariffs or to protect against material availability, and transitioning our sourcing over the long term away from vendors in countries most impacted by tariffs. At this time, the overall effectiveness of our responses in managing these challenges remains uncertain and depends on multiple factors, including the duration and potential expansion of current tariffs, future changes to tariff rates, scope of enforcement, retaliatory measures by impacted exporting countries, inflationary effects and broader macroeconomic responses or changes to consumer purchasing behavior. If we are unable to effectively mitigate tariff-related risks through price increases or inventory and source adjustments, financial performance and growth prospects could be negatively affected.
Any of these mitigation efforts comes with risks to our reputation, business, financial condition, results of operations and cash flows. Raising prices to end customers could result in them choosing a more cost effective manufacturer. Increasing inventory stockpiles, if such stockpiles are not used in current production, could result in us having to lower prices in order to sell down inventory or in inventory write-offs. Changing our sources of raw materials may require us to increase our cost of engineering in order to test and approve these new sources, negatively impact the availability of inventory when needed for production, or diminish overall product quality.
We could incur significant costs in complying with EHS laws and regulations and could be adversely affected by liabilities or obligations imposed under such laws.
We are subject to comprehensive and frequently changing foreign, federal, state and local EHS laws and regulations, including laws and regulations governing emissions of air pollutants, including greenhouse gas emissions, discharges of wastewater and stormwater, releases of hazardous materials to soil and water, the transportation, treatment, storage and disposal of hazardous wastes and the regulation of, and exposure to, hazardous materials in current or former products, the workplace or the environment. We could incur significant costs, including fines, cleanup costs and third-party claims, as a result of violations of or liabilities under these laws and regulations. We may also incur significant costs to achieve or maintain compliance with EHS laws in the future, including for obligations to install pollution control equipment or eliminate certain hazardous materials from our products.
In addition, it is difficult to accurately predict the nature and extent of environmental liabilities and obligations that may result from laws or regulations adopted in the future and how existing or future laws and regulations will be administered or interpreted. For example, changes in environmental laws, including laws relating to energy and water consumption and efficiency and greenhouse gas emissions, will likely require additional investments in product designs, which may be more expensive or difficult to manufacture, qualify for applicable certifications and sell, or may involve additional product safety risks, and could increase environmental compliance expenditures. See
“Risks Relating to Government Regulation and Litigation—Energy efficiency, water usage standards and other product-related standards could adversely affect our industry.” Increasing changes in regulations related to climate change could subject us to additional costs and restrictions, such as increased energy and raw materials costs. Furthermore, various jurisdictions and regulators may take different approaches to and impose differing or inconsistent requirements under environmental laws, which may make it more costly or difficult for us to sell our products (including by requiring that we monitor such developments, incur increased test and certification costs, increase time-to-market and develop additional country-specific variants for certain products) or prevent us from selling certain products in certain geographic markets.
Our facilities and operations also are subject to various hazards incidental to the manufacturing and transportation of commercial-grade laundry equipment. We are also subject to potential strict, joint and several liability for the investigation and remediation of contamination, including contamination caused by other parties, at properties we currently own or operate and previously owned or operated and at other properties where we or our predecessors have arranged for the disposal of hazardous substances. Some of our facilities have a history of industrial and commercial operations or are located on property with previously identified contamination, and we may incur significant additional costs, including cleanup costs and other environmental liabilities, as a result of environmental conditions that are existing or discovered or obligations that are imposed in the future. From time to time, we have been and may, in the future, be involved in administrative and judicial proceedings, investigation and remediation activities, inquiries and other claims relating to these and other environmental matters. Our existing insurance or any additional insurance may not provide adequate coverage against potential liability resulting from any such liabilities, proceedings, inquiries and claims. As a result, the aggregate amount of future cleanup costs and other environmental liabilities and obligations could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We are subject to risks related to environmental, social and governance (“ESG”) and sustainability laws, regulations, policies and initiatives.
There is continued focus from various stakeholders and regulatory authorities in the United States, European Union and other jurisdictions in which we operate, on ESG and sustainability matters. Stakeholders’ expectations are not uniform, and proponents and opponents of various ESG- and sustainability-related matters have increasingly resulted in a range of activism and legal and regulatory developments. If we do not succeed in meeting, or are perceived as failing to meet, stakeholders’ expectations, whether in support of or against ESG- and sustainability-related matters, or our publicly-stated goals, or if we do not effectively respond to new or revised legal, regulatory or reporting requirements concerning such matters, we may be subject to litigation risks, regulatory enforcement and sanctions, our reputation may suffer and our stock price may be negatively affected, among other potential impacts. New, increasingly stringent, revised or conflicting ESG and sustainability laws, regulations and expectations in and across the jurisdictions in which we do business may increase compliance burdens and costs for us and for third parties throughout our global supply chain. For example, the Corporate Sustainability Reporting Directive (“CSRD”) enacted in the European Union and certain laws enacted in California will require us to report on various sustainability-related information, including greenhouse gas emissions. These laws also have been or may be subject to amendments, delays in implementation or legal challenges, the outcomes of which are difficult to predict, as is their impact on us. In addition, there are existing and changing requirements and expectations in various jurisdictions that may require us to proactively monitor the ESG practices of our value chain. See “Risks Relating to Our Business—Our business depends on the performance of our third-party distributors, route operators and suppliers who are subject to additional risks that are beyond our control, including those that could harm our business, financial condition and results of operations.”
Energy efficiency, water usage standards and other product-related standards could adversely affect our industry.
Certain of our washer products are subject to foreign, federal, state and local laws and regulations which pertain to energy and water usage and efficiency. There are federal standards for energy and water efficiency for both residential (consumer) and small-chassis commercial washers. There is also a federal energy efficiency standard for residential (consumer) dryers. Currently our equipment is required to be compliant with the guidelines of numerous regulatory agencies worldwide.
We anticipate there will continue to be proposals and actions by legislators and regulators at the foreign, federal, state and local levels to modify or expand laws and regulations relating to energy and water usage and efficiency and other similar concerns. For example, in 2024, the U.S. Department of Energy (the “DOE”) finalized new energy and water efficiency standards for residential clothes washers and dryers which will require compliance from March 2028 (“Efficiency Standards”). Compliance with these standards would require us to make changes to the design of certain of our washer and dryer products, which would require significant engineering, manufacturing, design and equipment costs. In February 2025, the DOE announced a postponement of the implementation of the Efficiency Standards and in May 2025, the DOE proposed to rescind or reduce 47 regulations related to electric and gas appliances, including water use and conservation standards related to residential clothes washers. While the ultimate outcome of such regulatory developments, as well as their future enforcement, is difficult to predict, these or other similar regulatory changes applicable to our products may impact demand for, or the cost and difficulty of producing or selling, our products and services, create short-term market conditions which are economically disadvantageous to us, require additional investments, make our products more expensive or difficult to qualify for applicable certifications, increase environmental compliance expenditures, or involve additional product safety risks. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We are subject to risks of future legal proceedings.
At any given time, we are a defendant in various legal proceedings and litigation arising in the ordinary course of business. These may relate to, among other things, product safety, personal injuries, intellectual property rights, cybersecurity incidents, contract-related claims, taxes, EHS matters, employee health and safety, competition laws and laws governing improper business practices. For example, we have in the past been subject to litigation related to allegations of anti-trust and labor law violations. The possibility of such litigation, and its timing, is in large part outside our control. Although we maintain insurance policies, we can make no assurance that this insurance will be adequate to protect us from all material expenses related to potential claims or that these levels of insurance will be available in the future at commercially reasonable prices or at all.
Additionally, as a global business, we are subject to complex laws and regulations in the U.S. and other countries in which we operate. These laws and regulations, including interpretations thereof, may change from time to time. A significant judgment against us, the loss of a significant permit or other approval or the imposition of a significant fine or penalty could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Our employees and our third-party distributors, route operators and suppliers may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements.
We are exposed to the risk that our employees and our third-party distributors, route operators and suppliers may engage in fraudulent conduct, bribery or other illegal activity. Misconduct by these parties could include intentional, reckless or negligent conduct or disclosure of unauthorized activities to us that violate the regulations of regulatory authorities, including those laws requiring the reporting of true, complete and accurate information to such authorities, or laws that require the reporting of financial information or data accurately. We are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices.
We have a code of conduct applicable to all of our employees as well as a business partners code of conduct applicable to our third-party distributors, route operators and suppliers, but it is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. Failure of our employees and our third-party distributors, route operators and suppliers to comply with applicable laws may subject us to litigation or other reputational risks. Additionally, we have been in the past, and may again be in the future, subject to the risk that a person could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal
and administrative penalties, damages, monetary fines, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
Changes in accounting standards may adversely affect us.
Our financial statements are subject to the application of U.S. generally accepted accounting principles (“GAAP”), which is periodically revised or expanded. Accordingly, from time to time, we are required to adopt new or revised accounting standards issued by recognized authoritative bodies, including the Financial Accounting Standards Board (“FASB”) and the Securities and Exchange Commission. Such changes could have a material impact on how we report our financial condition and results of operations.
Our business may be impacted by new or changing tax laws or regulations and actions by international, federal, state, and local agencies, or by how judicial authorities apply tax laws.
Our operations are subject to various international, federal, state and local tax laws and regulations. Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. In many cases, the application of tax laws is uncertain and subject to differing interpretations, especially when evaluated in the context of a new administration for the U.S. federal government. Moreover, if and to the extent that the U.S. federal income tax code is changed as part of a comprehensive corporate tax reform plan or otherwise, our net income may be impacted positively or negatively. Alternately, changes in tax laws could negatively impact our ability to continue to source high-quality raw materials and components at costs similar to those which we currently obtain. We cannot predict future changes to tax laws and regulations or the impact such changes may have on our business.
Risks Relating to Intellectual Property Matters
Failure to adequately protect our intellectual property rights may have a material adverse effect on our results of operations or our ability to compete.
We attempt to protect our intellectual property rights in the U.S. and in foreign countries through a combination of patent, trademark, copyright and trade secret laws, as well as licensing agreements and agreements preventing the unauthorized disclosure and use of our intellectual property. These efforts are critical to safeguarding the proprietary designs, technologies and control systems in our commercial laundry equipment that distinguish us in the market. We cannot assure that these protections will be adequate to prevent competitors from copying or reverse engineering our products, or independently developing and marketing products that are substantially similar to our own. We may be unable to obtain or maintain adequate protections for certain of our intellectual property in the U.S. or foreign countries and third parties may be able to successfully challenge, oppose or invalidate our intellectual property rights. Our patent and trademark applications we may file in the future may never be granted and, even if we are successful in obtaining effective protection, it is expensive to maintain these rights, both in terms of application and maintenance costs, and the time and cost required to defend our rights could be substantial. Limited resources or strategic priorities might constrain our ability to secure comprehensive intellectual property coverage across all regions where our products are sold, leaving vulnerabilities in our portfolio.
Further, our intellectual property rights may not receive the same degree of protection in foreign countries as they would in the U.S. because of the differences in foreign trademark, patent and other laws concerning proprietary rights. In some markets, differing legal standards could allow competitors to exploit our innovations, undermining our ability to maintain a differentiated position. The laws of some foreign countries do not afford intellectual property protection to the same extent as the laws of the U.S., and many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. For example, the requirements for patentability may differ in certain countries, particularly in developing countries. Moreover, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws, particularly in developing countries, and there may be unforeseen changes in intellectual property rights laws, which could make it difficult for us to stop the infringement of our patents or the misappropriation or other violation of our other intellectual property rights. Such failure or inability to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect
on our business, financial condition, results of operations and cash flows, as third parties may be able to commercialize and use products and technologies that are substantially the same as ours to compete with us without incurring the development and licensing costs that we have incurred.
Failure to protect the confidentiality of our trade secrets or other proprietary information could harm our business, financial condition, results of operations and competitive position.
We rely on trade secrets and confidentiality agreements to protect our unpatented know-how, technology and other proprietary information and to maintain our competitive position. However, trade secrets and know-how can be difficult to protect. We seek to protect these trade secrets and other proprietary technology, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as certain of our employees, corporate collaborators, outside contractors, consultants, advisors and other third parties, but we cannot guarantee that we have entered into such agreements with each party that may have or has had access to our trade secrets or proprietary or confidential information, including our technology and processes. In addition, despite these efforts, we have experienced and may in the future experience breaches of confidentiality agreements and disclosure of our proprietary or confidential information (including our trade secrets) by these parties, including former employees. We may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable.
In addition, some courts inside and outside the U.S. are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor or other third party, it could have a material adverse effect on our competitive position, business, financial condition, results of operations and cash flows.
If our trademarks, trade names and domain names are not adequately protected, maintained and enforced, we may not be able to build name recognition in our markets of interest and our competitive position may be harmed.
We rely on trademark registrations and enforcement measures to protect our brand identity, logos and other distinctive marks and to maintain our competitive position in the marketplace. If we are unable to successfully register our trademarks, trade names and domain names and establish name recognition based on our trademarks and trade names, we may not be able to build name recognition in our target markets and our ability to maintain our competitive position in the marketplace may be adversely affected. In addition, competitors or other third parties have in the past, and may in the future, adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity, interfering with our consumer communications or infringing or otherwise decreasing the value of our trademarks, domain names and other intellectual property and proprietary rights possibly leading to market confusion and potentially requiring us to pursue legal action. Furthermore, the laws protecting trademarks and the regulations governing domain names and other intellectual property and proprietary rights could change in ways that block or interfere with our ability to use relevant domains or our current brands. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our unregistered trademarks or trade names.
We may become involved in legal proceedings to enforce our intellectual property rights or relating to allegations that we have infringed third party intellectual property rights, the outcome of which would be uncertain and could be costly, time-consuming, and have a material adverse effect on our business.
Third parties may infringe, misappropriate or otherwise violate our intellectual property rights, which could require us to pursue costly and time-consuming enforcement proceedings with uncertain outcomes. Despite our efforts to protect our intellectual property, third parties may attempt to use our technologies, designs, brands or proprietary information without our permission, which could adversely affect our commercial success. We may discover competing products or services in the market that use our protected intellectual property without authorization. While we actively monitor for unauthorized use of our intellectual property and may take enforcement actions, such as initiating claims or litigation against third parties for infringement, misappropriation or other
violation of our intellectual property rights or other proprietary rights or to establish the validity of such rights, detecting and addressing all potential infringements can be difficult and resource-intensive. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights, and we may not always prevail in these matters. Additionally, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. Any litigation, whether or not it is resolved in our favor, could result in the impairment or loss of portions of our intellectual property, which may materially and adversely affect our business, financial condition, results of operations and cash flows.
In some jurisdictions, particularly internationally, enforcement of our intellectual property rights may be especially challenging or impractical. While we intend to protect our intellectual property rights in the major markets for our products, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market our products. Additionally, even if we successfully enforce our rights, the process could be lengthy and expensive, during which time the infringing products may cause market confusion or diminish our competitive position. These challenges in protecting and enforcing our intellectual property rights against third-party infringement could have a material adverse effect on our business, financial condition, results of operations and cash flows, and divert management’s attention from our core business operations.
Further, we have received, and may in the future receive, notices alleging infringement of the intellectual property rights of third parties. Certain of such notices have proceeded to litigation, and similar claims may arise and proceed to litigation in the future. These claims and related allegations, regardless of their merit or our defenses, could be time-consuming, result in considerable litigation costs, result in injunctions against us or the payment of damages by us, require significant amounts of management time, result in the diversion of significant operational resources and expensive changes to our business model, result in the payment of substantial damages or injunctions against us, result in ongoing royalty payments or significant settlement payments, or require us to enter into costly royalty or licensing agreements, but such licenses or arrangements may not be available on terms acceptable to us or at all. Any payments we are required to make or any injunctions we are required to comply with as a result of such infringement actions could materially and adversely affect our business, financial condition, results of operations and cash flows. In addition, we may be unable to obtain or use on terms that are favorable to us, or at all, licenses or other rights with respect to intellectual property we do not own. These risks have been amplified by the increase in third parties whose sole or primary business is to assert such claims.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property may cause us to incur significant expenses, have a material adverse effect on our business, financial condition, results of operations and cash flows, and could distract our technical and management personnel from their normal responsibilities.
We may be subject to claims that our employees, consultants, advisors or independent contractors have wrongfully used or disclosed alleged trade secrets or other confidential information from their current or former employers, or other third parties or claims asserting ownership of what we regard as our own intellectual property or proprietary rights.
Although we try to ensure that our employees, consultants, advisors and independent contractors do not use the confidential or proprietary information, trade secrets or know-how of others in their work for us, we may be subject to claims that we or these individuals have, inadvertently or otherwise, improperly used or disclosed intellectual property rights, confidential or proprietary information, trade secrets or know-how, of any such individual’s current or former employer or other third party. Additionally, to the extent we hire personnel from competitors, we may be subject to allegations that such personnel have divulged proprietary or other confidential information to us.
Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.
Further, while it is our policy to require certain of our employees, suppliers, consultants, advisors and independent contractors who may be involved in the conception or development of intellectual property rights to execute agreements assigning such intellectual property rights to us, we cannot guarantee that we have entered into such agreements with each party that may have developed intellectual property rights for us. Individuals involved in the development of intellectual property rights for us, whether or not subject to such assignment agreements, may make adverse ownership claims to our current and future intellectual property rights. The assignment of intellectual property rights in agreements entered into by individuals involved in the development of intellectual property rights for us may be insufficient or breached, and we may not be able to obtain adequate remedies for such breaches. We may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property rights. Any of the foregoing could have a material adverse effect on our competitive position, business, financial condition, results of operations and cash flows.
Some of our products and services contain open source software, which may pose particular risks to our proprietary software, products and services in a manner that could have a material and adverse effect on our business, financial condition, results of operations and cash flows.
We use open source software in connection with our products and services and anticipate using open source software in the future. Our use of open source software may also pose particular cybersecurity risks to our proprietary software and systems. Because the source code for open source software is publicly available, it may be easier for hackers and other third parties to identify vulnerabilities and determine how to breach our sites and systems that rely on such software. Some open source software licenses require users who distribute open source software as part of their own software product to publicly disclose all or part of the source code to such software product or to make available any derivative works of the open source code on unfavorable terms or at no cost, and we may be subject to such terms.
While we monitor our use of open source software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur, or could be claimed to have occurred, in part because open source license terms are often ambiguous. The terms of many open source licenses have not been interpreted by U.S. or foreign courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our technology. As a result, we could face claims from third parties claiming ownership of, or demanding release of, derivative works that we have developed using such open source software, which could include proprietary source code, or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license or cease offering the implicated products or services unless and until we can recode or reengineer such source code in a manner that avoids infringement. This reengineering process could require us to expend significant additional research and development resources, and we may not be able to complete the reengineering process successfully.
In addition to risks related to open source license requirements, use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide support, warranties, indemnification or other contractual protection regarding infringement claims or the quality of the code. Open source licensors generally do not provide assurances of non-infringement or functionality, and there is typically no support available. We cannot ensure that the authors of such open source software will implement or push updates to address security risks, or that such software will continue to be maintained or developed. There is little legal precedent in this area and any actual or claimed requirement to disclose our proprietary source code or pay damages for breach of contract could harm our business and could help third parties, including our competitors, develop products and services that are similar to or better than ours. Any of the foregoing could have a material adverse effect on our competitive position, business, financial condition, results of operations and cash flows. These risks may be difficult to eliminate or manage and, if not adequately addressed, could have an adverse effect on our competitive position, business, financial condition, results of operations and cash flows.
Risks Relating to Data Compliance, Cybersecurity and Artificial Intelligence
The protection of our data involves risks regarding potential failure to comply with data privacy and security laws, regulations and other obligations, which could damage our reputation, harm our operating results or result in significant liabilities or other adverse consequences that could have a material and adverse effect on our business.
We collect, store, process and transmit sensitive data, including personal information from customers, employees and business partners, through our equipment financing program and Speed Queen and Huebsch apps, subjecting us to a complex and evolving array of data privacy laws and regulations in the U.S. and abroad. These include the California Consumer Privacy Act, as amended by the California Privacy Rights Act (collectively, the “CCPA”), which broadly defines personal information and requires companies that process information of California residents to make disclosures to consumers about their data collection, use and sharing practices, as well as imposes stringent requirements on how we handle personal information, such as payment data, increasing our compliance burden and exposure to potential penalties. The CCPA also gives California residents expanded privacy rights and protections, such as affording them the right to opt out of certain data sharing with third parties, right to access and request deletion of their information and provides a new cause of action for certain data breaches that result in the loss of personal information. This private right of action has increased the likelihood of, and risks associated with, data breach litigation. The law also prohibits covered businesses from discriminating against California residents (for example, charging more for services) for exercising any of their CCPA rights. The CCPA provides for severe civil penalties and statutory damages for violations. Certain laws and regulations may also require us to implement security measures to protect our systems and internet-of-things (“IoT”) connected devices. For example, the California Internet of Things Security Law, which became effective in 2020, requires us to implement reasonable security measures for IoT devices, and failure to do so could expose us to penalties. Moreover, laws in all 50 U.S. states require businesses to provide notice under certain circumstances to consumers whose personal data has been disclosed as a result of a data breach. It is possible that new laws, regulations and other requirements, or amendments to or changes in interpretations of existing laws, regulations and other requirements, may require us to incur significant costs, implement new processes, or change our processing of information, including Personal Information, and business operations. It is unclear how the laws and regulations relating to the collection, processing and use of personal data will further develop in the U.S., and to what extent this may affect our operations in the future.
In addition, we are required to comply with various global data privacy regulations, such as the European Union’s General Data Protection Regulation (the “EU GDPR”) and the United Kingdom (“UK”) equivalent (the “UK GDPR” and, together with the EU GDPR, the “GDPR”). The GDPR imposes stringent requirements for controllers and processors of personal data of individuals within the European Economic Area (“EEA”) or the UK. Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements. Additionally, although currently the EU GDPR and UK GDPR remain largely aligned, the UK has announced plans to reform the country’s data protection legal framework in its Data Reform Bill, which will introduce significant changes from EU GDPR. This may lead to additional compliance costs and could increase our overall risk exposure as we may no longer be able to take a unified approach across the EEA and the UK, and we will need to amend our processes and procedures to align with the new framework. Implementing mechanisms to endeavor to ensure compliance with the GDPR and relevant local legislation may be onerous and may adversely affect our business, financial condition, results of operations and cash flows. While we have taken steps to comply with the GDPR where applicable, our efforts to achieve and remain in compliance with GDPR may not be fully successful.
In addition to the foregoing, failure to safeguard personal data in our possession or control or to comply with applicable privacy laws and regulations could result in regulatory investigations, reputational damage, orders to cease or change use of our data, significant fines—such as up to 20 million Euros (£17.5 million) or 4% of our annual global revenue under the GDPR, whichever is greater—or civil litigation, including pursuant to a private right of action for data breaches under the CCPA or pursuant to class-action litigation, which could heighten our legal and financial risks. These proceedings and any subsequent adverse outcomes may subject us to significant negative publicity and an erosion of trust.
Further, while we strive to implement privacy policies that are accurate, comprehensive and compliant with applicable laws, regulations, rules and industry standards, we cannot ensure that our privacy policies and other statements regarding our practices will be sufficient to protect us from claims, proceedings, liability or adverse publicity relating to data privacy and security. Although we endeavor to comply with our privacy policies, we may at times fail to do so or be alleged to have failed to do so. Our privacy policies and other documentation that provide promises and assurances about data privacy and security can subject us to potential government or legal action if they are found to be deceptive, unfair or misrepresentative of our actual practices. Any inability to adequately address privacy concerns, even if unfounded, could result in additional cost and liability to us, damage our reputation and harm our business.
The protection of our data involves risks regarding security incidents which could damage our reputation, harm our operating results or result in significant liabilities or other adverse consequences that could have a material and adverse effect on our business.
We rely on the proper functioning, availability and uninterrupted operation of our computer systems, hardware, software, technology infrastructure and online sites and networks for both internal and external operations that are critical to our business (collectively, “IT Systems”) and any failure, interruption or breach in the security of such IT Systems could severely disrupt our operations and adversely affect our business or financial condition. We own and manage some of these IT Systems but also rely on third parties for a range of IT Systems and related products and services, including but not limited to third-party-hosted solution providers.
Information security threats, including cybersecurity threats, could pose risks to the security of our systems and networks, as well as the confidentiality, availability and integrity of our data. Cyberattacks are expected to accelerate on a global basis in frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques and tools—including artificial intelligence (“AI”)—that circumvent security controls, evade detection and remove forensic evidence. Recently, the United States government has raised concerns about a potential increase in cyberattacks generally as a result of the military conflict between Russia and Ukraine and the related sanctions imposed by the United States and other countries and the ongoing conflict between Israel and Gaza. Although we maintain systems and processes that are designed to protect the security of our technology infrastructure, security incidents—such as physical or electronic break-ins, sabotage, intentional acts of vandalism, terrorism and other cyber-related attacks—can occur that could compromise the security of our infrastructure, thereby exposing our confidential information to unauthorized access by third parties. Any material incidents could cause us to experience financial losses that are either not insured against or not fully covered through any insurance maintained by us and increased expenses related to addressing or mitigating the risks associated with any such material incidents. Despite our efforts to ensure the integrity of our systems, as cyber threats evolve and become more difficult to detect and successfully defend against, one or more cyber threats might defeat the measures that we or our vendors take to anticipate, detect, avoid or mitigate such threats. For example, we experienced a prior data breach incident on information systems of an acquired company that resulted in unauthorized access to personal data. We detected the access and notified governmental agencies and impacted individuals in a timeframe which we believe minimized any financial, operational and reputational risk, and at no point was our ability to generate revenues disrupted. However, if future attacks occur, there is no assurance we will be able to detect the incident in a timely manner or at all.
We also depend on the security of our networks and that of our third-party service providers. These infrastructures may be vulnerable to cybersecurity incidents, acts of vandalism, computer viruses, misplaced or lost data, programming or human errors or other similar events. While we generally perform cybersecurity diligence on our key service providers, because we do not directly control any of such parties’ information security operations, we cannot ensure the cybersecurity measures they take will be sufficient to protect any information we share with them. Due to applicable laws and regulations or contractual obligations, we may be held responsible for cyberattacks or other similar incidents attributed to our service providers as they relate to the information we share with them. Any actual or perceived jeopardization of the security of our customers’ confidential information resulting from unauthorized use of our, or our third-party service providers’, networks could severely damage our reputation and our relationship with our customers as well as expose us to risks of litigation, liability or other penalties, all of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We may be required to expend significant capital and other resources to protect against, remedy or alleviate these and related problems, and we may not be able to remedy these problems in a timely manner, or at all.
Our use of AI technologies may not be successful, which may adversely affect our reputation, business and financial condition.
We currently use machine learning and AI technologies licensed from third parties to enhance our commercial laundry equipment and systems. These AI technologies, which we integrate into our products and solutions and expect to expand on, support features such as predictive maintenance, usage analytics and optimization of our laundry systems. The integration of AI technologies into our laundry equipment and systems may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality or security risks, ethical concerns, legal liability or other complications. A failure on our part to develop solutions to ensure compliance with regulatory regimes may result in unforeseen costs or delays in deploying new and improved features using AI technologies. In some cases, we are subject to contractual limitations from our AI technology providers that restrict how we can use certain data in connection with the training and use of AI systems. Further, while we aim to develop and use AI responsibly and attempt to mitigate ethical and legal issues presented by its use, we may ultimately be unsuccessful in identifying or resolving issues before they arise.
Uncertainty around emerging AI technologies may require additional investment in the development and maintenance of proprietary datasets and machine learning models, development of new approaches related to the collection and use of training data, and development of appropriate protections and safeguards for handling the use of customer data with AI technologies, which may be costly and could impact our expenses. AI technologies from third parties that are incorporated into our laundry systems and business processes may use algorithms, datasets or training methodologies that may be flawed or contain deficiencies that could be difficult for us to detect during testing, and such AI technologies can pose risks from an intellectual property, data protection and privacy perspective. Use of third-party AI-powered software in connection with our business or services, may lead to the inadvertent disclosure or incorporation of our confidential information into publicly available training sets, which may impact our ability to realize the benefit of, or adequately maintain, protect and enforce our intellectual property or confidential information, harming our competitive position and business. As the utilization of AI becomes more prevalent, we anticipate that it will continue to present new or unanticipated ethical, reputational, technical, operational, legal, competitive and regulatory issues, among others. We expect that our incorporation of AI in our business will require additional resources. We may not have adequate access to such resources or the ability to attract talent in the product development, data science and engineering fields to develop and implement the tools necessary to compete. Further, our competitors or other third parties may incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively.
Additionally, we may face challenges in adequately complying with new or changing laws, regulations or industry standards, or contractual requirements regarding the use of licensed AI technologies and data in our commercial laundry systems and solutions and may incur significant operational costs in our attempts to do so. It is possible that new laws and regulations will be adopted in the United States and in non-U.S. jurisdictions, or that existing laws and regulations may be interpreted in ways that would affect the operation of our products and solutions and the way in which we use AI and similar technologies. We may not be able to adequately anticipate or respond to these evolving laws and regulations, and we may need to expend additional resources to adjust our offerings in certain jurisdictions if applicable legal frameworks are inconsistent across jurisdictions. Moreover, because these technologies are themselves highly complex and rapidly developing, it is not possible to predict all of the legal or regulatory risks that may arise relating to our use of such technologies. Further, the cost to comply with such laws or regulations could be significant and would increase our operating expenses, which could adversely affect our business, financial condition, results of operations and cash flows.
Any of the foregoing challenges presented with our use of AI may result in decreased demand for our laundry solutions, harm to our business, results of operations or reputation, legal liability, regulatory action or failure to achieve expected results.
Risks Relating to Our Indebtedness
Our substantial indebtedness could adversely affect our financial condition.
As of June 30, 2025, we had $2,075 million of indebtedness outstanding, consisting of $2,075 million of indebtedness outstanding under our Term Facility and $0.3 million of finance lease obligations. We also had $250 million of undrawn capacity under our Revolving Facilities.
Our substantial indebtedness, combined with our other financial obligations and contractual commitments, could have important consequences, including to:
•increase our vulnerability to adverse economic and industry conditions, which could place us at a competitive disadvantage compared to our competitors that have relatively less indebtedness;
•require us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness, thereby reducing the availability of our cash flows to fund working capital, capital expenditures, acquisitions, research and development efforts, growth in international markets and other general corporate needs;
•limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and
•limit our ability to borrow additional funds, if needed, for working capital, capital expenditures, acquisitions, product development and other corporate purposes.
We require a significant amount of cash to service our indebtedness. Our ability to generate cash depends on many factors beyond our control, and we may be unable to generate sufficient cash flow to service our debt obligations.
Our ability to make scheduled payments of principal and interest with respect to our indebtedness will depend on our ability to generate cash and on future financial results. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
There can be no assurances that our business will generate sufficient cash flow from operations to enable us to pay our indebtedness when due. In such circumstances, we may need to refinance all or a portion of our indebtedness on or before maturity, sell material assets or operations, delay capital expenditures, or raise additional debt or equity capital. Our ability to refinance our debt will depend on the condition of the capital markets and our financial condition at that time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.
Interest rate fluctuations could have an adverse effect on our financial results.
We are exposed to market risk associated with adverse movements in interest rates. Specifically, we are primarily exposed to changes in earnings and related cash flows on our variable interest rate debt obligations, including obligations outstanding under our Term Facility and Revolving Facilities. As a result, increases in interest rates would increase the cost of servicing our debt. Each 1% increase in underlying base interest rates on our variable-rate debt would increase our annual forecasted interest expense by approximately $6.4 million on the non-hedged portion of our borrowings based on balances as of December 31, 2024. The impact of rising interest rates could be more significant for us than it would be for some other companies because of our substantial indebtedness.
The agreements governing our indebtedness contain restrictions and limitations that could restrict our current and future operations, particularly our ability to respond to change or pursue our business strategies.
The Credit Agreement that governs our Term Facility and Revolving Facilities contains a number of restrictive covenants that impose restrictions on our ability to pursue our business plans and activities and that could limit our
ability to plan for or react to market conditions, meet capital needs or make acquisitions, including, among other things, restrictions on our ability, to:
•incur or guarantee additional indebtedness;
•create or maintain liens;
•pay dividends or make other distributions in respect of equity interests, or redeem, purchase or retire equity interests;
•make payments in respect of subordinated debt;
•make investments, loans, advances, guarantees and acquisitions;
•consolidate, merge, liquidate or dissolve;
•dispose of assets;
•enter into transactions with affiliates; and
•materially alter the conduct of our business.
The Revolving Facilities are also subject to a financial maintenance covenant that imposes on us a maximum first lien secured net leverage ratio in the event usage under the Revolving Facilities exceeds a specified threshold. Our ability to comply with this financial maintenance covenant may be affected by events beyond our control, including prevailing and future economic, financial and industry conditions, and we cannot provide assurance that we will continue to comply with this covenant in the future. If we are unable to comply with the financial maintenance covenant, we may have to request an amendment or waiver from lenders under the Revolving Facilities. There is no assurance that we would be able to obtain any such amendment or waiver, either on commercially reasonable terms or at all.
Our failure to comply with these covenants and restrictions could result in an event of default which, if not waived, could result in the lenders terminating our ability to make further borrowings under the Revolving Facilities and accelerating our outstanding indebtedness under the Term Facility, the Revolving Facilities and any other material indebtedness. In the event of such acceleration, we may not have sufficient assets to satisfy our repayment obligations, which could cause us to become bankrupt or insolvent. Additionally, if we are unable to satisfy our repayment obligations, the lenders under the Term Facility and the Revolving Facilities will also have the right to proceed against the collateral that secures those borrowings, which could have serious adverse consequences to our business, financial condition, results of operations and cash flows. See “Description of Certain Indebtedness—Credit Agreement” for further information regarding our Term Facility and Revolving Facilities. The repayment obligations under our outstanding debt may also have the effect of discouraging, delaying or preventing a takeover of our company.
Despite our current indebtedness levels, we and our subsidiaries may incur significant additional indebtedness in the future. This could further exacerbate the risks associated with our substantial financial leverage.
Although the Credit Agreement contains restrictions on the incurrence of additional indebtedness, these restrictions are subject to several qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. If new debt is added to our current debt levels, the related risks that we now face could intensify.
We may have future capital needs and may not be able to obtain additional financing on acceptable terms.
Although we believe that our current cash position and the additional funding available under our Revolving Facilities is sufficient for our current operations, we may require additional financing if our cash flow from operations is less than we anticipate, if our cash requirements are more than we expect, if we intend to finance acquisitions or if our operating plan changes because of factors currently unknown to us. In addition, we may seek
additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.
Our ability to secure additional financing on favorable terms or at all and to satisfy our financial obligations under indebtedness outstanding from time to time will depend upon our future operating performance and operating cash flows, the condition of the capital markets, the availability of credit generally, economic conditions and financial, business and other factors, many of which are beyond our control. Furthermore, if financing is not available when needed, or is available on unfavorable terms, we may be unable to take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows. If we incur additional debt or raise equity through the issuance of additional capital shares, the terms of the debt or capital shares issued may give the holders rights, preferences and privileges senior to those of holders of our shares of common stock offered hereby, particularly in the event of liquidation. The terms of the debt may also impose additional and more stringent restrictions on our operations than we currently have. If we raise funds through the issuance of additional equity, the percentage ownership of existing shareholders in our company would decline.
Risks Relating to this Offering and Ownership of Our Common Stock
If you purchase shares in this offering, you will suffer immediate and substantial dilution.
The initial public offering price per share of common stock will be substantially higher than our as further adjusted net tangible book value per share immediately after this offering. As a result, you will pay a price per share of common stock that substantially exceeds the per share net tangible book value after this offering. Based on the initial public offering price of $ per share of common stock, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, less the underwriting discounts and commissions and estimated offering expenses payable by us, you will experience immediate dilution of $ per share, representing the difference between our as further adjusted net tangible book value per share after giving effect to this offering and the initial public offering price (less the underwriting discounts and commissions and estimated offering expenses payable by us). If the underwriters exercise their option to purchase additional shares, you will experience additional dilution. See “Dilution.” Further, we may need to raise additional funds in the future to finance our operations or acquire complementary businesses. If we obtain capital in future offerings on a per-share basis that is less than the initial public offering price per share, the value of the price per share of your common stock will likely be reduced. In addition, if we issue additional equity securities in a future offering and you do not participate in such offering, there will effectively be dilution in your percentage ownership interest in the Company.
We may in the future grant stock options and other awards to certain of our current or future officers, directors, employees and consultants under additional plans or individual agreements. The grant, exercise, vesting or settlement of these awards, as applicable, will have the effect of diluting your ownership interests in the Company. We may also issue additional equity securities in connection with other types of transactions, including shares issued as part of the purchase price for acquisitions of assets or other companies from time to time or in connection with strategic partnerships or joint ventures, or as incentives to management or other providers of resources to us. Such additional issuances are likely to have the same dilutive effect.
There is currently no public market for our common stock, and an active, liquid public market for our common stock may not develop or continue following this offering.
There is currently no public market for our common stock. If an active and liquid public market for our common stock does not develop or is not sustained following completion of this offering, you may have difficulty selling your shares of common stock at an attractive price or at all. The initial public offering price per share of common stock will be determined by agreement between us and the representatives of the underwriters and may not be indicative of the price at which shares of our common stock will trade in the public market after this offering. An inactive market may also impair our ability to raise capital by selling shares of our common stock and may impair our ability to acquire other companies by using our shares of common stock as consideration.
Our stock price could be extremely volatile and, as a result, you may not be able to resell your shares at or above the price you paid for them, and you could lose all or part of your investment as a result.
Even if a trading market develops, the market price of our common stock may be highly volatile, and investors in our common stock may experience a decrease, which could be substantial, in the value of their stock, including decreases unrelated to our operating performance or prospects, and could lose all or part of their investment. The price of our common stock could be subject to wide fluctuations in response to a number of factors, including those described elsewhere in this prospectus and others such as:
•variations in our operating performance and the performance of our competitors;
•actual or anticipated fluctuations in our quarterly or annual operating results;
•publication of research reports by securities analysts about us, our competitors or our industry;
•our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market;
•additions or departures of key personnel;
•strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;
•an increase in our indebtedness or the interest rates applicable to our indebtedness;
•future sales of our common stock or other securities;
•the passage of legislation or other regulatory developments affecting us or our industry;
•changes in legislation, regulation and government policy as a result of the U.S. presidential and congressional elections;
•speculation in the press or investment community;
•changes in accounting principles;
•terrorist acts, acts of war or periods of widespread civil unrest;
•natural or man-made disasters and other calamities;
•changes in general market and economic conditions in our industry or the economy as a whole; and
Additionally, in the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.
Future sales of a substantial amount of our common stock after this offering could cause the price of our common stock to fall.
Following completion of this offering, there will be approximately shares of our common stock outstanding, approximately % of which (or approximately % of which if the underwriters exercise their option to purchase additional shares in full) will be held by our principal stockholder. Of our issued and outstanding shares, all of the common stock sold in this offering will be freely transferable, except for any shares held by our “affiliates,” as that term is defined in Rule 144 under the Securities Act, including our principal stockholder.
Each of our executive officers and directors, certain senior employees that are not executive officers and certain former directors, and BDTBH, the funding vehicle through which our principal stockholder and the Minority Investment Institutional Co-Investors hold their respective interests, which collectively owned approximately 99% of our outstanding common stock prior to this offering, have entered into a lock-up agreement with BofA Securities, Inc. and J.P. Morgan Securities Inc., as representatives of the underwriters, which regulates their sales of our common stock for a period of 180 days after the date of this prospectus, subject to certain exceptions. BofA Securities, Inc. and J.P. Morgan Securities Inc. may, in their sole discretion, release all or some portion of the shares subject to lock-up agreements at any time and for any reason. See “Shares Eligible for Future Sale—Lock-Up Agreements.” In addition to the lock-up agreements described above, certain of our current and former employees hold equity awards or shares of our common stock that are subject to equity award or purchase agreements containing market standoff or lock-up provisions, which covers the balance of all of our outstanding common stock owned prior to this offering. These provisions generally prohibit the sale or transfer of any shares of our common stock acquired pursuant to such agreements, whether or not any such awards have been exercised and the shares are held outright, for 180 days after the date of this prospectus. We have agreed to enforce all such market standoff or lock-up restrictions and not to amend or waive any such provisions during the 180-day lock-up period without first obtaining the written consent of the representatives, provided that we may release shares from such restrictions to the extent such shares would be entitled to release under the lock-up agreements described above.
Sales of substantial amounts of our common stock in the public market after this offering, the perception that such sales will occur, or early release of these lock-up agreements could adversely affect the market price of our common stock and make it difficult for us to raise funds through securities offerings in the future.
We currently do not intend to declare dividends on our common stock in the foreseeable future and, as a result, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.
We currently do not expect to declare any dividends on our common stock in the foreseeable future. Instead, we anticipate that all of our earnings in the foreseeable future will be used to support our operations and to finance the growth and development of our business. Any determination to declare or pay dividends in the future will be at the discretion of our board of directors, subject to applicable laws and dependent upon a number of factors, including our earnings, capital requirements and overall financial conditions. In addition, because we are a holding company, our ability to pay dividends on our common stock is dependent upon cash dividends, distributions and other transfers from our subsidiaries. The agreements governing certain indebtedness of our subsidiaries also impose restrictions on our ability to pay dividends, and we may be further restricted from doing so by the terms of any future debt or preferred securities. Accordingly, your only opportunity to achieve a return on your investment in the Company may be if the market price of our common stock appreciates and you sell your common stock at a profit. The market price for our common stock may never exceed, and may fall below, the price that you pay for such common stock.
We have broad discretion in the use of the net proceeds from this offering, and our use of those proceeds may not yield a favorable return on your investment.
Our management has broad discretion in the application of the net proceeds from this offering, including for any purpose described in “Use of Proceeds,” and we could utilize such proceeds in ways with which you may not agree. In addition, we might not use the net proceeds from this offering effectively or in a manner that increases our market value or enhances our profitability. Our failure to apply the net proceeds from this offering effectively could compromise our ability to pursue our growth strategy and we might not be able to yield a significant return, if any, in our investment of these net proceeds. You will not have the opportunity to influence our decisions on how to use our net proceeds from this offering. If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us, our business or our market, or if they change their recommendation regarding our common stock adversely, the trading price and trading volume of our common stock could decline.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us, our business, our market or our competitors. If no or few securities or industry
analysts commence coverage of us, or if any analysts cease coverage of us unexpectedly, the price and trading volume of our common stock likely would be negatively impacted. If securities or industry analysts initiate coverage and one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about us, the trading price of our common stock would likely decline. If analysts publish target prices for our common stock that are below the then-current public price of our common stock, it could cause the trading price of our common stock to decline significantly.
Our principal stockholder currently controls the direction of our business. Our principal stockholder’s interests in our business may conflict with the interests of our other stockholders.
Following completion of this offering, our principal stockholder will beneficially own approximately % of our outstanding common stock (approximately % if the underwriters exercise in full their option to purchase additional shares). The Stockholders Agreement will provide that, so long as our principal stockholder beneficially owns at least 40% of the aggregate outstanding shares of our common stock, our principal stockholder may designate a majority of the nominees for election to our board of directors; so long as our principal stockholder beneficially owns at least 10% but less than 40% of the aggregate outstanding shares of our common stock, our principal stockholder will continue to retain certain designation rights under the Stockholders Agreement proportionate to its percentage ownership in our common stock. In addition, so long as our principal stockholder beneficially owns at least 25% of the aggregate outstanding shares of our common stock, our principal stockholder will have the right to appoint and remove the chairman of our board of directors and the lead independent director, if any. See “Certain Relationships and Related Party Transactions—Stockholders Agreement.” This concentration of ownership may have the effect of deterring, delaying or preventing a change of control of the Company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of the Company and might ultimately affect the market price of our common stock. We have opted out of Section 203 of the DGCL, which prohibits a publicly held Delaware corporation from engaging in a business combination transaction with an interested stockholder for a period of three years after the interested stockholder became such unless the transaction fits within an applicable exemption, such as board approval of the business combination or the transaction which resulted in such stockholder becoming an interested stockholder. Therefore, after the 180-day lock-up period expires, our principal stockholder will be able to transfer control of us to a third party by transferring their shares of our common stock (subject to certain restrictions and limitations), which would not require the approval of our board of directors or our other stockholders.
Our principal stockholder may also have interests that differ from yours. For example, our principal stockholder, and the members of our board of directors who are affiliated with our principal stockholder, by the terms of our certificate of incorporation, will not be required to offer us any corporate opportunity of which it becomes aware and can take any such corporate opportunity for itself or offer it to other companies in which it has an investment. We, by the terms of our certificate of incorporation, will expressly renounce any interest or expectancy in any such corporate opportunity to the extent permitted under applicable law, even if the opportunity is one that we or our subsidiaries might reasonably have pursued or had the ability or desire to pursue if granted the opportunity to do so. In addition, our principal stockholder is in the business of making investments in companies and may, from time to time, acquire and hold interests in businesses that directly or indirectly compete with our business, as well as in businesses that are significant existing or potential customers.
Upon the listing of our common stock on the NYSE, we will be a “controlled company” within the meaning of the corporate governance standards of the NYSE. As a result, we will qualify for, and may in the future rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.
After the completion of this offering, our principal stockholder will control a majority of the voting power of shares eligible to vote in the election of our directors. Because more than 50% of the voting power in the election of our directors will be held by an individual, group or another company, we will be a “controlled company” within the meaning of the corporate governance standards of the NYSE. As a controlled company, we may elect in the future
not to comply with certain corporate governance requirements, including the requirements that, within one year of the date of the listing of our common stock:
•our board of directors be composed of a majority of “independent directors,” as defined under the NYSE’s rules;
•the compensation of our executive officers be determined, or recommended to our board of directors for determination, by a compensation committee comprised solely of independent directors; and
•our director nominees be selected, or recommended for our board of director’s selection, by a nominating and governance committee comprised solely of independent directors.
Immediately following the completion of this offering, we do not intend to rely on these exemptions but may decide to do so in the future. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE.
One of the underwriters is an affiliate of our principal stockholder and has interests in this offering beyond customary underwriting discounts and commissions.
BDT & MSD, a participant in the underwriting syndicate for this offering, is an affiliate of BDTCP, our principal stockholder, and will receive a portion of the underwriting discounts and commissions in connection with this offering. In addition, BDT & MSD has previously provided placement and other financial advisory services to the Company, for which BDT & MSD has received customary fees. BDT & MSD may, in the future, provide similar services to the Company and may receive customary fees for such services. Thus it may have interests beyond customary underwriting discounts and commissions, including interests in the pricing, allocation or terms of the offering or the exercise by the underwriters of their option to purchase additional shares from the principal stockholder. This could result in decisions or actions that are not aligned with the interests of investors in this offering or that benefit BDT & MSD and our principal stockholder to a greater extent than other investors. Further, our principal stockholder expects to participate on behalf of the Company in determining such underwriting discounts and commissions for this offering.
As a result, a “conflict of interest” is deemed to exist under Rule 5121(f)(5) of the Conduct Rules of FINRA. Accordingly, we intend that this offering will be made in compliance with the applicable provisions of Rule 5121. Pursuant to that rule, the appointment of a “qualified independent underwriter” is not required in connection with this offering as BDT & MSD is not primarily responsible for managing this offering, and the underwriters that are primarily responsible for managing this offering (BofA Securities, Inc. and J.P. Morgan Securities LLC) satisfy the criteria required by Rule 5121(f)(12)(E) and do not have a conflict of interest with us. However, in accordance with Rule 5121, BDT & MSD will not sell our common stock to any account over which it exercised discretionary authority without receiving written approval from the account holder. See “Underwriting (Conflicts of Interest)” We are taking steps to comply with applicable FINRA rules and have appointed underwriters without such conflicts to manage the offering. However, we cannot provide assurance that these measures will fully mitigate the potential risks arising from this conflict of interest. As a result, investors in this offering may face additional risks related to the influence of our principal stockholder and its affiliate underwriter, including the possibility that their interests may not be fully aligned with those of other stockholders.
We will incur increased costs and become subject to additional regulations and requirements as a result of becoming a public company, and our management will be required to devote substantial time to new compliance matters, which could lower profits or make it more difficult to run our business.
As a public company, we expect to incur significant legal, accounting, reporting and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements and costs of recruiting and retaining non-executive directors. We also have incurred and will incur costs associated with compliance with the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act and related rules implemented by the SEC and the NYSE listing rules. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and
regulations to increase our legal and financial compliance costs and to make some activities more time consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. Our management will need to devote a substantial amount of time to ensure that we comply with all of these requirements.
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us, which could have an adverse effect on our business, financial condition, results of operations and cash flows.
These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.
Failure to comply with the requirements to design, implement and maintain effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could materially and adversely affect us.
As a public company, we will have significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. Testing and maintaining internal controls may divert our management’s attention from other matters that are important to our business.
If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements and harm our operating results. In addition, we will be required pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”), to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for the first fiscal year beginning after the effective date of this offering. This assessment will need to include disclosure of any material weaknesses identified by our management in an internal control over financial reporting. In addition, our independent registered public accounting firm will be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) commencing the year following our first annual report required to be filed with the SEC.
In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, we may encounter problems or delays in completing the remediation of any deficiencies identified by us or our independent registered public accounting firm in connection with the issuance of their attestation report.
We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 or our independent registered public accounting firm may not issue an unqualified opinion. If either we are unable to conclude that we have effective internal control over financial reporting or our independent registered public accounting firm is unable to provide us with an unqualified report,
investors could lose confidence in our reported financial information, which could cause the price of our common stock to decline, and we may be subject to investigation or sanctions by the SEC.
Risks Relating to our Organizational Structure
Some provisions of Delaware law, our Stockholders Agreement and our amended and restated certificate of incorporation and bylaws may deter third parties from acquiring us and diminish the value of our common stock.
Our Stockholders Agreement and our amended and restated certificate of incorporation and bylaws provide for, among other things:
•division of our board of directors into three classes of directors, with each class as equal in number as possible, serving staggered three-year terms;
•a prohibition on business combinations with interested shareholders (other than our principal stockholder and its transferees) similar to that set forth in Section 203 of the DGCL;
•so long as our principal stockholder beneficially owns at least 40% of the aggregate outstanding shares of our common stock, our principal stockholder may designate a majority of the nominees for election to our board of directors;
•so long as our principal stockholder beneficially owns at least 25% of the aggregate outstanding shares of our common stock, our principal stockholder will have the right to appoint and remove the chairman of our board of directors and the lead independent director, if any;
•following the time when our principal stockholder no longer maintains beneficial ownership of at least a majority of the aggregate outstanding shares of our common stock, there will be:
◦restrictions on the ability of our stockholders to call a special meeting and the business that can be conducted at such meeting or to act by written consent; and
◦removal of directors by the affirmative vote of holders of 66 2/3% of the total voting power of our outstanding shares of common stock, voting together as a single class, and, for so long as our board of directors remains classified, only for cause;
•following the time when our principal stockholder no longer maintains beneficial ownership of at least 40% of the aggregate outstanding shares of our common stock, there will be supermajority approval requirements for amending or repealing certain provisions in the certificate of incorporation and bylaws;
•our ability to issue additional shares of common stock and to issue preferred stock with terms that our board of directors may determine, in each case without stockholder approval (other than as specified in our certificate of incorporation);
•the absence of cumulative voting in the election of directors; and
•advance notice requirements for stockholder proposals and nominations.
These provisions in our Stockholders Agreement and our amended and restated certificate of incorporation and bylaws may discourage, delay or prevent a transaction involving a change in control of our company that is in the best interest of our minority stockholders. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging future takeover attempts. These provisions could also make it more difficult for stockholders to nominate directors for election to our board of directors and take other corporate actions.
The provision of our amended and restated certificate of incorporation requiring exclusive forum in certain courts in the State of Delaware or the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.
Our amended and restated certificate of incorporation will provide that, unless we, in writing, select or consent to the selection of an alternative forum, all complaints asserting any internal corporate claims (defined as claims, including claims in the right of the Company: (i) that are based upon a violation of a duty owed to us or our stockholders by a current or former director, officer or other employee in such capacity; or (ii) as to which the DGCL confers jurisdiction upon the Court of Chancery), to the fullest extent permitted by law, and subject to applicable jurisdictional requirements, shall be brought solely in the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have, or declines to accept, subject matter jurisdiction, another state court or a federal court located within the State of Delaware). Additionally, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Our choice-of-forum provision will not apply to suits brought to enforce any liability or duty created by the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any person or entity purchasing or otherwise acquiring or holding any interest in our common stock shall be deemed to have notice of and to have consented to the forum selection provisions described in our amended and restated certificate of incorporation. Although we believe these exclusive forum provisions benefit us by providing increased consistency in the application of Delaware law and federal securities laws in the types of lawsuits to which each applies, the exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or stockholders, which may discourage lawsuits with respect to such claims. Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder as a result of our exclusive forum provisions. Further, in the event a court finds either exclusive forum provision contained in our certificate of incorporation to be unenforceable or inapplicable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, financial conditions, results of operations and cash flows.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies and other future conditions. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “predict,” “project,” “target,” “potential,” “seek,” “will,” “would,” “could,” “should,” “continue,” contemplate,” “plan,” and other words and terms of similar meaning.
Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes may differ materially from those made in or suggested by the forward-looking statements contained in this prospectus. In addition, even if our results of operations, financial condition and cash flows, and the development of the markets in which we operate, are consistent with the forward-looking statements contained in this prospectus, those results or developments may not be indicative of results or developments in subsequent periods. New factors emerge from time to time that may cause our business not to develop as we expect, and it is not possible for us to predict all of them. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed under the caption entitled “Risk Factors.”
We discuss these risks and others in greater detail under the section titled “Risk Factors.” Given these uncertainties, you should not place undue reliance on these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus, and, while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.
You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this prospectus by these cautionary statements. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
USE OF PROCEEDS
We estimate that the net proceeds we will receive from this offering will be approximately $ million, assuming an initial public offering price of $ per share, which is the midpoint of the range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.
Certain of the shares of common stock offered by this prospectus are being sold by the principal stockholder. The principal stockholder in this offering is BDTCP. We will not receive any of the proceeds from the sale of shares by the principal stockholder in this offering, including from any exercise by the underwriters of their option to purchase additional shares from the principal stockholder. For information about the principal stockholder, see “Principal Stockholders.” We intend to use approximately $ of the net proceeds from this offering to repay outstanding indebtedness under the Term Facility (as defined in “Description of Certain Indebtedness”). As of June 30, 2025, the aggregate principal balance outstanding under the Term Facility was $2,075 million. For the six months ended June 30, 2025, the average interest rate applicable to the Term Facility was 6.83%. The Term Facility has a maturity date of August 19, 2031. For more information regarding our outstanding indebtedness, including a description of the Term Facility, see “Description of Certain Indebtedness.” We intend to use the remainder of the net proceeds to us from this offering for general corporate purposes. We will have broad discretion over how to use the net proceeds to us from this offering, and our investors will be relying on the judgment of our management regarding the application of the net proceeds of this offering.
Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share of our common stock, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by $ , assuming the number of shares of our common stock offered in this offering by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, an increase (decrease) of one million shares in the number of shares of our common stock sold in this offering by us would increase (decrease) the net proceeds to us from this offering by $ , assuming the initial public offering price of $ per share of our common stock, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. The information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering determined at the time of the pricing of this offering.
DIVIDEND POLICY
We currently intend to retain all available funds and future earnings, if any, to fund the development and expansion of our business, and we do not anticipate declaring or paying any cash dividends in the near term. The declaration and payment by us of any future dividends to holders of shares of our common stock will be at the sole discretion of our Board of Directors and will depend on our financial condition, earnings, cash needs, capital requirements (including requirements of our subsidiaries), contractual, legal, tax and regulatory restrictions, and any other factors that our Board of Directors deems relevant in making such a determination. Additionally, we are a holding company and do not conduct any business operations of our own. As a result, our ability to pay cash dividends on shares of our common stock is dependent upon cash dividends, distributions and other transfers from our subsidiaries. Our Credit Agreement imposes restrictions on certain of our subsidiaries’ ability to pay dividends or other distributions to us. See “Risk Factors—Risks Related to Our Capital Structure, Indebtedness and Capital Requirements” and “Description of Certain Indebtedness—Credit Agreement.” We may also enter into other credit agreements or borrowing arrangements in the future that could restrict our ability to declare or pay cash dividends. Therefore, we cannot assure you that we will pay any cash dividends or other distributions to holders of shares of our common stock, or as to the amount of any such cash dividends or other distributions. In August 2024, the Company declared and issued a special dividend (the “2024 Dividend”) to its ordinary common stockholders, which included a $841.7 million dividend to its direct stockholder, BDTBH, through which our principal stockholder and the Minority Investment Institutional Co-Investors hold their respective shares, and $58.3 million in dividends to management common stockholders. The 2024 Dividend was paid from proceeds received from borrowings under the Credit Agreement along with approximately $11 million funded from cash on our balance sheet. The 2024 Dividend was paid as a means to provide our common stockholders with a return of capital. The 2024 Dividend was made at the discretion of our Board of Directors, which took into account the economic environment, our financial condition and our consistent growth in profitability over the preceding years, as well as our expectations regarding our ability to repay borrowings under the Credit Agreement from our anticipated net cash flows.
CAPITALIZATION
The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2025:
•on an actual basis;
•on an as adjusted basis, after giving effect to (i) the filing and effectiveness of our amended and restated certificate of incorporation, (ii) the -for-1 forward stock split and (iii) the , 2025 retirement of shares of our treasury stock; and
•on an as further adjusted basis, after giving effect to (i) the adjustments set out above and (ii) the issuance and sale by us of shares of common stock in this offering at an assumed initial public offering price of $ per share of common stock, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, including the application of the net proceeds as set forth under “Use of Proceeds.” The as further adjusted information set forth in the table below is illustrative only and our cash and cash equivalents and capitalization following the completion of this offering will be adjusted based on the actual initial public offering price, the number of shares of our common stock issued and sold in this offering and other terms of this offering determined when the initial public offering price is determined. You should read the following table in conjunction with the sections of this prospectus entitled “Summary Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Capital Stock” and our financial statements and related notes included elsewhere in this prospectus. | | | | | | | | | | | | | | | | | |
| As of June 30, 2025 |
| (in thousands, except share amounts) | Actual | | As Adjusted | | As Further Adjusted(1) |
Cash and cash equivalents | $ | 222,587 | | | $ | | | | $ | | |
Long-term debt (including current portion): | | | | | |
Term Loans | $ | 2,075,000 | | | | | |
Revolving Credit Facility | — | | | | | |
| Asset Backed Borrowings owed to securitization investors | 583,269 | | | | | |
Stockholders’ equity (deficit): | | | | | |
Common stock, $0.01 par value; 4,000,000 shares authorized and 1,656,435 shares issued and 1,202,164 outstanding on an actual basis; shares authorized and shares issued and outstanding on an as adjusted basis; shares authorized and shares issued and outstanding on an as further adjusted basis | 17 | | | | | |
Additional paid-in capital | 193,516 | | | | | |
(Accumulated deficit) retained earnings | 79,790 | | | | | |
Treasury stock(2) | (501,252) | | | | | |
Accumulated other comprehensive income (loss) | 51,434 | | | | | |
Total stockholders’ equity (deficit) | $ | (176,495) | | | | | |
Total capitalization | $ | 2,704,361 | | | $ | | | | $ | | |
__________________
(1)Each $1.00 increase or decrease in the assumed initial public offering price of $ per share of common stock, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization on an as further adjusted basis by approximately $ , assuming that the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each 1,000,000-share increase or decrease in the number of shares of common stock offered by us in this offering would increase or decrease, as applicable, each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization on an as further adjusted basis by approximately $ , assuming an initial public offering price of $ per share of common stock, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
(2)On , 2025, the Company retired all shares of its treasury stock reported as of June 30, 2025. Thus, As Adjusted and As Further Adjusted reflects zero shares of treasury stock outstanding.
The as adjusted and as further adjusted columns in the table above are based on the number of shares of our common stock that will be outstanding after this offering, which in turn is based on shares of common stock outstanding as of , 2025, which gives effect to the Assumed Share Events set forth under the section titled “Prospectus Summary—The Offering” and excludes: • shares of our common stock issuable upon exercise of options to purchase shares of our common stock outstanding under the 2015 Stock Option Plan as of , 2025, with a weighted-average exercise price of $ per share;
• shares of our common stock reserved for future issuance under our 2025 Plan; and
◦ shares of our common stock reserved for future issuance under our ESPP.
DILUTION
Information in this Dilution section reflects a -for-1 forward stock split of our common stock to occur after the effectiveness of the registration statement of which this prospectus forms a part and prior to the closing of this offering.
If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share of our common stock in this offering and the as further adjusted net tangible book value per share of our common stock immediately after this offering.
We calculate historic net tangible book value per share by dividing the net tangible book value, which is total tangible assets, less total liabilities, by the number of outstanding shares of our common stock. As of June 30, 2025, we had a historical net tangible book value (deficit) of $(1,628) million, or per share of common stock, based on shares of our common stock outstanding as of June 30, 2025. Dilution is calculated by subtracting net tangible book deficit per share of our common stock from the initial public offering price per share of our common stock.
Our as adjusted net tangible book value as of June 30, 2025 was $ million, or $ per share of common stock, based on shares of our common stock outstanding as of June 30, 2025, after giving effect to the filing and effectiveness of our amended and restated certificate of incorporation.
After giving further effect to the sale of shares of our common stock in this offering at the initial public offering price of $ per share of common stock, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, less the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our as further adjusted net tangible book value as of June 30, 2025 would have been approximately $ million, or $ per share of common stock. This amount represents an immediate increase in the as further adjusted net tangible book value of $ per share of our common stock to the existing stockholders and immediate dilution of $ per share of our common stock to investors purchasing shares of our common stock in this offering.
The following table illustrates this dilution on a per share basis:
| | | | | | | | | | | |
Assumed initial public offering price per share of common stock | | | $ | | |
Historical net tangible book value per share as of June 30, 2025 | $ | | | | |
Increase in net tangible book value per share of common stock attributable to the adjustments described above | | | |
As adjusted net tangible book value per share of common stock | | | |
Increase in as adjusted net tangible book value per share of common stock attributable to investors purchasing shares of common stock in this offering | | | |
As further adjusted net tangible book value per share of common stock, after giving effect to this offering | | | |
Dilution in as further adjusted net tangible book value per share of common stock to investors in this offering | | | $ | | |
The dilution information discussed above is illustrative only and will change based on the actual initial public offering price, the number of shares of common stock sold by us in this offering and other terms of this offering determined at pricing.
Each $1.00 increase or decrease in the assumed initial public offering price of $ per share of common stock, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, the as further adjusted net tangible book value per share after this offering by approximately $ and the dilution per share to new investors by $ , assuming that the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
Each increase of 1,000,000 shares in the number of shares of common stock offered by us would increase our as further adjusted net tangible book value per share after this offering by $ and decrease the dilution per share to new investors by $ , assuming no change in the assumed initial public offering price per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each decrease of 1,000,000 shares in the number of shares of common stock offered by us would decrease our as further adjusted net tangible book value per share after this offering by $ and increase the dilution per share to new investors by $ , assuming no change in the assumed initial public offering price per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
The following table summarizes, as of June 30, 2025, on the as further adjusted basis described above, the total number of shares of our common stock purchased from us, the total consideration paid to us, and the average price per share of our common stock paid by purchasers of such shares and by new investors purchasing shares of our common stock in this offering:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shares Purchased | | Total Consideration | | Average
Price Per
Share |
| Number | | Percent | | Amount | | Percent | |
| Existing stockholders |
| |
| | $ | |
| | $ |
| New investors |
| |
| |
| |
| |
|
| Total |
| |
| | $ | |
| | $ |
A $1.00 increase or decrease in the assumed initial public offering price of $ per share of common stock offered by us in this offering, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase or decrease the total consideration paid by new investors by $ million and increase or decrease the percent of total consideration paid by new investors by %, assuming no change in the number of shares of common stock offered by us in this offering, as set forth on the cover page of this prospectus, and before deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.
Sales by the principal stockholder in this offering will cause the number of shares held by existing stockholders before this offering to be reduced to shares, or % of the total number of shares of our common stock outstanding immediately after the completion of this offering, and will increase the number of shares held by new investors to shares, or % of the total number of shares of our common stock outstanding immediately after the completion of this offering.
Except as otherwise indicated, the above discussion and tables assume no exercise of the underwriters’ option to purchase additional shares of common stock. If the underwriters were to exercise in full their option to purchase additional shares, our existing stockholders would own % and our new investors would own % of the total number of shares of common stock outstanding upon the completion of this offering.
We may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to holders of our common stock. To the extent that any outstanding options are exercised, there may be further dilution to investors participating in this offering.
The number of shares of our common stock that will be outstanding after this offering is based on shares of common stock outstanding as of , 2025, which gives effect to the Assumed Share Events set forth under the section titled “Prospectus Summary—The Offering” and excludes: • shares of our common stock issuable upon exercise of options to purchase shares of our common stock outstanding under the 2015 Stock Option Plan as of , 2025, with a weighted-average exercise price of $ per share;
• shares of our common stock reserved for future issuance under our 2025 Plan; and
• shares of our common stock reserved for future issuance under our ESPP.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this prospectus. The following discussion and analysis also includes discussion of certain non-GAAP financial measures. For a description and reconciliation of the non-GAAP measures discussed in this section, see “—Non-GAAP Financial Measures and Key Operating Metrics” below. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in “Special Note Regarding Forward-Looking Statements” and “Risk Factors.” The information in this section does not give effect to the -for-1 forward stock split. Our Business
We are the world’s largest designer and manufacturer of commercial laundry systems, serving a diverse and resilient range of global end markets. We believe we engineer and produce the highest quality and one of the most reliable commercial laundry systems in the industry. We leverage our pure play focus on the commercial laundry industry and over 100 years of engineering excellence to drive innovation and design our equipment to deliver outstanding performance in the most demanding applications. We believe the need for clean laundry is universal and growing, and our premium machines meet this fundamental human need, all day, every day.
We are focused on the large and attractive commercial laundry market where our systems’ quality, durability and reliability are key strategic advantages with our channel partners, customers and end users. End users of our systems include healthcare facilities, fire stations, hotels, laundromats, communal laundry facilities and many other commercial applications where hygiene is critical. We believe the criticality of laundry equipment to these users’ operations creates a discerning customer base that appreciates the quality and economic attractiveness of highly effective and reliable equipment. We leverage our scale and focus to deliver a compelling total value proposition to this diverse customer base.
We estimate that we hold approximately 40% of the commercial laundry market in North America and have leading positions in growing markets around the world. The commercial laundry market benefits from a regular replacement cycle driven by a large base of installed machines, which provides us with an advantage as the largest incumbent manufacturer and offers us a high level of revenue consistency to support our growth ambitions. In addition, residential customers are increasingly demanding commercial-quality products for the home, and our machines represent a compelling fit for this select but growing segment of the residential market.
Commercial laundry customers view laundry systems as infrastructure to support core business operations or as revenue-generating assets. Avoidance of downtime and repair costs, as well as effective processing of large volumes of laundry, are important drivers of machine economics and help our end-customers run their businesses effectively.
As such, customers focus on total cost of ownership when making purchasing decisions, which often involve investments of hundreds of thousands of dollars.
Our systems are known for their use of high-quality materials in their construction, their build quality and the extensive testing regimen they undergo, resulting in best-in-class performance. Our culture of operational excellence and continuous improvement supports the maintenance of these exceptionally high-quality standards. As a result, we believe we offer an attractive total cost of ownership, and our customers purchase our machines because of their reliability, durability and effectiveness. This dynamic allows us to sell our products at a price premium versus
competitor offerings while securing a high degree of loyalty from our customers when they need to replace a machine.
We sell our systems through an extensive global network of approximately 600 distributors and through direct sales channels in certain key markets. Distributors are a critical part of the commercial laundry market as they are frequently the first point of contact for end-customers and are highly influential in educating those customers about equipment features and highlighting the key factors in making a purchasing decision. We have valuable and difficult-to-replicate relationships with our distributors that have been built over decades. Approximately 94% of our North American distributors have been with the Company for ten years or more. Our distribution partners often see us as the vendor of choice given our focus on quality, insights into customer needs, the attractive economics of our machines and our support teams staffed with highly trained personnel. Our direct sales channel complements our distribution network by bringing us closer to end-customers and enhancing strategic flexibility, particularly in select markets that we believe represent significant growth opportunities.
We operate through two geographic reporting segments with our North America segment representing 74% of 2024 revenue and our International segment representing the remaining 26%. Our historical financial performance has benefited from consistent and predictable growth at attractive margins, and we have a strong cash generation profile accompanied by minimal capital expenditure requirements given our well-invested manufacturing footprint. For the twelve-month period ended December 31, 2024, our net revenue was $1.5 billion, net income was $98 million (with a net income margin of approximately 7%), Adjusted EBITDA was $383 million (with an Adjusted EBITDA Margin of approximately 25%) and capital expenditures were approximately 3% of net revenue. For the six months ended June 30, 2025, our net revenue was $837 million, net income was $48 million (with a net income margin of approximately 6%), Adjusted EBITDA was $219 million (with an Adjusted EBITDA Margin of approximately 26%) and capital expenditures were approximately 2% of net revenue. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures and
Key Operating Metrics” regarding our use of Adjusted EBITDA and Adjusted EBITDA Margin, which are non-GAAP financial measures, and a reconciliation of these measures to their most directly comparable financial measure calculated in accordance with GAAP. Key Factors Affecting Our Performance
Our results of operations and financial condition have been, and will continue to be, affected by several factors that present significant opportunities for us but can also pose risks and challenges, including but not limited to those discussed below and in the section of this prospectus titled “Risk Factors.” Incumbent Replacement Cycle
Despite the high reliability and durability of our equipment it does have a finite life, and the mission-critical nature of our estimated eight million unit installed base of equipment, which we calculate assuming a ten-year average useful life of our products, means our growth and performance has been driven by a consistent and predictable demand for replacement equipment. The incumbency advantage offered by this significant installed base and our investment in maintaining industry-leading physical and digital product offerings make us, we believe, well placed to capitalize on global demand and continue to grow our market share and develop new markets for our products. This global demand is driven by the commercial demand of our continually improved products, our customers repeatedly choosing our products and the attractiveness of laundromats as an investment, and changes in customer habits or changes to the economic model, including changes to operating, real estate and construction costs, the operating environment, or delays in laundromat construction or increased regulatory or permitting obligations for laundromats, could impact this demand in the future.
Investment Trends in Diversified End-Markets
In addition to replacement demand, our performance is also driven by investment trends in both our developed and developing end markets. The investment and macro trends impacting the On-Premise, Vended and Commercial In-Home end-markets rarely move in tandem, and our ability to access all these markets by providing systems to satisfy the many differences between them has been a key driver to our historical performance and we believe will continue to drive our performance going forward.
Myriad applications required by the On-Premise end market create investment trends that rarely move in sync. Whether our products are used to sterilize large volumes of linens in healthcare, wash highly specialized firefighting gear, launder hotel linens or are applied in any of the many other end-use cases, our ability to provide specific solutions for all of these applications gives us end market diversification globally. We believe our incumbency in many of these applications provides a strong platform for future growth in both developed and developing markets, as these markets upgrade their laundry systems to align to more developed market standards.
The growth of the Vended market, whether in laundromats or communal laundry facilities, is being driven by a combination of changes to the investment model in mature markets, including the U.S. and Western Europe, and demographic changes in less mature markets where we are helping create the demand and drive adoption of Vended laundry applications.
The U.S. and Western European laundromat markets are seeing an acceleration of investment, driven by a shift to more commercially focused investors who are willing to invest in the latest machines and technology to deliver an improved customer experience, and which also allows them to more easily operate their multi-site businesses. This is driving demand for equipment for new laundromat locations, but also accelerating the replacement cycle in existing stores as owners refurbish them to keep pace with the market trends. We believe our industry leading products and digital technologies, alongside our in-house financing capability in the U.S., makes our products the most attractive choice for these investors which has driven and will continue to drive our performance.
There remains significant untapped opportunity for Vended laundry systems across many under-penetrated developing markets where there is a nascent or non-existent Vended laundry culture. We have a successful track record of expanding our business in these high-potential geographies, such as in Thailand where we have grown revenue at a compound annual growth rate of approximately 50% since we began operations there in 2017. We
believe Vended laundry market opportunities are driven by a number of key indicators such as GDP growth, population growth, rising personal incomes, increasing urbanization, and expanding family sizes—all resulting in evolving lifestyles that demand Vended laundry solutions. We believe there are many other potential markets that could replicate the success we have already seen in markets like Thailand, though there are inevitable risks associated with growth in these new markets. For example, we face risks associated with unforeseen government actions, changing political conditions, fluctuations in currency exchange rates, increases in inflation, and other risks. See “Risk Factors.” In these developing markets, our team takes a “feet on the street” approach to foster the development of the local commercial laundry industry. We believe accessing these under-penetrated markets will continue to drive our performance alongside our local partners. Within the Commercial In-Home market, we have benefited from users who are becoming increasingly frustrated with lower quality residential machines and are looking for a more reliable and durable commercial-grade solution. We have capitalized on this demand by focusing on our go-to-market strategy of selling through independent retailers and not “Big Box” stores; we believe this strategy is unique in the industry and delivers the most profitable laundry sale for a retailer. We also continue to launch product extensions. Together, these efforts have expanded our reach and product range to in-home customers and we believe there remains continued growth opportunities in this market as these trends continue.
Manufacturing and Procurement Excellence and Related Costs
To ensure that the reliability, durability and quality of our machines meet our customers’ expectations, we seek to achieve manufacturing and procurement excellence, which in turn means our systems may have higher labor and material costs than our primary competitors. Those high-quality product characteristics require us to run our manufacturing facilities efficiently, design products, supporting technologies and any new technologies to appropriately balance cost and performance, and procure materials and components at optimal prices. These activities have been key to our historical margin expansion and will continue to be drivers of our margins in the future.
While we continue to focus on cost-down initiatives through engineering, manufacturing and procurement workstreams, we remain exposed to market prices for these costs. We manage the potential risk in these input costs through, when we deem appropriate, hedging and fixed price or term contracts. This focus on balancing cost with performance and quality extends to our suppliers where we focus on long-term, mutually beneficial relationships, rather than short-term cost minimization transactions, resulting in partnerships that help us to navigate any market volatility. For example, these relationships were particularly valuable as we navigated the COVID-19 pandemic and supply chain issues that followed, where we saw no significant disruption to our supply of components and materials.
Global Supply Chain and Geopolitical Conflict
Though our strategy generally involves sourcing inputs from the same or nearby geographic regions as our manufacturing facilities, we continue to face risks associated with supply disruptions or delays in shipments and supply chains regionally and globally. These disruptions could impact our ability to procure raw materials or other materials on a timely basis and/or at expected prices, and have been driven by supply chain market constraints and macroeconomic conditions, including inflation and labor market shortages. Current geopolitical conditions, including conflicts and other causes of strained intercountry relations, as well as sanctions and other trade restrictive activities, also contribute to these issues. Additionally, there has been consolidation of distributors in our industry. Increased consolidation may result in fewer alternatives for distributors, which in turn could decrease our bargaining power as it relates to pricing and purchase order terms. Our business and financial performance is also affected by elevated levels of inflation and interest rates. Certain costs, including rising labor rates and supplier costs, have increased as a result of inflation. Moreover, volatility in interest rates and financial markets can lead to economic uncertainty, an economic downturn or recession and impact the demand for our products and services as well as our supply chain.
In addition, changes, potential changes or uncertainties in regulatory and economic conditions or laws and policies governing foreign trade, manufacturing, and development and investment in the territories and countries
where we operate or sell our products could adversely affect our business, results of operations and financial condition. There have been, and could be further, legislative actions limiting outsourcing manufacturing and production activities to jurisdictions outside the United States, including through tariffs or penalties. Such actions could impact our ability to obtain sourcing, as well as increase prices for materials as we seek alternative sources.
Public Company Costs
Following the completion of this offering, we expect to incur additional costs associated with operating as a public company. We expect that these costs will include additional personnel, legal, consulting, regulatory, insurance, accounting, investor relations, and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as amended, as well as rules adopted by the SEC and national securities exchanges, require public companies to implement specified corporate governance practices that are currently inapplicable to us as a private company. These additional rules and regulations, as well as others associated with being a public company, will increase our legal, regulatory, financial and insurance costs and will make some other activities more time-consuming and costly.
Non-GAAP Financial Measures and Key Operating Metrics
We regularly review non-GAAP measures to evaluate our business, measure our performance and manage our operations, including identifying trends affecting our business, formulating business plans and making strategic decisions. We believe that non-GAAP measures provide an additional way of viewing aspects of our operations that, when viewed together with our GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business. These non-GAAP financial measures are also used by our management to evaluate financial results and to plan and forecast future periods. Non-GAAP financial measures should be considered a supplement to, and not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.
Adjusted EBITDA and Adjusted EBITDA Margin
This prospectus contains certain financial measures, including Adjusted EBITDA and Adjusted EBITDA Margin, that are not required by, or prepared in accordance with, GAAP. We refer to these measures as “non-GAAP” financial measures. The use of non-GAAP financial measures should not be construed as an alternative to, or more meaningful than, the comparable GAAP financial measure. You should not consider Adjusted EBITDA or Adjusted EBITDA Margin either in isolation or as substitutes for analyzing our results as reported under GAAP. Adjusted EBITDA and Adjusted EBITDA Margin are presented for supplemental informational purposes only and have limitations as an analytical tool. For example, Adjusted EBITDA and Adjusted EBITDA Margin exclude certain tax payments that may reduce cash available to us, exclude non-cash charges for depreciation of property and equipment and amortization of intangible assets, do not reflect any cash capital expenditure requirements for such assets being depreciated and amortized that may have to be replaced in the future, do not reflect changes in, or cash requirements for, our working capital needs and do not reflect the interest income or expense, or the cash requirements necessary to service interest or principal payments, on our debt. You should be aware that our presentation of these and other non-GAAP financial measures in this prospectus may not be comparable to similarly titled measures used by other companies, including our competitors.
Adjusted EBITDA and Adjusted EBITDA Margin, as defined below, are key non-GAAP measures we use to assess our financial performance. “Adjusted EBITDA” represents net income before provision for income taxes, interest expense, depreciation and amortization and is further adjusted to exclude certain expenses not representative of our ongoing operations and other charges not involving cash outlays and “Adjusted EBITDA Margin” represents Adjusted EBITDA divided by net revenues. Management utilizes Adjusted EBITDA and Adjusted EBITDA Margin as measures of operating performance. Management believes that these non-GAAP financial measures are useful to investors for period-to-period comparisons of the Company’s business and in understanding and evaluating the Company’s operating results for the following reasons:
•Adjusted EBITDA and Adjusted EBITDA Margin are widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as share-based compensation expense, depreciation and amortization expense, interest expense, other expense (income), net, and income
taxes expense (benefit) that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired; and
•Adjusted EBITDA and Adjusted EBITDA Margin provide consistency and comparability with the Company’s past financial performance, facilitate period-to-period comparisons of the Company’s primary operating results, and also facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.
Non-GAAP Reconciliation
The following table presents a reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA Margin for the periods presented:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Six Months Ended June 30, | | For the Year Ended December 31, |
| (in thousands except for percentages) | 2025 | | 2024 | | 2024 | | 2023 | | 2022 |
| Net income | $ | 48,263 | | | $ | 67,577 | | | $ | 98,319 | | | $ | 88,229 | | | $ | 99,650 | |
| Provision for income taxes | 14,874 | | | 18,977 | | | 25,130 | | | 16,226 | | | 16,374 | |
| Interest expense | 84,288 | | | 58,431 | | | 132,001 | | | 123,397 | | | 58,099 | |
| Depreciation and amortization | 45,958 | | | 44,909 | | | 90,169 | | | 88,704 | | | 87,284 | |
| EBITDA | 193,383 | | | 189,894 | | | 345,619 | | | 316,556 | | | 261,407 | |
Refinancing and debt related costs (1) | 1,054 | | | — | | | 33,217 | | | — | | | 223 | |
Shared-based compensation (2) | 1,771 | | | 1,776 | | | 3,263 | | | 3,343 | | | 3,144 | |
Pension termination costs (3) | — | | | — | | | — | | | 7,011 | | | 4,619 | |
Strategic transaction costs (4) | 3,044 | | | 4,668 | | | 5,803 | | | 1,083 | | | 437 | |
Foreign exchange (gain)/loss on intercompany loans (5) | 19,854 | | | (230) | | | (4,654) | | | 484 | | | 1,931 | |
| Adjusted EBITDA | $ | 219,106 | | | $ | 196,108 | | | 383,248 | | | 328,477 | | | 271,761 | |
| Net revenues | $ | 836,757 | | | $ | 729,009 | | | $ | 1,508,440 | | | $ | 1,365,154 | | | $ | 1,376,277 | |
Net income margin | 5.8 | % | | 9.3 | % | | 6.5 | % | | 6.5 | % | | 7.2 | % |
| Adjusted EBITDA Margin | 26.2 | % | | 26.9 | % | | 25.4 | % | | 24.1 | % | | 19.7 | % |
__________________
(1)Represents fees in connection with the Credit Agreement and predecessor credit facilities.
(2)Non-cash expenses related to equity awards granted to management.
(3)Expenses related to the termination and settlement of pension obligations, including settlement charges and amortization of net actuarial losses.
(4)Comprised of professional fees, advisory services and other expenses related to acquisitions and other strategic initiatives.
(5)Foreign exchange (gains)/losses on intercompany loans where the lender or borrower’s functional currency differs from the loan denomination currency.
Segment Operating Metrics
Our business is organized into two reportable segments, North America and International. The Company uses Segment Net Revenues, Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin as its measures of performance. The Company allocates certain costs including manufacturing variances, customer support expenses and selling and general expenses which are incurred in our global operations to the reportable segments in determining Segment Adjusted EBITDA.
Segment Adjusted EBITDA is a performance metric utilized by the Company’s Chief Operating Decision Maker to allocate resources on a segment basis. We define Segment Adjusted EBITDA as, on a segment basis, net income before provision for income taxes, interest expense, depreciation and amortization and further adjusted to exclude certain expenses not representative of our ongoing operations and charges not involving cash outlays. Segment Adjusted EBITDA is a measure of operating performance of our reportable segments and may not be comparable to similar measures reported by other companies. See Note 23, “Segment Information,” to our audited consolidated financial statements included elsewhere in this prospectus and “—Segment Results” below.
Components of Results of Operations
Net Revenues
Revenue is primarily generated through the sale of our commercial-grade laundry systems and service parts across our two geographic segments and into the three end markets of OPL, Vended and Commercial In-Home. In addition to the sale of equipment, we also generate revenues from our wrap-around customer offerings including equipment servicing, digital products and customer financing solutions.
Equipment, Service parts and other
The Company offers a full line of stand-alone laundry washers and dryers and related service parts. These products range from small residential washers and dryers to large commercial laundry systems. Revenue from equipment and service part sales is recognized when the Company satisfies a performance obligation by transferring control of a product, or providing service, to a customer net of any discounts or allowances. Where post-invoice rebates, allowances or sales incentive programs are offered, the Company estimates and records the cost of this variable consideration at the time of sale of the related product.
Equipment financing
The Company offers an equipment financing program to end-customers who are primarily laundromat owners to finance their purchase of new equipment. Typical terms for equipment financing receivables range from two to twelve years. Interest income is accrued as earned on outstanding balances. Recognition of income is suspended, and previously recorded accrued interest income is reversed, when it is determined that collection of future income is not probable (after 89 days past due). Fees earned and incremental direct costs incurred upon origination of equipment financing are not significant.
Costs and Expenses
Cost of Sales
Cost of sales is comprised of the costs of raw materials and component parts, distribution expenses, costs incurred at the manufacturing plant level and costs of warehousing, including, but not limited to, labor and related fringe benefits, depreciation, supplies, utilities, property taxes and insurance, as well as costs associated with product warranties, and other costs of supporting our other wrap-around customer offerings.
Equipment Financing Expenses
Equipment financing expenses are made up of the interest cost and fees related to our Asset Backed Equipment Facility, alongside the operational costs, including but not limited to, headcount and systems expenses related to administering the equipment finance program.
Gross Profit
Gross profit is determined by subtracting cost of sales and equipment financing expenses from net revenues.
Selling, general and administrative expenses
Our selling expenses consist of expenses related to selling our products and services to customers through our global sales organization including the salaries of our direct sales team. General and Administrative expenses include the cost of our global, ‘24x7’ engineering and innovation teams as well as the costs required to support the administration of the business such as finance, accounting, information technology, human resources, legal, general management and amortization related to the BDTCP Transaction.
Operating income
Operating income is gross profit less SG&A and Other Costs.
Interest expense, net
The Company incurs interest expense related to servicing of its outstanding obligations under its Credit Agreement as defined herein. The amortization of debt issuance costs and impact of our interest rate hedging instruments are also included as a component of periodic interest expense.
Net income
Net income is operating income less interest expense, net, other expenses, net, and provision for income taxes.
Factors Affecting the Comparability of Our Results of Operations
Set forth below is a brief discussion of the key factors impacting the comparability of our results of operations.
Refinancing Costs
From time to time the Company enters into new or amended credit agreements or securitization facilities to support its operations, fund acquisitions, make dividend distributions or for other general corporate purposes. These refinancing activities and related costs, as well as any capitalized costs and original issue discounts from prior transactions, are capitalized or expensed in accordance with the debt modification and debt extinguishment accounting guidance. Debt issuance costs are amortized using the effective interest rate method or straight line when straight line approximates the effective interest rate method.
In August 2024, the Company incurred fees of $32.8 million in connection with the execution of the Credit Agreement. Of these fees, $30.4 million was expensed and included in Other expenses, net and Other expenses, net - related parties in the consolidated statements of comprehensive income. The remaining $2.4 million related to the Revolving Facilities and was capitalized and included in the Other long-term assets line of the consolidated balance sheets. The Company also recorded $10.4 million of original issuance discount related to the Credit Agreement, which is included in the Long-term debt, net line of the consolidated balance sheets. Additionally, the Company wrote off a portion of the unamortized debt issuance costs and original issuance discounts related to the prior credit agreement, resulting in expense of $2.8 million recorded in Other expenses, net in the consolidated statements of comprehensive income.
Presentation of Financial Information
Alliance Laundry Holdings Inc. is a holding company with no business operations or assets other than the capital stock of its direct and indirect subsidiaries, including those of Alliance Laundry Holdings LLC and Alliance Laundry Systems LLC. Alliance Laundry Systems LLC, a direct, wholly owned subsidiary of Alliance Laundry Holdings LLC, which is a direct, wholly owned subsidiary of Alliance Laundry Holdings Inc., is the U.S. Borrower under the Credit Agreement and the Originator and Servicer under the Asset Backed Equipment Facility and the Asset Backed Trade Receivables Facility, each as defined below.
Results of Operations
For the Six Months Ended June 30, 2025 and 2024
The following table sets forth our results of operations for the periods indicated:
| | | | | | | | | | | |
| (in thousands) | June 30, 2025 | | June 30, 2024 |
| Net revenues: | | | |
| Equipment, service parts and other | $ | 812,472 | | | $ | 704,660 | |
| Equipment financing | 24,285 | | | 24,349 | |
| Net revenues | 836,757 | | | 729,009 | |
| Costs and expenses: | | | |
| Cost of sales | 498,256 | | | 439,875 | |
| Cost of sales - related parties | 3,082 | | | 2,995 | |
| Equipment financing expenses | 16,209 | | | 16,410 | |
| Gross profit | 319,210 | | | 269,729 | |
| | | |
| Selling, general, and administrative expenses | 150,727 | | | 124,824 | |
| Selling, general, and administrative expenses - related parties | 150 | | | 150 | |
| | | |
| Total operating expenses | 150,877 | | | 124,974 | |
| Operating income | 168,333 | | | 144,755 | |
| | | |
| Interest expense, net | 84,288 | | | 58,431 | |
Other expenses, net | 20,908 | | | (230) | |
| | | |
| Income before taxes | 63,137 | | | 86,554 | |
| Provision for income taxes | 14,874 | | | 18,977 | |
| Net income | $ | 48,263 | | | $ | 67,577 | |
Net Revenues
Net revenues for the six months ended June 30, 2025 increased $107.7 million, or 14.8%, to $836.8 million from $729.0 million for the six months ended June 30, 2024. Equipment revenue increased $99.5 million, or 16.4%, year over year, primarily driven by volume growth across our reportable segments and all three end markets and modest price increases. Service parts revenue increased $7.1 million, or 9.0%, year over year primarily driven by volume growth. Other revenues increased $1.2 million, or 6.0%, primarily due to increased field service revenue. Equipment financing revenue decreased $0.1 million, or 0.3%, year over year driven by a decrease in interest income as floating loan rates decreased alongside the prime rate, partially offset by growth of the loan base.
Net revenues increased $91.6 million in North America, mainly driven by strong demand across all end markets, with particularly strong performance in the Vended, an increase of 7.2%, and Commercial In-Home, an increase of 41.8%, end markets. International segment net revenues increased by $16.2 million due to strong performance in Europe, an increase of 16.9%, and in Asia Pacific, an increase of 14.6%.
Gross profit
Gross profit for the six months ended June 30, 2025 increased $49.5 million, or 18.3%, to $319.2 million from $269.7 million for the six months ended June 30, 2024. Gross profit as a percentage of net revenues was 38.1% for the six months ended June 30, 2025 as compared to 37.0% for the six months ended June 30, 2024. The increase in gross profit as a percentage of revenue was primarily driven by our continued focus on manufacturing and procurement excellence where cost down initiatives delivered approximately $5 million in savings, the benefits of higher production volumes and benefit from modest price increases.
Selling, general, and administrative expenses (“SG&A”)
Selling, general, and administrative expenses for the six months ended June 30, 2025 increased $25.9 million to $150.9 million from $125.0 million for the six months ended June 30, 2024. Selling, general, and administrative expenses as a percentage of net revenues was 18.0% for the six months ended June 30, 2025 as compared to 17.1% for the six months ended June 30, 2024. Included within Selling, general, and administrative expenses is $22.3 million and $22.4 million related to non-cash depreciation and amortization of assets, which represents the portion of assets that had increases to their historical basis as a result of purchase accounting related to the BDTCP Transaction for the six months ended June 30, 2025 and 2024, respectively. The increase in Selling, general and administrative expenses is primarily due to investment in physical and digital product development, increased IT systems expense, acquisition of distributors and promotion, commission and bonus payments driven by financial performance.
Interest expense, net
Interest expense, net for the six months ended June 30, 2025 increased $25.9 million to $84.3 million from $58.4 million for the six months ended June 30, 2024. The increase in interest expense was primarily attributable to the higher debt balance following the August 2024 refinancing referenced elsewhere in this “Management’s Discussion and Analysis.” Other expenses, net
Other expenses, net for the six months ended June 30, 2025 was $20.9 million compared to income of $0.2 million for the six months ended June 30, 2024. Other expenses, net for the six months ended June 30, 2025 included $19.9 million foreign exchange losses on intercompany loans where the lender or borrower’s functional currency differs from the loan denomination currency and $1.1 million of debt issuance costs. Other expenses, net for the six months ended June 30, 2024 was comprised of $0.2 million foreign exchange gains on intercompany loans.
Provision for Income Taxes
The effective income tax rate was 23.6% for the six months ended June 30, 2025 as compared to 21.9% for the six months ended June 30, 2024. The effective tax rate for the six months ended June 30, 2025 was impacted by an increase in overall income with a change in the mix to higher tax countries.
For the Year Ended December 31, 2024 v. Year Ended December 31, 2023
The following table sets forth our results of operations for the periods indicated:
| | | | | | | | | | | |
| (in thousands) | December 31, 2024 | | December 31, 2023 |
| Net revenues: | | | |
| Equipment, service parts and other | $ | 1,459,746 | | | $ | 1,321,427 | |
| Equipment financing | 48,694 | | | 43,727 | |
| Net revenues | 1,508,440 | | | 1,365,154 | |
| Costs and expenses: | | | |
| Cost of sales | 914,655 | | | 858,286 | |
| Cost of sales - related parties | 6,218 | | | 4,466 | |
| Equipment financing expenses | 36,316 | | | 29,310 | |
| Gross profit | 551,251 | | | 473,092 | |
| | | |
| Selling, general, and administrative expenses | 266,444 | | | 237,108 | |
| Selling, general, and administrative expenses - related parties | 300 | | | 300 | |
| Other costs | 494 | | | — | |
| | | | | | | | | | | |
| (in thousands) | December 31, 2024 | | December 31, 2023 |
| Total operating expenses | 267,238 | | | 237,408 | |
| Operating income | 284,013 | | | 235,684 | |
| | | |
| Interest expense, net | 132,001 | | | 123,397 | |
Other expenses, net | 23,376 | | | 7,832 | |
| Other expenses, net - related parties | 5,187 | | | — | |
| Income before taxes | 123,449 | | | 104,455 | |
| Provision for income taxes | 25,130 | | | 16,226 | |
| Net income | $ | 98,319 | | | $ | 88,229 | |
Net Revenues
Net revenues for the year ended December 31, 2024 increased $143.3 million, or 10.5%, to $1,508.4 million from $1,365.2 million for the year ended December 31, 2023. Equipment revenue increased $119.6 million, or 10.5%, year over year, primarily driven by volume growth across our reportable segments and all three end markets and modest price increases. Service parts revenue increased year over year $15.4 million, or 10.9%, primarily driven by volume growth. Other revenues increased $3.3 million, or 8.5%, primarily due to increased field service revenue. Equipment financing revenue increased $5.0 million, or 11.4%, driven by increasing interest income as floating loan rates increased alongside the prime rate and also the growth of the loan base.
Net revenues increased $112.4 million in North America, mainly driven by strong demand across all end markets, with particularly strong performance in the Vended, an increase of 6.5%, and Commercial In-Home, an increase of 17%, end markets. International segment net revenues increased by $30.9 million due to strong performance in Europe, an increase of 17% and in Latin America, an increase of 23%, where the expanding Vended end markets are driving growth.
Gross profit
Gross profit for the year ended December 31, 2024 increased $78.2 million, or 16.5%, to $551.3 million from $473.1 million for the year ended December 31, 2023. Gross profit as a percentage of net revenues was 36.5% for the year ended December 31, 2024 as compared to 34.7% for the year ended December 31, 2023. The increase in gross profit as a percentage of revenue was primarily driven by our continued focus on manufacturing and procurement excellence where cost down initiatives delivered approximately $17 million in savings, the benefits of higher production volumes and benefit from modest price increases.
Selling, general, and administrative expenses (“SG&A”)
Selling, general, and administrative expenses for the year ended December 31, 2024 increased $29.3 million, to $266.7 million from $237.4 million for the year ended December 31, 2023. Selling, general, and administrative expenses as a percentage of net revenues was 17.7% for the year ended December 31, 2024 as compared to 17.4% for the year ended December 31, 2023. Included within Selling, general, and administrative expenses is $44.6 million and $44.7 million related to non-cash depreciation and amortization of assets, which represents the portion of assets that had increases to their historical basis as a result of purchase accounting related to the BDTCP Transaction for the year ended December 31, 2024 and 2023, respectively. The increase in Selling, general and administrative expenses is primarily due to investment in physical and digital product development, increased IT systems expense, acquisition of distributors and promotion, commission and bonus payments driven by financial performance.
Interest expense, net
Interest expense, net for the year ended December 31, 2024 increased $8.6 million to $132.0 million from $123.4 million for the year ended December 31, 2023. The increase in interest expense was primarily attributable to
Other expenses, net
Other expenses, net for the year ended December 31, 2024 was $28.6 million compared to $7.8 million for the year ended December 31, 2023. Other expenses, net for the year ended December 31, 2024 were comprised of $33.2 million associated with the entry into the Credit Agreement and $4.7 million foreign exchange gains on intercompany loans where the lender or borrower’s functional currency differs from the loan denomination currency. Other expenses, net for the year ended December 31, 2023, was comprised of a $7.0 million pension settlement loss related to the termination of the pension plan, $0.5 million foreign exchange losses on intercompany loans and $0.3 million of nonservice components of net periodic pension expense.
Provision for Income Taxes
The effective income tax rate was 20.4% for the year ended December 31, 2024 as compared to 15.5% for the year ended December 31, 2023. The effective tax rate for the year ended December 31, 2023 was impacted by a tax benefit resulting from reversal of valuation allowances in Brazil and U.S. state tax rate reductions.
For the Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
The following table sets forth our results of operations for the periods indicated:
| | | | | | | | | | | |
| (in thousands) | December 31, 2023 | | December 31, 2022 |
| Net revenues: | | | |
| Equipment, service parts and other | $ | 1,321,427 | | | $ | 1,345,924 | |
| Equipment financing | 43,727 | | | 30,353 | |
| Net revenues | 1,365,154 | | | 1,376,277 | |
| Costs and expenses: | | | |
| Cost of sales | 858,286 | | | 939,980 | |
| Cost of sales - related parties | 4,466 | | | — | |
| Equipment financing expenses | 29,310 | | | 16,892 | |
| Gross profit | 473,092 | | | 419,405 | |
| | | |
| Selling, general, and administrative expenses | 237,108 | | | 225,540 | |
| Selling, general, and administrative expenses - related parties | 300 | | | 275 | |
| Other costs | — | | | 13,426 | |
| Total operating expenses | 237,408 | | | 239,241 | |
| Operating income | 235,684 | | | 180,164 | |
| | | |
| Interest expense, net | 123,397 | | | 58,099 | |
| Other expenses, net | 7,832 | | | 6,041 | |
| Other expenses, net - related parties | — | | | — | |
| Income before taxes | 104,455 | | | 116,024 | |
| Provision for income taxes | 16,226 | | | 16,374 | |
| Net income | $ | 88,229 | | | $ | 99,650 | |
Net Revenues
Net revenues for the year ended December 31, 2023 decreased $11.1 million, or 0.8%, to $1,365.2 million from $1,376.3 million for the year ended December 31, 2022. Equipment revenue decreased $28.7 million, or 2.5%, year
over year, primarily driven by a decrease in volume across both segments, with the impact of reduced volumes stemming from our strategic decisions to prioritize margin improvement through an increased focus on product and customer profitability negatively impacting revenue by approximately $44 million, partially offset by modest price increases. Service parts revenue remained relatively flat, having increased $0.4 million, or 0.3%, year over year. Other revenues increased $3.8 million, or 11.1%, which was primarily due to increased field service revenue, partially offset by a $3.2 million decrease in scrap steel revenue. Equipment financing revenue increased $13.4 million, or 44.1%, driven by increased interest income as floating loan rates increased alongside the prime rate and also the growth of the loan base.
Net revenues increased $1.5 million in North America due to growth in our Commercial In-Home end market, an increase of 2%, and an increase in equipment financing revenue driven by increased interest income as floating loan rates increased alongside the prime rate and the growth of the loan base. This was offset by reduced volumes stemming from our strategic decision to prioritize margin improvement through an increased focus on product and customer profitability, which reduced net revenues by approximately $12 million.
Revenues decreased $12.6 million in International partially driven by strategic decisions in Europe and Asia Pacific to eliminate sales to customers with lower margins, which reduced net revenues by approximately $33 million. This was partially offset by increased revenue in Latin America and Asia Pacific due to strong demand from Vended end markets.
Gross profit
Gross profit for the year ended December 31, 2023 increased $53.7 million, or 12.8%, to $473.1 million from $419.4 million for the year ended December 31, 2022. Gross profit as a percentage of net revenues was 34.7% for the year ended December 31, 2023 as compared to 30.5% for the year ended December 31, 2022. Globally, the increase in gross profit as a percentage of revenue was primarily driven by our continued focus on manufacturing and procurement excellence where cost down initiatives delivered approximately $16 million in savings. Additionally, strategic pricing actions and underperforming product rationalization improved margin year over year.
Selling, general, and administrative expenses
Selling, general, and administrative expenses for the year ended December 31, 2023 increased $11.6 million to $237.4 million from $225.8 million for the year ended December 31, 2022. Selling, general, and administrative expenses as a percentage of net revenues was 17.4% for the year ended December 31, 2023 as compared to 16.4% for the year ended December 31, 2022. Included within Selling, general, and administrative expenses is $44.7 million and $44.5 million related to non-cash depreciation and amortization of assets, which represents the portion of assets that had increases to their historical basis as a result of purchase accounting related to the BDTCP Transaction for the years ended December 31, 2023 and 2022, respectively. The increase in Selling, general and administrative expenses is primarily due to an increase in employee related expenditures and the acquisition of distributors in the United States.
Other costs
There were no Other costs for the year ended December 31, 2023. Other costs recorded for the year ended December 31, 2022 included $12.6 million in non-cash asset impairments, primarily related to impairment of the UniMac trademark.
Interest expense, net
Interest expense, net for the year ended December 31, 2023 increased $65.3 million to $123.4 million from $58.1 million for the year ended December 31, 2022. The increase in interest expense was primarily attributable to the impact of the mark-to-market fair value adjustments of the Company’s interest rate swaps, which resulted in interest income of $31.6 million for the year ended December 31, 2022 and interest expense of $6.4 million for the year ended December 31, 2023. Additionally, there was a $27.9 million increase in term loan interest due to higher interest rates in 2023.
Other expenses, net
Other expenses, net for the year ended December 31, 2023, was $7.8 million compared to $6.0 million for the year ended December 31, 2022. Other expenses, net for the year ended December 31, 2023, was comprised of a $7.0 million pension settlement loss related to the termination of the pension plan, which was finalized in 2023, $0.5 million foreign exchange losses on intercompany loans where the lender or borrower’s functional currency differs from the loan denomination currency and $0.3 million of nonservice components of net periodic pension expense. Other expenses, net recorded for the year ended December 31, 2022 was comprised of $4.6 million pension settlement loss related to the termination of the pension plan, $1.9 million foreign exchange losses on intercompany loans where the lender or borrower’s functional currency differs from the loan denomination currency and $0.2 million of debt issuance costs, which was partially offset by $0.7 million of non-service components of net periodic pension benefit.
Provision for Income Taxes
The effective income tax rate was 15.5% for the year ended December 31, 2023 as compared to 14.1% for the year ended December 31, 2022. The effective tax rate for the year ended December 31, 2023 was impacted by a tax benefit resulting from reversal of valuation allowances in Brazil and U.S. state tax rate reductions. The effective tax rate for the year ended December 31, 2022 was impacted by a tax benefit resulting from share-based compensation from stock options exercised during the year.
Segment Results
Our business is organized into two reportable segments, North America and International.
The Company uses Segment Net revenues, Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin as its measures of performance. The Company allocates certain costs including manufacturing variances, customer support expenses and selling and general expenses which are incurred in our global operations to the reportable segments in determining Segment Adjusted EBITDA.
The segment measurements provided to, and evaluated by, the Chief Operating Decision Maker (“CODM”) are described in Note 23 “Segment Information” to our audited consolidated financial statements included elsewhere in this prospectus.
The following table presents the Company’s segment results.
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| Six Months Ended June 30, | | Year Ended December 31, |
| (in thousands, except for percentages) | 2025 | | 2024 | | 2024 | | 2023 | | 2022 |
| North America | | | | | | | | | |
Net revenues | $ | 621,414 | | $ | 529,836 | | $ | 1,109,134 | | $ | 996,762 | | $ | 995,294 |
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Adjusted EBITDA | 177,578 | | 156,297 | | 317,779 | | 265,391 | | 227,693 |
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Adjusted EBITDA Margin | 28.6 | % | | 29.5 | % | | 28.7 | % | | 26.6 | % | | 22.9 | % |
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| International | | | | | | | | | |
Net revenues | $ | 215,343 | | $ | 199,173 | | $ | 399,306 | | $ | 368,392 | | $ | 380,983 |
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Adjusted EBITDA | 65,694 | | 56,321 | | 103,148 | | 94,402 | | 82,793 |
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Adjusted EBITDA Margin | 30.5 | % | | 28.3 | % | | 25.8 | % | | 25.6 | % | | 21.7 | % |
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For the Six Months Ended June 30, 2025 and 2024
North America
Revenue in North America increased $91.6 million or 17.3% to $621.4 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Equipment revenue increased $84.3 million, or
19.6%, mainly driven by strong demand across all end markets, with particularly strong performance in the Vended (an increase of 7.2%) and Commercial In-Home (an increase of 41.8%) end markets. Service parts revenue increased $5.8 million, or 10.2%, primarily driven by volume growth and modest price increases. Other revenues increased $1.4 million, or 7.8%, primarily due to field service revenues. Equipment financing revenue remained relatively flat, having increased $0.1 million, or 0.23%.
Adjusted EBITDA increased $21.3 million or 13.6% to $177.6 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 and Adjusted EBITDA Margin decreased to 28.6% for the six months ended June 30, 2025 from 29.5% for the six months ended June 30, 2024. This decrease was primarily driven by continued investment in product development.
International
Revenue increased $16.2 million or 8.1% to $215.3 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Equipment revenue increased $15.1 million, or 8.7%, primarily due to strong performance in Europe (an increase of 16.9%) and in Asia Pacific (an increase of 14.6%) where the expanding Vended end markets are driving growth. Service parts revenue increased $1.3 million, or 5.9%, primarily driven by volume growth.
Adjusted EBITDA increased $9.4 million or 16.6% to $65.7 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024 and Adjusted EBITDA Margin increased to 30.5% for the six months ended June 30, 2025 from 28.3% for the six months ended June 30, 2024. This was primarily driven by gross margin expansion due to additional volumes.
For the Year ended December 31, 2024 v. December 31, 2023
North America
Revenue in North America increased $112.4 million or 11.3% to $1,109.1 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. Equipment revenue increased $91.4 million, or 11.1%, year over year, mainly driven by strong demand across all end markets, with particularly strong performance in the Vended (an increase of 6.5%) and Commercial In-Home (an increase of 17%) end markets. Service parts revenue increased year over year $12.8 million, or 12.6%, primarily driven by volume growth. Other revenues increased $3.0 million, or 9.1%, primarily due to field service revenues. Equipment financing revenue increased $5.2 million, or 12.2%, driven by increasing interest income as floating loan rates increased alongside the prime rate and also the growth of the loan base.
Adjusted EBITDA increased $52.4 million or 19.7% to $317.8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 and Adjusted EBITDA Margin increased to 28.7% for the year ended December 31, 2024 from 26.6% for the year ended December 31, 2023. This increase was primarily driven by increased revenue alongside the benefits of cost down initiatives.
International
Revenue increased $30.9 million or 8.4% to $399.3 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. Equipment revenue increased $28.3 million, or 8.8%, year over year, primarily due to strong performance in Europe (an increase of 17.1%) and in the Middle East and Africa (an increase of 22.6%) where the expanding Vended end markets are driving growth. Service parts revenue increased year over year $2.6 million, or 6.7%, primarily driven by volume growth.
Adjusted EBITDA increased $8.7 million or 9.3% to $103.1 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 and Adjusted EBITDA Margin increased to 25.8% for the year ended December 31, 2024 from 25.6% for the year ended December 31, 2023. This was primarily driven by increases in revenue.
For the Year ended December 31, 2023 v. December 31, 2022
North America
Revenue in North America increased $1.5 million, or 0.1%, to $996.8 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. Equipment revenue decreased $15.3 million, or 1.8%, year over year, primarily due to reduced volumes stemming from our strategic decision to prioritize margin improvement through an increased focus on product and customer profitability, which reduced net revenues by approximately $12 million. This was partially offset by growth in our Commercial In-Home end market (an increase of 2%). Service parts revenue remained relatively flat, having decreased $0.7 million, or 0.7%, year over year. Other revenues increased $4.0 million, or 13.9%. Equipment financing revenue increased $13.6 million, or 46.2%, driven by increased interest income as floating loan rates increased alongside the prime rate and also the growth of the loan base.
Adjusted EBITDA increased $37.7 million, or 16.6%, to $265.4 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 and Adjusted EBITDA Margin increased to 26.6% for the year ended December 31, 2023 from 22.9% for the year ended December 31, 2022. This increase in profit and margin was primarily driven by delivery of cost down initiatives in manufacturing and procurement and the impact of customer and product rationalization and pricing strategies on improved profit margin.
International
Revenue decreased $12.6 million, or 3.3%, to $368.4 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. Equipment revenue decreased $13.4 million, or 4.0%, year over year, primarily driven by strategic decisions in Europe and Asia Pacific to eliminate sales to customers with lower margins, which reduced net revenues by approximately $33 million. This was partially offset by increased revenue in Latin America and Asia Pacific due to strong demand from Vended end markets. Service parts revenue increased year over year $1.1 million, or 3.0%, primarily driven by volume growth.
Adjusted EBITDA increased $11.6 million or 14.0% to $94.4 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 and Adjusted EBITDA Margin increased to 25.6% for the year ended December 31, 2023 from 21.7% for the year ended December 31, 2023. This was primarily driven by the decision to eliminate sales to customers with lower margins, as well as favorability from product mix changes resulting from product rationalization initiatives.
Liquidity and Capital Resources
Overview
Our principal sources of liquidity are cash on hand, cash flows generated from operations, and potential borrowings under our revolving credit facilities. We believe that our sources of liquidity will be adequate to meet our anticipated requirements for ongoing operations, capital expenditures, working capital, interest payments, scheduled principal payments, and other debt repayments over the next twelve months while remaining in compliance with the covenants of our debt agreements. As of June 30, 2025, we had unrestricted cash and cash equivalents of $222.6 million. As of December 31, 2024 and 2023, we had unrestricted cash and cash equivalents of $154.7 million and $182.4 million, respectively. As of June 30, 2025, our total long-term debt, net was $2,035.7 million, and our total asset backed borrowings was $583.3 million. As of December 31, 2024 and 2023, our total long-term debt, net was $2,034.5 million and $1,237.6 million, respectively, and our total asset backed borrowings was $553.8 million and $515.2 million, respectively. See “Description of Certain Indebtedness—Credit Agreement” for more information and for any definitions not included in this “—Liquidity and Capital Resources.” We are a holding company that transacts substantially all of our business through our operating subsidiaries. Consequently, our ability to pay dividends to stockholders, meet debt payment obligations, and pay taxes and operating expenses is largely dependent on dividends or other distributions from our subsidiaries, whose ability to pay such distributions to us is restricted, subject to certain exceptions, pursuant to the terms of the Credit Agreement. See “Description of Certain Indebtedness—Credit Agreement ” for a description of the covenants
contained in the Credit Agreement that may restrict our operating subsidiaries from issuing dividends and other distributions to us. In addition, see “Dividend Policy” and “Risk Factors—We currently do not intend to declare dividends on our common stock in the foreseeable future and, as a result, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.” Our principal liquidity needs have been, and we expect them to continue to be, working capital and general corporate needs, debt service, capital expenditures and potential acquisitions. Our capital expenditures were $16.6 million and $10.4 million for the periods ended June 30, 2025 and 2024, respectively. Our capital expenditures were $43.5 million, $32.7 million and $25.4 million for the years ended December 31, 2024, 2023 and 2022, respectively. We expect that capital expenditures in 2025 will be approximately $47.0 million.
On August 19, 2024, one of the Company’s subsidiaries entered into the Credit Agreement. The Credit Agreement provides for a Term Facility in an aggregate principal amount of $2,075.0 million, a Primary Revolving Facility with aggregate commitments of $225.0 million, and a Thai Baht Revolving Facility with aggregate commitments of $25.0 million. In connection with the execution of the Credit Agreement, the Company incurred fees of $32.8 million, of which $30.4 million was expensed immediately and the remaining $2.4 million was capitalized. In addition, the Company recorded $10.4 million of original issuance discount related to the Credit Agreement. Additionally, the Company wrote off a portion of the unamortized debt issuance costs and original issuance discounts related to the prior credit agreement, resulting in expense of $2.8 million.
At December 31, 2024, borrowings under (i) the Term Facility bore interest at a rate per annum equal to, at the applicable Borrower’s option, Term SOFR plus 3.50% or the applicable base rate plus 2.50%, (ii) the Revolving Facilities denominated in U.S. dollars bore interest at a rate per annum equal to, at the applicable Borrower’s option, Term SOFR plus 3.25% or the applicable base rate plus 2.25% and (iii) the Revolving Facilities denominated in Euros or Thai baht bore interest at a rate per annum equal to Adjusted EURIBOR or the Daily Simple RFR, respectively, plus, in each case, 3.25%.
At June 30, 2025, borrowings under (i) the Term Facility bore interest at a rate per annum equal to, at the applicable Borrower’s option, Term SOFR plus 2.50% or the applicable base rate plus 1.50%, (ii) the Revolving Facilities denominated in U.S. dollars bore interest at a rate per annum equal to, at the applicable Borrower’s option, Term SOFR plus 2.25% or the applicable base rate plus 1.25% and (iii) the Revolving Facilities denominated in Euros or Thai baht bore interest at a rate per annum equal to Adjusted EURIBOR or the Daily Simple RFR, respectively, plus, in each case, 2.25%. The foregoing interest rate margins were subject to a step up of 0.25% in the event we failed to maintain a First Lien Net Leverage Ratio equal to or less than 4.50 to 1.00.
After giving effect to the August Repricing Amendments, borrowings under (i) the Term Facility bear interest at a rate per annum equal to, at the applicable Borrower’s option, Term SOFR plus 2.25% or the applicable base rate plus 1.25%, (ii) the Revolving Facilities denominated in U.S. dollars bear interest at a rate per annum equal to, at the applicable Borrower’s option, Term SOFR plus 2.25% or the applicable base rate plus 1.25%, and (iii) the Revolving Facilities denominated in Euros or Thai baht bear interest at a rate per annum equal to Adjusted EURIBOR or the Daily Simple RFR, respectively, plus, in each case, 2.25%. Following delivery of our first audited annual or unaudited quarterly financial statements and a related compliance certificate after the effectiveness of the August Repricing Amendments (which is anticipated to be in respect of the quarter ended September 30, 2025), the foregoing interest rate margins will be subject to a step down of 0.25% in the event (i) the credit ratings for the applicable class of loans by Moody’s Investor Services, Inc. and Standard & Poor’s Ratings Group, Inc. are B1 (stable) and B+ (stable), respectively, or higher and (ii) we achieve a First Lien Net Leverage Ratio equal to or less than 3.50 to 1.00.
In addition, the U.S. Borrower is required to pay a commitment fee equal to 0.250% per annum on any unused commitments under the Revolving Facilities, subject to a step up to 0.375% in the event we fail to maintain a First Lien Net Leverage Ratio equal to or less than 4.50 to 1.00.
The Company maintains a trade receivables securitization facility. ALTR LLC, a special-purpose bankruptcy remote subsidiary of the Company, is party to a $120.0 million revolving credit facility (which represents an increase of $20.0 million from the $100.0 million facility size as of December 31, 2024, effected by an amendment
entered into on May 1, 2025), which is secured by the Asset Backed Trade Receivables Facility. The Asset Backed Trade Receivables Facility is due to expire on May 1, 2028. ALTR LLC finances the acquisition of trade receivables from Alliance Laundry Systems through borrowings under the Asset Backed Trade Receivables Facility in the form of funding notes which are limited to an advance rate of approximately 88% as of June 30, 2025.
The Company also maintains an internal financing organization primarily to assist end-user laundromat locations in financing company-branded equipment through the Company’s distributors. The financing organization originates and administers the sale of equipment financing receivables. Under this program, the Company sells certain equipment financing receivables to a special-purpose bankruptcy remote subsidiary, which in turn transfers them to a trust. The special-purpose subsidiary and trust are party to a $500.0 million revolving credit facility (which represents an increase of $40.0 million from the $460.0 million facility size as of December 31, 2024, effected by an amendment entered into on May 1, 2025), which is secured by the Asset Backed Equipment Facility. The Asset Backed Equipment Facility is due to expire on May 1, 2028. The trust finances the acquisition of equipment financing receivables through borrowings under the Asset Backed Equipment Facility in the form of funding notes which are limited to an advance rate of approximately 88%.
In August 2024, following the execution of the Credit Agreement, we paid a $900.0 million dividend to common stockholders. This outflow represented a substantial increase in common stock related activity compared to prior years and had a material impact on our liquidity position. In 2023, we repurchased $19.0 million of shares of common stock from former employees, while in 2022, we repurchased $66.5 million of shares of common stock from former employees and paid $12.2 million in taxes related to the net share settlement of stock options exercised in exchange for shares of common stock. Although these distributions are not recurring operational expenditures, they meaningfully affected our cash flows and overall liquidity in each respective period.
We anticipate that any additional liquidity needs will be funded through the proceeds from this offering and, if needed, the future incurrence of additional indebtedness, or the issuance of additional equity, or a combination thereof. We cannot assure you that we will be able to obtain this additional liquidity on reasonable terms, or at all. Additionally, our liquidity and our ability to meet our obligations and fund our capital requirements are also dependent on our future financial performance, which is subject to general economic, financial, and other factors that are beyond our control. See “Risk Factors.” Cash Flows Information
The following table presents a summary of cash flows for the periods presented:
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| Six Months ended June 30, | | Year Ended December 31, |
| (in thousands) | 2025 | | 2024 | | 2024 | | 2023 | | 2022 |
| Net cash provided by operating activities | $ | 50,697 | | | $ | 36,634 | | | $ | 145,460 | | | $ | 208,716 | | | $ | 105,056 | |
| Net cash used in investing activities | $ | (24,111) | | | $ | (17,695) | | | $ | (87,760) | | | (52,001) | | | (4,357) | |
Net cash provided by/ (used in) financing activities | $ | 25,234 | | | $ | (99,841) | | | $ | (75,374) | | | (91,857) | | | (75,727) | |
| Effect of exchange rate changes on cash and cash | $ | 1,595 | | | $ | (4,092) | | | $ | (4,253) | | | (804) | | | (778) | |
| Increase/(decrease) in cash, cash equivalents, and restricted cash | $ | 53,415 | | | $ | (84,994) | | | $ | (21,927) | | | $ | 64,054 | | | $ | 24,194 | |
Operating Activities
Cash provided by operating activities in the six months ended June 30, 2025 of $50.7 million was primarily derived from net income adjusted for non-cash provisions partially offset by a $67.4 million increase in working capital. The primary contributors to the change in working capital were a $45.7 million increase in accounts and equipment financing receivables held for securitization investors, a decrease in other liabilities of $15.8 million, a $13.9 million increase in inventory, an increase in accounts receivable and equipment financing receivables of $11.4
million, and an increase of $4.2 million in other assets, partially offset by an increase of $23.5 million in accounts payable.
Cash provided by operating activities in the six months ended June 30, 2024 of $36.6 million was primarily derived from net income adjusted for non-cash provisions partially offset by a $79.3 million increase in working capital. The primary contributors to the change in working capital were a $36.3 million increase in accounts and equipment financing receivables held for securitization investors, a $11.0 million increase in inventory, an increase in accounts receivable and equipment financing receivables of $10.8 million, a decrease in other liabilities of $10.1 million, a decrease of $7.5 million in accounts payable, and an increase of $3.6 million in other assets.
Cash provided by operating activities during 2024 of $145.5 million was primarily derived from net income adjusted for non-cash provisions and a $25.7 million increase in working capital. The primary contributors to the change in working capital were a $26.0 million increase in accounts and equipment financing receivables held for securitization investors and a decrease in other liabilities of $12.1 million, partially offset by a decrease in inventory of $5.8 million, a $5.6 million increase in accounts payable, a decrease in accounts receivable and equipment financing receivables of $0.6 million and a $0.4 million decrease in other assets.
Cash provided by operating activities during 2023 of $208.7 million was primarily derived from net income adjusted for non-cash provisions and a $37.0 million decrease in working capital. The primary contributors to the change in working capital were a decrease in inventory of $29.4 million, a decrease in accounts and equipment financing receivables of $19.6 million, an increase in other liabilities of $23.5 million and a $2.4 million decrease in other assets, partially offset by a $27.1 million increase in accounts and equipment financing receivables held for securitization investors and a $10.9 million decrease in accounts payable.
Cash provided by operating activities during 2022 of $105.1 million was primarily derived from net income adjusted for non-cash provisions, offset by a $63.9 million increase in working capital. The primary contributors to the change in working capital were a $20.3 million increase in accounts and equipment financing receivables held for securitization investors, an increase in inventory of $20.0 million, an increase in accounts and equipment financing receivables of $14.7 million, a $12.1 million decrease in accounts payable, and a decrease in other liabilities of $2.1 million, partially offset a $5.4 million decrease in other assets.
Investing Activities
Cash used in investing activities of $24.1 million for the six months ended June 30, 2025 was primarily the result of $16.6 million of capital expenditures and $3.1 million related to the acquisitions of distributors in the United States.
Cash used in investing activities of $17.7 million for the six months ended June 30, 2024 was primarily the result of $10.4 million related to capital expenditures and $1.7 million related to acquisitions of distributors in the United States.
Cash used by investing activities of $87.8 million for the year ended December 31, 2024 was primarily the result of $43.5 million of capital expenditures primarily related to new and replacement manufacturing equipment, $27.9 million related to the acquisitions of distributors in the United States, and $18.8 million net outflow related to originations of new equipment financing receivables exceeding collections.
Cash used by investing activities of $52.0 million for the year ended December 31, 2023 was primarily the result of $32.7 million of capital expenditures primarily related to new and replacement manufacturing equipment, $15.1 million related to the acquisitions of distributors in the United States and $4.3 million net outflow related to originations of new equipment financing receivables exceeding collections.
Cash used by investing activities of $4.4 million for the year ended December 31, 2022 was primarily the result of $25.4 million of capital expenditures primarily related to new and replacement manufacturing equipment and $8.6 million related to the acquisitions of distributors in the United States.This use of cash was partially offset by $29.0 million net inflow related to collections on equipment financing receivables exceeding originations.
Financing Activities
Cash provided by financing activities of $25.2 million for the six months ended June 30, 2025 was primarily comprised of a $29.5 million net increase in asset backed borrowings owed to securitization investors, partially offset by $2.3 million for the repurchase of shares of common stock.
Cash used in financing activities of $99.8 million for the six months ended June 30, 2024 was primarily comprised of $107.0 million in payments on long-term borrowings, partially offset by $13.8 million related to an increase in asset backed borrowings owed to securitization investors.
Cash used by financing activities of $75.4 million for the year ended December 31, 2024 was primarily the result of $1,268.0 million in payments on long-term borrowings, in addition to $900.0 million for dividends to common stockholders, and $5.7 million net payments on revolving line of credit borrowings. This use of cash was funded by $2,064.6 million in proceeds from long-term borrowings and $38.5 million related to a net increase in asset backed borrowings owed to securitization investors.
Cash used by financing activities of $91.9 million for the year ended December 31, 2023 was primarily the result of $90.5 million net payments on long-term borrowings, which included $75.0 million voluntary prepayments on our term loan, and $19.0 million for the repurchase of shares of common stock from former employees. This use of cash was partially offset by $20.6 million related to a net increase in asset backed borrowings owed to securitization investors.
Cash used by financing activities of $75.7 million for the year ended December 31, 2022 was primarily the result of $66.5 million for the repurchase of shares of common stock from former employees, $13.9 million net payments on long-term borrowings, $12.2 million for taxes paid related to net share settlement of stock option exercises and $7.0 million net payments on revolving line of credit borrowings. This use of cash was partially offset by $24.3 million related to a net increase in asset backed borrowings owed to securitization investors.
Contractual Obligations and Commercial Commitments
A summary of our contractual commitments as of December 31, 2024, and the effect such obligations are expected to have on liquidity and cash flow in future periods appears below.
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| Payments due by period |
| (in thousands) | Total | | Less than 1 year | | 2-3 years | | 4-5 years | | More than 5 years |
Debt and finance lease obligations (1) | $ | 2,075,359 | | | $ | 20,896 | | | $ | 41,676 | | | $ | 41,537 | | | $ | 1,971,250 | |
Projected interest on long-term debt (2) | 931,419 | | | 156,098 | | | 309,245 | | | 312,343 | | | 153,733 | |
| Asset backed borrowings - owed to securitization investors | 553,772 | | | 170,862 | | | 141,356 | | | 116,171 | | | 125,383 | |
Projected interest on asset backed borrowings (3) | 82,534 | | | 21,798 | | | 43,671 | | | 12,571 | | | 4,494 | |
| Operating leases | 20,397 | | | 6,463 | | | 8,678 | | | 3,543 | | | 1,713 | |
Purchase commitments (4) | 451,736 | | | 211,600 | | | 236,120 | | | 4,016 | | | — | |
| | | | | | | | | |
| Total contractual cash obligations | $ | 4,115,216 | | | $ | 587,717 | | | $ | 780,745 | | | $ | 490,181 | | | $ | 2,256,572 | |
__________________
(1)Debt includes the $2,075.0 million Term Facility and $0.4 million related to finance leases.
(2)$2,075.0 million of our outstanding debt at December 31, 2024 is subject to floating interest rates. Interest payments are projected based on rates in effect on December 31, 2024 assuming no variable rate fluctuations going forward including the impact of $600.0 million in interest rate swaps. Further, we have assumed that debt payments would be made on schedule, with no prepayments, for purposes of projecting interest on long-term debt.
(3)Asset backed borrowings - owed to securitization investors at December 31, 2024 totaled $553.8 million. Future payments on our securitization facilities are estimated based on the projected timing of payments on the underlying assets related to the sale of accounts receivable and equipment financing receivables. Projected interest was calculated based on forward Secured Overnight Financing Rate (“SOFR”), plus applicable spread, as of December 31, 2024.
(4)Purchase commitments are based on our estimate of the liability we expect to incur under open and blanket purchase orders for inventory related items.
Off–Balance Sheet Arrangements
As of December 31, 2024, we did not have any off-balance sheet arrangements, as defined in Regulation S-K promulgated by the SEC.
Critical Accounting Policies and Use of Estimates
The preparation of financial statements in conformity with United States generally accepted accounting principles (“GAAP”) requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date and reported amounts of revenues and expenses, including amounts that are susceptible to change. Our critical accounting estimates include accounting methods and estimates underlying such financial statement preparation, as well as judgments around uncertainties affecting the application of those policies. In applying critical accounting estimates, materially different amounts or results could be reported under different conditions or using different assumptions. When required, management considers the perspective of market participants in accordance with current accounting guidance. See Note 2, “Significant Accounting Policies” to our consolidated financial statements included elsewhere in this prospectus for a summary of our significant accounting policies. Goodwill and Indefinite-Lived Intangible Assets. Goodwill is tested for impairment at least annually and more frequently if an event occurs which indicates that goodwill may be impaired. ASU No. 2017-04 Intangibles-Goodwill and Other (“Topic 350”): Simplifying the Test for Goodwill allows companies to apply a one-step quantitative test and, as applicable, record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The estimated fair value is determined on an income-based approach. Under the income-based approach, fair value is estimated using the expected present value of future cash flows. There was no goodwill impairment for the years ended December 31, 2024, 2023 and 2022.
Several of the Company’s tradenames and trademarks have been deemed to have an indefinite life as the Company expects to continue to use these assets for the foreseeable future. There are no limitations of a legal, regulatory or contractual nature that limit the period of time for which the Company can use these assets. The Company has the right to continue to use these assets and can continue to do so with limited cost to the Company. The effects of obsolescence, demand, competition and other economic factors are not expected to impact the indefinite life assumptions. Intangible assets not subject to amortization (indefinite-lived intangible assets) are tested for impairment at least annually and more frequently if an event occurs which indicates the intangible asset may be impaired. The impairment test consists of a comparison of the fair value of the intangible asset with its carrying amount. An impairment loss is recognized if the carrying amount of an intangible asset exceeds its fair value in an amount equal to that excess, but not to exceed the carrying amount of the intangible asset. The fair value of the tradenames and trademarks is determined using the relief-from-royalty method. There was no impairment of our indefinite-lived assets for the years ended December 31, 2024 or 2023. For the year ended December 31, 2022, the Company recorded an impairment charge of $12.0 million related to the indefinite-lived UniMac trademark.
Income Taxes. The income tax provision is computed based on the pretax income included in the Company’s consolidated statements of comprehensive income. Certain items of income and expense are not recognized on the Company’s income tax returns and financial statements in the same year, which creates timing differences or are permanently disallowed. The income tax effect of these timing differences results in (i) deferred income tax assets that create a reduction in future income taxes and (ii) deferred income tax liabilities that create an increase in future income taxes. Recognition of deferred income tax assets is based on management’s belief that it is more likely than not that the income tax benefit associated with temporary differences will be realized. The Company records a valuation allowance to reduce its net deferred income tax assets if, based on its assessment of future taxable income, it is more likely than not that it will not be able to use these tax benefits. The Company may have to adjust the valuation allowance if its estimate of future taxable income changes at any time. Recording such an adjustment could have a material adverse effect on the Company’s consolidated statements of comprehensive income.
Product Warranty Liabilities. The costs of warranty obligations are estimated and provided for at the time of sale. Standard product warranties vary from one to seven years. The standard warranty program includes
replacement of defective components. Additionally, the standard warranty covers labor costs for repairs solely related to Commercial In-Home equipment. The Company also sells separately priced extended warranties associated with its commercial products. The Company recognizes extended warranty revenues over the period covered by the warranty.
Allowance for Credit Losses – Equipment Financing Receivables. The allowance for credit losses is an estimate of losses inherent to our equipment financing receivables portfolio. Our estimate includes accounts that have been individually identified as impaired and estimated credit losses over a pool of receivables where it is probable that certain receivables in the pool are impaired but that the individual accounts cannot yet be identified. When determining estimates of probable credit loss or whether an account is impaired, management takes into consideration numerous quantitative and qualitative factors such as historical loss experience, credit risk, portfolio duration, and economic conditions. The Company determined that there is a limited correlation between expected credit losses and forecasted economic conditions based on a correlation analysis performed to compare historical losses to various economic conditions, such as real gross domestic product, inflation rate and unemployment rate. On an ongoing basis, the Company monitors credit quality based on past-due status as there is a meaningful correlation between the past-due status of customers and the risk of credit loss.
We determine that an equipment financing receivable is impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan or lease. These equipment financing receivables are collateral-dependent and measurement of impairment is based upon the estimated fair value of collateral. The determination of the allowance for credit losses is based on an analysis of historical loss experience and reflects an amount which, in our judgment, is adequate to provide for probable credit losses. When a financing receivable is non-performing, aged greater than 89 days and the Company has exhausted all efforts of collection, the receivable is deemed to be uncollectible and is charged off and deducted from the allowance.The allowance is increased for recoveries and by charges to earnings.
The total allowance for credit losses as of December 31, 2024 and 2023 was $5.9 million and $2.5 million, respectively. The reserve as a percentage of the total gross portfolio balance as of December 31, 2024 and 2023 was 1.1% and 0.5%, respectively.
Recent Accounting Pronouncements
For a discussion of new accounting pronouncements recently adopted and not yet adopted, see the notes to our consolidated financial statements included elsewhere in this prospectus.
Quantitative and Qualitative Disclosures about Market Risk
Derivative instruments are accounted for at fair value. The accounting for changes in the fair value of a derivative depends on the intended use, designation and type of the derivative instrument. The Company does not designate any of its derivatives as hedges and, as such, records all changes in fair values as a component of earnings.
Using derivative instruments means assuming counterparty credit risk. Counterparty credit risk relates to the loss the Company could incur if a counterparty were to default on a derivative contract. The Company primarily deals with investment grade counterparties and monitors its overall credit risk and exposure to individual counterparties. The Company does not anticipate nonperformance by any counterparties. The amount of counterparty credit exposure is the unrealized gains, if any, on such derivative contracts. The Company does not require, nor does it post collateral, or security, on such contracts.
The Company is exposed to certain risks relating to its ongoing business operations. As a result, the Company enters into derivative transactions to manage these exposures. The primary risks managed through the use of derivative instruments are fluctuations in interest rates, foreign currency exchange rates and commodity prices. Fluctuations in these rates and prices can affect the Company’s operating results and financial condition. The Company manages the exposure to these market risks through operating and financing activities and through the use of derivative financial instruments. The Company does not enter derivative financial instruments for trading or speculative purposes.
Interest Rate Risk
Borrowings outstanding under the Term Facility totaled $2,075.0 million at December 31, 2024. Borrowings under the Term Facility bear interest, at the option of the applicable Borrower, at a rate equal to an applicable margin plus (a) the applicable base rate or (b) Term SOFR (both rates as determined in accordance with the Credit Agreement). As of December 31, 2024, the applicable margins for the Term Facility were 2.50% with respect to adjusted base rate loans and 3.50% with respect to Term SOFR loans. An assumed 10% increase/decrease in the current interest rate in effect at December 31, 2024 would increase/decrease annual interest expense $6.4 million on the non-hedged portion of the borrowing.
In February 2025, we finalized an amendment to our Term Facility, which reduced the interest rate to Term SOFR plus 2.75% or the applicable base rate plus 1.75% subject to a step down of 0.25% if the Company’s First Lien Net Leverage ratio is less than or equal to 4.50 to 1.00.
Effective September 3, 2024, the Company entered into a $600.0 million interest rate swap agreement to hedge a portion of our interest rate risk related to our long-term borrowings. Under the swap, which matures on September 1, 2027, the Company pays a fixed rate of 3.61% and receives or pays monthly interest payments based upon a comparison to the one-month Term SOFR rate.
Effective April 1, 2025, the Company entered into a $150.0 million interest rate swap agreement to hedge a portion of our interest rate risk related to our long-term borrowings. Under the swap, which matures on April 3, 2028, the Company pays a fixed rate of 3.36% and receives or pays monthly interest payments based upon a comparison to the one-month Term SOFR rate.
Foreign Currency Risk
The Company has manufacturing, sales, and distribution facilities in the Czech Republic, China and Thailand. The Company also has various sales and distribution facilities in Brazil, France, Spain, Italy, Germany and the United Arab Emirates. The Company also makes investments and enters into transactions denominated in foreign currencies. The vast majority of the Company’s international sales from its domestic operations are denominated in U.S. dollars. However, the Company is exposed to transactional and translational foreign exchange risk related to its foreign operations.
Regarding transactional foreign exchange risk, the Company from time to time enters into certain forward exchange contracts to reduce the variability of the earnings and cash flow impacts of foreign denominated receivables and payables. The Company does not designate these contracts as hedge transactions. Accordingly, the mark-to-market impact of these contracts is recorded each period to current earnings. At December 31, 2024, and 2023, the Company had no outstanding foreign currency contracts and $0.1 million notional value foreign currency contracts, respectively.
The Company’s primary translation exchange risk exposures at December 31, 2024 were the euro, Czech koruna, and Thai baht. Amounts invested in non-U.S. based subsidiaries are translated into U.S. dollars at the exchange rate in effect at period end. The resulting translation adjustments are recorded in accumulated other comprehensive (loss)/income as foreign currency translation adjustments.
Commodity Risk
The Company is subject to the effects of changing raw material and component costs caused by movements in underlying commodity prices. The Company purchases raw materials and components containing various commodities including nickel, zinc, aluminum and copper. The Company generally buys these raw materials and components based upon market prices that are established with the vendor as part of the procurement process.
From time to time, the Company enters into contracts with its vendors to lock in commodity prices for various periods to limit its near-term exposure to fluctuations in raw material and component prices. In addition, the Company enters into commodity forward contracts, for commodities such as nickel, copper and aluminum, to reduce the variability on its earnings and cash flows of purchasing raw materials containing such commodities. The
Company does not designate these contracts as hedge transactions. Accordingly, the mark-to-market impacts of these contracts are recorded each period to current earnings. At December 31, 2024, the Company was managing $1.7 million notional value of nickel forward contracts. At December 31, 2023, the Company was managing $0.2 million notional value of copper forward contracts and $1.0 million notional value of nickel forward contracts.
The Company presents its derivatives at gross fair values in the Company’s consolidated balance sheets and does not maintain derivative contracts which would require financial instrument or collateral balances.
Internal Control over Financial Reporting
In connection with the preparation of our consolidated financial statements, we identified a material weakness in our internal control over financial reporting. See “Risk Factors—We have identified a material weakness in our internal control over financial reporting. If our remediation efforts are not effective, or if we experience additional material weaknesses or otherwise fail to maintain an effective system of internal controls in the future, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock.” We are in the process of implementing measures designed to improve our internal control over financial reporting and remediate the material weakness. This includes formally documenting key controls, implementing enhanced management review and monitoring procedures over financially significant transactions and remediating and restricting system user access to key financial functions with a focus on appropriate segregation of duties. We have also established a SOX Steering Committee to oversee these remediation efforts and are conducting ongoing testing and monitoring to ensure the effectiveness of our internal controls.
BUSINESS
Our Company
Every Day is Laundry Day.
We are the world’s largest designer and manufacturer of commercial laundry systems, serving a diverse and resilient range of global end markets. We believe we engineer and produce the highest quality and one of the most reliable commercial laundry systems in the industry. We leverage our pure play focus on the commercial laundry industry and over 100 years of engineering excellence to drive innovation and design our equipment to deliver outstanding performance in the most demanding applications. We believe the need for clean laundry is universal and growing, and our premium machines meet this fundamental human need, all day, every day.
According to a third-party market study, the total addressable market for commercial, residential and industrial laundry systems was approximately $82 billion in 2023. Within this market, the commercial laundry systems industry generated nearly $7.4 billion in revenues during the same year. We are focused on this large and attractive commercial laundry market where our systems’ quality, durability and reliability are key strategic advantages with our channel partners, customers and end users. End users of our systems include healthcare facilities, fire stations, hotels, laundromats, communal laundry facilities and many other commercial applications where hygiene is critical. We believe the criticality of laundry equipment to these users’ operations creates a discerning customer base that appreciates the quality and economic attractiveness of highly effective and reliable equipment. We leverage our scale and focus to deliver a compelling total value proposition to this diverse customer base.
We estimate that we hold approximately 40% of the commercial laundry market in North America and have leading positions in growing markets around the world. The commercial laundry market benefits from a regular replacement cycle driven by a large base of installed machines, which provides us with an advantage as the largest incumbent manufacturer and offers us a high level of revenue consistency to support our growth ambitions. In addition, residential customers are increasingly demanding commercial-quality products for the home, and our machines represent a compelling fit for this select but growing segment of the residential market.
Commercial laundry customers view laundry systems as infrastructure to support core business operations or as revenue-generating assets. Avoidance of downtime and repair costs, as well as effective processing of large volumes of laundry, are important drivers of machine economics and help our end-customers run their businesses effectively.
As such, customers focus on total cost of ownership when making purchasing decisions, which often involve investments of hundreds of thousands of dollars.
Our systems are known for their use of high-quality materials in their construction, their build quality and the extensive testing regimen they undergo, resulting in best-in-class performance. Our culture of operational excellence and continuous improvement supports the maintenance of these exceptionally high-quality standards. As a result, we believe we offer an attractive total cost of ownership, and our customers purchase our machines because of their reliability, durability and effectiveness. This dynamic allows us to sell our products at a price premium versus
competitor offerings while securing a high degree of loyalty from our customers when they need to replace a machine.
We sell our systems through an extensive global network of approximately 600 distributors and through direct sales channels in certain key markets. Distributors are a critical part of the commercial laundry market as they are frequently the first point of contact for end-customers and are highly influential in educating those customers about equipment features and highlighting the key factors in making a purchasing decision. We have valuable and difficult-to-replicate relationships with our distributors that have been built over decades. Approximately 94% of our North American distributors have been with the Company for ten years or more. Our distribution partners often see us as the vendor of choice given our focus on quality, insights into customer needs, the attractive economics of our machines and our support teams staffed with highly trained personnel. Our direct sales channel complements our distribution network by bringing us closer to end-customers and enhancing strategic flexibility, particularly in select markets that we believe represent significant growth opportunities.
We operate through two geographic reporting segments with our North America segment representing 74% of 2024 revenue and our International segment representing the remaining 26%. Our historical financial performance has benefited from consistent and predictable growth at attractive margins, and we have a strong cash generation profile accompanied by minimal capital expenditure requirements given our well-invested manufacturing footprint. For the twelve-month period ended December 31, 2024, our net revenue was $1.5 billion, net income was $98 million (with a net income margin of approximately 7%), Adjusted EBITDA was $383 million (with an Adjusted EBITDA Margin of approximately 25%) and capital expenditures were approximately 3% of net revenue. For the six months ended June 30, 2025, our net revenue was $837 million, net income was $48 million (with a net income margin of approximately 6%), Adjusted EBITDA was $219 million (with an Adjusted EBITDA Margin of approximately 26%) and capital expenditures were approximately 2% of net revenue. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures and
Key Operating Metrics” regarding our use of Adjusted EBITDA and Adjusted EBITDA Margin, which are non-GAAP financial measures, and a reconciliation of these measures to their most directly comparable financial measure calculated in accordance with GAAP.
Our History
Our business began in 1908 in Ripon, Wisconsin when we introduced a hand-operated washer to the marketplace. Industry leading features were introduced under the Speed Queen brand with the introduction of stainless steel wash tubs in 1938 and automatic washers and dryers in 1952. The spirit of innovation, quality and reliability persists to this day. We manufacture durable products with high-quality steel that are meticulously tested and augmented by novel technologies. More recently, we introduced our pioneering ProCapture lint capture technology in 2023 and have developed our digital platform that can be leveraged across our brands to monitor product performance, business revenues and provide fleet management efficiencies, among other benefits. We sell our highly engineered products across a portfolio of five strategic brands: Speed Queen (which, according to a third-party market study, has the highest Net Promoter Score in North America), Huebsch, UniMac, IPSO and Primus.
Principal Stockholder
On August 31, 2015, our principal stockholder, members of our management and the Minority Investment Institutional Co-Investors indirectly acquired 100% of the outstanding equity interests in Alliance Laundry Holdings in the BDTCP Transaction. Since the BDTCP Transaction, our principal stockholder has continued to consist of funds affiliated with BDT & MSD, a merchant bank with an advisory and investment platform built to serve the distinct needs of business owners and strategic, long-term investors. Its funds are managed by its affiliated investment advisers, BDTCP and MSD Partners, L.P.
After the closing of this offering, our principal stockholder will own approximately % of our outstanding common stock (or approximately % if the underwriters exercise their option to purchase additional shares in full).
Business Segments
We operate in a global market that is estimated to be worth nearly $7.4 billion and our business is organized into two reportable segments: North America and International. While accessories and consumables, estimated at $1.6 billion, are not included in this $7.4 billion global market, these areas represent opportunities for future growth and expansion of our business.
North America
Our North America segment consists of the United States and Canada. We have sales and support teams based both at our Ripon, Wisconsin locations and remotely to support our end markets though a mixture of independent distributors, direct sales to communal laundry room operators and our company-owned distribution offices. While the majority of products sold in the North America segment are produced in our U.S. manufacturing facilities, some specialist machines are sourced from our other global facilities. We believe we are the number one supplier of commercial laundry equipment in terms of market share in North America.
International
Our International segment comprises all countries outside of the United States and Canada. Sales are primarily made through independent distributors who cover an allocated territory, usually in either a single country or region, and who we support through regionally based sales and support teams. Additionally, we have direct sales offices in three key European markets (France, Spain and Italy) and Brazil, where we believe the opportunity justifies our direct presence. As with our North America segment, we operate a multi-brand strategy in each market, with multiple distributors representing one or more brands. The majority of our systems sold in each region are made at our facilities in that region. We believe we are the number one supplier of commercial laundry equipment in terms of market share in Latin America and Asia Pacific (excluding China), and the number three supplier in Europe.
Our Industry
The commercial laundry systems industry, which, according to a third-party market study, generated nearly $7.4 billion in revenues in 2023, is comprised of three core end markets that cover the products and services the Company provides:
•On-Premise Laundry (“OPL”): Businesses or institutions that process large volumes of laundry in support of their core business, including healthcare facilities, fire stations and hotels;
•Vended: Businesses, such as laundromats and communal laundry operators, that operate commercial systems for end users who pay for use; and
•Commercial In-Home: Residential consumers who pay a premium to have the reliability and effectiveness of commercial systems in their homes.
In addition to the replacement of equipment where we believe we have an advantage as the largest incumbent equipment manufacturer, customers across these three core end markets require aftermarket replacement parts, accessories, consumables and service, which are all sold separately, to maintain their laundry systems throughout their useful lives, representing an attractive source of recurring revenue. While accessories and consumables,
estimated at $1.6 billion, are not included in our $7.4 billion market, these areas represent opportunities for future growth and expansion of our business.
Our industry is highly fragmented with few global players and many small regional players. Alliance is the global market leader and the only scaled player focused exclusively on commercial laundry systems.
According to a third-party market study, the global commercial laundry systems market generated nearly $7.4 billion in revenues in 2023 and is expected to grow at approximately 5% per year from 2023 through 2028. Growth in the commercial laundry systems market is supported by end-market tailwinds—such as hospitality sector growth and the ongoing evolution of the laundromat industry—and macro-level drivers, such as increasing GDP growth, population growth, rising incomes and increasing urbanization. Growth in developed markets, primarily North America and Europe, is benefitting from professionalization and digitization of laundromats, as well as increasing demand from consumers for commercial machines in their homes. In Europe specifically, where Alliance saw revenue increase at a compound annual growth rate of 5.3% from 2021 to 2024, sustainability concerns over water and energy consumption are spurring growth in both communal laundry rooms and laundromats. Growth in Europe is further supported by an expanding gross domestic product, which grew at an average annual rate of 4.4% from 2019 to 2024 and is expected to accelerate to a 5.9% average annual growth rate from 2024 to 2029.
Demand in emerging markets (e.g., Latin America, Southeast Asia, the Middle East and Africa) is supported by demographic trends, including population growth, growth in communal laundry facilities in apartment complexes and increasing laundromat penetration. The Latin American market’s expansion is driven by the increasing construction of “micro-apartments” (less than approximately 350 square feet), which fuels growth in communal laundry rooms. From 2021 to 2024, Alliance’s revenue in the region grew at a compound annual growth rate of
24.2%. The region’s gross domestic product grew at an average annual rate of 5.2% from 2019 to 2024 and is projected to grow at a slightly slower average annual growth rate of 4.9% from 2024 to 2029.
In the Middle East and Africa, increasing laundromat penetration is driven by income growth and larger family sizes. Alliance’s revenue in this region grew at a compound annual growth rate of 16.5% from 2021 to 2024, while the region’s gross domestic product grew at an average annual growth rate of 3.4% from 2019 to 2024, which is projected to increase to 3.7% from 2024 to 2029.
In Asia Pacific (excluding China), rapid population growth and increasing urban density are accelerating demand for laundromats. Alliance’s revenue grew at a compound annual growth rate of 1.4% from 2021 to 2024 in the region, while gross domestic product grew at an average annual growth rate of 3.8% from 2019 to 2024 and is projected to grow at an annual growth rate of 5.5% from 2024 to 2029.
We have achieved a revenue compound annual growth rate of 7.3% over our ten most recent fiscal years, and we expect our highly diversified set of end markets and growth drivers will continue to support consistent, long-term growth across economic cycles.
Across both developing and emerging markets, customers of commercial laundry systems depend on their laundry systems as essential equipment supporting the efficient operation of their core business or home. The systems simply need to work, reliably and effectively, always to ensure customers are able maintain operations. The cost of failure to end users is high and purchasing decisions tend to be more focused on reliability and total cost of ownership rather than the up-front cost of the machine. Relatively few occurrences of equipment downtime or technician service calls can easily offset the difference in cost of a less expensive, yet less reliable, piece of equipment.
End Markets
On-Premise Laundry
OPLs are operated by end users in a wide range of distinct sectors, including healthcare facilities, fire stations, hotels and any other sector where clean laundry is critical to supporting the end user’s core business. Ultimately, if the laundry systems of OPL customers are not functioning, their businesses cannot operate.
User requirements in this segment vary significantly in terms of load capacities, cycle times, water efficiency and other features, some of which can be driven by regulation or other policies. For example, the ability to sterilize large volumes of linens in healthcare and the ability to wash highly specialized firefighting gear are both critical to health and safety but also require distinct capabilities. OPLs choose commercial laundry systems based on ability to meet these specific industry requirements, as well as total cost of ownership, manufacturer reputation and reliability.
Vended
The Vended market includes laundromat businesses and communal laundry operators, which manage laundry facilities in apartments, universities and other institutions. Both laundromats and communal laundry operators utilize a pay-per-use model to generate revenue, meaning if their laundry systems are down, they lose the ability to generate revenue and will need to incur additional costs to get back up and running. As such, reliability and durability are key purchasing criteria to minimize equipment downtime and the need for costly repair visits.
The laundromat market in North America represents a large installed base, estimated to be 1.1 million machines in the United States alone, according to a third-party market study. A significant portion of the installed base is replaced each year, generating a large and attractive recurring revenue stream where market position, scale, incumbency, product reliability and brand reputation are important to retain and gain market share as machines are replaced.
In developed laundromat markets there is a secular shift away from traditional sole proprietor models to professionalized operators managing multi-site operations. These professional operators are upgrading and expanding store formats, adding higher capacity machines and leveraging digital tools to earn more revenue per store. In addition to the shifting operating models for laundromats in developed markets, many emerging economies are in the early stages of laundromat penetration, representing a significant opportunity for future growth.
Communal laundry facilities are managed primarily by operators who purchase, own, install and service the equipment under contracts with property owners or management companies. Sophisticated route operators with multiple locations are increasingly seeking technology, such as remote monitoring and digital control, to unlock cost savings and other operating efficiencies. Internationally, high-density metropolitan regions are seeing growth in multi-unit housing with small sized living units, driving demand for communal laundry facilities.
Commercial In-Home
The Commercial In-Home market is comprised of households and individual users who purchase commercial units to meet their reliability, quality and heavy-duty laundry needs.
In-home customers have become increasingly frustrated with traditional residential machines, which are typically sold based on lowest price or most features, but have lower-quality construction mainly comprised of plastic materials. Frustration with traditional residential machines is generating strong demand for commercial systems from customers who are willing to pay a premium for high quality, durable, reliable and long-lasting laundry systems.
Products and Service
We offer a full line of stand-alone commercial laundry systems, as well as provide the service parts and value-added aftermarket services those systems require. Our products range from small-chassis washers and dryers to large-chassis laundry equipment with load capacities of up to 400 pounds. Our small-chassis systems utilize smaller frame designs, while our large-chassis systems are constructed on frames built to withstand significant load sizes. Most of our large-chassis products are designed to withstand up to 30,000 cycles, with some rated up to 48,000 cycles.
Washers
Washer Extractors.
Our washer extractor products are used to process 20 to 400 pounds of laundry per load. In addition to washing laundry, these products also extract water from the laundry with spin speeds that produce up to approximately 500 G-force, which reduces water retention, drying time and energy costs. We build our washer extractor products to be extremely durable to handle this high level of G-force, which they frequently endure many times a day given our systems are in constant use. The durability of our washer extractors reduces breakdowns and malfunctions that can increase operating costs and machine downtime. We sell our washer extractors to a variety of end markets and customers. We sell smaller washer extractors that process up to 100 pounds of laundry per load to laundromats, while we sell our larger washer extractors that process up to 400 pounds of laundry per load to on-premise laundry customers. We also produce a specialized hygienic washer extractor, often called a medical barrier washer, for the healthcare industry.
Topload Washers.
Topload washers are small-chassis products with the capability to process up to 16 pounds of laundry per load with spin speeds that produce up to approximately 200 G-force. These products are sold primarily to operators of communal laundry rooms in the Vended end market and to individual consumers in the Commercial In-Home end market. Our topload washers are available with a traditional wash system or with a “smart” inverter drive system that adjusts the water level and wash action to match load size. We have recently added matte black machines to our product range, providing consumers with more aesthetic optionality.
Our topload washers are among the highest rated Commercial In-Home washers available on the market. Consumer Reports ranked Speed Queen as the most reliable appliance brand for the six years the designation was awarded. Additionally, Speed Queen has the highest Net Promoter Score in North America, according to a third-party market study.
Many of our Commercial In-Home topload washers are ENERGY STAR™ certified. The ENERGY STAR™ certification, which is issued by the U.S. federal government, denotes products that use less energy, helping users reduce the impact on the environment and save money on utility bills.
Frontload Washers.
Frontload washers are small-chassis machines that a user loads via a door at the front of the machine. Our frontload washers can be purchased with a matching small-chassis dryer or a customer can purchase a stacked system, which includes both a small-chassis frontload washer and dryer in a single unit.
Many of our Vended and OPL frontload washers are also ENERGY STAR™ certified.
The list prices of our washers across all categories ranges from approximately $1,300 to $80,000 per unit.
Dryers
Tumblers.
Tumblers are large dryers with the capability of drying up to 200 pounds of laundry per load. Tumblers are sold primarily to laundromats and on-premise laundry facilities under all five of our brands.
Our tumblers have industry-leading technology capabilities. Our Over-Dry Prevention Technology (“OPTidry”) is a novel design that more accurately gauges load dryness. Our ProCapture technology, a patent-pending technology we introduced in 2023, captures over 90% of dryer lint on first-run drying cycles compared to approximately 63% in conventional lint screen solutions. Increased lint capture helps reduce service, maintenance and cleaning costs.
Small-Chassis Dryers.
Small-chassis dryers are smaller capacity machines with the capability of processing up to 18 pounds of laundry per load. These products have capacity of 7.0 cubic feet, among the largest capacity for a small-chassis system in the industry. Many of our residential small-chassis dryers are ENERGY STAR™ certified.
Combination Washer and Dryer
In 2021, we introduced a combination washer extractor and tumbler in two capacities. Our combination washer and dryers offer a unique space saving solution that combines large capacity commercial washing and drying functionalities into a single drum. These units are marketed primarily under our Speed Queen brand and are sold in our Asia Pacific and Latin American markets.
The list prices of our dryers across all categories ranges from approximately $1,400 to $34,000 per unit.
Touch Screen Technology
Our touch screen control platform on washer extractors and tumblers is a best-in-class touch LCD control that provides unprecedented value to our customers by providing ease of use and programming and increased revenue generating options. This control platform works in tandem with our proprietary cloud-connected technology solutions that link over 200,000 machines globally, serving more than three million users.
Service Parts and Aftermarket
We sell the service parts used to support our estimated eight million unit installed base of equipment, which we calculate assuming a ten-year average useful life of our products. We estimate that the market replacement rate of our equipment is seven to thirteen years, meaning there is a substantial useful life over which we need to provide the parts to service equipment. The demand for service parts generated by our large installed base provides us with a source of recurring, predictable and higher margin revenue. In total, our aftermarket parts program supports the sale of more than 150,000 parts online.
Consumables
We also see a growing demand for detergents, softeners and other chemicals across both the OPL and Vended end markets. In the OPL end market, we see growth in demand for direct injection of chemical products, which has
long been the preferred solution in many applications. In the Vended end market, a growing trend towards chemical inclusive pricing in both developed and new markets is driving demand for the high margin recurring sales.
Other Value-Added Services
We believe that we offer an unmatched range of complementary services and customer support. We believe these services—such as equipment financing, laundromat site selection assistance, investment seminar training programs, computer-aided commercial laundry room design, sales and service training for distributors, technical assistance and on-call installation and repair service—are significant drivers of high customer satisfaction and retention. Among these, our equipment financing program is a particularly valuable offering, enabling customers to access and finance essential equipment through flexible arrangements tailored to their operational needs. We believe this program has contributed positively to our revenue growth and supports our broader strategy of delivering comprehensive solutions to our customer base. Our philosophy is to anticipate our customers’ needs and provide them with services far beyond traditional customer support. The following represent examples of our digital value-added services:
•My Alliance is an online customer portal designed with an intuitive interface offering various tools that allow customers to quickly and easily access sales, marketing and technical information on our products. My Alliance is mobile-friendly and can be navigated in various languages.
•Alliance Academy is a state-of-the-art e-learning platform, a first for the commercial laundry industry, that delivers training tools to our authorized distributors and route operators. Sales training tools focus on the sales process, product features and benefits. Service training tools assist service technicians in understanding the operation of our equipment and teach them how to diagnose and correct issues quickly and accurately. We have approximately 22,000 active users of the Alliance Academy who have completed more than 165,000 courses. Additionally, the Service Technician certification program associated with Alliance Academy allows us to recognize and leverage our distribution network’s professional skills in appliance servicing.
In addition to our highly desirable physical laundry systems and extensive support infrastructure, we also offer market leading technology solutions across our OPL and Vended end markets. Our technology strategy is centered around leveraging our connected machines to provide a comprehensive suite of technology offerings designed for different end markets. Speed Queen Insights, Huebsch Command, Primus i-Trace and IPSO Connect provide industry-leading control and insights to Vended laundry customers through functionalities such as performance reporting, issue and error alerts, machine control and programming, a mobile payment platform with an integrated loyalty program and an integrated CRM and marketing system. UniMac Core is a cloud-based monitoring and reporting management tool that helps on-premise laundry managers take control of laundry efficiency by allowing them to manage their laundry operations from anywhere and at any time. UniMac’s FireLinc™ system gives fire departments a powerful tool that makes record keeping simple through digital capabilities and fire equipment bar code scanning. We also have a financing website for our existing laundromat customers, which allows them to manage bills, statements and account balances. We continue to enhance our digital offerings with a focus on sustainability solutions, automation technologies, and ecosystem integrations that differentiate our offerings in the commercial laundry space.
Our digital products have demonstrated strong market adoption with over 30% penetration in our target geographies of North America and Asia Pacific Vended segments, driving incremental recurring revenue through subscription services while deepening customer relationships and loyalty to our equipment ecosystem. Our chargeable Partner API Ecosystem enables third-party developers to integrate with our platform, giving them access to remotely control and program machines and analyze performance data in their products, creating additional value for our customers, especially in international markets where localized payment options require bespoke solutions that would not be economical for us to support, and new revenue streams for our business. Our cybersecurity investments ensure the integrity and reliability of our connected platforms, while our centralized data analytics capabilities enhance our internal visibility into equipment performance and market trends to inform future product innovations. This convergence of physical and digital innovation creates significant competitive barriers, as
customers benefit from an integrated ecosystem that becomes increasingly valuable over time, strengthening our market position across all segments.
Our Competitive Strengths
We Offer a Premier Portfolio of Commercial Laundry Systems
In commercial laundry, product and service quality are critical. Our systems are engineered for efficiency, reliability and long-lasting performance to ensure these high standards are met. This starts in our engineering department where we have designed and developed features that improve the durability, reliability and utility of our systems, and extends through to the quality of our materials and manufacturing. Our services are comprehensive and add value to customer operations, starting with site selection, design and financing, and extending through the lifecycle with genuine parts, technical support and warranties. As a result, we have tremendous customer allegiance and brand loyalty.
Our Unparalleled Scale is Advantageous
In our commercial end markets, we are approximately two times larger than the next competitor, and in total have an estimated installed base of eight million units, which we calculate assuming a ten-year average useful life of our products, across approximately 150 countries. As a result, there is a sizeable ecosystem of operators, technicians and users of our equipment who interact with our systems every day, resulting in highly sticky relationships. Our installed base also helps to generate sizeable replacement cycle tailwinds as customers upgrade their Alliance systems over time. Moreover, it allows us to support a scaled research and development and manufacturing effort, investing in engineering advancements that meaningfully improve the customer value proposition.
We Have a Global Manufacturing Footprint and Rigorous Testing Capabilities
We operate six strategically located facilities globally and we believe we are the only manufacturer that produces commercial equipment across North America, Europe and Asia Pacific. This “local for local” strategy delivers supply chain resiliency and strengthens our cost position. Our manufacturing footprint spans approximately 2.7 million square feet and our facilities have significant vertical integration, which enables greater control over the manufacturing process. The quality control process within our facilities is world-class and includes AI-powered defect monitoring, tests on 100% of machines produced and randomized audits, including full teardowns of finished
products. We maintain approximately 800 dedicated testing bays, and we have ‘24x7’ testing capability across the globe, a critical capability that supports our mission to offer the highest quality products in the industry.
We Employ a Tailored Go-to-Market Strategy with Established Channel Relationships
Our success is enabled by our global channel partner network and direct sales channels. We have built a hard-to-replicate network of approximately 600 independent distributors worldwide that sell into approximately 4,000 independent retail locations. Our relationships with many of our distributors and their sales teams and technicians are long-standing, and we continue to invest in resources to assist them with training, which results in a deep understanding of our technology and trust in our systems. Our channel partners are also structurally incentivized to sell our systems because end-consumers value our products’ superior total cost of ownership metrics and our partners benefit from our products’ attractive economics. We supplement our expansive independent distribution and retail network with our direct sales offices and direct sales to communal laundry operators to enhance strategic flexibility and access underpenetrated markets.
We Have a Proven Track Record of Innovation and Application Engineering Expertise
Innovation is a core focus of our business and we have history of developing industry-leading products and digital tools that address the specific needs of our customers. For example, our recently introduced ProCapture Cyclonic Filtration technology captures over 90% of lint on first-run drying cycles—compared to approximately 63% in traditional machines—helping reduce maintenance frequency, lower labor costs and mitigate operational risks from lint buildup in high-usage environments. We complement our equipment innovation with a proprietary suite of digital tools that simplify operations and maximize profitability for multi-store laundromat owners and communal laundry room operators. Our integrated platform enables customers to remotely adjust pricing, process payments, monitor machine usage and identify maintenance needs in real time. Ultimately, these innovations,
tailored to the distinct application requirements of our customers, strengthen relationships and drive long-term value across our ecosystem.
We Have Demonstrated Consistent Best-in-Class Financial Performance
Alliance has demonstrated exceptional performance over time, with a revenue compound annual growth rate of approximately 9.5% over our fifteen most recent fiscal years, as well as a net income margin in 2024 of approximately 7% and an Adjusted EBITDA Margin in 2024 of approximately 25%. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures and Key Operating Metrics” regarding our use of Adjusted EBITDA Margin, which is a non-GAAP financial measure, and a reconciliation to its most directly comparable financial measure calculated in accordance with GAAP. Our consistent financial performance through economic cycles is due to the mission-critical nature of our products, our focus on operational excellence, the reliability of replacement cycle revenue and the benefits of a diversified end market and customer base. Our operational teams drive continuous improvement and efficiency to enhance profitability, while our sales teams focus on winning high-margin customers. Our business model is capital efficient, with capital expenditures equaling on average approximately 2% of net revenue over the last three years. We Have a Seasoned and Experienced Management Team
We are led by a team of industry veterans with decades of combined experience in the commercial laundry space. The team has fostered a customer-focused culture that has delivered exceptional and consistent financial performance through the cycle. Our leadership team has executed a number of strategic initiatives, including new product and technology launches, expansion into new international markets, acquisitions and integrations of complementary businesses and the implementation of lean manufacturing processes throughout our operations to drive greater efficiency, among others.
Our Growth Strategies
We have a long track record of growth because of the strength of our business model and organization. We intend to extend our leadership position in the market by leveraging the following growth strategies:
Maintain Relentless Focus on Product Quality to Drive Share Gains
Demand in the commercial laundry systems market is driven by the replacement cycle. We expect existing customers to continue to purchase our machines and new customers to migrate to us from our competitors at the time of replacement. Our existing customers return and we win new customers due to the performance of our machines over their life cycles, which require fewer expensive maintenance events and offering greater uptime over a longer operating life. In a poll of industry customers, equipment performance was ranked as the most important purchasing factor.
Continue to Develop Innovative Products to Accelerate the Replacement Cycle
Given our scale and focus, we have been able to make significant investments in the development of new technologies and capabilities that accelerate the replacement cycle of our machines. Between 2020 and 2024, we spent over $100 million on research and development. The engineering advancements resulting from this investment have real utility to our customers, improving performance and accelerating the replacement of existing systems.
Support the Ongoing Evolution of the Laundromat Market
We believe there is a compelling shift underway in the laundromat industry as sophisticated, commercially-focused investors revamp store designs and the laundromat user experience. Leveraging our unparalleled scale, we will continue to support this new class of entrepreneurs to build and expand their businesses across multi-site operations with larger store footprints and larger capacity machines. We are well positioned to capitalize on this trend, offering a full suite of set-up services, including: site selection, design, operator training and equipment financing, which enable operators to scale faster. Additionally, our comprehensive digital platform enables management of multi-site operations and lowers operational cost through remote monitoring, digital payments and data-driven decision making.
Recent industry data highlights several key trends that reflect this shift in the laundromat industry. The average number of machines per laundromat has increased as operators seek to maximize returns, and is expected to grow further in the coming years, from 56.0 machines per location in 2024 to 60.1 machines per location by 2030. Operators are also replacing older machines sooner to access newer, faster equipment with enhanced features, resulting in a projected decrease in estimated equipment life from 8.7 years in 2024 to 8.4 years by 2030. There is a growing preference for larger machines, as operators aim to improve efficiency, speed and the overall user experience. Reflecting this, annual installations of large machines are expected to grow at a compound annual growth rate of 5.3% between 2024 and 2030, outpacing the estimated 2.5% compound annual growth rate of installation of all machines across the same period.
Serve Growing Demand for Commercial Machines from Commercial In-Home Customers
We believe there is an exciting opportunity to significantly expand our share in the residential market, as demand for our commercial laundry systems is growing from users who are becoming increasingly frustrated with lower quality residential machines. We serve this market with commercial machines, generating commercial-like margins and satisfying the demands of homeowners that are focused on reliability and total cost of ownership.
Penetrate and Develop High-Potential International Markets
The global commercial laundry industry remains underpenetrated in many regions, presenting meaningful long-term growth opportunities. We focus on high-potential geographies where structural trends—such as rising GDP, population growth, urbanization, increasing household income, and evolving lifestyles—point to growing demand for commercial laundry solutions. In these markets, our local teams help to establish and scale the commercial laundry ecosystem. For example, in Thailand, we provided operational training, digital tools and other support to local laundromat entrepreneurs to accelerate the creation of the laundromat industry and have grown our Thailand revenue at a compound annual growth rate of approximately 50% since we began operations there in 2017. Additionally, in Brazil, we established our own operator business in 2016, which we later sold to a multinational consumer products company, to foster growth in the local commercial laundry market. As a result, we have grown our Brazil revenue at a compound annual growth rate of approximately 30% since 2017.
Drive Consistent Operational Improvements to Further Expand Margins
We intend to further expand margins through the continued implementation of cost-down initiatives and an ongoing focus on operational excellence. We will build on our demonstrated track record of durable margin improvement through several initiatives, including: monitoring our global supply chain to identify raw material cost saving opportunities, enhancing labor efficiency by optimizing plant operations, further automating our manufacturing facilities to improve productivity, leveraging our engineering capabilities to develop more cost effective products and eliminating component redundancy.
Sales and Marketing
We go to market through our independent distributors, direct sales offices and direct sales to scaled communal laundry route operators.
Our independent distributor and route operator customers are supported by teams of regional sales managers and our broader complementary support offering, which includes equipment financing, laundromat site selection assistance, investment seminar training materials, commercial laundry room design, sales and service training and technical assistance. Our direct distribution offices also benefit from this complementary infrastructure to support their sales, service and install personnel employed to support key markets.
In the Vended and OPL end markets, our distributors sell directly to the operators of the laundry systems, whereas in the North American Commercial In-Home market they utilize a network of independent appliance retailers to sell to end consumers.
We support our sales force and distributors through a full complement of marketing activities. These activities take a variety of forms such as traditional and digital marketing development and support, trade advertising, lead generation, multi-media projects, print literature, direct mail and public relations activities. In addition, our representatives attend trade shows to introduce new products, grow relationships with existing customers, develop new customer relationships and generate sales leads for our products and services.
Distributors and Customers
We maintain an extensive global network of approximately 600 independent distributors and work with the largest route operators in the jurisdictions where we operate to deliver our products to our end-customers.
We define an “independent distributor” as an entity that holds inventory of our products and markets and sells those products to, and services our products for, our end-customers. Our end-customers are businesses and individuals who ultimately utilize our product, such as laundromats, hotels and restaurants.
We have deeply established and difficult-to-replicate relationships with our distributors that have been built over decades. Our distribution partners often see us as the vendor of choice due to our focus on quality, insights into customer needs, the attractive economics of our machines and our support teams staffed with highly trained personnel.
The vast majority of our distribution is conducted through our independent third-party distributors. Approximately 72% of our global revenue is generated through independent third-party distributors that primarily resell to equipment users and operators in our end markets. Some of those third-party distributors may also operate some of the equipment themselves in communal laundry and laundromat settings. Because we do not monitor end-use information after selling to third-party distributors, we cannot further disaggregate revenue from these channels. The remaining approximately 28% of our global revenue comprises (i) direct sales to communal laundry room operators (representing approximately 10% of global revenue) and (ii) sales made through our domestic and international sales offices (representing approximately 12% and 6%, respectively, of our global revenue) which transact either directly or through local and regional distributors and dealers. Our top ten distributors globally accounted for approximately 25% of our annual revenue in 2024, and no single distributor accounted for more than 5% of such revenue. Given that no distributor makes up more than 5% of our annual revenue, we believe that no single end-customer accounts for more than 5% of our annual revenue.
Competition
Our industry is highly fragmented with few global players and many small regional players. We have few large competitors within the stand-alone commercial laundry equipment industry of the United States and Canada. We believe that we are the only participant to serve our Vended and OPL markets with a full line of topload washers, washer-extractors, frontload washers, tumbler dryers and standard dryers in this region.
We also have several large competitors within the international stand-alone commercial laundry equipment industry who participate in these regions of the world alongside several other local manufacturers.
In the Commercial In-Home end market, our products principally compete against high-priced residential machines from consumer brands.
Research and Development
Given our scale and focus, we have been able to make significant investments in the development of new technology and capabilities that accelerate the replacement cycle of our machines. Between 2020 and 2024, we spent over $100 million on research and development activities. The engineering advancements resulting from this investment have real utility to our customers through new products, improving performance and accelerating the replacement of existing systems.
This development is delivered by our global engineering organization of approximately 200 laundry experts based across our three global engineering hubs in the U.S., Czech Republic and Thailand. They work in industry-leading facilities, which contain approximately 800 testing bays, and operate with ‘24x7’ testing capability across the globe to minimize time to market for product innovations while maintaining our highest quality standards. In addition, our research and development efforts also deliver continuous improvement on existing designs, enhance reliability and performance of our equipment, improve energy efficiency and ensure regulatory compliance of our laundry products. Our team of engineers and technical leaders continuously collaborate with our sales and marketing leaders, as well as key customers, to ensure we identify and meet customer needs.
Our U.S. location in Ripon, Wisconsin has a ISO 17025 Certified Laboratory as part of Underwriters Laboratories’ Data Acceptance Program. We believe we are the only manufacturer in the industry to have this ability, allowing us to significantly reduce time-to-market for innovations that require certifications.
Our digital innovation strategy has transformed our business from traditional equipment manufacturing to a technology-enabled solutions provider. We have invested significantly in our proprietary cloud-connected platform that currently links over 200,000 machines globally and serves more than three million users. This platform, marketed under our various brand names including Speed Queen Insights, Huebsch Command and UniMac CORE, allows us to deliver value-added services that extend beyond hardware.
Our digital research and development approach is highly customer-centric, with cross-functional teams that include product managers, quality assurance specialists and developers working directly with customers through extensive field testing. Recent innovations include our QR code-based payment solution that eliminates the need for app installation, AI-driven operational insights that provide plain-English recommendations to operators and self-healing machine capabilities that can resolve some common issues without technician intervention. We have strategically expanded our digital development teams in Thailand to accelerate our global product delivery capabilities while maintaining consistent quality standards. Looking ahead, our digital innovation roadmap focuses on sustainability solutions, automation technologies and deeper ecosystem integrations that will continue to differentiate our offerings in the commercial laundry space.
Manufacturing
We operate six strategically located facilities globally and we believe we are the only manufacturer that produces across North America, Europe and Asia Pacific. This “local for local” strategy delivers supply chain resiliency and strengthens our cost position. Our manufacturing footprint spans approximately 2.7 million square feet and our facilities have significant vertical integration, which enables greater control over the manufacturing process.
| | | | | | | | | | | | | | |
| Country | | Facilities | | Approx. Sq. Ft. |
| United States | | 3 | | 2,000,000 |
| Czech Republic | | 1 | | 380,000 |
| Thailand | | 1 | | 280,000 |
| China | | 1 | | 60,000 |
Our manufacturing operations primarily engage in fabricating, machining, painting, assembling and finishing operations, but also operate as finished goods and service parts distribution centers. The facilities are organized to focus on specific product groups although each facility serves multiple end markets and segments.
The U.S. facilities produce our small-chassis topload washers, frontload washers and dryers as well as large-chassis washer extractors and dryers. The other facilities all produce large-chassis washer extractors and dryers while the Czech Republic also produces barrier washers and ironers. This diversification of production supports our “local for local” strategy and enables us to respond quickly to local requirements. This strategy also allowed us to temporarily move production of some large-chassis equipment between our U.S. and Thai facilities and some small-chassis assembly from the U.S. to the Czech Republic to maximize available labor during COVID-19 restrictions.
We have invested approximately $370 million in capital expenditures in our manufacturing facilities over the past ten years, including opening new facilities in the U.S. and Thailand. Current global production is at approximately 75% of capacity and we believe we have more than sufficient capacity to fulfill our medium-term growth objectives and beyond while maintaining our approximate 3% of net revenue annual capital expenditure spend target.
We are committed to continuous improvement in all aspects of our business and operations in order to maintain our industry leading position and all our manufacturing facilities are certified by the International Standardization Organization (“ISO”).
| | | | | | | | |
| Country | | ISO Certification |
| United States | | 9001 |
| Czech Republic | | 9001 14001 45001 50001 |
| Thailand | | 9001 14001 50001 |
| China | | 9001 14001 45001 |
Suppliers and Materials
We purchase substantially all our raw materials and components from a variety of independent suppliers. Where possible and cost effective we aim to do this as close to each of our manufacturing facilities as possible, sourcing in region for consumption in the same region.
Key material inputs for manufacturing processes include motors, stainless and carbon steel, aluminum castings, electronic controls, corrugated boxes and plastics. While we believe most of our raw materials and component parts are generally available from multiple suppliers at competitive prices, due to the nature of some of our purchases, including some co-developed components, we do have some single- and sole-source suppliers and are exposed to commodity markets.
Our largest single input material is steel and we aim to secure supply agreements for extended periods of time at fixed prices to mitigate the risk of market fluctuations. We believe we currently have sufficient steel under contract for the near term. For further discussion of the possible effects of the cost and availability of raw materials on our business, see the “Risk Factors” section. Facilities
Headquarters and Office Locations
Our global headquarters is located at 221 Shepard Street, Ripon, Wisconsin 54971. We expect that this approximately 1.7 million square foot corporate complex, of which we own and lease portions, will accommodate our growth plans for the foreseeable future. In addition to our global headquarters, we lease sales offices across the United States, as well as in Belgium, China, Brazil, France, Spain, Italy, Germany, Netherlands and the United Arab Emirates. We believe that our current facilities are adequate to meet our immediate needs and believe that we should be able to renew any of our leases without an adverse impact on our operations.
Manufacturing and Distribution Facilities
We operate manufacturing facilities located in the United States (Ripon and Manitowoc, Wisconsin); Pribor, Czech Republic; Chonburi, Thailand; and Guangzhou, China with an aggregate footprint of approximately 2.7 million square feet, including our global headquarters. Our manufacturing operations primarily consist of fabricating, machining, painting, assembling and finishing operations. We also operate finished goods and service parts distribution centers.
The following is a summary of our principal properties as of June 30, 2025, the majority of which are leased spaces, including manufacturing, distribution, warehouse and sales office sites.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | No. of Facilities |
Locations | | Manufacturing | | Distribution / Sales Offices with Warehouses | | Sales / Corporate Offices Only | | Warehouses
Only |
United States | | | |
| | | | |
Wisconsin | | 3 | | | | 1 | | 2 |
Florida | | | | 1 | | | | |
Texas | | | | 2 | | | | |
California | | | | 3 | | 1 | | 2 |
New York | | | | 1 | | | | |
Georgia | | | | 1 | | | | |
Illinois | | | | 1 | | | | 1 |
Washington | | | | 1 | | | | |
Oregon | | | | | | | | 1 |
Maryland | | | | 1 | | | | 1 |
Pennsylvania | | | | | | | | 1 |
Utah | | | | 1 | | | | |
Tennessee | | | | 1 | | | | |
Rest of World | | | | | | | | |
China | | 1 | | | | 1 | | 1 |
Czech Republic | | 1 | | | | | | 1 |
Thailand | | 1 | | | | | | 1 |
Brazil | | | | | | 1 | | 2 |
France | | | | 1 | | | | 1 |
Germany | | | | | | 1 | | |
Italy | | | | 1 | | | | 1 |
Netherlands | | | | | | 1 | | |
Spain | | | | 1 | | 1 | | |
UAE | | | | | | 1 | | |
Belgium | | | | | | 1 | | |
Employees
As of June 30, 2025, we employed 4,046 full-time employees and 99 part-time employees. Of these employees, 2,824 are located in the United States and 1,321 are located outside of the United States (including 737, 370, 78 and 36 employees in the Czech Republic, Thailand, China and France, respectively). The United Steelworkers union represented 1,722 employees at our Wisconsin facilities. All employees at our Pribor, Czech Republic facility are subject to a collective bargaining agreement, and certain employees at the facility are represented by a trade union. All employees at our Guangzhou, China facility are subject to a collective bargaining agreement and represented by a workers’ union. All employees at our Saint-Priest, France facility are represented by a social and economic committee. We believe that our current labor relations are good and no labor disruptions are anticipated in the foreseeable future.
In December 2021, the United Steelworkers union ratified a five-year contract with us. The contract became effective on January 1, 2022 and contains provisions that are usual and customary. There have been no work stoppages at any of our Wisconsin facilities for more than 50 years.
Intellectual Property
We rely upon a combination of trade secrets, copyrights, trademarks, patents, confidentiality policies and procedures, nondisclosure agreements and technical measures designed to protect the intellectual property and commercially valuable confidential information and data used in our business. As of June 30, 2025, we held 21 issued U.S. patents and 91 issued foreign patents relating to our technologies, such as washing machine technologies and dryer technologies, as well as 35 U.S. trademark registrations and approximately 615 foreign trademark registrations covering our marks and brands. As of June 30, 2025, we also held 2 pending U.S. patent applications, 9 pending foreign patent applications, 2 pending U.S. trademark applications and approximately 59 pending foreign trademark applications. We also develop proprietary software, primarily for our firmware and digital products. We license our intellectual property to third parties for them to develop vended payment systems that are compatible with our equipment. We also receive licenses to third-party intellectual property, some of which is integrated into our products.
We take steps to safeguard our trade secrets and proprietary information. These measures include internal access controls, nondisclosure agreements with employees and third parties and cybersecurity protocols designed to prevent unauthorized disclosure of sensitive business information. We also monitor and pursue action against infringements of our intellectual property, such as trademark rights and trade secrets.
We believe we have taken reasonable measures to protect this portfolio of intellectual property rights, but we cannot be assured that none of these intellectual property rights may be challenged and found invalid or unenforceable. See the “Risk Factors” section for further discussion of intellectual property matters. Regulatory Matters
We are subject to foreign, federal, state and local laws and regulations that impact our business, including the design, manufacture, marketing, sale, servicing, packaging, labeling, handling, storage, transportation and use of our commercial and residential laundry equipment. These laws and regulations relate to matters such as product safety and certification, product labeling, energy and water efficiency standards, environmental protection, workplace health and safety, and ESG and sustainability. In the United States, our operations are regulated by agencies such as the Consumer Product Safety Commission, Federal Trade Commission and DOE, as well as the Environmental Protection Agency and the Occupational Safety and Health Administration. Our international operations are also subject to regulation by equivalent regulatory agencies and frameworks of the countries in which we operate and sell our products. Violations of such laws and regulations could result in fines and penalties, enforcement actions, third-party claims, cessation of operations and other sanctions. In addition, compliance with such laws and regulations in the future could prove to be costly and could affect various aspects of our business.
We and our operations are also subject to and affected by foreign, federal, state and local EHS regulations, including with respect to climate concerns. In particular, our business is subject to governmental regulation of energy and water usage and efficiency standards, emissions of air pollutants, including greenhouse gas emissions, discharges of wastewater and stormwater, releases of hazardous materials to soil and water, the transportation, treatment, storage and disposal of hazardous wastes and exposure to hazardous materials in current or former products, the workplace or the environment, among other things. See “Risk Factors—Risks Relating to Government Regulation and Litigation—We could incur significant costs in complying with EHS laws and regulations and could be adversely affected by liabilities or obligations imposed under such laws.” and “Risk Factors—Risks Relating to Government Regulation and Litigation—Energy efficiency, water usage standards and other product-related standards could adversely affect our industry.” Changes in laws and regulations or government policies could affect our operations worldwide. Additionally, the evolving and increased fragmentation of regulatory requirements may increase our costs by requiring the development of country-specific variants, the monitoring and compliance of additional regulations as well as additional testing and certifications. The laws, regulations and policies applicable to our products and services
change regularly, and certain regulatory changes may render our products and technologies noncompliant. In addition, we are also subject to evolving standards and requirements related to ESG and sustainability matters. For example, the CSRD enacted in the European Union and certain laws enacted in California will require us to report on various sustainability-related information, including greenhouse gas emissions. See“Risk Factors—Risks Relating to Government Regulation and Litigation—We are subject to risks related to environmental, social and governance (“ESG”) and sustainability laws, regulations, policies and initiatives.” Our operations are also subject to and could be affected by the changing landscape related to tariffs and trade regulations. U.S. laws, regulations, orders and other measures concerning the export or re-export of products, software, services and technology, and other trade-related activities involving non-U.S. countries and parties affect the operations of our company and our affiliates. These potential effects are further discussed in “Risk Factors—Risks Relating to Government Regulation and Litigation—Our international operations expose us to worldwide economic conditions; unfavorable global economic conditions could lead to reduced revenues and negatively impact our results of operations.” For further discussion of risks related to other government regulations, see “Risk Factors—Risks Relating to Government Regulation and Litigation.” Legal Proceedings
From time to time we are a party to various legal proceedings incidental to the conduct of our business. The results of legal proceedings are inherently unpredictable and uncertain. We are not presently party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, prospects, financial condition, liquidity, results of operations, cash flows or capital levels.
We periodically reexamine our estimates of probable liabilities and any associated expenses and receivables and make appropriate adjustments to such estimates based on experience and developments in litigation. As a result, the current estimates of the potential impact on our business, prospects, financial condition, liquidity, results of operation, cash flows or capital levels for the proceedings and claims described in the notes to our consolidated financial statements could change in the future.
Regardless of the outcome, legal proceedings have the potential to have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. See “Risk Factors—Risks Relating to Government Regulation and Litigation” for more information on the risk of potential legal proceedings and their associated costs.
MANAGEMENT
Executive Officers and Non-Employee Directors
The following table presents the name, age and position for each of the individuals who are expected to serve as our executive officers and directors following the completion of this offering.
| | | | | | | | | | | | | | |
| Name | | Age | | Position |
| Executive Officers: | | | | |
| Michael D. Schoeb | | 63 | | Chief Executive Officer and Director |
Dean Nolden | | 56 | | Chief Financial Officer |
Cody Masluk | | 56 | | Chief Commercial Officer – North America |
| Jan Vleugels | | 60 | | Chief Operating Officer – International |
| Samantha Hannan | | 37 | | Chief Legal & Compliance Officer |
| Joseph Hainline | | 44 | | Chief Technology Officer |
| Amanda Kopetsky | | 45 | | Chief Human Resources Officer |
| Mick Mancuso | | 46 | | Vice President – Operations |
| | | | |
| Non-Employee Directors: | | | | |
| Robert L. Verigan | | 50 | | Chairman |
| Clyde B. Anderson | | 65 | | Director |
| Timothy J. FitzGerald | | 55 | | Director |
| Phyllis A. Knight | | 62 | | Director |
| Narasimha Nayak | | 56 | | Director |
| | | | Director Nominee |
Additional information regarding our director nominee will be provided in a future submission.
The following are brief biographies describing the backgrounds of our executive officers and directors.
Executive Officers
Michael D. Schoeb, 63, has served as Chief Executive Officer of Alliance Laundry Systems and has been a member of our Board of Directors since February 2011. Mr. Schoeb will serve in a similar role for Alliance Laundry Holdings upon consummation of this offering. Previously, Mr. Schoeb was our President and Chief Operating Officer from October 2007 to January 2011. Before joining us, Mr. Schoeb served as President and Chief Operating Officer at Wausau Homes, Inc., and a number of positions at Hilti, Inc. and Johnson Controls International. Mr. Schoeb also served on the Board of Directors of Weber-Stephen Products from 2016 through 2021.
Dean Nolden, 56, has served as Chief Financial Officer of Alliance Laundry Systems since April 2025 and will serve in a similar role for Alliance Laundry Holdings upon consummation of this offering. Before joining us, Mr. Nolden served as the Chief Financial Officer of Stella & Chewy’s from 2021 to 2025, of Techniplas from 2020 to 2021 and of REV Group, Inc. from 2016 to 2020, where he led the company’s initial public offering in 2017. Mr. Nolden also served in a number of positions at The Manitowoc Company, a public manufacturing company, from 1997 to 2016, including Vice President of Finance and Treasurer as well as Vice President of Finance – Manitowoc Crane and Foodservice Segments. Mr. Nolden started his career in the audit practice of PricewaterhouseCoopers from 1991 to 1997. Mr. Nolden also served on the Board of Directors of Buckbone Organics from March 2024 to April 2025 and of Riverbend Industries from July 2020 to December 2021.
Cody Masluk, 56, has served as Chief Commercial Officer for North America of Alliance Laundry Systems since May 2025 and will serve in a similar role for Alliance Laundry Holdings upon consummation of this offering. Previously, Mr. Masluk served as our Vice President and General Manager of North America Residential from 2019
to May 2025. Before joining us, Mr. Masluk served in various roles at Electrolux Major Appliances from 2001 to 2019, including Senior Director Product Line Management, Senior Director Trade Marketing and Merchandising and General and Region Manager Sales. Mr. Masluk also served in assorted field roles at Amana Appliances and Maytag Appliances from 1994 to 2000.
Jan Vleugels, 60, has served as Senior Vice President of Alliance Laundry Systems since 2021 and as Chief Operating Officer International of Alliance Laundry Systems since 2014. Mr. Vleugels will serve in similar roles for Alliance Laundry Holdings upon consummation of this offering. Before joining us, Mr. Vleugels served as Chief Operating Officer of Primus Laundry Equipment from 2007 to 2014 and as Plant Manager at Primus CE, in Pribor, Czech Republic, from 1991 to 2007.
Samantha Hannan, 37, has served as Chief Legal and Compliance Officer of Alliance Laundry Systems, previously under the title General Counsel, since 2021 and will serve in a similar role for Alliance Laundry Holdings upon consummation of this offering. Before joining us, Ms. Hannan served as Deputy General Counsel and Assistant General Counsel at Alteon Health from 2019 to 2020 and as Counsel at Envision Healthcare from 2014 to 2019. Ms. Hannan was also a corporate associate at Gunderson Dettmer from 2013 to 2014.
Joseph Hainline, 44, has served as Chief Technology Officer of Alliance Laundry Systems since 2023 and will serve in a similar role for Alliance Laundry Holdings upon consummation of this offering. Previously, Mr. Hainline served as our Vice President of Technology from 2021 to 2023 and as our Director of Technology Innovation from April 2021 to December 2021. Before joining us, Mr. Hainline served in a number of positions at World Wide Technology Asynchrony Labs from 2016 to 2021, including Digital Client Director, Product Portfolio Manager and Partnership Manager. Mr. Hainline has also served as Digital Client Director at World Wide Technology since November 2023 and is also Co-Founder of Rookie Trading Cards.
Amanda Kopetsky, 45, has served as Chief Human Resources Officer of Alliance Laundry Systems, previously under the title of Vice President of Global Human Resources, since 2022 and will serve in a similar role for Alliance Laundry Holdings upon consummation of this offering. Previously, Ms. Kopetsky served as our Director of Corporate Human Resources from 2018 to 2022. Before joining us, Ms. Kopetsky held various Human Resources leadership roles at Bemis Company, Inc. (now Amcor), including HR Director Finance and Operations, HR Director Supply Chain and Operations for Bemis North America, HR Director for Bemis Healthcare Division and HR Director for Performance Packaging Division from 2007 to 2018.
Mick Mancuso, 46, has served as Vice President of Operations for North America of Alliance Laundry Systems since 2022 and will serve in a similar role for Alliance Laundry Holdings upon consummation of this offering. Previously, Mr. Mancuso served as our Senior Director of Supply Chain and Manufacturing Transformation from 2021 to 2022. Before joining us, Mr. Mancuso held various positions at Rockwell Automation from 2006 to 2021, including Director of Connected Enterprise Operations, Director of Manufacturing Operations, Multi-Site Plant Manager, Production and Inventory Control Manager and Supply Management Manager.
Non-Employee Directors
Robert L. Verigan, 50, is the Chairman of the Board of Directors of Alliance Laundry Holdings and has served as a director since August 2015, and was appointed by our principal stockholder following its acquisition of the Company. Mr. Verigan is a Partner at BDT & MSD, serves on the firm’s Investment Committee and has held various positions with BDT & MSD since October 2013. Prior to joining BDT & MSD, Mr. Verigan was a Partner at Sidley Austin LLP, in their Corporate and Securities practice group, focusing on mergers and acquisitions, corporate finance, board and shareholder governance, private equity and venture capital investments, from 1999 to 2013. Mr. Verigan currently sits on the Board of Directors at Greystar Real Estate Partners, Nation Safe Drivers and Tory Burch, and is a board observer of Culligan. He formerly served on the Board of Directors at Truck-Lite and Lou Malnati’s. Mr. Verigan serves on the Founder’s Board, and as a Vice Chair of the Investment Committee, of Ann & Robert H. Lurie Children's Hospital of Chicago and is a Fellow of the Class of 2013 of Leadership Greater Chicago.
Clyde B. Anderson, 65, has served on the Board of Directors for Alliance Laundry Holdings since December 2015, and was appointed by our principal stockholder following its acquisition of the Company. Mr.
Anderson founded Anderson Growth Partners, LLC in 1997 and continues to serve as a Managing Member. He served as a board member of Hibbett Sports Inc. until 2014, overseeing its public offering in 1996. He has served as Executive Chairman of Books-A-Million, Inc. since 1982, and led the company through its public offering in 1992 and its subsequent privatization in 2015. In October 2023, he became Executive Chairman of Cavender’s. He is currently a Board Member of TNT Fireworks and principal shareholder of Preferred Growth Properties. Additionally, Mr. Anderson serves as Chairman of the BDTCP Fund Advisory Committee.
Timothy J. FitzGerald, 55, has served on the Board of Directors for Alliance Laundry Holdings since April 2021. Mr. FitzGerald has been the Chief Executive Officer of The Middleby Corporation (“Middleby”) since March 2019, before which he held many positions at Middleby and its subsidiary, Middleby Marshall Inc., including Vice President and Chief Financial Officer from 2003 to 2019, Vice President and Corporate Controller from 2000 to 2003, and Corporate Controller from 1998 to 2003. Before joining Middleby, Mr. FitzGerald was a Manager with Arthur Anderson LLP for seven years. He currently sits on the Board of Directors at Middleby.
Phyllis A. Knight, 62, has served on the Board of Directors for Alliance Laundry Holdings since January 2022. Ms. Knight currently serves as Chief Financial Officer and Executive Vice President of Tecumseh Products Company LLC after joining the company in August 2020. She previously served as Managing Director at Conway MacKenzie Inc. from 2019 to August 2020, Chief Financial Officer at Polar Corporation from 2014 to 2016 and Chief Financial Officer at Diversified Restaurant Holdings, Inc. from 2016 to 2019. She also served as Executive Vice President and Chief Financial Officer at Champion Enterprises, Inc. and Champion Enterprises Holdings, LLC from 2002 to 2013. She previously served in various roles in the Mortgage Services Division at Green Tree Financial Corp., and as Senior Manager at KPMG.
Narasimha Nayak, 56, has served on the Board of Directors for Alliance Laundry Holdings since May 2025. Mr. Nayak has served as Vice President of the IoT and Connected Products Group at Rheem since March 2024 and previously served as Chief Technology Officer and Executive Vice President of the Chamberlain Group from 2019 to 2023; Senior Vice President of the Connected Car Division at Harman International from 2015 to 2019; Senior Vice President of the Systems and Solutions Group at Comverse, Inc. from 2012 to 2014; Senior Vice President and General Manager of the Software Services & Solutions Business Group at Alcatel-Lucent from 2006 to 2012; in addition to prior roles at Openwave Systems, LogicaCMG Global Telecoms, ECI Telecom, Hughes Network Systems and PRC, Inc. Mr. Nayak also served on the Technical Advisory Board of Gentherm in 2024. Mr. Nayak also previously served on the Board of Directors of mHub.
Additional information regarding our director nominee will be provided in a future submission.
Composition of our Board of Directors
Our business and affairs are managed under the direction of our Board of Directors. Upon the completion of this offering, our amended and restated certificate of incorporation will provide that the Board of Directors shall consist of at least five but not more than thirteen directors and that the number of directors may be fixed from time to time by resolution of the Board of Directors. The Board of Directors will initially consist of seven members. Our amended and restated certificate of incorporation will provide that our Board of Directors will be divided into three classes of directors, as nearly equal in number as possible, with one class being elected each year by our stockholders. The initial division of the three classes of directors is as follows:
•Class I, which will initially consist of Michael D. Schoeb, Phyllis A. Knight and Robert L. Verigan, whose terms will expire at our first annual meeting of stockholders, which we expect to hold in 2026;
•Class II, which will initially consist of Clyde B. Anderson and , whose terms will expire at the following annual meeting of stockholders, which we expect to hold in 2027; and
•Class III, which will initially consist of Narasimha Nayak and Timothy J. FitzGerald, whose terms will expire at the following annual meeting of stockholders, which we expect to hold in 2028.
At each annual meeting of stockholders after the initial classification, the successors to the directors whose terms will then expire will be elected to serve from the time of election and qualification until the third annual
The Stockholders Agreement will grant our principal stockholder the right to designate nominees to our Board of Directors, in addition to certain other rights, subject to the principal stockholder maintaining certain ownership thresholds in us. Robert L. Verigan and Clyde B. Anderson have been designated by our principal stockholder as its nominees to serve on our Board of Directors following the completion of the offering. Following the time when the principal stockholder no longer maintains beneficial ownership of at least a majority of the aggregate outstanding shares of our common stock (the “Majority Ownership Threshold”), directors may only be removed from office with the affirmative vote of holders of 66 2/3% of the total voting power of our outstanding shares of common stock, voting together as a single class, and, for so long as our Board of Directors remains classified, only for cause. This requirement of a supermajority vote to remove directors for cause could enable a minority of our stockholders to exercise veto power over any such removal. Prior to such time, directors may be removed with or without cause by the affirmative vote of the holders of a majority of the total voting power of our outstanding shares of common stock. See “Certain Relationships and Related Person Transactions—Agreements to be Entered into in Connection with this Offering—Stockholders Agreement.” Controlled Company
Because our principal stockholder will continue to own a majority of the voting power of our common stock following the completion of this offering, we will be a “controlled company” for purposes of the NYSE’s listing rules. As a controlled company, exemptions will be available to us under the listing rules of the NYSE that would exempt us from certain of the NYSE’s corporate governance requirements, including the requirements that, within one year of the date of the listing of our common stock:
•that our Board of Directors be composed of a majority of “independent directors,” as defined under the NYSE’s rules;
•that we have a compensation committee that is composed entirely of independent directors; and
•that we have a nominating and governance committee that is composed entirely of independent directors.
Accordingly, for so long as we are a “controlled company,” you will not have the same protections afforded to stockholders of companies that are subject to all of the NYSE’s corporate governance requirements. In the event that we cease to be a controlled company and our common stock continues to be listed on the NYSE, we will be required to comply with these provisions prior to the end of the transition period provided under the listing requirements of the NYSE and SEC rules and regulations for companies that cease to qualify as controlled companies. See “Risk Factors—Upon the listing of our common stock on the NYSE, we will be a “controlled company” within the meaning of the corporate governance standards of the NYSE. As a result, we will qualify for, and may in the future rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.” Immediately following the completion of this offering, we do not intend to rely on the exemption to the requirement that a majority of our directors be “independent” as defined in the rules nor to the exemptions to the requirements that we have an independent compensation committee and independent nominating and corporate governance committee.
These exemptions do not modify the independence requirements for our Audit Committee, and we expect to satisfy the member independence requirement for our Audit Committee immediately following the completion of this offering.
Director Independence
We anticipate that, prior to the completion of this offering, our Board of Directors will review the independence of each director and determine that each of our directors other than Michael D. Schoeb is independent as defined under the NYSE’s listing rules. In assessing the independence of each of our directors, our Board of Directors will consider the relationships that each director has with the Company and our principal stockholder and all other facts and circumstances that our Board of Directors deemed relevant to determine director independence. For so long as we are a controlled company, we will not be required to maintain compliance with the director independence requirements of the NYSE and may choose in the future to change our Board of Directors or committee composition or other arrangements to manage our corporate governance in accordance with the controlled company exemptions described under “—Controlled Company” above. Board Committees
Upon the completion of this offering, our Board of Directors will have three standing committees: the Audit Committee; the Compensation Committee; and the Nominating and Governance Committee. The composition and responsibilities of each committee are described below. Each of the committees will operate under its own written charter adopted by our Board of Directors, each of which will be available on our website upon the completion of this offering. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated into, this prospectus, and you should not rely on any such information in making the decision whether to purchase shares of our common stock. Members will serve on these committees until their resignation or until otherwise determined by our Board of Directors. In the future, our Board of Directors may establish other committees as it deems necessary or advisable to assist it with its responsibilities.
Audit Committee
Following this offering, our Audit Committee will be composed of Phyllis A. Knight, Timothy J. FitzGerald and , with Ms. Knight serving as chairperson of our Audit Committee. We anticipate that, prior to the completion of this offering, our Board of Directors will determine that each of them satisfies the independence requirements of the NYSE and of the SEC under Rule 10A-3 under the Exchange Act. Our Board of Directors has determined that Ms. Knight is an “audit committee financial expert” within the meaning of the applicable SEC rules, and that each member of the Audit Committee has been determined to be “financially literate” under the requirements of the NYSE.
The purpose of our Audit Committee will be assisting our Board of Directors’ oversight of (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) our independent auditors’ qualifications and independence, and (4) the performance of our independent auditors and our internal audit function. The responsibilities of our Audit Committee will include:
•appointment, compensation, retention and oversight of the work of our independent auditors and any other registered public accounting firm engaged for the purpose of preparing or issuing an audit report or to perform audit, review or attestation services;
•pre-approval of, or the adoption of appropriate procedures to pre-approve, all audit and non-audit services to be provided by our independent auditors;
•consideration of reports or communications submitted to our Audit Committee by our independent auditors, including reports and communications related to the overall audit strategy;
•meeting with management and our independent auditors to discuss the scope of the annual audit, to review and discuss our financial statements and related disclosures and to discuss any significant matters arising from any audit and any major issues regarding accounting principles and financial statement presentations;
•discussing with members of the legal department any significant legal, compliance or regulatory matters that may have a material effect on our financial statements, business or compliance policies; and
•establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters, and for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
Compensation Committee
Following this offering, our Compensation Committee will be composed of Robert L. Verigan, Phyllis A. Knight and Timothy J. Fitzgerald, with Mr. Verigan serving as chairperson of our Compensation Committee. The responsibilities of our Compensation Committee will include:
•establishing and approving, and making recommendations to our Board of Directors regarding, performance goals and objectives relevant to the compensation of our Chief Executive Officer, evaluating the performance of our Chief Executive Officer in light of those goals and objectives and setting, or recommending to the full Board of Directors for approval, the Chief Executive Officer’s compensation, including incentive-based and equity-based compensation, based on that evaluation;
•setting the compensation of our other executive officers, based in part on recommendations of the Chief Executive Officer;
•exercising administrative authority under our equity incentive plans and employee benefit plans;
•establishing policies and making recommendations to our Board of Directors regarding director compensation; and
•preparing a compensation committee report on executive compensation as may be required from time to time to be included in our annual proxy statements or annual reports on Form 10-K filed with the SEC.
Nominating and Governance Committee
Following this offering, our Nominating and Governance Committee will be composed of Clyde B. Anderson, Narasimha Nayak and Robert L. Verigan, with Mr. Anderson serving as chairperson of our Nominating and Governance Committee. The responsibilities of our Nominating and Governance Committee will include:
•identifying and recommending director nominees, consistent with criteria approved by our Board of Directors;
•reviewing the qualifications of incumbent directors to determine whether to recommend them for reelection at the next annual meeting of stockholders;
•developing and recommending to our Board of Directors standards to be applied in making determinations as to the absence of material relationships between us and a director;
•identifying, evaluating and recommending board members qualified to serve on any board committee and recommending that our Board of Directors appoint the identified member or members to the applicable committee;
•developing and recommending corporate governance guidelines to our Board of Directors; and
•overseeing the evaluation of our Board of Directors.
Code of Business Conduct and Ethics
Our Board of Directors will adopt a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees. The Board of Directors will also adopt a Code of Ethics for Senior Financial Executives. The full text of the Code of Business Conduct and Ethics and Code of Ethics for Senior Financial Executives will be made available on our website upon the completion of this offering. In addition, we intend to make available on our website or in a current or periodic report filed with the SEC any legally required disclosures regarding amendments to, or waivers of, provisions of our Code of Business Conduct and Ethics or Code of Ethics for Senior Financial
Executives. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated into, this prospectus, and you should not rely on any such information in making the decision whether to purchase shares of our common stock.
Compensation Committee Interlocks and Insider Participation
Additional information regarding Compensation Committee interlocks and insider participation will be provided in a future submission.
DIRECTOR COMPENSATION
Board of Directors
In 2024, we compensated members of our Board of Directors in accordance with a policy established by our Compensation Committee.
Only our non-employee directors receive compensation for their service on our Board of Directors, which is paid in cash. None of our non-employee directors received grants of stock options or other equity-based awards in 2024.
The following table summarizes all compensation awarded to, earned by, or paid to each of our non-employee directors during 2024 (excluding Mr. Nayak, who joined our Board of Directors in May 2025).
| | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned or Paid in Cash ($)(1) | | All Other Compensation ($) | | Total ($) |
| Robert L. Verigan (Chairman) | | 150,000 | | | — | | | 150,000 | |
Phyllis A. Knight | | 150,000 | | | — | | | 150,000 | |
Timothy J. FitzGerald | | 150,000 | | | — | | | 150,000 | |
San W. Orr(2) | | 150,000 | | | — | | | 150,000 | |
Clyde B. Anderson | | 150,000 | | | — | | | 150,000 | |
James A. Winnefeld Jr.(2) | | 150,000 | | | — | | | 150,000 | |
______________
(1)Reflects annual board fees of $150,000, payable in cash in arrears.
(2)Messrs. Orr and Winnefeld Jr. resigned from our Board of Directors on August 29, 2025.
Post-Offering Director Compensation
In connection with this offering, we intend on adopting a compensation policy for our non-employee directors who are unaffiliated with Alliance Laundry Holdings. Additional information regarding this policy will be provided in a future submission.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The purposes of this Compensation Discussion and Analysis is to provide information about the material elements of compensation that, during our fiscal year ended December 31, 2024 were paid to, awarded to, or earned by our named executive officers (“NEOs”). Our NEOs for 2024 were:
| | | | | | | | |
| Name | | Position |
Michael Schoeb | | Chief Executive Officer (“CEO”) |
| Robert Calver | | Vice President, Financial Planning and Analysis |
| Rebecca Huang | | Former Chief Financial Officer |
| Joseph Hainline | | Chief Technology Officer |
| Justin Blount | | Former President and Chief Operating Officer |
| Craig Dakauskas | | Former Senior Vice President, North America (“NA”) Commercial |
As noted above, this Compensation Discussion and Analysis describes our historical executive compensation program for our NEOs during 2024. In connection with this offering, we intend to adopt compensation plans that are designed to comply with laws applicable to public companies and we expect that, after our initial public offering, our Compensation Committee will set policies that may be different from the policies that applied to our NEOs before our initial public offering.
Effective July 31, 2024, Rebecca Huang stepped down as our Chief Financial Officer. On that date, our Board of Directors determined that Robert Calver, our Vice President, Financial Planning and Analysis, would carry out the duties and responsibilities of the Chief Financial Officer in an interim capacity until a new Chief Financial Officer was appointed. For purposes of our reporting obligations, Mr. Calver served as our principal financial officer following Ms. Huang’s departure until the appointment of Dean Nolden as our Chief Financial Officer, effective April 14, 2025.
Effective January 31, 2025, Justin Blount stepped down as our President and Chief Operating Officer.
Effective March 31, 2025, Craig Dakauskas, our Senior Vice President, NA Commercial, retired.
Compensation Philosophy and Objectives
Our executive compensation program is designed to attract, motivate, reward, focus and retain high caliber management deemed essential to ensure our success. The program seeks to align executive compensation with our short- and long-term objectives, business strategy and financial performance, which also aligns the interests of our NEOs with those of our stockholders. As a result, we provide competitive compensation packages to our NEOs, a material component of which is performance-based compensation that is dependent upon the achievement of our business objectives and encourages our NEOs to drive long-term stockholder value. Our compensation program is designed to achieve the following objectives:
•provide competitive and attractive pay plans that reflect the respective positions, duties and responsibilities of our NEOs;
•incentivize contributions to the continued growth and development of our business;
•retain NEOs and compensate their short- and long-term contributions; and
•align the interests of our NEOs with the financial and strategic objectives of our stockholders.
We have determined that any risks arising from our compensation programs and policies are not reasonably likely to have a material adverse effect on our business. Our compensation programs and policies mitigate risk by combining performance-based, long-term compensation elements with payouts that are correlated to the value
delivered to stockholders. This combination, as well as the multi-year vesting schedule for equity awards, encourage employees to maintain both a short- and long-term view with respect to our performance.
Determination of Compensation
Historically, the compensation of our NEOs has been set by the Compensation Committee in consultation with Mr. Schoeb (other than with respect to his own compensation). The Compensation Committee strives for a dynamic approach in designing our compensation, reviewing compensation arrangements annually to account for company and individual performance and industry trends. Mr. Schoeb, typically provides annual recommendations to the Compensation Committee, offering insights on the compensation and performance of our NEOs. Mr. Schoeb bases his recommendations upon a comprehensive review (formed both subjectively and objectively against individually developed goals) of the performance of the NEOs, our satisfaction of rigorous corporate goals, internal pay equity considerations, the competitiveness of the market for each NEO’s services and an annual self-evaluation performed by such NEO. The Compensation Committee evaluates any recommended compensation adjustments or awards to NEOs and ultimately determines executive compensation. The Compensation Committee screens Mr. Schoeb from all conversations surrounding his own compensation structure, ensuring that any decisions are untainted by improper influence.
In anticipation of this offering, our Board of Directors will adopt a written charter for the Compensation Committee that establishes, among other things, the Compensation Committee’s purpose and its responsibilities with respect to executive compensation. This charter will provide that the Compensation Committee will, among other things, assist the Board of Directors in its oversight of executive compensation, management development and succession, director compensation and executive compensation disclosure.
In December 2024, we engaged Aon as an outside consultant to advise on the design of our go-forward executive compensation. The Compensation Committee determined that Aon’s services as its independent compensation consultant for 2024 did not raise any conflicts of interest. The Compensation Committee considered the following factors, among others, when assessing Aon’s independence:
•Aon did not provide any other services to us and reported directly to the Compensation Committee;
•Aon has policies and procedures in place to prevent conflicts of interest;
•no member of the Aon consulting team serving the Compensation Committee has a business or personal relationship with any of our executive officers; and
•the amount of fees paid to Aon is less than 1% of its total consulting income.
Summary Compensation Table
The following table presents compensation awarded to, earned by and paid to our NEOs for the fiscal year ended December 31, 2024.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | | Year | | Salary ($) | | Bonus ($)(1) | | Option Awards ($) | | Nonequity Incentive Plan Compensation ($)(2) | | All Other Compensation ($)(3) | | Total ($) |
Michael Schoeb Chief Executive Officer | | 2024 | | 887,625 | | 10,000 | | — | | | 1,483,059 | | 20,700 | | 2,401,384 |
Robert Calver Vice President, Financial Planning and Analysis | | 2024 | | 247,651 | | 85,000 | | — | | | 116,354 | | 34,714 | | 483,719 |
Rebecca Huang Former Chief Financial Officer | | 2024 | | 192,833 | | - | | — | | | 251,875 | | 20,700 | | 465,408 |
Joseph Hainline Chief Technology Officer | | 2024 | | 293,841 | | 11,200 | | — | | | 178,173 | | 20,700 | | 503,914 |
Justin Blount Former President and Chief Operating Officer | | 2024 | | 536,813 | | 210,000 | | — | | | 488,250 | | 20,700 | | 1,255,763 |
Craig Dakauskas Former Senior Vice President, NA Commercial | | 2024 | | 352,272 | | 10,000 | | — | | | 210,221 | | 20,700 | | 593,193 |
______________
(1)For Mr. Blount, the amount reflects a $100,000 sign-on bonus, as well as a discretionary bonus earned in respect of individual performance in 2024. Amounts reflected for remaining NEOs consist of discretionary bonuses earned in respect of individual performance in 2024.
(2)Amounts reflected consist of annual incentive bonuses payable under the Metric Bonus Plan. While incentive targets were established in fiscal year 2023, payouts occurred during March 2024, subject to the NEOs remaining actively employed on the applicable payment date and as such, were deemed earned in 2024. See “—Annual Incentive Awards” below for more information. (3)The amounts in the “All Other Compensation” column for fiscal year 2024 include the following:
a)Our contributions to the ALCAP (401(k) plan) for Messrs. Schoeb, Calver, Dakauskas, Hainline and Blount and Ms. Huang, in the amount of $20,700 each.
b)For Mr. Calver, a housing allowance to facilitate a relocation from the United Kingdom to Miami, Florida ($9,000) and payment of expenses incurred in preparing personal tax filings ($5,014).
Elements of Compensation
The following table describes the material elements of our compensation program for the fiscal year ended December 31, 2024 as applicable to our NEOs and reflected in the Summary Compensation Table above. Historically, our executive compensation program has consisted of the following elements: base salary, annual cash incentive compensation, long-term equity incentive compensation, health, welfare and retirement benefits and reasonable perquisites, each designed to achieve the compensation objective outlined herein with respect to each
element. We believe that together these elements supported the objectives of our compensation program without encouraging unnecessary or excessive risk taking by our NEOs.
| | | | | | | | |
Compensation Element | | Compensation Objectives Designed to be Achieved and Key Features |
| Base Salary | | Attract and retain industry leaders by providing base cash compensation at competitive levels |
| Annual Cash Incentive Compensation | | Focus efforts toward the realization of annual performance goals and to reward individual and group contributions to our annual operating performance based upon the achievement of pre-established performance standards. We may also grant discretionary bonuses from time to time. |
| Long-Term Equity Incentive Compensation | | Incentivize the alignment of interests between executives and stockholders, historically achieved through the provision of time and performance-based stock options |
Health, Welfare and Retirement Benefits and other Perquisites | | Demonstrate commitment to employee well-being through the provision of reasonable benefits to executives and their families |
As part of our transition to a publicly traded company in connection with this offering, we will evaluate our executive compensation program, which may differ in several respects from our historical program. For information on certain elements of our executive compensation program that we intend to adopt in connection with this offering, see “—Post-Offering Compensation” below. Base Salary
The base salaries of our NEOs have been an important part of their total compensation package, and have been intended to reflect their respective positions, duties and responsibilities. Base salary is a visible and stable fixed component of our compensation program. Although we believe that a substantial portion of each NEO’s total compensation should be “at risk,” we also recognize the importance of setting base salaries at levels that will attract, retain and motivate top talent. In setting annual base salary levels for our NEOs, we take into account competitive considerations, individual performance, tenure, internal pay equity, salaries provided to executive officers of our peer companies, each NEO’s anticipated role criticality relative to our other employees, and the determination by our Compensation Committee and Mr. Schoeb of the essential need to attract and retain these NEOs.
On a prospective basis, we intend to continue to evaluate the mix of base salary, short-term incentive compensation and long-term incentive compensation to appropriately align the interests of our NEOs with those of our stockholders.
Annual Incentive Awards
Recognizing that annual cash incentives are an essential component of a balanced compensation scheme, we instituted our Metric Bonus Plan (“Metric Bonus Plan”), focusing our NEOs’ attention on our financial and strategic growth objectives. We consider annual cash incentives to be an important “at risk” component of our compensation program. Rather than adopt a complicated and opaque bonus formula, we tie annual incentives to a singular metric, Adjusted EBITDA, and have adopted ambitious, but achievable targets for our NEOs. In order to secure any payment under the Metric Bonus Plan, our Adjusted EBITDA must reach at least 95% of the predetermined target. Bonus targets are established as a percentage of base salary. In addition, to further ensure the retention of our NEOs, payment under the Metric Bonus Plan requires continued employment through the bonus payment date, which occurs by March 15 of the year following the year subject to the applicable Adjusted EBITDA metric. The chart
below demonstrates the potential payouts under the Metric Bonus Plan based on achievement of Adjusted EBITDA for the 2023 fiscal year, which were paid in March 2024.
| | | | | | | | | | | | | | | | | |
| Minimum in Millions (95%) | | Target in Millions (100%) | | Maximum in Millions (110%) |
2023 Adjusted EBITDA Target | $ | 301.4 | | | $ | 317.3 | | | $ | 349.0 | |
| Payout as a % of Target | 50 | % | | 100 | % | | 200 | % |
The Metric Bonus Plan is reviewed and approved by our Board of Directors, with individual targets set by the Compensation Committee. The table below sets forth for 2023 the target annual bonus opportunities for each of our NEOs, with actual payouts received in March 2024 in accordance with the Metric Bonus Plan. For purposes of the Metric Bonus Plan, our 2023 Adjusted EBITDA was $334,763,000, resulting in the achievement of the performance objective at 155% of target for each NEO. This measure consists of Adjusted EBITDA for the fiscal year ended December 31, 2023, subject to additional upward adjustments of $6,286,000 to exclude certain expenses not representative of our ongoing operations such as severance, certain new product development expenses and litigation and legal expenses. For a reconciliation of Adjusted EBITDA to net income, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures and Key Operating Metrics.” | | | | | | | | | | | | | | | | | | | | |
| NEO | | Target (as a % of Base Salary) | | Annual Incentive Target ($) | | Actual Annual Incentive Award ($) |
| Michael Schoeb | | 112.5 | % | | 956,812 | | | 1,483,059 | |
| Robert Calver | | 30 | % | | 75,067 | | | 116,354 | |
| Rebecca Huang | | 50 | % | | 162,500 | | | 251,875 | |
| Joseph Hainline | | 40 | % | | 114,950 | | | 178,173 | |
| Justin Blount | | 60 | % | | 315,000 | | | 488,250 | |
| Craig Dakauskas | | 40 | % | | 135,626 | | | 210,221 | |
In addition to bonuses paid under the Metric Bonus Plan, certain of our NEOs received discretionary bonuses in respect of individual performance in 2024. These amounts are set forth in the Summary Compensation Table above.
Long-Term Incentive Awards
We view equity-based compensation as a critical component of our total compensation program. Equity-based compensation creates an ownership culture among our NEOs that provides an incentive to contribute to our continued growth and development and aligns the long-term interests of our NEOs with those of our stockholders.
Historically, we granted time- and performance-based stock options pursuant to the 2015 Stock Option Plan. Generally, time-based options vest and become exercisable in five equal installments on each of the first five anniversaries of the vesting commencement date specified in the applicable award agreement, subject to the recipient’s continued employment with either us or one of our subsidiaries through each vesting date. Performance-based stock options vest and become exercisable subject to our principal stockholder receiving aggregate proceeds in excess of a deemed investment threshold and an internal rate of return on its investment in us in connection with a liquidity event (which includes this offering) (the “performance-based options”). We anticipate that this offering will generate the requisite proceeds to trigger the vesting of outstanding performance-based stock options. We believe that these conditions serve as an effective retention tool while also motivating our executives to achieve strong corporate performance that provides material returns to our stockholders. In 2024, none of our NEOs were granted stock options, as we considered their existing holdings sufficient to incentivize superior performance and sought to maintain current levels of management ownership in light of this offering.
We supplement our option grants through our 2015 Stock Purchase Plan, which provides a further opportunity for our NEOs to augment their ownership stake in us. See “Equity Plans—2015 Stock Purchase Plan” below for a more comprehensive overview of our 2015 Stock Purchase Plan.
Employment Agreements
We entered into an employment agreement with our CEO, Michael Schoeb, in November 2015. The agreement was subject to an initial five-year term, with automatic renewals for additional two-year terms thereafter, unless either we or Mr. Schoeb provides written notice of an election not to renew at least 60 days prior to the applicable renewal date. The employment agreement sets forth Mr. Schoeb’s annual base salary, eligibility for an annual cash incentive opportunity equal to 100% of his annual base salary (which was subsequently increased by the Compensation Committee to 112.5% of his annual base salary) and certain employee benefits and perquisites, including the use of our private plane for personal use for up to 25 flight hours per year. During our 2024 fiscal year, Mr. Schoeb made no personal use of our private plane. Upon termination of Mr. Schoeb’s employment by either us without “Cause” or by him for “Good Reason” (each, as defined in the employment agreement), and subject to his execution and non-revocation of a general release of claims in our favor and compliance with the restrictive covenants described in the next sentence, he will be entitled to receive: (i) an aggregate amount equal to two times the sum of his annual base salary in effect immediately prior to his termination and his annual bonus for the immediately preceding fiscal year, (ii) a pro-rated annual bonus for the year of termination and (iii) payment of the employer-portion of health insurance coverage for 24 months for him and his eligible dependents. Mr. Schoeb’s employment agreement provides for a Section 280G “best net cut-back” such that payments or benefits that Mr. Schoeb receives in connection with a change in control will be reduced to the extent necessary to avoid the imposition of any excise tax under Sections 280G and 4999 of the Code if such reduction would result in a greater after-tax payment amount for Mr. Schoeb. The employment agreement includes perpetual confidentiality and mutual non-disparagement covenants, and non-competition, employee and customer non-solicitation and no hire covenants, which, in each case, continue for two years following his termination of employment.
We also entered into an employment agreement with our former President and Chief Operating Officer, Justin Blount, in May 2023. The employment agreement set forth Mr. Blount’s annual base salary, eligibility for an annual cash incentive opportunity equal to 60% of his annual base salary, a stock option grant valued at $5,000,000 and additional cash and equity incentives and certain employee benefits. Upon a termination by us without cause, and subject to his execution and non-revocation of a general release of claims in our favor, Mr. Blount’s employment agreement provided for 52 weeks’ base salary, eligibility for a prorated bonus under the Metric Bonus Plan and a lump-sum payment to cover 52 weeks’ medical COBRA costs. The employment agreement was conditioned upon execution of our Non-Compete, Non-Solicitation, Confidentiality, and Invention Assignment Agreement, which includes, a perpetual confidentiality covenant, a non-compete covenant continuing for one year following termination of employment and employee and customer non-solicit covenants continuing for two years following termination of employment.
In December 2024, we entered into a retention letter agreement with Mr. Calver in recognition of his contributions while discharging the duties of Chief Financial Officer during the period when we were conducting a search for a chief financial officer on a permanent basis and to ensure his retention through and following the completion of a public offering. The agreement increased Mr. Calver’s annual cash incentive opportunity for the Metric Bonus Plan for the 2024 fiscal year to 40% of his annual base salary and provided for a stock option award with a grant date value of $500,000 (which award was subsequently granted in our 2025 fiscal year), a potential cash incentive of $100,000, contingent upon our selection of another individual to serve as our Chief Financial Officer on a permanent basis and a retention cash bonus which is expected to become payable in connection with this offering (totaling $200,000, with half becoming payable upon completion of such offering and the remainder becoming payable within 30 days after the one year anniversary thereof, subject to continued employment). Upon a termination by us without cause, and subject to his execution and non-revocation of a general release of claims in our favor, Mr. Calver’s agreement provides for 52 weeks’ base salary, eligibility for a prorated bonus under the Metric Bonus Plan and, for the year of termination, professional tax preparation services.
Severance Guidelines
Our NEOs as of December 31, 2024 (other than Messrs. Schoeb, Blount and Calver) are eligible for the severance benefits generally available to all of our full-time, non-unionized employees based in the United States in connection with a termination without cause, with severance benefits determined based on seniority and years of service with us and payment conditioned on the execution and non-revocation of a release of claims in favor of us.
The benefits consist of base salary continuation for up to 52 weeks, eligibility for a prorated bonus under the Metric Bonus Plan, a lump-sum payment to cover medical expenses for the number of weeks for which base salary continuation is provided and career transition services for a specified time. If employees are not afforded at least two weeks’ notice prior to termination, they are entitled to two weeks of pay in lieu thereof. Based on these guidelines, Mr. Hainline is eligible for 26 weeks’ base salary, a lump-sum payment to cover up to 26 weeks’ medical COBRA costs and 12 months of career transition services.
We entered into separation and general release agreements with Mr. Blount following his separation of employment, effective January 31, 2025, and Mr. Dakauskas following his retirement, effective March 31, 2025, which are included as exhibits to this registration statement.
Employee Benefits and Perquisites
All of our full-time U.S.-based employees, including our NEOs, are eligible to participate in our health and welfare plans. We also provide a limited number of other benefits to our executives, including annual physical examinations, reasonably incurred tax preparation service fees for Mr. Calver and cellular phone reimbursements for Mr. Schoeb. None of our NEOs is entitled to any tax gross-up payment. In considering the suitability of these benefits, we have evaluated whether each such benefit renders our NEOs more efficient and effective, and stimulates recruitment, motivation and retention. All future practices with respect to perquisites will be approved by the Compensation Committee, with an emphasis on avoiding excessive perquisites. In addition, Mr. Schoeb is entitled to use our private plane for personal use for up to 25 flight hours per year under the terms of his employment agreement but he did not use this benefit in 2024.
Retirement Benefits
We maintain the Alliance Laundry Systems Capital Appreciation Plan (our “ALCAP”), a tax-qualified defined contribution retirement savings plan for our U.S.-based employees, including our NEOs, who satisfy certain eligibility requirements. Our NEOs are eligible to participate in the 401(k) plan on the same terms as other full-time employees. We believe that providing a vehicle for tax-deferred retirement savings though these plans, and making matching contributions, adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our NEOs, in accordance with our compensation policies.
Under our ALCAP, eligible U.S. employees may contribute up to 50% of their pre-tax pay, up to the limits established by the Internal Revenue Service. For all non-union personnel, we match 100% of the first 6% of employee contributions. For all union personnel, we match 50% of the first 6% of employee contributions. Additionally, we provide a discretionary annual contribution equaling 1.5% of salaries and wages, subject to statutory limits, for eligible union personnel.
We do not offer a defined benefit pension, supplemental executive retirement plan or a non-qualified deferred compensation plan to our U.S.-based employees.
Grants of Plan Based Awards
| | | | | | | | | | | | | | | | | | | | |
| Name | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) |
| Threshold ($) | | Target ($) | | Maximum ($) |
| Michael Schoeb | | 506,250 | | | 1,012,500 | | | 2,025,000 | |
| Robert Calver | | 51,759 | | | 103,518 | | | 207,035 | |
| Rebecca Huang | | 83,688 | | | 167,375 | | | 334,750 | |
| Joseph Hainline | | 59,199 | | | 118,398 | | | 236,797 | |
| Justin Blount | | 162,225 | | | 324,450 | | | 648,900 | |
| Craig Dakauskas | | 67,263 | | | 134,526 | | | 269,052 | |
______________
(1)The tabular disclosure demonstrates the potential payouts under the 2024 Metric Bonus Plan based on achievement of the applicable Adjusted EBITDA targets. The payouts delineated in the “Target ($)” column correspond to an Adjusted EBITDA figure of $360 million,
while the payouts delineated in the “Threshold ($)” and “Maximum ($)” columns correspond to Adjusted EBITDA figures of $342 million and $396 million, respectively.
Outstanding Equity Awards at Fiscal Year-End
The following table presents information regarding outstanding equity awards held by our NEOs as of December 31, 2024, which consist solely of stock options granted pursuant to the 2015 Stock Option Plan.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards |
| Name | | Grant Date(1) | | Number of Securities Underlying Unexercised Options Exercisable (#) | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (2) | | Option Exercise Price ($) | | Option Expiration Date |
| Michael Schoeb | | 4/16/2021(2) | | 6,818 | | | — | | | 1,705 | | | 821.32 | | 10/1/2030 |
| | 4/16/2021(3) | | — | | | — | | | 8,523 | | | 821.32 | | 10/1/2030 |
| Rebecca Huang | | — | | | — | | | — | | | — | | |
| | — | |
| Robert Calver | | 11/30/2019(2) | | 345 | | | — | | | — | | | 724.19 | | 10/31/2029 |
| | 4/16/2021(2) | | 389 | | | — | | | 98 | | | 821.33 | | 10/1/2030 |
| | 4/16/2021(3) | | — | | | — | | | 487 | | | 821.33 | | 10/1/2030 |
| | 1/1/2022(3) | | | | | | 438 | | | 1140.82 | | 1/1/2032 |
| | 1/1/2022(2) | | 175 | | | — | | | 263 | | | 1140.82 | | 1/1/2032 |
| Craig Dakauskas | | 4/1/2019(2) | | 367 | | | — | | | — | | | 680.62 | | 4/1/2029 |
| | 1/1/2022(3) | | — | | | — | | | 1,885 | | | 1140.82 | | 1/1/2032 |
| | 1/1/2022(2) | | 754 | | | — | | | 1,131 | | | 1140.82 | | 1/1/2032 |
| Joseph Hainline | | 9/28/2021(2) | | 124 | | | — | | | 83 | | | 1208.19 | | 4/13/2031 |
| | 9/28/2021(3) | | — | | | — | | | 207 | | | 1208.19 | | 4/13/2031 |
| | 1/1/2022(3) | | — | | | — | | | 657 | | | 1140.82 | | 1/1/2032 |
| | 1/1/2022(2) | | 263 | | | — | | | 394 | | | 1140.82 | | 1/1/2032 |
| | 11/27/2023(2) | | 28 | | | — | | | 119 | | | 1705.93 | | 11/27/2033 |
| | 11/27/2023(3) | | — | | | — | | | 147 | | | 1705.93 | | 11/27/2033 |
| Justin Blount | | 6/12/2023(2) | | 344 | | | — | | | 1,376 | | | 1453.35 | | 6/12/2033 |
| | 6/12/2023(3) | | — | | | — | | | 1,720 | | | 1453.35 | | 6/12/2033 |
______________
(1)Tabular disclosure reflects the disaggregation of time-based and performance-based options.
(2)Time-based options vest and become exercisable in five equal installments on each of the first five anniversaries of the vesting commencement date specified in the applicable award agreement, subject to the recipient’s continued employment with either us or one of our subsidiaries through each applicable vesting date. All share numbers reflected in this table have been rounded to the nearest whole share.
(3)Performance-based options vest and become exercisable subject to our principal stockholder receiving aggregate proceeds in excess of a deemed investment threshold and an internal rate of return on its investment in us in connection with a liquidity event (which includes the offering). Payouts are not subject to a threshold or maximum level of performance. All share numbers reflected in this table have been rounded to the nearest whole share.
Option Exercises
The following table sets forth the exercise of stock options in 2024 by our NEOs. Given that our NEOs did not hold unvested stock or other similar instruments in us, references to stock awards have been omitted from the table.
| | | | | | | | | | | | | | | | | |
| | Option Awards |
Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) |
| Michael Schoeb | | — | | | — | | |
| Rebecca Huang | | 550.41 | | | 131,614 | | (1) |
| Robert Calver | | — | | | — | | |
| Craig Dakauskas | | — | | | — | | |
| Joseph Hainline | | — | | | — | | |
Justin Blount | | — | | | — | | |
______________
(1)Options exercised on July 31, 2024 in connection with her termination of service. The dollar amount is determined by multiplying (i) the number of shares of our common stock to which the exercise of the stock option related by (ii) the difference between the fair market value of our common stock on the date of exercise and the exercise price of the stock options.
Potential Payments Upon Termination or Change in Control
The section below describes the payments that we would have made to our NEOs in connection with certain terminations of employment, including in connection with a corporate transaction like a change in control, or continued employment through a change in control, if such events had occurred on December 31, 2024, the last business day of our most recently completed fiscal year. The descriptions of the benefits below are based on the terms set forth in Messrs. Schoeb and Blount’s respective employment agreements, Mr. Calver’s retention letter and our severance guidelines. While this section outlines the respective entitlements of our NEOs in place as of December 31, 2024, we ultimately negotiated and executed individualized separation agreements with Mr. Dakauskas, who retired as our Senior Vice President, NA Commercial, effective March 31, 2025 and Mr. Blount, who stepped down as President and Chief Operating Officer, effective January 31, 2025. All severance benefits described below would have been subject to such executive entering into an effective release of claims. Given that Ms. Huang stepped down as our Chief Financial Officer, effective July 31, 2024, she has been omitted from the discussion below.
Severance Benefits Under Employment Agreements
Michael Schoeb
Upon termination of Mr. Schoeb’s employment by either us without Cause or by him for Good Reason (each, as defined in his employment agreement), and subject to his execution and non-revocation of a general release of claims in favor of us and compliance with the restrictive covenants described in the next sentence, he will be entitled to receive: (i) an aggregate amount equal to two times the sum of (A) his annual base salary in effect immediately prior to his termination and (B) his annual bonus for the immediately preceding fiscal year, (ii) a pro-rated annual bonus for the year of termination and (iii) payment of the employer-portion of health insurance coverage for 24 months for him and his eligible dependents, payable in equal installments over a period of 24 months. Mr. Schoeb’s employment agreement provides for a Section 280G “best net cut-back” such that payments or benefits that Mr. Schoeb receives in connection with a change in control will be reduced to the extent necessary to avoid the imposition of any excise tax under Sections 280G and 4999 of the Code if such reduction would result in a greater after-tax payment amount for Mr. Schoeb. The employment agreement includes perpetual confidentiality and mutual non-disparagement covenants, and non-competition, employee and customer non-solicitation and no hire covenants, which, in each case, continue for two years following his termination of employment. Had Mr. Schoeb experienced a qualifying termination of employment with respect to fiscal year 2024, this amount would be equal to $3,049,979. If Mr. Schoeb’s employment is terminated by us for Cause, due to his death, permanent disability or
permanent incapacity, or he resigns other than for Good Reason or he does not renew his employment period, he will forfeit his right to any payment or benefits other than his earned base salary through the date of termination.
Justin Blount
Upon a termination by us without cause, and subject to his execution and non-revocation of a general release of claims in our favor, Mr. Blount’s employment agreement provides for 52 weeks’ base salary, eligibility for a prorated bonus under the Metric Bonus Plan and a lump-sum payment to cover 52 weeks’ medical COBRA costs. The employment agreement was conditioned upon execution of our Non-Compete, Non-Solicitation, Confidentiality, and Invention Assignment Agreement, which includes, for a period commencing upon termination of employment, one-year non-compete, two-year employee and customer non-solicit and perpetual confidentiality covenants. Had Mr. Blount experienced a qualifying termination of employment with respect to fiscal year 2024, this amount would be equal to $935,327. Mr. Blount’s agreement does not provide for severance benefits if his employment is terminated under any other circumstances.
Robert Calver
Upon a termination by us without cause, and subject to his execution and non-revocation of a general release of claims in our favor, Mr. Calver’s retention letter agreement provided for 52 weeks’ base salary, eligibility for a prorated bonus under the Metric Bonus Plan and, for the year of termination, professional tax preparation services. Had Mr. Calver experienced a qualifying termination of employment with respect to fiscal year 2024, this amount would be equal to $387,673. Mr. Calver’s agreement does not provide for severance benefits if his employment is terminated under any other circumstances.
In the absence of a separate agreement providing for benefits upon a qualifying termination of employment, our NEOs are eligible for the severance benefits generally available to all of our full-time, non-unionized employees based in the United States in connection with a termination without cause, with severance benefits determined based on seniority and years of service with us and payment conditioned on the execution and non-revocation of a release of claims in favor of us. The benefits consist of base salary continuation for up to 52 weeks, eligibility for a prorated bonus under the Metric Bonus Plan, a lump-sum payment to cover medical expenses for the number of weeks for which base salary continuation is provided and career transition services for a specified time. If employees are not afforded at least two weeks’ notice prior to termination, they are entitled to two weeks of pay in lieu thereof. Based on these guidelines, Mr. Hainline is eligible for a maximum of 26 weeks’ base salary, a lump-sum payment to cover up to 26 weeks’ medical COBRA costs and 12 months of career transition services and Mr. Dakauskas is eligible for a maximum of 26 weeks’ base salary, a lump-sum payment to cover up to 26 weeks’ medical COBRA costs and 6 months of career transitions services. Pursuant to our severance guidelines, if our NEOs are not afforded at least two weeks’ notice prior to termination, they are entitled to two weeks of pay in lieu thereof.
The aggregate value of such amounts for each of our NEOs subject to our generally applicable severance guidelines is as follows:
•Joseph Hainline: $187,578
•Craig Dakauskas: $219,427
Treatment of Outstanding Options
Each of the stock option award agreements with our NEOs provides that unless our Compensation Committee determines that outstanding stock option awards will be honored, assumed or substituted by the successor corporation, in the event of a “Change in Control” (as defined in the 2015 Stock Option Plan), each option subject to service-based vesting conditions, whether or not then exercisable, along with each outstanding option that, prior to or in connection with such Change in Control, has become exercisable upon the attainment of specified performance objectives, will be cancelled in exchange for a lump-sum cash payment equaling the per share Change in Control consideration less the exercise price (with any option failing to have achieved applicable performance-based vesting conditions forfeited for no consideration). Alternatively, the Compensation Committee may permit for the assumption or rollover of options in connection with a Change in Control, provided that, among other things,
following such assumption or rollover, the options are fully vested and exercisable (with the acceleration of the vesting of options or the settlement thereof not being limited by the application of Section 280G of the Code).
The value of the outstanding options that would vest and become exercisable upon a Change in Control (including, for purposes of performance-based options, this offering) for each of the NEOs, reflecting the fair market value of the shares underlying such stock options on December 31, 2024, which was $1,751.73 per share, is as follows:
•Michael Schoeb: $9,515,845
•Robert Calver: $972,907
•Joseph Hainline: $812,265
•Justin Blount: $923,881
•Craig Dakauskas: $1,842,027
Each of the stock option award agreements with our NEOs provides that we may require our NEOs to forfeit or allow us to recoup any then-outstanding options (whether vested or unvested) if such individual materially breaches any restrictive covenant set forth in the stock option award agreement, including perpetual confidentiality and two-year post-termination non-competition restrictive covenants.
Each of the stock option award agreements with our NEOs further provide that unless our Compensation Committee elects to provide for longer post-termination exercise periods, in the event the NEO’s employment terminates for any reason other than for “Cause” (as defined in the 2015 Stock Option Plan), any options held by such NEO which are exercisable at the date of termination of employment will remain exercisable for the shorter of (i) the period that is up to 60 days following the date of termination (or the 120th day after the date of death if the NEO dies post-termination but within the original exercise period) or (ii) the original option expiration date. If the NEO’s employment terminates by reason of death, disability or retirement, any option exercisable as of such date may be exercised at any time prior to one year following his or her termination or the original option expiration date, whichever period is shorter. Unless otherwise determined by the Compensation Committee, any options held by the NEO which are not then exercisable at the time of the termination of employment will terminate and be canceled immediately upon such termination of employment.
All outstanding options (whether or not exercisable) held by an NEO who is terminated for Cause will be terminated and cancelled immediately upon such termination.
Equity Plans
2015 Stock Option Plan
Our 2015 Stock Option Plan became effective on August 31, 2015 and provides for the grant of both incentive stock options and non-qualified stock options. Awards may be granted to any director, employee or other service provider selected by either the Compensation Committee or an authorized officer of Alliance Laundry Holdings, subject to the approval of the Compensation Committee.
As of , 2025 we had shares of our common stock available for issuance under our 2015 Stock Option Plan. As of , 2025 stock options to purchase shares of our common stock with a weighted-average exercise price of $ per share were outstanding. Shares of our common stock underlying cancelled, terminated or forfeited awards shall be again made available for grant under the 2015 Stock Option Plan. Moreover, any shares of Common Stock that are withheld to settle tax obligations, without otherwise being issued, shall also be available for future grants under the 2015 Stock Option Plan.
Our 2015 Stock Option Plan is administered by our Compensation Committee, which has the authority to, among other things, determine grantees and the terms and conditions of any awards; prescribe, amend and rescind any rules and regulations relating to the 2015 Stock Option Plan; and to make any and all determinations deemed
advisable for the interpretation and administration of the 2015 Stock Option Plan. Any determination made by the Compensation Committee in the course of administering the 2015 Stock Option Plan will be final, binding and conclusive.
Upon the occurrence of any event affecting our common stock (including any stock dividend, stock split, recapitalization, reorganization, extraordinary dividend or other extraordinary distribution), proportionate adjustments will be made to (1) the number of shares reserved for issuance under the 2015 Stock Option Plan, (2) the number of shares subject to outstanding grants and (3) the exercise price, vesting conditions and other terms of any outstanding awards.
In the event of a “Change in Control” (as defined in the 2015 Stock Option Plan), each option subject to service-based vesting conditions, whether or not then exercisable, along with each outstanding option that, prior to or in connection with such Change in Control, has become exercisable upon the attainment of specified performance objectives, will be cancelled in exchange for a cash payment equaling the per share Change in Control consideration less the exercise price (with any option failing to have achieved applicable performance-based vesting conditions forfeited for no consideration). However, award agreements may provide for assumption or rollover of options, provided that, among other things, following such assumption or rollover, the options are fully vested and exercisable.
In the event of a “Public Offering” (as defined in the 2015 Stock Option Plan), our Compensation Committee may, subject to any exceptions set forth in the 2015 Stock Option Plan, amend any outstanding option to provide for (i) the substitution of any exercisability criteria based on the attainment of applicable performance goals (including relating to our principal stockholder’s return on its investment) with criteria based on stock price and (ii) the imposition of certain blackout periods, in each case, as it determines to be appropriate; provided, however that such amendments shall preserve the economic value, and vesting and exercisability of the options, as determined by our Compensation Committee in its sole good faith discretion.
Awards granted under our 2015 Stock Option Plan generally may not be transferred or assigned in any manner other than by will or the laws of descent and distribution, unless otherwise permitted by the Compensation Committee. Shares of our common stock issued in respect of an award also generally may not be transferred or assigned in any manner unless otherwise provided in our Shareholders Agreement. For more information on our Shareholders Agreement, see “Certain Relationships and Related Person Transactions.” The Compensation Committee may amend or terminate both the 2015 Stock Option Plan and any awards, provided that such amendment or termination preserves the before- and after-tax economic value of any previously granted award. Our 2015 Stock Option Plan will expire on August 31, 2026, unless terminated earlier in accordance with the terms of the 2015 Stock Option Plan.
2015 Stock Purchase Plan
We sponsor the 2015 Stock Purchase Plan (our “2015 Stock Purchase Plan”), which became effective on August 31, 2015. Our 2015 Stock Purchase Plan, which is administered by our Compensation Committee, incentivizes employees, directors and other service providers to participate in our growth by offering them an opportunity to bolster their ownership interest through the ability to purchase shares of our common stock at a purchase price equaling the fair market value of such shares on the purchase date.
The total number of shares of our common stock that may be reserved and made available for purchase pursuant to our 2015 Stock Purchase Plan is 92,058.921 shares.
The Compensation Committee possesses the requisite authority to prescribe and rescind rules and regulations relating to the 2015 Stock Purchase Plan, interpret our 2015 Stock Purchase Plan and make all other determinations necessary or advisable to effectuate the purposes of the plan. Any determination made by the Compensation Committee in the course of administering the 2015 Stock Purchase Plan will be final, binding and conclusive. The Compensation Committee shall designate, in its discretion, those employees, directors and other service providers eligible to participate in the 2015 Stock Purchase Plan.
Unless terminated earlier, our 2015 Stock Purchase Plan will automatically terminate on August 31, 2026. In connection with the offering, our 2015 Stock Purchase Plan will terminate effective on the business day immediately prior to the effective date of the registration statement of which this prospectus forms a part.
Policies
Stock Ownership Guidelines
In connection with this offering, we intend on adopting executive officer and stock ownership guidelines. Additional information regarding these guidelines will appear in a future submission in the section titled “Corporate Governance—Stock Ownership Guidelines” above. Clawback Policy
In connection with and effective as of the date of this offering, we adopted our Incentive Compensation Recovery Policy (our “Clawback Policy”) pursuant to which we must seek to recover compensation from an executive officer awarded after the date of the policy in connection with an accounting restatement required due to our material noncompliance with any financial reporting requirements under the federal securities laws.
Tax and Accounting Implications
Tax Consequences of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally prohibits public companies from claiming a tax deduction for more than $1 million of annual compensation paid to a company’s named executive officers who are covered employees under Section 162(m), even if such compensation is performance-based or paid following termination of employment. Although the Compensation Committee will be cognizant of Section 162(m)’s limitations in remunerating our executives, we believe the tax deduction is only one of several relevant factors in setting compensation.
Following the completion of this offering, the Compensation Committee will consider the implications of Section 162(m) of the Code when designing and implementing our compensation programs, but will maintain flexibility to design programs that it believes are in the best interests of us and our stockholders and consistent with the objectives of our executive compensation programs, including the flexibility to authorize payments that might not be deductible.
Accounting for Stock-Based Compensation
Currently and following the completion of this offering, we will account for stock-based payments in accordance with the requirements of FASB ASC Topic 718.
Stockholder Say-on-Pay and Say-on Frequency Vote
Our stockholders will have their first opportunity to cast an advisory vote to approve our NEOs’ compensation at our first annual meeting of stockholders and to determine the frequency of these advisory votes. In the future, we intend to consider the outcome of the say-on-pay and say-on-frequency votes when making compensation decisions regarding our NEOs.
Post-Offering Compensation
In connection with this offering, we intend to formalize our post-offering compensation philosophy and implement compensation arrangements that reflect that philosophy, which we expect to be similar to our current compensation philosophy, with appropriate adjustments to reflect our and our stockholders go-forward interests as a newly public company. We believe that this offering will enable us to offer our key employees compensation directly linked to the performance of our business which we expect will assist us in maintaining our ability to attract, retain and motivate a highly skilled and qualified workforce and serve the interests of our stockholders. We are committed to retaining a fair and competitive compensation package, with total compensation tying personal earnings to achievement of both short- and long-term company financial and strategic goals. Additional information regarding our post-offering compensation architecture will be described in a future submission.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Other than compensation arrangements for our executive officers and directors which are described elsewhere in this prospectus, below we describe transactions since January 1, 2022 to which we were or will be a participant and in which:
•the amounts involved exceeded or will exceed $120,000; and
•any of our directors, executive officers or holders of more than 5% of our outstanding voting securities, or any member of the immediate family of, or person sharing the household with, the foregoing persons (each, a “related person”), had or will have a direct or indirect material interest.
Other than as described below under this section titled “Certain Relationships and Related Person Transactions,” since January 1, 2022, we have not entered into any transactions, nor are there any currently proposed transactions, between us and a related person where the amount involved exceeds, or would exceed, $120,000, and in which any related person had or would have a direct or indirect material interest. Agreements to be Entered into in Connection with this Offering
Stockholders Agreement
Concurrent with the closing of the BDTCP Transaction, Alliance Laundry Holdings entered into a stockholders agreement (the “BDTCP Stockholders Agreement”) with our principal stockholder and certain other parties who own shares of Alliance Laundry Holdings common stock. The BDTCP Stockholders Agreement contains agreements among the parties with respect to the election of directors, tag-along rights, drag-along rights, calls and preemptive rights, transfer restrictions and permitted transferees.
In connection with this offering, the BDTCP Stockholders Agreement will be terminated and we will enter into a new stockholders agreement with our principal stockholder (the “Stockholders Agreement”) the form of which will be filed as an exhibit to the registration statement of which this prospectus forms a part. The Stockholders Agreement will govern the relationship between us and our principal stockholder following this offering, including matters related to our corporate governance, rights to designate directors and additional matters.
The Stockholders Agreement will provide that, so long as our principal stockholder beneficially owns at least 40% of the aggregate number of outstanding shares of our common stock, our principal stockholder will be able to designate a majority of the nominees for election to our Board of Directors. So long as our principal stockholder beneficially owns at least 10% but less than 40% of the aggregate number of outstanding shares of our common stock, our principal stockholder will have the right to nominate a percentage of the authorized number of directors equal to our principal stockholder’s ownership of our outstanding common stock (rounded up to the nearest whole director).
Furthermore, under the Stockholders Agreement, at least one of our principal stockholder’s nominees shall be entitled to serve on each committee of our Board of Directors so long as our principal stockholder has the right to nominate at least one director to our Board of Directors and any such nominee at all times remains eligible to serve on the applicable committee under applicable law and the listing standards of the NYSE, including any applicable general and heightened independence requirements.
In addition, so long as our principal stockholder beneficially owns at least 25% of the aggregate number of outstanding shares of our common stock, our principal stockholder will have the right to appoint and remove the chairman of our Board of Directors and the lead independent director, if any.
Registration Rights Agreement
Concurrent with the closing of the BDTCP Transaction, Alliance Laundry Holdings entered into an amended and restated registration rights agreement with our principal stockholder and the other parties to the BDTCP Stockholders Agreement (the “Existing Registration Rights Agreement”). The Existing Registration Rights
Agreement contains, among other things, certain demand and piggyback registration rights for parties to the agreement.
In connection with this offering, the Existing Registration Rights Agreement will be terminated and we will enter into a new registration rights agreement with our principal stockholder (the “New Registration Rights Agreement”), the form of which will be filed as an exhibit to the registration statement of which this prospectus forms a part. The New Registration Rights Agreement will provide our principal stockholder with demand registration rights, piggyback registration rights and shelf registration rights whereby our principal stockholder can require us to register under the Securities Act shares of our common stock.
Indemnification Agreements
In connection with this offering, we intend to enter into indemnification agreements with each of our directors and officers. These agreements will require us to indemnify these individuals and, in certain cases, affiliates of such individuals, to the fullest extent permissible under Delaware law against liabilities that may arise by reason of their service to us or at our direction, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. See “Description of Capital Stock—Limitation of Liability and Indemnification of Directors and Officers.” Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors and officers, we have been informed that in the opinion of the SEC such indemnification is against public policy and is therefore unenforceable.
Transactions with BDT & MSD
As consideration for the services provided by BDT & MSD as a financial advisor in connection with the execution of the Credit Agreement, we incurred arrangement fees of approximately $5.2 million for the year ended December 31, 2024.
Other Related Person Transactions
In August 2024, the Company declared and issued a dividend to its ordinary common stockholders, which included a $841.7 million dividend to its direct stockholder, BDTBH, through which our principal stockholder and the Minority Investment Institutional Co-Investors hold their respective shares, and $58.3 million in dividends to management common stockholders. The Company’s Board of Directors also has members that are employees of our principal stockholder, to whom the Company paid an aggregate total of $0.3 million in each of the years ended December 31, 2024, 2023 and 2022. Additionally, entities affiliated with our principal stockholder hold a controlling interest in a vendor from whom the Company purchases certain raw materials. The Company made purchases of $6.2 million and $5.5 million from this vendor during the years ended December 31, 2024 and 2023, respectively, included in inventory and cost of sales in the Company’s financial statements. As of December 31, 2024 and 2023, the Company had amounts due to this vendor of $1.3 million and $1.5 million, respectively.
In May 2025, we entered into a settlement agreement with our former Chief Financial Officer, Rebecca Huang, regarding certain purported claims. The Company paid $807,250 pursuant to the settlement agreement.
Policy on Related Person Transactions
In connection with this offering, we will adopt a policy with respect to the review and approval of related person transactions. Under the policy, our Audit Committee will be responsible for reviewing and approving related person transactions. This policy will cover any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant and a related person had or will have a direct or indirect material interest, as determined by the Audit Committee. In the course of its review and approval of related person transactions, our Audit Committee will consider all relevant facts and circumstances to decide whether to approve such transactions, including, among other things, the terms and nature of the transaction and its materiality to the Company and the extent of the related person’s interest in the transaction. Under the policy, our Audit Committee may approve only those related person transactions that are in, or not inconsistent with, our
best interests. In the event that we become aware of a related person transaction that has not been previously reviewed, approved or ratified under the policy and that is ongoing or is completed, the transaction will be submitted to the Audit Committee so that it may determine whether to ratify, rescind or terminate the related person transaction.
All related person transactions described in this “Certain Relationships and Related Person Transactions” section occurred prior to the adoption of the Related Person Transactions Policy and, as such, these transactions were not subject to the approval and review procedures set forth in the Related Person Transactions Policy.
PRINCIPAL AND SELLING STOCKHOLDER
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of , 2025 and as adjusted to reflect the completion of this offering, for:
•each person, or group of affiliated persons, known by us to beneficially own more than 5% of the outstanding shares of our common stock (including the principal stockholder);
•each of our directors and director nominee;
•each of our named executive officers; and
•all of our executive officers, directors and director nominee as a group.
The following table gives effect to the forward stock split and assumes:
• shares of common stock outstanding immediately prior to the completion of this offering; and
• shares of common stock outstanding immediately after the completion of this offering.
Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to such securities. A security holder is also deemed to be, as of any date, the beneficial owner of all securities that such security holder has the right to acquire within 60 days after such date through (1) the exercise of any option or warrant, (2) the conversion of a security, (3) the power to revoke a trust, discretionary account or similar arrangement or (4) the automatic termination of a trust, discretionary account or similar arrangement. Except as otherwise indicated in the footnotes to the following table, to our knowledge all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. Except as otherwise indicated, the mailing address for each stockholder listed below is c/o Alliance Laundry Systems LLC, PO Box 990, 221 Shepard Street, Ripon, Wisconsin 54971.
Our principal stockholder, BDTCP, and its affiliated investment funds are affiliates of a registered broker-dealer, BDT & MSD, an underwriter in this offering, and BDTCP has informed us that:
•it purchased our securities in the ordinary course of business, and
•at the time our securities to be resold were purchased, it had no agreements or understandings, directly or indirectly, with us or any of our affiliates or any person acting on our behalf or on behalf of any of our affiliates, to distribute such securities.
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Name and address of beneficial owners | | Shares beneficially owned prior to this offering | | Common stock to be sold in this offering | | Shares beneficially owned after this offering (without exercise of underwriters’ option) | | Shares beneficially owned after this offering (with exercise of underwriters’ option) |
| Number | | Percent | | Number | | Number | | Percent | | Number | | Percent |
5% beneficial owners: |
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BDT Capital Partners, LLC(1) |
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Directors and named executive officers: |
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Michael D. Schoeb(2) |
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Robert Calver(3)** |
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Rebecca Huang** |
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Joseph Hainline(4) |
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Justin Blount** |
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Craig Dakauskas(5)** |
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Clyde B. Anderson |
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Timothy J. FitzGerald | | | | | | | | | | | | | | |
Phyllis A. Knight | | | | | | | | | | | | | | |
Narasimha Nayak | | | | | | | | | | | | | | |
Robert L. Verigan | | | | | | | | | | | | | | |
Director Nominee | | | | | | | | | | | | | | |
All current executive officers and directors as a group (14 persons)(6) |
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__________________
*Represents beneficial ownership of less than one percent of our outstanding shares of common stock.
**Ms. Huang and Messrs. Blount, Calver and Dakauskas are NEOs for the purposes of this filing but are no longer executive officers of the Company. Accordingly, Ms. Huang and Messrs. Blount, Calver and Dakauskas, and the shares beneficially owned by each, respectively, are not reflected in the directors and executive officers of the Company as a group.
(1)Represents shares wholly owned by BDTCP through the investment fund BDTBH. The managing member of BDTBH is BDTCP GP II-A, LP, of which its general partner is BDTCP GP II, Co. The sole member of BDTCP GP II, Co. is BDTCP, of which the managing member is BDTP GP, LLC. Byron D. Trott is the sole member of BDTP GP, LLC. Each of BDTCP GP II-A, LP, BDTCP GP II, Co., BDTCP, BDTP GP, LLC and Mr. Trott may be deemed to have indirect voting and investment control over the shares held by BDTBH. Voting and investment determinations with respect to the shares held by BDTBH are made by an investment committee of BDT & MSD, comprised of Byron D. Trott, Dan Jester, Gregg Lemkau, San Orr, Robert Platek, Amy Ennesser, Genevieve Hovde, Douglas Londal, Robert Verigan, Greg Olafson and a rotating non-voting observer. Accordingly, each of the foregoing entities and individuals may be deemed to share beneficial ownership of the securities held of record by BDTBH. Each of them disclaims beneficial ownership of such securities except to the extent of their pecuniary interest therein. The address for BDTBH, BDTCP GP II-A, LP, BDTCP GP II, Co., BDTCP, BDTP GP, LLC and Mr. Trott is BDT & MSD, 401 North Michigan Avenue, Suite 3100, Chicago, IL 60611.
(2)Represents shares owned by (i) Michael D. Schoeb, (ii) his spouse Michelle Schoeb, (iii) the Schoeb Family 2020 Irrevocable Trust, (iv) the Schoeb Family 2024 Irrevocable Trust FBO Claudia N. Schob, Cameron N. Schoeb, Chloe E Schoeb, (v) Michael D. Schoeb Roth IRA the Privatebank and Trust Co and (vi) 3C Ventures, a . Includes shares underlying stock options that are currently exercisable as of .
(3)Includes shares underlying stock options that are currently exercisable as of .
(4)Includes shares underlying stock options that are currently exercisable as of .
(5)Includes shares underlying stock options that are currently exercisable as of .
(6)Includes shares underlying stock options that are currently exercisable as of .
DESCRIPTION OF CERTAIN INDEBTEDNESS
The following is a summary of the material terms of certain indebtedness of us and our subsidiaries. The summary does not purport to be complete and is qualified in its entirety by reference to the full text of the agreements governing the terms of such indebtedness, which have been filed as exhibits to the registration statement of which this prospectus is a part.
Credit Agreement
Overview
On August 19, 2024, our subsidiary, Alliance Laundry Systems LLC (“Alliance Laundry Systems” or the “U.S. Borrower”), entered into a Credit Agreement (as amended on February 20, 2025, as further amended on February 20, 2025 (collectively, the “February Repricing Amendments”), as amended on August 21, 2025 and as further amended on August 21, 2025 (collectively, the “August Repricing Amendments” and, together with the February Repricing Amendments, the “Repricing Amendments”), the “Credit Agreement”) with Alliance Laundry Holdings LLC (“Holdings LLC”), Alliance Laundry (Thailand) Company Limited (the “Thai Borrower” and, together with the U.S. Borrower, the “Borrowers”), Citibank, N.A., as administrative agent, and the lenders and issuing banks from time to time party thereto. The Credit Agreement provides for senior secured credit facilities consisting of (1) a term loan facility in an aggregate principal amount of $2,075.0 million (the “Term Facility,” and the loans thereunder, the “Term Loans”), (2) a revolving credit facility with aggregate commitments of $225.0 million (the “Primary Revolving Facility,” and the loans thereunder, “Primary Revolving Facility Loans”), including a $102.2 million letter of credit sub-facility, and (3) a revolving credit facility with aggregate commitments of $25.0 million, all of which is available for letters of credit (the “Thai Baht Revolving Facility” and, together with the Primary Revolving Facility, the “Revolving Facilities” and, together with the Term Facility, the “Credit Facilities”; the loans under the Thai Baht Revolving Facility are referred to as the “Thai Baht Revolving Facility Loans”). The Term Loans are denominated in U.S. dollars, loans and letters of credit under the Primary Revolving Facility are available in U.S. dollars or Euros, and loans and letters of credit under the Thai Baht Revolving Facility are available in U.S. dollars or Thai baht.
As of June 30, 2025, the aggregate principal amount of Term Loans outstanding was $2,075.0 million. As of June 30, 2025, there was no amount drawn under the Primary Revolving Facility and there was no amount drawn under the Thai Baht Revolving Facility.
Use of Proceeds
Proceeds of the Term Facility were used to refinance our then-outstanding credit facility, pay the 2024 Dividend, pay fees and expenses related thereto and for working capital and general corporate purposes. Proceeds of the Revolving Facilities are used for working capital, capital expenditures and other general corporate purposes.
Interest Rate and Fees
At December 31, 2024, prior to giving effect to the Repricing Amendments, borrowings under (i) the Term Facility bore interest at a rate per annum equal to, at the applicable Borrower’s option, Term SOFR plus 3.50% or the applicable base rate plus 2.50%, (ii) the Revolving Facilities denominated in U.S. dollars bore interest at a rate per annum equal to, at the applicable Borrower’s option, Term SOFR plus 3.25% or the applicable base rate plus 2.25% and (iii) the Revolving Facilities denominated in Euros or Thai baht bore interest at a rate per annum equal to Adjusted EURIBOR or the Daily Simple RFR (each as defined in the Credit Agreement), respectively, plus, in each case, 3.25%. The foregoing interest margins were subject to certain step downs if the Company achieved specified ratios of consolidated first lien net debt to consolidated EBITDA (with certain adjustments) (“First Lien Net Leverage Ratio”).
At June 30, 2025 (after giving effect to the February Repricing Amendments), borrowings under (i) the Term Facility bore interest at a rate per annum equal to, at the applicable Borrower’s option, Term SOFR plus 2.50% or the applicable base rate plus 1.50%, (ii) the Revolving Facilities denominated in U.S. dollars bore interest at a rate per annum equal to, at the applicable Borrower’s option, Term SOFR plus 2.25% or the applicable base rate plus
1.25% and (iii) the Revolving Facilities denominated in Euros or Thai baht bore interest at a rate per annum equal to Adjusted EURIBOR or the Daily Simple RFR, respectively, plus, in each case, 2.25%. The foregoing interest rate margins were subject to a step up of 0.25% in the event we failed to maintain a First Lien Net Leverage Ratio equal to or less than 4.50 to 1.00.
After giving effect to the August Repricing Amendments, borrowings under (i) the Term Facility bear interest at a rate per annum equal to, at the applicable Borrower’s option, Term SOFR plus 2.25% or the applicable base rate plus 1.25%, (ii) the Revolving Facilities denominated in U.S. dollars bear interest at a rate per annum equal to, at the applicable Borrower’s option, Term SOFR plus 2.25% or the applicable base rate plus 1.25%, and (iii) the Revolving Facilities denominated in Euros or Thai baht bear interest at a rate per annum equal to Adjusted EURIBOR or the Daily Simple RFR, respectively, plus, in each case, 2.25%. Following delivery of our first audited annual or unaudited quarterly financial statements and a related compliance certificate after the effectiveness of the August Repricing Amendments (which is anticipated to be in respect of the quarter ended September 30, 2025), the foregoing interest rate margins will be subject to a step down of 0.25% in the event (i) the credit ratings for the applicable class of loans by Moody’s Investor Services, Inc. and Standard & Poor’s Ratings Group, Inc. are B1 (stable) and B+ (stable), respectively, or higher and (ii) we achieve a First Lien Net Leverage Ratio equal to or less than 3.50 to 1.00.
In addition, the U.S. Borrower is required to pay a commitment fee equal to 0.250% per annum on any unused commitments under the Revolving Facilities, subject to a step up to 0.375% in the event we fail to maintain a First Lien Net Leverage Ratio equal to or less than 4.50 to 1.00.
Mandatory Prepayments
The Term Loans are subject to mandatory prepayments with the proceeds of certain asset sales, insurance proceeds and debt issuances. In addition, annual mandatory prepayments of the Term Loans are required based upon a calculation of excess cash flow, subject to certain deductions.
Voluntary Prepayment
The Borrowers may, at any time and from time to time, voluntarily prepay any outstanding loans under the Credit Facilities, in whole or in part, without premium or penalty other than customary “breakage” costs with respect to Term SOFR or Eurocurrency loans, subject to a 1.00% prepayment premium in connection with certain repricing transactions in respect of the Term Facility that occur on or prior to February 23, 2026, after giving effect to the August Repricing Amendments.
Amortization and Maturity
The Term Loans amortize in equal quarterly installments of 0.25% of the aggregate initial principal amount thereof. The remaining unpaid balance, together with all accrued and unpaid interest thereon, is due and payable on or prior to August 19, 2031.
Outstanding borrowings under the Revolving Facilities do not amortize, and are due and payable on or prior to August 19, 2029.
Guarantees and Security
The obligations of the Borrowers under the Credit Agreement are guaranteed by certain of their subsidiaries and Holdings LLC (collectively, together with the Borrowers, the “Loan Parties”) and are secured by a first priority lien on substantially all of the Loan Parties’ assets (subject to certain customary exceptions).
Covenants and Representations and Warranties
The Credit Agreement contains customary affirmative covenants (including reporting obligations) and negative covenants and requires the Borrowers and, in some cases, Holdings LLC to make customary representations and
warranties. With respect to the covenants, these restrictions include, among other things and subject to certain exceptions, limitations on the ability of the Borrowers and their subsidiaries and, in some cases, Holdings LLC to:
•incur or guarantee additional indebtedness;
•create or maintain liens;
•pay dividends or make other distributions in respect of equity interests, or redeem, purchase or retire equity interests;
•make payments in respect of subordinated debt;
•make investments, loans, advances, guarantees or acquisitions;
•consolidate, merge, liquidate or dissolve;
•dispose of assets;
•enter into transactions with affiliates; and
•materially alter the business conducted by the Borrowers and their subsidiaries.
The Revolving Facilities also includes a springing financial covenant that will be tested only if the revolving credit exposure exceeds 40% of the aggregate amount of revolving credit commitments as of the last day of any fiscal quarter (which calculation will exclude (i) up to $65.0 million of undrawn letters of credit and cash collateralized letters of credit and (ii) up to $25.0 million of Primary Revolving Facility Loans or Thai Baht Revolving Facility Loans borrowed after the effective date of the Credit Agreement to fund acquisitions or other investments or capital expenditures). If such condition is met, the financial covenant requires the U.S. Borrower to maintain, as of the last day of such fiscal quarter, a First Lien Net Leverage Ratio not to exceed 8.50 to 1.00.
The Term Facility does not include a financial covenant.
Events of Default
The Credit Agreement contains customary events of default, subject in certain circumstances to specified grace periods, thresholds and exceptions, including, among others, payment defaults, cross-defaults to certain material indebtedness, covenant defaults, material inaccuracy of representations and warranties, bankruptcy events, non-payment of material judgments, material ERISA-related events and change of control. If an event of default occurs, the lenders will be entitled to exercise various remedies, including accelerating the loans and terminating the commitments under the Credit Agreement, foreclosing on collateral and other remedial actions available to a secured creditor. Failure to pay certain amounts owing under our Credit Agreement may result in an increased interest rate equal to 2.00% per annum plus the applicable interest rate for such outstanding loans.
Financial Advisor
As consideration for the services provided by BDT & MSD as a financial advisor in connection with our entry into the Credit Agreement, we incurred arrangement fees of approximately $5.2 million for the year ended December 31, 2024.
Asset Backed Facilities
Securitized Receivables Financing
The Company maintains a trade receivables securitization facility. Alliance Laundry Trade Receivables LLC (“ALTR LLC”), a special-purpose bankruptcy remote subsidiary of the Company, is party to a $120.0 million revolving credit facility that is secured by trade receivables originated by Alliance Laundry Systems and sold to ALTR LLC (the “Asset Backed Trade Receivables Facility”). PNC Bank, National Association is the committed purchaser and lender. The Asset Backed Trade Receivables Facility is due to expire on May 1, 2028.
ALTR LLC finances the acquisition of trade receivables from Alliance Laundry Systems through borrowings under the Asset Backed Trade Receivables Facility in the form of funding notes which are limited to an advance rate of approximately 62%.
The risk of loss to the trade receivables under the Asset Backed Trade Receivables Facility resulting from default or dilution on trade receivables is mitigated by credit enhancement provided by Holdings LLC in the form of over-collateralization.
Under the Asset Backed Trade Receivables Facility, interest payments on the variable funding notes are paid monthly at an interest rate equal to the daily 1-month SOFR rate plus a margin of 110 basis points. The lender also earns an unused facility fee of 0.35% of the unfunded portion of each lender’s commitment amount prior to a rapid amortization event or event of default.
Unless extended, after May 1, 2028, ALTR LLC will not be permitted to request new borrowings, and the outstanding borrowings will amortize over 90 days with any remaining balance due at maturity.
Additional advances under the Asset Backed Trade Receivables Facility are subject to certain continuing conditions, including: (i) satisfaction of a borrowing base calculation, which applies reserves and concentration limits; (ii) the absence of a rapid amortization event or event of default; (iii) the continued accuracy of our representations and warranties and compliance with all covenants, including delivery of required reports and information; and (iv) no event having occurred which has or could reasonably be expected to have a material adverse effect on Alliance Laundry Systems, ALTR LLC or the receivables pool.
All the residual beneficial interests in ALTR LLC and cash flows remaining from the pool of receivables after payment of all obligations under the Asset Backed Trade Receivables Facility will accrue to the benefit of the Company.
Securitized Equipment Financing
The Company maintains an internal financing organization primarily to assist end-user laundromat locations in financing company-branded equipment through the Company’s distributors. The financing organization originates and administers the sale of equipment financing receivables. Under this program, the Company sells certain equipment financing receivables to a special-purpose bankruptcy remote subsidiary, which in turn transfers them to a trust. The special-purpose subsidiary and trust are party to a $500.0 million revolving credit facility that is secured by the equipment financing receivables (the “Asset Backed Equipment Facility”). PNC Bank, National Association and Fifth Third Bank, National Association are the committed purchasers and lenders. The Asset Backed Equipment Facility is due to expire on May 1, 2028.
The trust finances the acquisition of equipment financing receivables through borrowings under the Asset Backed Equipment Facility in the form of funding notes which are limited to an advance rate of approximately 88%.
Additional advances under the Asset Backed Equipment Facility are subject to certain continuing conditions, including: (i) satisfaction of eligibility criteria and covenant restrictions relating to the weighted average life, weighted average interest rate and the amount of fixed rate equipment financing receivables held by the trust, as well as concentration limits and other pool composition requirements; (ii) the absence of a rapid amortization event or event of default; (iii) the continued accuracy of our representations and warranties and compliance with all covenants, including delivery of required reports and information by Alliance Laundry Systems as servicer; and (iv) no event having occurred which has or could reasonably be expected to have a material adverse effect on Alliance Laundry Systems, the trust or the receivables pool.
The risk of loss to the note purchasers under the Asset Backed Equipment Facility resulting from default or dilution on equipment financing receivables is mitigated by credit enhancement provided by Alliance Laundry Systems in the form of cash reserves and over-collateralization. Alliance Laundry Systems also retains the servicing rights and receives a monthly servicing fee for the equipment financing receivables sold at a 1.00% annual rate of the aggregate balance of such equipment financing receivables.
Under the Asset Backed Equipment Facility, interest payments on the variable funding notes are paid monthly at an interest rate equal to the daily simple SOFR rate plus a margin of 120 basis points. The lenders also earn an unused facility fee of 0.35% of the unfunded portion of each lender’s commitment amount prior to a rapid amortization event or event of default.
Unless extended, after May 1, 2028, the trust will not be permitted to request new borrowings, and the outstanding borrowings will amortize over a period of two and a half years with any remaining balance due at maturity. The equipment financing receivables typically have interest rates ranging primarily from Prime plus 0.49% to Prime plus 4.75% for variable rate equipment financing receivables and 4.00% to 11.50% for fixed-rate equipment financing receivables. The average interest rate for all equipment financing receivables at December 31, 2024 was 8.84% with terms ranging primarily from two years to twelve years. The weighted-average remaining expected life of equipment financing receivables held by the trust was approximately 3.39 years at June 30, 2025. All equipment financing receivables allow the holder to prepay outstanding principal amounts without penalty.
Alliance Laundry Systems earns a margin spread on the equipment financing receivables, which is recognized as part of EBITDA. The net interest income and servicing fees generated from the equipment financing receivables, after deducting the interest expense and fees paid by the trust under the facility, are included in the Company’s consolidated EBITDA. This margin reflects the difference between the interest rates charged to end customers on the equipment financing receivables and the lower funding costs incurred by the trust under the facility.
All the residual beneficial interests in the trust and cash flows remaining from the pool of receivables after payment of all obligations under the Asset Backed Equipment Facility will accrue to the benefit of the Company. The Company provides no support or recourse for the risk of loss relating to default on the assets transferred to the trust except for retained interests and credit enhancement customary for transactions of this nature.
DESCRIPTION OF CAPITAL STOCK
The following description summarizes the most important terms of our capital stock. We will adopt an amended and restated certificate of incorporation and amended and restated bylaws in connection with this offering, and the provisions of our amended and restated certificate of incorporation and amended and restated bylaws that will be in effect upon the completion of this offering and relevant sections of the Delaware General Corporation Law (“DGCL”) are summarized below. The forms of our amended and restated certificate of incorporation and amended and restated bylaws have been filed as exhibits to the registration statement of which this prospectus is a part. The following descriptions of our capital stock and provisions of our amended and restated certificate of incorporation, our amended and restated bylaws and provisions of the DGCL are summaries and are qualified by reference to our amended and restated certificate of incorporation and our amended and restated bylaws that will be in effect upon the completion of this offering, as well as to the relevant provisions of the DGCL.
Authorized Capital Stock
Upon the completion of this offering, our authorized capital stock will consist of shares of common stock, par value $0.01 per share, and shares of our preferred stock, par value $0.01 per share. Following the completion of this offering, we will have outstanding shares of our common stock, held of record by stockholders, and no shares of preferred stock outstanding. Based on an assumed initial public offering price of $ per share (the midpoint of the estimated price range set forth on the cover of this prospectus), upon the completion of this offering, we will have outstanding shares of our common stock (and after giving effect to the -for-1 forward stock split) and no shares of preferred stock outstanding.
Common Stock
Holders of our common stock will be entitled to one vote per share held of record on all matters on which stockholders are entitled to vote generally, including the election or removal of directors. Our common stockholders will not be entitled to cumulative voting in the election of directors.
Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of our common stock will be entitled to receive ratably such dividends as may be declared by our Board of Directors out of funds legally available therefor if our Board of Directors, in its discretion, determines to issue dividends and only then at the times and in the amounts that our Board of Directors may determine.
Upon our liquidation, dissolution or winding up, holders of our common stock will be entitled to receive their ratable share of our net assets available after payment of all debts and other liabilities, subject to the prior preferential rights and payment of liquidation preferences, if any, of any outstanding shares of preferred stock.
All shares of our common stock that will be outstanding at the time of the completion of the offering will be fully paid and non-assessable. Holders of our common stock will have no preemptive, subscription or redemption rights. There will be no redemption or sinking fund provisions applicable to our common stock. The rights, preferences and privileges of holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate in the future.
Preferred Stock
No shares of preferred stock will be issued or outstanding immediately after the offering contemplated by this prospectus. Our Board of Directors will have the authority, subject to the limitations imposed by Delaware law and the NYSE’s listing rules, without any further vote or action by our stockholders, to issue preferred stock in one or more series and to fix the designations, powers, preferences, limitations and rights of the shares of each series, including:
•the designation of the series;
•the number of shares of the series, which our Board of Directors may, except where otherwise provided in the preferred stock designation, increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares then outstanding);
•whether dividends, if any, will be cumulative or non-cumulative and the dividend rate of the series;
•the dates at which dividends, if any, will be payable;
•the redemption rights and price or prices, if any, for shares of the series;
•the terms and amounts of any sinking fund provided for the purchase or redemption of shares of the series;
•the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of our Company;
•whether the shares of the series will be convertible into shares of any other class or series, or any other security, of our company or any other entity, and, if so, the specification of the other class or series or other security, the conversion price or prices or rate or rates, any rate adjustments, the date or dates as of which the shares will be convertible and all other terms and conditions upon which the conversion may be made;
•restrictions on the issuance of shares of the same series or of any other class or series; and
•the voting rights, if any, of the holders of the series.
Satisfaction of any dividend preferences of outstanding shares of preferred stock would reduce the amount of funds available for the payment of dividends on shares of our common stock. Holders of shares of preferred stock may be entitled to receive a preference payment in the event of our liquidation, dissolution or winding-up before any payment is made to the holders of shares of our common stock.
Our Board of Directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in control of the Company and may adversely affect the market price of our common stock and the voting and other rights of the holders of our common stock.
There are no current agreements or understandings with respect to the issuance of preferred stock and our Board of Directors has no present intentions to issue any shares of preferred stock.
Registration Rights
In connection with this offering, we will enter into the New Registration Rights Agreement with our principal stockholder. The New Registration Rights Agreement will provide our principal stockholder with certain registration rights as described below.
Demand Registration Rights
At any time after expiration or waiver of the lock-up for this offering, subject to several exceptions, including underwriter cutbacks and our right to defer a demand registration under certain circumstances, our principal stockholder may require that we register for public resale under the Securities Act all shares of common stock constituting registrable securities that they request be registered at any time following this offering so long as the securities requested to be registered in each registration statement have an aggregate estimated market value of least $25,000,000.
Piggyback Registration Rights
If we propose to register any of our securities under the Securities Act for our own account or the account of any other holder (excluding any registration related to an employee benefit plan or a corporate reorganization or other Rule 145 transaction), our principal stockholder is entitled to notice of such registration and to request that we include registrable securities for resale on such registration statement, and we are required, subject to certain exceptions, to include such registrable securities in such registration statement.
Shelf Registration Rights
If we become eligible to register the sale of our securities on Form S-3 under the Securities Act, which will not be until at least twelve months after the date of this prospectus, our principal stockholder has the right to require us to register the sale of the registrable securities held by them on Form S-3, subject to offering size and other restrictions. We will undertake in the New Registration Rights Agreement to use our reasonable best efforts to file a shelf registration statement on Form S-3 to permit the resale of the shares of common stock held by our principal stockholder. The New Registration Rights Agreement does not contemplate the payment of penalties or liquidated damages to our principal stockholder as a result of a failure to register, or delays with respect to the registration of, the registrable securities.
Assignment; Expenses and Indemnification
In connection with the transfer of their registrable securities, our principal stockholder may assign certain of its rights under the New Registration Rights Agreement under certain circumstances. In connection with the registrations described above, we will indemnify our principal stockholder and we will bear all fees, costs and expenses (except underwriting discounts and spreads).
Certain Anti-Takeover Provisions of our Amended and Restated Certificate of Incorporation, our Amended and Restated Bylaws, our Stockholders’ Agreement and Applicable Law
Certain provisions of our amended and restated certificate of incorporation, our amended and restated bylaws, our Stockholders Agreement and the DGCL may discourage or make more difficult a takeover attempt that a stockholder might consider to be in his, her or its best interest. These provisions may also adversely affect the prevailing market price for shares of our common stock. We believe that the benefits of increased protection give us the potential ability to negotiate with the proponent of an unsolicited proposal to acquire or restructure us, which may result in an improvement of the terms of any such proposal in favor of our stockholders, and outweigh any potential disadvantage of discouraging those proposals.
No Cumulative Voting
Under Delaware law, the right to vote cumulatively does not exist unless the certificate of incorporation specifically authorizes cumulative voting. Our amended and restated certificate of incorporation will not authorize cumulative voting. Therefore, stockholders holding a majority in voting power of the shares of our common stock entitled to vote generally in the election of directors will be able to elect all our directors.
Supermajority Approval Requirements
The DGCL generally provides that the affirmative vote of the holders of a majority of the total voting power of the shares entitled to vote on any matter is required to amend a corporation’s certificate of incorporation or bylaws, unless either a corporation’s certificate of incorporation or bylaws require a greater percentage. Our amended and restated certificate of incorporation and bylaws will provide that, following the time when our principal stockholder no longer maintains beneficial ownership of at least 40% of the aggregate outstanding shares of our common stock, the affirmative vote of holders of 66 2/3% of the total voting power of our outstanding common stock eligible to vote in the election of directors, voting together as a single class, will be required to amend, alter, change or repeal specified provisions of our certificate of incorporation, including provisions relating to the size of the Board of Directors, classification of the Board of Directors, election and removal of directors, cumulative voting, special meetings, actions by written consent, indemnification and exculpation, waiver of corporate opportunities, jurisdiction and exclusive forum, and business combinations, and to amend, alter, change or repeal our bylaws. This requirement of a supermajority vote to approve amendments to our certificate of incorporation and bylaws could enable a minority of our stockholders to exercise veto power over any such amendments.
Authorized but Unissued Shares of Capital Stock
Our authorized but unissued shares of common stock and preferred stock will be available for future issuance without stockholder approval, subject to the applicable provisions of the DGCL and rules of the NYSE. These
additional shares may be used for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans.
One of the effects of the existence of authorized but unissued common stock or preferred stock may be to enable our Board of Directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of the Company by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive our stockholders of opportunities to sell their shares of common stock at a price higher than the prevailing market price.
Election and Removal of Directors
Our amended and restated certificate of incorporation will provide that our Board of Directors shall consist of not less than five nor more than thirteen directors. The Stockholders Agreement will provide that, so long as the principal stockholder beneficially owns at least 40% of the aggregate number of outstanding shares of our common stock, the principal stockholder will be able to designate a majority of the nominees for election to our Board of Directors. So long as the principal stockholder beneficially owns at least 10% but less than 40% of the aggregate number of outstanding shares of our common stock, the principal stockholder will have the right to nominate a percentage of the authorized number of directors equal to the principal stockholder’s ownership of our outstanding common stock (rounded up to the nearest whole director). In addition, so long as the principal stockholder beneficially owns at least 25% of the outstanding shares of our common stock, the principal stockholder will have the right to appoint and remove the chairman of our Board of Directors and the lead independent director, if any.
In addition, our amended and restated certificate of incorporation will provide that our Board of Directors will be divided into three classes of directors, with each class as equal in number as possible, serving staggered three-year terms. Following the time when the Majority Ownership Threshold is no longer met, and subject to obtaining any required stockholder votes, directors may only be removed from office with the affirmative vote of holders of 66 2/3% of the total voting power of our outstanding shares of common stock, voting together as a single class, and, for so long as our Board of Directors remains classified, only for cause. This requirement of a supermajority vote to remove directors for cause could enable a minority of our stockholders to exercise veto power over any such removal. Prior to such time, directors may be removed with or without cause by the affirmative vote of the holders of a majority of the total voting power of our outstanding shares of common stock. See “Management—Composition of our Board of Directors.” These provisions may have the effect of deferring, delaying or discouraging hostile takeovers, or changes in control of us or our management. Our amended and restated certificate of incorporation will also provide that, subject to the Stockholders Agreement and the rights granted to one or more series of preferred stock then outstanding, any vacancies on our board may be nominated by the Chair and will be filled only by the affirmative vote of a majority of the remaining directors, even if less than a quorum.
Special Meetings of Stockholders
Our amended and restated certificate of incorporation and amended and restated bylaws will provide that special meetings of our stockholders may be called at any time by our Board of Directors, the chairman of our Board of Directors, our Chief Executive Officer and, until the Majority Ownership Threshold is no longer met, holders of a majority of the total voting power of our outstanding shares of common stock. Our amended and restated bylaws will prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting. Except as described above, our stockholders are not permitted to call a special meeting or to require our Board of Directors to call a special meeting.
Advance Notification Requirements for Stockholder Proposals and Director Nominations
Our amended and restated bylaws will establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of our Board of Directors or a committee of our Board of Directors. In order for any matter to be “properly brought” before a meeting, a stockholder will have to comply with advance notice requirements and provide us with certain information. Generally, to be timely, a stockholder’s notice must be received at our principal executive
offices not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders. Our amended and restated bylaws will also specify requirements as to the form and content of a stockholder’s notice. Our amended and restated bylaws will allow the chairman of the meeting at a meeting of the stockholders to adopt rules and regulations for the conduct of meetings which may have the effect of precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions will not apply to the principal stockholder until the Majority Ownership Threshold is no longer met. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to influence or obtain control of us.
Stockholder Action by Written Consent
Pursuant to Section 228 of the DGCL, any action required to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is or are signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of our stock entitled to vote thereon were present and voted, unless our amended and restated certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation will provide that, following the time that the Majority Ownership Threshold is no longer met, stockholder action can be taken only at an annual or special meeting of stockholders and cannot be taken by written consent in lieu of a meeting.
Section 203 of the Delaware General Corporation Law
Our amended and restated certificate of incorporation will contain a provision opting out of Section 203 of the DGCL. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for three years following the date that such stockholder became an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes, among other things, a merger, an asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with its affiliates and associates, owns, or did own within three years prior to the determination of interested stockholder status, 15% or more of the corporation’s voting stock. However, our amended and restated certificate of incorporation will contain similar provisions to Section 203 of the DGCL providing that we may not engage in a “business combination” with any “interested stockholder” for three years following the date that such stockholder became an interested stockholder, unless the business combination is approved in a prescribed manner. Our amended and restated certificate of incorporation will provide that our principal stockholder and its affiliates and any of their respective direct or indirect transferees and any group as to which such persons are a party do not constitute “interested stockholders” for purposes of this provision.
Exclusive Forum
Our amended and restated certificate of incorporation will require, to the fullest extent permitted by law, that (1) derivative actions or proceedings brought on behalf of the Company, (2) actions against directors, officers and employees asserting a claim of breach of a fiduciary duty owed to the Company or the Company’s stockholders, (3) actions asserting a claim against the Company arising pursuant to the DGCL or the Company’s amended and restated certificate of incorporation or bylaws, (4) actions to interpret, apply, enforce or determine the validity of the Company’s amended and restated certificate of incorporation or bylaws or (5) actions asserting a claim against the Company governed by the internal affairs doctrine, may be brought only in specified courts in the State of Delaware. Our amended and restated certificate of incorporation also provides that the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action against us or any of our directors, officers, employees or agents and arising under the Securities Act. However, Section 22 of the Securities Act provides that federal and state courts have concurrent jurisdiction over lawsuits brought the Securities Act or the rules and regulations thereunder. To the extent the exclusive forum provision restricts the courts in which claims arising under the Securities Act may be brought, there is uncertainty as to whether a court would enforce such a provision. We note that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. This provision does not apply to claims brought under the Exchange Act. See “Risk Factors—The provision of our amended and restated certificate of incorporation requiring exclusive forum in certain courts in the State of Delaware or the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.” Corporate Opportunities
The DGCL permits corporations to adopt provisions renouncing any interest or expectancy in certain opportunities that are presented to the corporation or its officers, directors or stockholders. Our amended and restated certificate of incorporation will renounce, to the maximum extent permitted from time to time by law, the application of the doctrine of corporate opportunity or any other analogous doctrine, with respect to the principal stockholder and our directors who are not employed by us or our subsidiaries, and their respective affiliates. Our amended and restated certificate of incorporation will provide that, to the fullest extent permitted by law, the principal stockholder and any of its affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his or her director and officer capacities) or his or her affiliates will not have any duty to (1) refrain from engaging in a corporate opportunity in the same or similar lines of business in which we or our affiliates now engage or propose to engage, (2) present such opportunity to us before otherwise engaging in it or offering it to another entity, unless such opportunity was offered to any of our directors in his or her capacity as our director or (3) refrain otherwise from competing, directly or indirectly, with us or our subsidiaries. In addition, to the fullest extent permitted by law, in the event that the principal stockholder or any non-employee director acquires knowledge of a potential transaction or other business opportunity which may be a corporate opportunity for themselves or himself or herself or their or his or her affiliates or for us or our affiliates, such person will have no duty to communicate or offer such transaction or business opportunity to us or any of our affiliates and they may take any such opportunity for themselves or offer it to another person or entity. To the fullest extent permitted by law, no business opportunity will be deemed to be a potential corporate opportunity for us unless we would be permitted to undertake the opportunity under our amended and restated certificate of incorporation, we have sufficient financial resources to undertake the opportunity and the opportunity would be in line with our business.
Limitation of Liability and Indemnification of Directors and Officers
Our amended and restated certificate of incorporation includes provisions that limit the personal liability of our directors and officers for monetary damages for breach of their fiduciary duties as directors or officers, except to the extent that such limitation is not permitted under the DGCL. Such limitation shall not apply, except to the extent permitted by the DGCL, to (1) any breach of a director’s or officer’s duty of loyalty to us or our stockholders, (2) acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (3) in the case of directors, any unlawful payment of a dividend or unlawful stock repurchase or redemption, as provided in Section 174 of the DGCL or (4) any transaction from which the director or officer derived an improper personal
benefit. These provisions will have no effect on the availability of equitable remedies such as an injunction or rescission based on a director’s or officer’s breach of his or her duty of care.
Our amended and restated certificate of incorporation will provide for indemnification, to the fullest extent permitted by the DGCL, of any person made or threatened to be made a party to any action, suit or proceeding by reason of the fact that such person is or was a director or officer of the Company, or, at the request of the Company, serves or served as a director, officer, employee, agent or trustee of another entity or enterprise, against all expenses, judgments, fines, amounts paid in settlement and other losses actually and reasonably incurred in connection with the defense or settlement of such action, suit or proceeding. In addition, we intend to enter into customary indemnification agreements with each of our executive officers and directors pursuant to which we will agree to indemnify each such executive officer and director to the fullest extent permitted by the DGCL.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is therefore unenforceable.
Listing
We intend to apply to list our common stock on the NYSE under the symbol “ALH”.
Transfer Agent and Registrar
Upon the completion of this offering, the transfer agent and registrar for our common stock will be Computershare Trust Company N.A. The transfer agent’s address is 150 Royall St, Canton MA 02021 and the telephone number is 1-800-736-3001.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there was no market for shares of our common stock. Future sales of substantial amounts of our common stock in the public market could adversely affect market prices prevailing from time to time. Furthermore, because only a limited number of shares of our common stock will be available for sale shortly after this offering due to existing contractual and legal restrictions on resale as described below, there may be sales of substantial amounts of our common stock in the public market after the restrictions lapse. This may adversely affect the prevailing market price and our ability to raise equity capital in the future.
Upon the completion of this offering, assuming the initial public offering price of $ per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, we will have shares of common stock outstanding. Of the shares of common stock outstanding following this offering, the shares of common stock sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except for any such shares of common stock held by our “affiliates,” as defined in Rule 144 under the Securities Act, which would be subject to the limitations and restrictions described below under “—Rule 144.”
The remaining shares of common stock that will be outstanding are “restricted shares” as defined in Rule 144 under the Securities Act. Restricted shares may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 under the Securities Act.
Rule 144
In general, under Rule 144 under the Securities Act, as currently in effect, a person (or persons whose shares are aggregated) who is not deemed to be or have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than an affiliate, is entitled to sell such shares without registration, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of a prior owner other than an affiliate, then such person is entitled to sell such shares without complying with any of the requirements of Rule 144.
In general, under Rule 144 under the Securities Act, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates, who have met the six-month holding period for beneficial ownership of “restricted shares” of our common stock, are entitled to sell within any three-month period, a number of shares that does not exceed the greater of:
•1% of the number of shares of our common stock then outstanding, which will equal approximately shares immediately after this offering (and after giving effect to the -for-1 forward stock split); and
•the average weekly trading volume of our common stock on the NYSE during the four calendar weeks preceding the date of filing a Notice of Proposed Sale of Securities Pursuant to Rule 144 under the Securities Act with respect to the sale.
Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.
Rule 701
In general, under Rule 701, any of our employees, directors, officers, consultants or advisors who purchased shares from us in connection with a compensatory stock or option plan or other written agreement before the effective date of a registration statement under the Securities Act are entitled to sell such shares 90 days after such effective date in reliance on Rule 144. An affiliate of ours can resell shares in reliance on Rule 144 without having to comply with the holding period requirement, and non-affiliates of ours can resell shares in reliance on Rule 144 without having to comply with the current public information and holding period requirements.
The SEC has indicated that Rule 701 will apply to typical stock options granted before we become subject to the reporting requirements of the Exchange Act, along with the shares acquired upon exercise of such options, including exercises after we become subject to the reporting requirements of the Exchange Act.
Equity Incentive Plans
We intend to file with the SEC, as soon as practicable following the completion of this offering, a registration statement on Form S-8 registering an aggregate number of shares of common stock underlying equity awards we will make to our employees and certain other qualifying individuals, and the resale of those shares of common stock. The Form S-8 will become effective upon filing and shares of common stock so registered will become freely tradable upon such effectiveness, subject to any restrictions imposed on such resale pursuant to the lock-up agreements entered into with the underwriters for this offering.
Lock-Up Agreements
We, our executive officers and directors, certain senior employees that are not executive officers and certain former directors, and BDTBH, the funding vehicle through which our principal stockholder and the Minority Investment Institutional Co-Investors hold their respective interests, which collectively owned approximately 99% of our outstanding common stock prior to this offering, have entered into lock-up agreements with BofA Securities, Inc. and J.P. Morgan Securities LLC, as representatives of the underwriters, pursuant to which we and they have agreed not to sell or transfer any common stock or securities convertible into, exchangeable for, exercisable for, or repayable with common stock, for 180 days after the date of this prospectus without first obtaining the written consent of the representatives. As representatives, BofA Securities, Inc. and J.P. Morgan Securities LLC have the authority, in their sole discretion, to release any of the shares subject to these lock-up agreements at any time and without notice to the other underwriters in this offering. Specifically, we and these other persons have agreed, with certain limited exceptions, not to (1) directly or indirectly offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of Alliance Laundry Holdings common stock or any securities convertible into or exercisable or exchangeable for Alliance Laundry Holdings common stock (collectively, the “Lock-Up Securities”), or exercise any right with respect to the registration of any of the Lock-Up Securities, (2) enter into any hedging, swap, loan or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Lock-Up Securities or (3) publicly disclose the intention to do any of the foregoing described in clauses (1) and (2) above. For additional information, see “Underwriting (Conflicts of Interest).” In addition to the lock-up agreements described above, certain of our current and former employees hold equity awards or shares of our common stock that are subject to equity award or purchase agreements containing market standoff or lock-up provisions, which covers the balance of all of our outstanding common stock owned prior to this offering. These provisions generally prohibit the sale or transfer of any shares of our common stock acquired pursuant to such agreements, whether or not any such awards have been exercised and the shares are held outright, for 180 days after the date of this prospectus. We have agreed to enforce all such market standoff or lock-up restrictions and not to amend or waive any such provisions during the 180-day lock-up period without first obtaining the written consent of the representatives, provided that we may release shares from such restrictions to the extent such shares would be entitled to release under the lock-up agreements described above.
Registration Rights Agreement
In connection with this offering, we expect to enter into the New Registration Rights Agreement with our principal stockholder. The New Registration Rights Agreement will provide our principal stockholder with certain registration rights whereby our principal stockholder can require us to register under the Securities Act shares of our common stock. See “Description of Capital Stock—Registration Rights” for additional information regarding these registration rights.
MATERIAL U.S. FEDERAL TAX CONSEQUENCES TO NON-U.S. HOLDERS OF OUR COMMON STOCK
The following is a general discussion of the material U.S. federal income tax consequences of the purchase, ownership and disposition of our common stock acquired in this offering by a “Non-U.S. Holder”. A “Non-U.S. holder” means a beneficial owner of our common stock that is not, for U.S. federal income tax purposes, any of the following:
•an individual who is a citizen or resident of the United States;
•a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
•an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
•a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable Treasury regulations to be treated as a United States person.
If an entity or arrangement that is treated as a partnership for U.S. federal income tax purposes holds our common stock, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partners and beneficial owners in partnerships or other pass-through entities that own our common stock should consult their own tax advisors with regard to the U.S. federal income tax treatment of an investment in our common stock.
This discussion is based on the Internal Revenue Code of 1986, as amended to the date hereof (the “Code”), administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations, changes to any of which subsequent to the date of this prospectus may affect the tax consequences described herein, possibly with retroactive effect. This discussion does not describe all of the tax consequences that may be relevant to you in light of your particular circumstances, including estate tax, alternative minimum tax and Medicare contribution tax consequences, and does not address any tax consequences arising under the laws of any state, local or foreign jurisdiction.
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| You should consult a tax advisor regarding the U.S. federal income tax consequences of acquiring, holding and disposing of common stock in your particular circumstances, as well as any tax consequences that may arise under the laws of any state, local or foreign jurisdiction. |
Dividends
If we make a distribution of cash or other property (other than certain distributions of our stock) in respect of our common stock, the distribution generally will be treated as a dividend to the extent it is paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Any portion of a distribution that exceeds our current and accumulated earnings and profits generally will be treated first as a tax-free return of capital that reduces your adjusted tax basis in our common stock, and to the extent the amount of the distribution exceeds your adjusted tax basis in our common stock, the excess will be treated as gain from the taxable disposition of our common stock, the tax treatment of which is discussed below under “—Gain on Disposition of Common Stock”. Except as described below, dividends paid to you generally will be subject to U.S. federal withholding tax at a 30% rate or at a lower rate if you are eligible for the benefits of a tax treaty that provides for a lower rate. In order to obtain a reduced rate of withholding under an applicable tax treaty, a Non-U.S. Holder generally will be required to provide a properly executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, certifying its entitlement to benefits under the tax treaty.
Dividends paid to you that are “effectively connected” with your conduct of a trade or business within the United States (and are attributable to a permanent establishment or fixed base that you maintain in the United States, if that is required by an applicable tax treaty), will not be subject to U.S. federal withholding tax if you provide a
properly executed IRS Form W-8ECI. Instead, the effectively connected dividend income will generally be subject to regular U.S. federal income tax as if you were a United States person as defined under the Code. If you are a corporate Non-U.S. Holder, “effectively connected” dividends that you receive may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or at a lower rate if you are eligible for the benefits of a tax treaty that provides for a lower rate.
If you are eligible for a reduced rate of U.S. withholding tax under a tax treaty, you may obtain a refund of any amounts withheld in excess of that rate by timely filing a refund claim with the IRS.
Gain on Disposition of Common Stock
•the gain is “effectively connected” with your conduct of a trade or business in the United States (and is attributable to a permanent establishment or fixed base that you maintain in the United States, if that is required by an applicable tax treaty) in which case the gain will be subject to U.S. federal income tax generally in the same manner as “effectively connected” dividend income as described above;
•you are an individual present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met, in which case the gain (net of certain U.S.-source losses) generally will be subject to U.S. federal income tax at a rate of 30% (or a lower tax treaty rate); or
•we are or have been a “United States real property holding corporation” (as described below), at any time within the five-year period preceding the disposition or your holding period, whichever period is shorter, and either (1) our common stock is not regularly traded on an established securities market prior to the beginning of the calendar year in which the disposition occurs or (2) you owned or are deemed to have owned, at any time within the five-year period preceding the disposition or your holding period, whichever period is shorter, more than 5% of our common stock.
We will be a United States real property holding corporation at any time that the fair market value of our “United States real property interests,” as defined in the Code and applicable Treasury regulations, equals or exceeds 50% of the aggregate fair market value of our worldwide real property interests and our other assets used or held for use in a trade or business (all as determined for the U.S. federal income tax purposes). We believe that we are not, and do not anticipate becoming in the foreseeable future, a United States real property holding corporation.
FATCA Withholding
Pursuant to Sections 1471 through 1474 of the Code, commonly known as the Foreign Account Tax Compliance Act (“FATCA”), a 30% withholding tax (“FATCA withholding”) may be imposed on payments of dividends on and the gross proceeds of dispositions of our common stock paid to (i) a “foreign financial institution” (as specifically defined in the Code) or (ii) a “non-financial foreign entity” (as specifically defined in the Code) unless various information reporting and due diligence requirements have been satisfied or an exemption from these rules applies. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing these rules may be subject to different rules. If FATCA withholding is imposed, a beneficial owner that is not a foreign financial institution generally may obtain a refund of any amounts withheld by filing a U.S. federal income tax return.
Although FATCA withholding generally could apply to gross proceeds on the disposition of our common stock, proposed Treasury regulations (the “Proposed Regulations”) eliminate FATCA withholding on the gross proceeds from a sale or other disposition of our common stock. The preamble to the Proposed Regulations states that taxpayers may rely on the Proposed Regulations pending finalization. However, there can be no assurance that the Proposed Regulations will be finalized in their present form. You should consult your tax advisor regarding the effects of FATCA on your investment in our common stock.
Backup Withholding and Information Reporting
Distributions paid to you and the amount of any tax withheld with respect to such distributions generally will be reported to the IRS. Copies of the information returns reporting such distributions and any withholding may also be made available to the tax authorities in the country in which you reside under the provisions of an applicable tax treaty.
You will not be subject to backup withholding on dividends received if you certify under penalty of perjury that you are a Non-U.S. Holder (and the payor does not have actual knowledge or reason to know that you are a United States person as defined under the Code), or you otherwise establish an exemption.
Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale or other disposition of our common stock made within the United States or conducted through certain U.S.-related financial intermediaries, unless you comply with certification procedures to establish that you are not a United States person in order to avoid information reporting and backup withholding. The certification procedures required to claim a reduced rate of withholding under a tax treaty will generally satisfy the certification requirements necessary to avoid backup withholding as well.
Backup withholding is not an additional tax and the amount of any backup withholding from a payment to you will be allowed as a credit against your U.S. federal income tax liability and may entitle you to a refund, provided that the required information is furnished to the IRS in a timely manner.
UNDERWRITING (CONFLICTS OF INTEREST)
BofA Securities, Inc. and J.P. Morgan Securities LLC are acting as representatives of each of the underwriters named below. Subject to the terms and conditions set forth in an underwriting agreement among us, our principal stockholder and the underwriters, we and the principal stockholder have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not jointly, to purchase from us and the principal stockholder, the number of shares of common stock set forth opposite its name below.
| | | | | | | | |
Underwriters | | Number of Shares |
BofA Securities, Inc. | | |
J.P. Morgan Securities LLC | | |
Morgan Stanley & Co. LLC | | |
Robert W. Baird & Co. Incorporated | | |
BDT & MSD Partners, LLC | | |
BMO Capital Markets Corp. | | |
Citigroup Global Markets Inc. | | |
Goldman Sachs & Co. LLC | | |
UBS Securities LLC | | |
CIBC World Markets Corp. | | |
Fifth Third Securities, Inc. | | |
Total | | |
Subject to the terms and conditions set forth in the underwriting agreement, the underwriters have agreed, severally and not jointly, to purchase all of the shares sold under the underwriting agreement if any of these shares are purchased. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated.
We and the principal stockholder have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of those liabilities.
The underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the shares, and other conditions contained in the underwriting agreement, such as the receipt by the underwriters of officer’s certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
Commissions and Discounts
The representatives have advised us and the principal stockholder that the underwriters propose initially to offer the shares to the public at the public offering price set forth on the cover page of this prospectus and to dealers at that price less a concession not in excess of $ per share. After the initial offering, the public offering price, concession or any other term of this offering may be changed.
The following table shows the public offering price, underwriting discount and proceeds before expenses to us and the principal stockholder. The information assumes either no exercise or full exercise by the underwriters of their option to purchase additional shares.
| | | | | | | | | | | | | | | | | |
| Per Share | | Without Option | | With Option |
Public offering price | $ | | | | $ | | | | $ | | |
Underwriting discount | $ | | | | $ | | | | $ | | |
Proceeds, before expenses, to us | $ | | | | $ | | | | $ | | |
Proceeds, before expenses, to our principal stockholder | $ | | | | $ | | | | $ | | |
The expenses of this offering, not including the underwriting discount, are estimated at $ and are payable by us. We have agreed to reimburse the underwriters for certain expenses, including those related to the clearance of this offering with the Financial Industry Regulatory Authority, Inc. (“FINRA”), in an amount not to exceed $50,000.
Option to Purchase Additional Shares
The principal stockholder has granted an option to the underwriters, exercisable for 30 days after the date of this prospectus, to purchase up to an additional shares at the public offering price, less the underwriting discount. If the underwriters exercise this option, each will be obligated, subject to the conditions contained in the underwriting agreement, to purchase a number of additional shares proportionate to that underwriter’s initial amount reflected in the above table.
No Sales of Similar Securities
We, our executive officers and directors, certain senior employees that are not executive officers and certain former directors, and BDTBH, the funding vehicle through which our principal stockholder and the Minority Investment Institutional Co-Investors hold their respective interests, which collectively owned approximately 99% of our outstanding common stock prior to this offering, have agreed not to sell or transfer any common stock or securities convertible into, exchangeable for, exercisable for, or repayable with common stock, for 180 days after the date of this prospectus without first obtaining the written consent of BofA Securities, Inc. and J.P. Morgan Securities LLC. Specifically, we and these other persons have agreed, with certain limited exceptions, not to directly or indirectly:
•offer, pledge, sell or contract to sell any common stock;
•sell any option or contract to purchase any common stock;
•purchase any option or contract to sell any common stock;
•grant any option, right or warrant to purchase any common stock;
•lend or otherwise transfer or dispose of any common stock or any securities convertible into or exercisable or exchangeable for common stock;
•exercise any right with respect to the registration of any common stock, or file, cause to be filed or cause to be confidentially submitted any registration statement in connection therewith, under the Securities Act;
•enter into any hedging, swap, loan or any other agreement or transaction (including, without limitation, any short sale or the purchase or sale of, or entry into, any put or call option, or combination thereof, forward or any other derivative transaction or instrument, however described or defined) that transfers, in whole or in part, the economic consequence of ownership of any common stock whether any such hedge, swap, loan or transaction is to be settled by delivery of shares or other securities, in cash or otherwise; or
•publicly disclose the intention to do any of the foregoing described above.
This lock-up provision applies to common stock and to securities convertible into or exchangeable or exercisable for or repayable with common stock. It also applies to common stock owned now or acquired later by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition.
In addition to the lock-up agreements described above, certain of our current and former employees hold equity awards or shares of our common stock that are subject to equity award or purchase agreements containing market standoff or lock-up provisions, which covers the balance of all of our outstanding common stock owned prior to this offering. These provisions generally prohibit the sale or transfer of any shares of our common stock acquired pursuant to such agreements, whether or not any such awards have been exercised and the shares are held outright, for 180 days after the date of this prospectus. We have agreed to enforce all such market standoff or lock-up restrictions and not to amend or waive any such provisions during the 180-day lock-up period without first obtaining the written consent of the representatives, provided that we may release shares from such restrictions to the extent such shares would be entitled to release under the lock-up agreements described above.
Listing
We expect the shares to be approved for listing on the NYSE, subject to notice of issuance, under the symbol “ALH”.
Before this offering, there has been no public market for our common stock. The initial public offering price will be determined through negotiations among us, the principal stockholder and the representatives. In addition to prevailing market conditions, the factors to be considered in determining the initial public offering price are:
•the valuation multiples of publicly traded companies that the representatives believe to be comparable to us,
•our financial information,
•the history of, and the prospects for, our company and the industry in which we compete,
•an assessment of our management, its past and present operations, and the prospects for, and timing of, our future revenues,
•the present state of our development, and
•the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours.
An active trading market for the shares may not develop. It is also possible that after this offering the shares will not trade in the public market at or above the initial public offering price.
The underwriters do not expect to sell more than 5% of the shares in the aggregate to accounts over which they exercise discretionary authority.
Price Stabilization, Short Positions and Penalty Bids
Until the distribution of the shares is completed, SEC rules may limit underwriters and selling group members from bidding for and purchasing our common stock. However, the representatives may engage in transactions that stabilize the price of the common stock, such as bids or purchases to peg, fix or maintain that price.
In connection with this offering, the underwriters may purchase and sell our common stock in the open market. These transactions may include short sales, purchases on the open market to cover positions created by short sales and stabilizing transactions. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in this offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares described above. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market.
In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the option granted to them. “Naked” short sales are sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common stock in the open market after pricing that could adversely affect investors who purchase in this offering. Stabilizing transactions consist of various bids for or purchases of shares of common stock made by the underwriters in the open market prior to the completion of this offering.
The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.
Similar to other purchase transactions, the underwriters’ purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. The underwriters may conduct these transactions on the NYSE, in the over-the-counter market or otherwise.
We, the principal stockholder and the underwriters do not make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common stock. In addition, we, the principal stockholder and the underwriters do not make any representation that the representatives will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.
Electronic Distribution
In connection with this offering, certain of the underwriters or securities dealers may distribute prospectuses by electronic means, such as e-mail.
Director Participation
Certain of our directors may be allocated shares in this offering at the public offering price. Any such allocations will be made at the discretion of the underwriters, and there is no assurance as to the number of shares, if any, that may be allocated to such persons.
Conflicts of Interest
BDT & MSD, a participant in the underwriting syndicate for this offering, is an affiliate of our principal stockholder, and will receive a portion of the underwriting discounts and commissions in connection with this offering. In addition, BDT & MSD has previously provided placement and other financial advisory services to Alliance Laundry Holdings, for which BDT & MSD has received customary fees. BDT & MSD may, in the future, provide similar services to the Company and may receive customary fees for such services. Thus, it may have interests beyond customary underwriting discounts and commissions. Further, our principal stockholder expects to participate on behalf of the Company in determining such underwriting discounts and commissions for this offering.
As a result, BDT & MSD is deemed to have a “conflict of interest” under Rule 5121(f)(5) of the Conduct Rules of the Financial Industry Regulatory Authority, Inc. (“FINRA”). Accordingly, this offering is being made in compliance with Rule 5121(a)(1) of FINRA’s Conduct Rules. Pursuant to that rule, the appointment of a “qualified independent underwriter” is not required in connection with this offering as the member primarily responsible for managing the public offering does not have a conflict of interest, is not an affiliate of any member that has a conflict of interest and meets the requirements of paragraph (f)(12)(E) of Rule 5121 and do not have a conflict of interest with us. BDT & MSD will not confirm sales of the shares of our common stock to any account over which it exercises discretionary authority without the specific written approval of the account holder.
Other Relationships
Some of the underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions. In particular, affiliates of BofA Securities, Inc., Citigroup Global Markets Inc., Morgan Stanley & Co. LLC and UBS Securities LLC serve as agents, arrangers, bookrunners, lenders or issuing banks under our Credit Agreement (as defined in “Description of Certain Indebtedness”). In addition, we expect to use a portion of the proceeds from this offering to repay outstanding indebtedness under the Term Facility. As a result, affiliates of those underwriters who are lenders under the Term Facility may receive a portion of the net proceeds from this offering. We do not expect any such underwriter or affiliate thereof to receive an amount in excess of 5% of the proceeds from this offering as a result of such repayment of our outstanding indebtedness. See “Use of Proceeds.” In addition, in the ordinary course of their business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Selling Restrictions
European Economic Area
In relation to each Member State of the European Economic Area (each a “Relevant State”), no shares have been offered or will be offered pursuant to this offering to the public in that Relevant State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation, except that offers of shares may be made to the public in that Relevant State at any time under the following exemptions under the Prospectus Regulation:
•to any legal entity which is a qualified investor as defined under the Prospectus Regulation;
•to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the representatives for any such offer; or
•in any other circumstances falling within Article 1(4) of the Prospectus Regulation,
provided that no such offer of shares shall require the Company or any representative to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.
Each person in a Relevant State who initially acquires any shares or to whom any offer is made will be deemed to have represented, acknowledged and agreed to and with the Company and the representatives that it is a qualified investor within the meaning of the Prospectus Regulation.
In the case of any shares being offered to a financial intermediary as that term is used in Article 5(1) of the Prospectus Regulation, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the shares acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer to the public other than their offer or resale in a Relevant State to qualified investors, in circumstances in which the prior consent of the representatives has been obtained to each such proposed offer or resale.
The Company, the representatives and their affiliates will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements.
For the purposes of this provision, the expression an “offer to the public” in relation to any shares in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares to be offered so as to enable an investor to decide to purchase or subscribe for any shares, and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129.
This selling restriction is in addition to any other selling restrictions set out below.
Notice to Prospective Investors in the United Kingdom
In relation to the United Kingdom (“UK”), no shares have been offered or will be offered pursuant to this offering to the public in the UK prior to the publication of a prospectus in relation to the shares which has been approved by the Financial Conduct Authority in the UK in accordance with the UK Prospectus Regulation and the FSMA, except that offers of shares may be made to the public in the UK at any time under the following exemptions under the UK Prospectus Regulation and the FSMA:
•to any legal entity which is a qualified investor as defined under the UK Prospectus Regulation;
•to fewer than 150 natural or legal persons (other than qualified investors as defined under the UK Prospectus Regulation), subject to obtaining the prior consent of the representatives for any such offer; or
•at any time in other circumstances falling within section 86 of the FSMA,
provided that no such offer of shares shall require the Company or any representative to publish a prospectus pursuant to Section 85 of the FSMA or Article 3 of the UK Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation.
Each person in the UK who initially acquires any shares or to whom any offer is made will be deemed to have represented, acknowledged and agreed to and with the Company and the representatives that it is a qualified investor within the meaning of the UK Prospectus Regulation.
In the case of any shares being offered to a financial intermediary as that term is used in Article 5(1) of the UK Prospectus Regulation, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the shares acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer to the public other than their offer or resale in the UK to qualified investors, in circumstances in which the prior consent of the representatives has been obtained to each such proposed offer or resale.
The Company, the representatives and their affiliates will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements.
For the purposes of this provision, the expression an “offer to the public” in relation to any shares in the UK means the communication in any form and by any means of sufficient information on the terms of the offer and any shares to be offered so as to enable an investor to decide to purchase or subscribe for any shares, the expression “UK Prospectus Regulation” means Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018, and the expression “FSMA” means the Financial Services and Markets Act 2000.
This document is for distribution only to persons who (i) have professional experience in matters relating to investments and who qualify as investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Financial Promotion Order”), (ii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc.”) of the Financial Promotion Order, (iii) are outside the UK, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). This document is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is available only to relevant persons and will be engaged in only with relevant persons.
Notice to Prospective Investors in Switzerland
The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or this offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this document nor any other offering or marketing material relating to this offering, the Company or the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA (FINMA), and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (“CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares.
Notice to Prospective Investors in the Dubai International Financial Centre
This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (“DFSA”) (an “Exempt Offer”). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus, you should consult an authorized financial advisor.
Notice to Prospective Investors in Australia
No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission (“ASIC”), in relation to this offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001 (the “Corporations Act”), and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.
Any offer in Australia of the shares may only be made to persons (the “Exempt Investors”) who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.
The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under this offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions.
This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.
Notice to Prospective Investors in Hong Kong
The shares have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the shares has been or may be issued or has been or may be in the possession of any person for the purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.
Notice to Prospective Investors in Japan
The shares have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) and, accordingly, will not be offered or sold, directly or indirectly, in Japan, or for the benefit of any Japanese Person or to others for re-offering or resale, directly or indirectly, in Japan or to any Japanese Person, except in compliance with all applicable laws, regulations and ministerial guidelines promulgated by relevant Japanese governmental or regulatory authorities in effect at the relevant time. For the purposes of this paragraph, “Japanese Person” shall mean any person resident in Japan, including any corporation or other entity organized under the laws of Japan.
Notice to Prospective Investors in Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, the shares were not offered or sold or caused to be made the subject of an invitation for subscription or purchase and will not be offered or sold or caused to be made the subject of an invitation for subscription or purchase, and this prospectus or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares, has not been circulated or distributed, nor will it be circulated or distributed, whether directly or indirectly, to any person in Singapore other than (i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act (Chapter 289) of Singapore, as modified or amended from time to time (the “SFA”)) pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where the shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
•a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
•a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,
securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares pursuant to an offer made under Section 275 of the SFA except:
•to an institutional investor or to a relevant person, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
•where no consideration is or will be given for the transfer;
•where the transfer is by operation of law; or
•as specified in Section 276(7) of the SFA.
Notice to Prospective Investors in Canada
The shares may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the shares must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.
Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
LEGAL MATTERS
The validity of the issuance of the shares of our common stock offered hereby will be passed upon for us by Cravath, Swaine & Moore LLP, New York, New York. Certain legal matters in connection with this offering will be passed upon for the underwriters by Davis Polk & Wardwell LLP, New York, New York.
EXPERTS
On August 8, 2025, ALH Holding Inc. filed a Certificate of Amendment to its Certificate of Incorporation to change the corporate name to Alliance Laundry Holdings Inc. See Note 28 - Legal Entity Name Change (unaudited).
The consolidated financial statements of ALH Holding Inc. at December 31, 2024 and 2023, and for each of the three years in the period ended December 31, 2024, included in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act for the shares of our common stock being offered by this prospectus. This prospectus, which is part of the registration statement, does not contain all of the information included in the registration statement or the exhibits filed thereto. For further information about us and the common stock offered hereby, you should refer to the registration statement and the exhibits filed thereto, which are available on the website of the SEC referred to below. References in this prospectus to any of our contracts or other documents are not necessarily complete, and each such reference is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement.
Upon the completion of this offering, we will be subject to the reporting and information requirements of the Exchange Act and, as a result, will file periodic and current reports, proxy statements and other information with the SEC. We expect to make our periodic reports and other information filed with or furnished to the SEC available, free of charge, through our website at www.alliancelaundry.com as soon as reasonably practicable after those reports and other information are filed with or furnished to the SEC. Additionally, the SEC maintains an Internet site that contains such periodic and current reports, proxy statements and other information filed electronically with the SEC at www.sec.gov.
The information contained on, or that can be accessed through, the websites referenced in this prospectus is not part of, and is not incorporated into, this prospectus, and you should not rely on any such information in making the decision whether to purchase shares of our common stock. We have included the website addresses referenced in this prospectus only as inactive textual references and do not intend them to be active links to such website addresses.
Index to Financial Statements:
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Condensed Consolidated Financial Statements (Unaudited): |
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of ALH Holding Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of ALH Holding Inc. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of comprehensive income, stockholders' equity/(deficit) and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 16(b) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
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Product Warranty Liability |
Description of the Matter | | At December 31, 2024, the Company’s product warranty liability was $51.8 million. As more fully described in Notes 2 and 17 to the consolidated financial statements, the Company estimates and records provisions for future product warranty liability claims at the time of sale based on projected incident rates of occurrence and projected cost per incident. The Company estimates its product warranty liability based on the specific product type, product use, and warranty period, which generally ranges from one to seven years.
Auditing the Company’s product warranty liability was complex due to the judgmental nature of management’s assumptions used to estimate the future commercial in-home product warranty liability for standard product warranty periods extending beyond three years, including the projected incident rates of occurrence and the projected cost per incident. In particular, there is a higher level of estimation uncertainty in determining the future projected incident rates of occurrence, which may not be reflective of historical incident rates or may not reflect product quality issues that have not yet been identified as of the financial statement date. Additionally, the projected cost per incident reflects management’s estimates of the future cost of replacement product parts, the cost of labor, and the amount of labor required to address the product warranty claim and changes in these estimates could have a material effect on the amount of product warranty liability recognized. |
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How We Addressed the Matter in Our Audit | | To test the adequacy of the Company’s calculation of the product warranty liability, our substantive audit procedures included, among others, testing the accuracy and completeness of the underlying data used in the product warranty liability calculation and significant assumptions discussed above. We tested the categorization of claims within the product warranty liability calculation and tested the completeness and accuracy of the claims settled data. We compared the historical incident rates of occurrence by product type, using actual claims data, to the projected incident rates of occurrence. We also compared the projected cost per incident to the average cost per incident using actual claims data. We assessed the historical accuracy of management's estimates by comparing the product warranty liability in the prior year to the actual claims paid in the subsequent year. |
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2017.
Milwaukee, Wisconsin
July 29, 2025
ALH HOLDING INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
| | | | | | | | | | | |
| December 31, 2024 | | December 31, 2023 |
| Assets | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 154,682 | | | $ | 182,449 | |
| Restricted cash | 6,401 | | | 3,373 | |
| Restricted cash - for securitization investors | 26,959 | | | 24,147 | |
Accounts receivable (net of allowance for credit losses of $2,663 and $2,172 at December 31, 2024 and 2023, respectively) | 92,150 | | | 91,415 | |
| Inventories, net | 133,494 | | | 138,379 | |
| Inventories, net - related parties | 989 | | | 1,044 | |
| Accounts receivable, net - restricted for securitization investors | 130,060 | | | 140,351 | |
| Equipment financing receivables, net | 4,600 | | | 6,389 | |
| Equipment financing receivables, net - restricted for securitization investors | 88,288 | | | 77,507 | |
| Prepaid expenses and other current assets | 30,534 | | | 28,657 | |
| Total current assets | 668,157 | | | 693,711 | |
| | | |
| Equipment financing receivables, net | 7,633 | | | 12,639 | |
| Property, plant, and equipment, net | 248,341 | | | 245,591 | |
| Operating lease right-of-use assets | 17,080 | | | 19,287 | |
| Equipment financing receivables, net - restricted for securitization investors | 417,672 | | | 379,292 | |
| Deferred income tax asset | 3,220 | | | 4,026 | |
| Debt issuance costs, net | 2,793 | | | 1,390 | |
| Goodwill | 666,580 | | | 660,112 | |
| Intangible assets, net | 793,666 | | | 835,912 | |
| Other long-term assets | 6,963 | | | 3,038 | |
| Total assets | $ | 2,832,105 | | | $ | 2,854,998 | |
| | | |
| Liabilities and Stockholders' Equity/(Deficit) | | | |
| Current liabilities: | | | |
| Current portion of long-term debt | $ | 20,896 | | | $ | 14,143 | |
| Revolving credit facilities | — | | | 5,831 | |
| Accounts payable | 141,808 | | | 132,096 | |
| Accounts payable - related parties | 1,338 | | | 1,509 | |
| Asset backed borrowings - owed to securitization investors | 170,862 | | | 167,277 | |
| Current operating lease liabilities | 5,502 | | | 5,776 | |
| Other current liabilities | 138,259 | | | 144,947 | |
| Total current liabilities | 478,665 | | | 471,579 | |
| | | |
| Long-term debt, net | 2,034,545 | | | 1,237,554 | |
| Asset backed borrowings - owed to securitization investors | 382,910 | | | 347,959 | |
| Deferred income tax liability | 171,103 | | | 204,014 | |
| Long-term operating lease liabilities | 12,549 | | | 14,614 | |
| Other long-term liabilities | 29,661 | | | 28,348 | |
| Total liabilities | 3,109,433 | | | 2,304,068 | |
| | | |
| Stockholders' equity/(deficit): | | | |
| Commitments and contingencies (see Note 25) | | | |
| Redeemable preferred stock, $0.01 par value, 2,000,000 shares authorized, no shares issued or outstanding | — | | | — | |
| Common stock, $0.01 par value, 4,000,000 shares authorized, 1,335,276 and 1,333,755 issued, respectively, and 882,329 and 881,618, outstanding, respectively | 13 | | | 13 | |
| Additional paid-in capital | 191,794 | | | 823,618 | |
| Retained earnings | 31,527 | | | 199,148 | |
| Accumulated other comprehensive (loss)/income | (1,752) | | | 25,616 | |
| Treasury stock, at cost, 452,947 and 452,137 shares, respectively | (498,910) | | | (497,465) | |
| Total stockholders' equity/(deficit) | (277,328) | | | 550,930 | |
| Total liabilities and stockholders' equity/(deficit) | $ | 2,832,105 | | | $ | 2,854,998 | |
The accompanying notes are an integral part of these consolidated financial statements.
ALH HOLDING INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | |
| December 31, 2024 | | December 31, 2023 | | December 31, 2022 |
| Net revenues: | | | | | |
| Equipment, service parts and other | $ | 1,459,746 | | | $ | 1,321,427 | | | $ | 1,345,924 | |
| Equipment financing | 48,694 | | | 43,727 | | | 30,353 | |
| Net revenues | 1,508,440 | | | 1,365,154 | | | 1,376,277 | |
| Costs and expenses: | | | | | |
| Cost of sales | 914,655 | | | 858,286 | | | 939,980 | |
| Cost of sales - related parties | 6,218 | | | 4,466 | | | — | |
| Equipment financing expenses | 36,316 | | | 29,310 | | | 16,892 | |
| Gross profit | 551,251 | | | 473,092 | | | 419,405 | |
| | | | | |
| Selling, general, and administrative expenses | 266,444 | | | 237,108 | | | 225,540 | |
| Selling, general, and administrative expenses - related parties | 300 | | | 300 | | | 275 | |
| Other costs | 494 | | | — | | | 13,426 | |
| Total operating expenses | 267,238 | | | 237,408 | | | 239,241 | |
| Operating income | 284,013 | | | 235,684 | | | 180,164 | |
| | | | | |
| Interest expense, net | 132,001 | | | 123,397 | | | 58,099 | |
Other expenses, net | 23,376 | | | 7,832 | | | 6,041 | |
| Other expenses, net - related parties | 5,187 | | | — | | | — | |
| Income before taxes | 123,449 | | | 104,455 | | | 116,024 | |
| Provision for income taxes | 25,130 | | | 16,226 | | | 16,374 | |
| Net income | $ | 98,319 | | | $ | 88,229 | | | $ | 99,650 | |
| | | | | |
| Comprehensive income: | | | | | |
| Net income | $ | 98,319 | | | $ | 88,229 | | | $ | 99,650 | |
| Foreign currency translation adjustment | (27,439) | | | 6,620 | | | (14,643) | |
| Change in pension liability and other post-retirement benefits, net of taxes of ($24), ($1,770) and ($75) at December 31, 2024, 2023 and 2022, respectively | 71 | | | 4,949 | | | 225 | |
| Comprehensive income | $ | 70,951 | | | $ | 99,798 | | | $ | 85,232 | |
| | | | | |
| Net income per share attributable to common stockholders: | | | | | |
| Basic | $ | 81.84 | | | $ | 73.23 | | | $ | 81.56 | |
| Diluted | 80.08 | | | 72.15 | | | 79.97 | |
| | | | | |
| Weighted average number of common shares outstanding | | | | | |
| Basic | 1,201 | | | 1,205 | | | 1,222 | |
| Diluted | 1,228 | | | 1,223 | | | 1,246 | |
| | | | | |
| Dividends declared per share of common stock | $ | 749.07 | | | $ | — | | | $ | — | |
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The accompanying notes are an integral part of these consolidated financial statements.
ALH HOLDING INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY/(DEFICIT)
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Accumulated Other | | Total |
| Common Stock | | Paid-in Capital | | Treasury Stock | | Retained Earnings | | Comprehensive Income/(loss) | | Stockholders' Equity/(Deficit) |
| Balances at December 31, 2021 | $ | 13 | | | $ | 828,475 | | | $ | (412,006) | | | $ | 11,269 | | | $ | 28,465 | | | $ | 456,216 | |
| Net income | — | | | — | | | — | | | 99,650 | | | — | | | 99,650 | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | (14,643) | | | (14,643) | |
| Change in pension liability and other post-retirement benefits, net | — | | | — | | | — | | | — | | | 225 | | | 225 | |
| Exercise of stock options and taxes paid for net share settlement | — | | | (12,182) | | | — | | | — | | | — | | | (12,182) | |
| Exercise of stock options | — | | | 1,008 | | | — | | | — | | | — | | | 1,008 | |
| Repurchase of common stock | — | | | — | | | (66,504) | | | — | | | — | | | (66,504) | |
| Share-based compensation | — | | | 3,144 | | | — | | | — | | | — | | | 3,144 | |
| | | | | | | | | | | |
| Balances at December 31, 2022 | 13 | | | 820,445 | | | (478,510) | | | 110,919 | | | 14,047 | | | 466,914 | |
| Net income | — | | | — | | | — | | | 88,229 | | | — | | | 88,229 | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | 6,620 | | | 6,620 | |
| Change in pension liability and other post-retirement benefits, net | — | | | — | | | — | | | — | | | 4,949 | | | 4,949 | |
| Exercise of stock options and taxes paid for net share settlement | — | | | (194) | | | — | | | — | | | — | | | (194) | |
| Exercise of stock options | — | | | 24 | | | — | | | — | | | — | | | 24 | |
| Repurchase of common stock | — | | | — | | | (18,955) | | | — | | | — | | | (18,955) | |
| Share-based compensation | — | | | 3,343 | | | — | | | — | | | — | | | 3,343 | |
| | | | | | | | | | | |
| Balances at December 31, 2023 | 13 | | | 823,618 | | | (497,465) | | | 199,148 | | | 25,616 | | | 550,930 | |
| Net income | — | | | — | | | — | | | 98,319 | | | — | | | 98,319 | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | (27,439) | | | (27,439) | |
| Change in other post-retirement benefits, net | — | | | — | | | — | | | — | | | 71 | | | 71 | |
| Exercise of stock options and taxes paid for net share settlement | — | | | (1,138) | | | — | | | — | | | — | | | (1,138) | |
| Exercise of stock options | — | | | 111 | | | — | | | — | | | — | | | 111 | |
| Repurchase of common stock | — | | | — | | | (1,445) | | | — | | | — | | | (1,445) | |
| Dividends | — | | | — | | | — | | | (265,940) | | | — | | | (265,940) | |
| Return of capital | — | | | (634,060) | | | — | | | — | | | — | | | (634,060) | |
| Share-based compensation | — | | | 3,263 | | | — | | | — | | | — | | | 3,263 | |
| | | | | | | | | | | |
| Balances at December 31, 2024 | $ | 13 | | | $ | 191,794 | | | $ | (498,910) | | | $ | 31,527 | | | $ | (1,752) | | | $ | (277,328) | |
The accompanying notes are an integral part of these consolidated financial statements.
ALH HOLDING INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| | | | | | | | | | | | | | | | | |
| December 31, 2024 | | December 31, 2023 | | December 31, 2022 |
| Cash flows from operating activities: | | | | | |
| Net income | 98,319 | | | 88,229 | | | 99,650 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
| Depreciation and amortization | 90,169 | | | 88,704 | | | 87,284 | |
| Amortization and extinguishment of debt issuance costs | 5,559 | | | 4,245 | | | 4,336 | |
| Amortization of original issue discount | 2,620 | | | 1,620 | | | 1,298 | |
| Non-cash interest expense/(income) | (700) | | | 6,480 | | | (31,650) | |
| Non-cash loss/(gain) on commodity & foreign exchange contracts, net | 657 | | | 52 | | | (647) | |
| Non-cash foreign exchange (income)/loss, net | (4,654) | | | 486 | | | 1,932 | |
| Non-cash stock-based compensation | 3,263 | | | 3,343 | | | 3,144 | |
| Non-cash impairment | — | | | — | | | 12,633 | |
| Non-cash loss for pension and post-retirement benefit plans | 71 | | | 7,362 | | | 4,112 | |
| Loss on sale of property, plant, and equipment | 318 | | | 487 | | | 981 | |
| Provision for credit losses | 7,145 | | | 2,075 | | | 1,827 | |
| Deferred income taxes | (31,583) | | | (31,101) | | | (15,485) | |
| Other, net | — | | | (256) | | | (485) | |
| Changes in assets and liabilities, net of the effects of acquisitions: | | | | | |
| Accounts and equipment financing receivables, net | 639 | | | 19,619 | | | (14,691) | |
| Accounts receivable - restricted for securitization investors | 9,071 | | | 8,048 | | | 8,141 | |
| Inventories, net | 5,776 | | | 30,436 | | | (19,953) | |
| Inventories, net - related party | 55 | | | (1,044) | | | — | |
| Equipment financing receivables, net - restricted for securitization investors | (35,065) | | | (35,102) | | | (28,454) | |
| Other assets | 362 | | | 2,400 | | | 5,366 | |
| Accounts payable | 5,755 | | | (12,391) | | | (12,142) | |
| Accounts payable - related parties | (171) | | | 1,509 | | | — | |
| Other liabilities | (12,146) | | | 23,515 | | | (2,141) | |
| Net cash provided by operating activities | 145,460 | | | 208,716 | | | 105,056 | |
| | | | | |
| Cash flows from investing activities: | | | | | |
| Capital expenditures | (43,485) | | | (32,686) | | | (25,437) | |
| Acquisition of businesses, net of cash acquired | (27,948) | | | (15,114) | | | (8,586) | |
| Proceeds on disposition of assets | 2,429 | | | 58 | | | 639 | |
| Originations of equipment financing receivables, net - restricted for securitization investors | (92,092) | | | (86,583) | | | (78,979) | |
| Collections of equipment financing receivables, net - restricted for securitization investors | 73,336 | | | 82,324 | | | 108,006 | |
| | | | | |
| Net cash used in investing activities | (87,760) | | | (52,001) | | | (4,357) | |
| | | | | |
| Cash flows from financing activities: | | | | | |
| | | | | |
| Payments on revolving line of credit borrowings | (5,674) | | | (2,877) | | | (6,968) | |
| Proceeds from long-term borrowings | 2,064,625 | | | 368 | | | 1,583 | |
| Payments on long-term borrowings | (1,268,000) | | | (90,827) | | | (15,497) | |
| Cash paid for debt establishment and amendment fees | (2,389) | | | — | | | (1,496) | |
| Increase in asset backed borrowings owed to securitization investors | 204,434 | | | 200,969 | | | 194,883 | |
| Decrease in asset backed borrowings owed to securitization investors | (165,898) | | | (180,364) | | | (170,554) | |
| Dividends paid | (265,940) | | | — | | | — | |
| Return of capital paid | (634,060) | | | — | | | — | |
| Repurchase of common stock | (1,445) | | | (18,955) | | | (66,504) | |
| Taxes paid related to net share settlement of stock options | (1,138) | | | (195) | | | (12,182) | |
| Net proceeds from stock options exercised | 111 | | | 24 | | | 1,008 | |
| Net cash used in financing activities | (75,374) | | | (91,857) | | | (75,727) | |
| | | | | |
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (4,253) | | | (804) | | | (778) | |
| | | | | |
| (Decrease)/increase in cash, cash equivalents, and restricted cash | (21,927) | | | 64,054 | | | 24,194 | |
| Cash, cash equivalents, and restricted cash at beginning of period | 209,969 | | | 145,915 | | | 121,721 | |
| Cash, cash equivalents, and restricted cash at end of period | $ | 188,042 | | | $ | 209,969 | | | $ | 145,915 | |
| | | | | |
| Reconciliation of cash, cash equivalents, and restricted cash to the Consolidated Balance Sheet: | | | | | |
| Cash and cash equivalents | $ | 154,682 | | | $ | 182,449 | | | $ | 122,799 | |
| Restricted cash | 6,401 | | | 3,373 | | | 2,643 | |
| Restricted cash - for securitization investors | 26,959 | | | 24,147 | | | 20,473 | |
| Total cash, cash equivalents, and restricted cash shown in the Statement of Cash Flows | $ | 188,042 | | | $ | 209,969 | | | $ | 145,915 | |
| | | | | |
| Supplemental disclosure of cash flow information: | | | | | |
| Cash paid for interest | $ | 146,660 | | | $ | 106,298 | | | $ | 72,674 | |
| Cash paid for interest - to securitized investors | $ | 34,313 | | | $ | 30,100 | | | $ | 14,450 | |
| Cash paid for income taxes | $ | 54,154 | | | $ | 33,716 | | | $ | 25,865 | |
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| Supplemental disclosure of investing and financing non-cash activities: | | | | | |
| Capital expenditures included in accounts payable | $ | 6,292 | | | $ | 1,637 | | | $ | 1,696 | |
The accompanying notes are an integral part of these consolidated financial statements.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Note 1 - Description of Business and Basis of Presentation
Description of Business
On August 31, 2015, BDT Capital Partners, LLC (“BDT”), Ontario Teachers’ Pension Plan Board (“OTPP”), and members of our management indirectly acquired 100% of the outstanding equity interests in Alliance Laundry Holdings LLC (“Alliance Holdings”) through the merger of ALH Holding Inc. (“ALH” or the “Company”) and Rally Acquisition Corporation. ALH was the surviving entity. The Company refers to the acquisition and merger as the “BDT Transaction”. As a result of the BDT Transaction, all the outstanding equity interests of Alliance Laundry Systems LLC (“Alliance Laundry”) are owned by Alliance Holdings and all the equity interests of Alliance Holdings are owned by ALH.
During the fourth quarter of 2015, BDT syndicated a portion of its equity interests in ALH to select strategic co-investors (“co-investors”). Simultaneous with these transactions, BDT and the co-investors contributed all their equity interests into BDT Badger Holdings, LLC (“Badger”), an investment fund for the purpose of holding equity interests in ALH. In July 2017, the Company repurchased the preferred and common shares outstanding of ALH held by OTPP. As of December 31, 2024, 90.3% of ALH common stock including unexercised warrants was owned by Badger and 9.7% was owned by our current management and independent directors.
The Company designs and manufactures a full line of commercial laundry equipment and residential laundry equipment for sale in the U.S. and international markets. The Company manufactures products in the United States in Ripon, Wisconsin and Manitowoc, Wisconsin, in Europe in Pribor, Czech Republic, and in Asia Pacific in Chonburi, Thailand and Guangzhou, China. Additionally, the Company provides equipment financing to laundromat operators and other end-users primarily in the U.S.
Basis of Presentation and Principles of Consolidation
The Consolidated Financial Statements include the accounts of ALH and all its majority-owned or controlled subsidiaries that are consolidated in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company consolidates its Asset Backed Facilities trust in accordance with variable interest entity accounting guidance as discussed in more detail in Note 7 - Asset Backed Facilities. All significant intercompany transactions have been eliminated. Gains and losses from the translation of substantially all foreign currency financial statements are recorded in the Accumulated other comprehensive (loss)/income within Stockholders' equity/(deficit).
Note 2 - Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash, Cash Equivalents, and Restricted Cash
All highly liquid instruments with an initial maturity of three months or less at the date of purchase are considered cash equivalents. Restricted cash primarily represents cash in escrow funds related to the BDT Transaction shareholder indemnity agreement, escrow accounts related to acquisitions and cash collection and reserve accounts restricted for securitization investors.
Earnings Per Share (“EPS”)
Basic net income per share of common stock is computed by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding during the respective reporting period.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Diluted net income per share of common stock is calculated by including the basic weighted-average shares of common stock outstanding adjusted for the effects of all potential dilutive shares of common stock. Diluted net income per share of common stock reflects the maximum potential dilution that could occur from the exercise of stock options and warrants outstanding, if any, determined by the treasury stock method. Potential shares with anti-dilutive effects are excluded from the diluted net income per share of common stock calculation.
Revenue Recognition
Revenue from product sales is recognized when all of the following criteria are met: (i) the Company and an independent customer approve a contract with commercial substance, (ii) the performance obligations in the contract are identified , (iii) the sales price is determinable and collectible, (iv) the sales price of a contract is allocated to each distinct performance obligation and (v) the performance obligations have been satisfied through the transfer of control of the goods to the customer. Generally, control is transferred when the risk and rewards of ownership are transferred to the customer. Except for certain sales to international customers, which are recognized upon receipt by the customer, these criteria are primarily satisfied and revenue is recognized upon shipment. See Note 3 – Net Revenues for more information.
Revenues are recorded net of sales incentive allowances, which are recognized as a deduction from sales at the time of sale. Sales incentive allowances include customer promotional programs and volume rebates that require the Company to estimate and accrue the ultimate costs of such programs. The Company maintains an accrual at the end of each period for the earned, but unpaid costs related to such programs.
The Company offers certain customers the right to return eligible equipment and other purchases. Returns are not significant for any period presented.
Deposits received from customers prior to satisfying revenue recognition performance obligations are recorded in Other current liabilities. Customer deposits are recognized into revenue when control of the goods passes to the customer, with conversion typically occurring within twelve months. The Company had customer deposits of $10.4 million and $9.4 million as of December 31, 2024 and 2023, respectively.
Supplier Financing
The Company participates in a supplier financing arrangement with a third-party financial institution that allows suppliers to request early payment for eligible receivables at their sole discretion. These arrangements do not alter the Company’s obligations to its suppliers, including amounts due and scheduled payment terms. Obligations under the supplier financing program are classified as Accounts payable in the Consolidated Balance Sheets. The Company discloses the key terms of the program, the outstanding amount under the program at the end of each reporting period and provides an annual rollforward of the related obligations. Refer to Note 24 - Supplier Financing for additional information regarding the Company’s supplier financing arrangements. Equipment Financing Receivables
Equipment financing receivables, net reflect equipment loans that the Company expects to sell in the short-term to the Company’s existing securitization facility as well as other loans not eligible for sale to the facility. Equipment financing receivables, net and Equipment financing receivables, net - restricted for securitization investors are stated at the principal amount outstanding net of the allowance for credit losses. Interest income is accrued as earned on outstanding balances. Recognition of income is suspended, and previously recorded accrued interest income is reversed, when it is determined that collection of future income is not probable (after 89 days past due). Fees earned and incremental direct costs incurred upon origination of equipment financing are not significant for any period presented.
In accordance with Accounting Standards Codification (“ASC”) 230, Statement of Cash Flows, the Company records cash flows associated with equipment loans provided directly to the Company’s customers as operating cash flows. The Company considers these lending activities to be an integral component of its primary revenue-generating operations, as they directly support sales to customers and are part of the Company’s ordinary course of business. The Company records cash flows associated with equipment loans with borrowers who purchase their
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
equipment through the Company’s independent distribution network as cash flows from investing activities. The Company considers these loans to be investments that support sales through external channels rather than direct revenue-generating activities.
Sales of Equipment Financing Receivables and Accounts Receivable
The Company sells a majority of its trade and equipment financing receivables originated in the U.S. to special-purpose bankruptcy remote entities and a related trust. In a subordinated capacity, the Company retains rights to the residual portion of cash flows, including interest earned, from the equipment financing receivables sold. The Company consolidates the trust, including the assets and liabilities associated with the sale of accounts and equipment financing receivables, into its Consolidated Financial Statements.
Financing Program Revenue
The Company sells trade and equipment financing receivables through its special-purpose bankruptcy remote entities and a related trust. As servicing agent, the Company retains collection and administrative responsibilities for the accounts and equipment financing receivables. The Company recognizes interest income on sold equipment financing receivables in the period the interest is earned. The Company receives a servicing fee, based on the average outstanding balance, for the equipment financing receivables sold. The Company does not establish a servicing asset or liability because the servicing fee adequately compensates the Company for the retained servicing rights.
Allowance for Credit Losses - Equipment Financing Receivables
The allowance for credit losses is an estimate of losses inherent to the Company’s equipment financing receivables portfolio. The Company’s estimate includes accounts that have been individually identified as impaired and estimated credit losses over a pool of receivables where it is probable that certain receivables in the pool are impaired but that the individual accounts cannot yet be identified. When determining estimates of probable credit loss or whether an account is impaired, management takes into consideration numerous quantitative and qualitative factors such as historical loss experience, credit risk, portfolio duration and economic conditions. The Company determined that there is a limited correlation between expected credit losses and forecasted economic conditions based on a correlation analysis performed to compare historical losses to various economic conditions, such as real gross domestic product, inflation rate and unemployment rate. On an ongoing basis, the Company monitors credit quality based on past-due status as there is a meaningful correlation between the past-due status of customers and the risk of credit loss.
The Company determines that an equipment financing receivable is impaired when it is expected that it will be unable to collect all amounts due according to the contractual terms of the loan or lease. These equipment financing receivables are collateral–dependent and measurement of impairment is based upon the estimated fair value of collateral. The determination of the allowance for credit losses is based on an analysis of historical loss experience and reflects an amount which, in the Company’s judgment, is adequate to provide for probable credit losses. When a financing receivable is non-performing, aged greater than 89 days and the Company has exhausted all efforts of collection, the receivable is deemed to be uncollectible and is charged off and deducted from the allowance. The allowance is increased for recoveries and by charges to earnings.
The total allowance for credit losses as of December 31, 2024 and 2023 was $5.9 million and $2.5 million, respectively. The reserve as a percentage of the total gross portfolio balance was 1.1% and 0.5% as of December 31, 2024 and 2023, respectively.
Inventories
Inventories are valued at cost, which approximate costs determined on the first-in, first-out method but not in excess of net realizable value. The Company’s policy is to evaluate all inventories for obsolescence on a quarterly basis. Inventory in excess of the Company’s estimated usage requirements is recorded at its estimated net realizable value. Inherent in the estimates of net realizable value are estimates related to future manufacturing schedules, customer demand, possible alternate uses and ultimate realization of potentially excess inventory.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Accounts Receivable and Allowance for Credit Losses
Accounts receivable consists primarily of trade receivables and is carried at sales value less allowance for credit losses, representing the Company’s estimate of the net amount expected to be realized in cash. The Company reviews the allowance for credit losses on an ongoing basis, using historical payment trends, write-off experience, credit conditions, economic conditions, and other specific customer circumstances, and adjustments are made to the allowance as necessary.
Long Lived Assets
Long lived assets (property, plant and equipment and other intangible assets with definite lives) are stated at cost. Betterments and major renewals are capitalized and included in property, plant and equipment while expenditures for maintenance and minor renewals are charged to expense. Other intangible assets with definite lives consist primarily of customer agreements and distributor networks, engineering drawings, product designs and manufacturing processes, trademarks, patents and computer software.
The costs of assets and related accumulated depreciation and amortization are eliminated when assets are retired or otherwise disposed of and any resulting gain or loss is reflected in operating costs. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable based upon related estimated future undiscounted cash flows. Impairment losses on assets to be held and used are recognized, when required, when the fair value of the asset is less than its carrying value. Long-lived assets to be disposed of by sale are reported at the lower of carrying amount or fair value less cost to sell.
Depreciation and amortization are computed over the estimated useful lives of the respective assets using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. Depreciation provisions for property, plant and equipment are based on the following estimated useful lives: buildings 40 years; machinery and equipment (including production tooling) 5 to 10 years; vehicles 4 years; and data processing equipment 3 years. Leasehold improvements are amortized over the lesser of the remaining life of the lease or the estimated useful life of the improvement. Other intangible assets with definite lives are amortized over the assets’ estimated useful lives which range from three to nineteen years.
The Company capitalizes interest on borrowings during the active construction period of major capital projects. Capitalized interest is added to the cost of the underlying assets and is amortized over the useful lives of the assets.
Goodwill and Indefinite-Lived Intangible Assets
Goodwill is tested for impairment at least annually, on October 1, and more frequently if an event occurs which indicates that goodwill may be impaired. ASU No. 2017-04 Intangibles-Goodwill and Other (“Topic 350”): Simplifying the Test for Goodwill allows companies to apply a one-step quantitative test and, as applicable, record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The estimated fair value is determined on an income-based approach. Under the income-based approach, fair value is estimated using the expected present value of future cash flows as determined with the assistance of a third party. Estimating future cash flows to be generated by the reporting unit requires significant judgments and assumptions by Management including sales, operating margins, royalty rates, discount rates, and future economic conditions. The Company believes its assumptions to be consistent with those a market participant would use for valuation purposes.
Several of the Company’s tradenames and trademarks have been deemed to have an indefinite life as the Company expects to continue to use these assets for the foreseeable future. There are no limitations of a legal, regulatory or contractual nature that limit the period of time for which the Company can use these assets. The Company has the right to continue to use these assets and can continue to do so with limited cost to the Company. The effects of obsolescence, demand, competition and other economic factors are not expected to impact the indefinite life assumptions. Intangible assets not subject to amortization (indefinite-lived intangible assets) are tested for impairment at least annually, on October 1, and more frequently if an event occurs which indicates the intangible asset may be impaired. The impairment test consists of a comparison of the fair value of the intangible asset with its
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
carrying amount. An impairment loss is recognized if the carrying amount of an intangible asset exceeds its fair value in an amount equal to that excess, but not to exceed the carrying amount of the intangible asset. The fair value of the tradenames and trademarks is determined with the assistance of a third party using the relief-from-royalty method.
A considerable amount of management judgment and assumptions are required in performing the impairment tests, principally in estimating future cash flows of each reporting unit and determining the fair value of the indefinite-lived intangible assets.
There was no impairment of our indefinite-lived assets for the years ended December 31, 2024 and 2023. For the year ended December 31, 2022, the Company recorded an impairment charge of $12.0 million related to the indefinite-lived UniMac trademark, see Note 12 - Goodwill and Other Intangibles. Additionally, no impairment charges were recorded to goodwill for the years ended December 31, 2024, 2023 and 2022.
Income Taxes
The income tax provision is computed based on the pretax income included in the Consolidated Statements of Comprehensive Income. Certain items of income and expense are not recognized on the Company’s income tax returns and financial statements in the same year, which creates timing differences or are permanently disallowed. The income tax effect of these timing differences results in (1) deferred income tax assets that create a reduction in future income taxes and (2) deferred income tax liabilities that create an increase in future income taxes. Recognition of deferred income tax assets is based on management’s belief that it is more likely than not that the income tax benefit associated with temporary differences will be realized. The Company records a valuation allowance to reduce its net deferred income tax assets if, based on its assessment of future taxable income, it is more likely than not that it will not be able to use these tax benefits. The Company may have to adjust the valuation allowance if its estimate of future taxable income changes at any time. Recording such an adjustment could have a material adverse effect on the Company’s Consolidated Statements of Comprehensive Income. The Company releases income tax effects from Accumulated other comprehensive (loss)/income when individual assets or liabilities are sold, terminated or extinguished.
The Tax Cuts and Jobs Act was signed into federal law on December 22, 2017. The Act subjects a US shareholder to current tax on global intangible low-taxed income (GILTI) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740 No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred. We have elected to recognize the tax on GILTI as a period expense in the period the tax is incurred.
Product Warranty Liabilities
The costs of warranty obligations are estimated and provided for at the time of sale. Standard product warranties vary from one to seven years. The standard warranty program includes replacement of defective components. Additionally, the standard warranty covers labor costs for repairs solely related to Commercial In-Home equipment. The Company also sells separately priced extended warranties associated with its commercial products. The Company recognizes extended warranty revenues over the period covered by the warranty. The reserves for standard and extended warranties are included in the table in Note 17 - Product Warranties.
Advertising Expenses
Advertising costs are expensed as incurred and are included in Selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income. These costs were approximately $14.1 million, $12.2 million and $11.5 million for the year ended December 31, 2024, 2023 and 2022, respectively.
Shipping and Handling Fees and Costs
Shipping and handling fees charged to customers are reflected in Net revenues and shipping and handling expenses are reflected in Cost of sales.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Debt Issuance Costs and Original Issue Discount
The Company enters into new, or amends existing, credit agreements to support its operations, fund acquisitions, securitization activities, dividend distributions and other purposes. These refinancing activities and related costs, as well as any capitalized costs and original issue discounts from prior transactions, are capitalized or expensed in accordance with the debt modification and debt extinguishment accounting guidance. Debt issuance costs are amortized using the effective interest rate method or straight line when straight line approximates the effective interest rate method.
In August 2024, the Company incurred $32.8 million of fees in connection with the Credit Agreement amendment. Of these fees, $30.4 million was expensed and included in Other expenses, net in the Consolidated Statements of Comprehensive Income. The remaining $2.4 million related to the revolving credit facility and was included in Other long-term assets in the Consolidated Balance Sheets. The Company also recorded $10.4 million for original issuance discount related to the Credit Agreement, which is included in Long-term debt, net in the Consolidated Balance Sheets. Additionally, the Company wrote off a portion of the unamortized debt issuance costs and original issuance discounts related to the Prior Credit Agreement, resulting in expense of $2.8 million recorded in Other expenses, net in the Consolidated Statements of Comprehensive Income for the current period.
Foreign Currencies
The functional currency of the Company's foreign subsidiaries is the local currency in which the subsidiary operates. The Company translates the results of operations of its foreign entities using average exchange rates for each month while balance sheet accounts are translated using exchange rates at the end of each period. The Company records the foreign currency translation adjustments as a component of Accumulated other comprehensive (loss)/income. Foreign exchange transaction losses/(gains) recorded in earnings were $0.7 million, $(0.3) million, and $(0.3) million for the year ended December 31, 2024, 2023, and 2022 respectively. Additionally, foreign exchange (gains)/losses on intercompany loans of $(4.7) million, $0.5 million, and $1.9 million were recorded in earnings for the years ended December 31, 2024, 2023, and 2022, respectively, see Note 6 - Other Expenses, net for further information.
Research and Development Expenses
Research and development expenditures are expensed as incurred and are included in the Selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income. Research and development costs were $22.8 million, $22.8 million and $20.3 million for the year ended December 31, 2024, 2023 and 2022, respectively.
Fair Value of Other Financial Instruments
The carrying amounts reported in the Consolidated Balance Sheets for Cash and cash equivalents, Restricted cash, Restricted cash - for securitization investors, Accounts receivable, net, Accounts receivable, net - restricted for securitization investors, Equipment financing receivables, net - restricted for securitization investors, Accounts payable and Asset backed borrowings - owed to securitization investors approximate fair value either due to the short-term nature or longer-term instruments which have interest at variable rates that re-price frequently. The fair value of interest rate swaps and commodity and foreign exchange hedges are obtained based upon third party quotes.
Current accounting guidance defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. It also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources while unobservable inputs (lowest level) reflect internally developed market assumptions. In accordance with the guidance, fair value measurements are classified under the following hierarchy:
•Level 1 - Quoted prices for identical instruments in active markets.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
•Level 2 - Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.
•Level 3 - Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable.
When available, the Company uses quoted market prices to determine fair value and classifies such measurements within Level 1. In some cases where market prices are not available, the Company makes use of observable market-based inputs to calculate fair value, in which case the measurements are classified within Level 2. If quoted or observable market prices are not available, fair value is based upon internally developed models that use, where possible, current market-based parameters such as interest rates, yield curves and currency rates. These measurements are classified within Level 3.
Fair value measurements are classified according to the lowest level input or value-driver that is significant to the valuation. A measurement may therefore be classified within Level 3 even though there may be significant inputs that are readily observable.
Derivative Financial Instruments
Changes in the fair value of derivatives are recognized in Net income or Accumulated other comprehensive income/(loss), as appropriate. The Company does not designate any of its derivatives as hedges and, as such, records all changes in fair values as a component of current earnings.
Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk include trade accounts receivable and equipment financing receivables. Concentrations of credit risk with respect to trade receivables and equipment financing receivables are limited, to a degree, by the large number of geographically diverse customers that make up the Company’s customer base. The Company controls credit risk through credit approvals, credit limits, monitoring procedures, and secured payment terms.
Stock Based Compensation
The Company issues stock-based compensation awards to employees in the form of service-based and performance-based stock options (collectively, “option awards”). The option awards are accounted for in accordance with ASC 718, Compensation: Stock Compensation (“ASC 718”), by measuring the fair value as of the grant date. Under the plan, options awards have a term of 10 years and an exercise price equal to 100% of the fair market value of the Company’s common stock at the grant date. Granted service options vest in five equal annual installments of the stated vesting commencement date with the potential for accelerated vesting upon a change in control of ALH. The Company has elected to recognize the resulting compensation costs for service-based awards on a straight-line basis over the requisite service period of the award.
Performance-based awards vest upon the occurrence of a liquidity event, defined as any of the following: (i) a Change in Control; (ii) a Public Offering; (iii) a SPAC Transaction; or (iv) a Direct Listing, and provided that our principal stockholder receives aggregate proceeds in excess of a deemed investment threshold and an internal rate of return on its investment. The Company recognizes compensation cost for these awards only when achievement of performance conditions is considered probable. Consequently, the Company’s determination of the amount of stock compensation expense requires judgement in estimating the probability of achievement of these performance conditions.
The fair value of option awards are estimated on the grant date. For performance-based awards, the Company uses a Monte-Carlo valuation simulation to measure the grant date fair value. For service-based awards, the Company uses the Black-Scholes option pricing model to measure the grant date fair value. The Black-Scholes option pricing model incorporates several key assumptions that require significant judgment, including the fair value of the underlying common stock, the risk-free interest rate, the expected term of the option, the expected volatility of
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
the Company’s common stock, and the expected dividend yield. The Black-Scholes assumptions are summarized as follows:
•Fair value of common stock - Given the absence of a public trading market, the Company has exercised reasonable judgment and considered a number of objective and subjective factors to determine the best estimate of the fair value of our common stock, including but not limited to: (i) the results of independent third-party valuations of the Company’s common stock; (ii) the lack of marketability of the Company’s common stock; (iii) actual operating and financial results; (iv) current business conditions and projections; (v) the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company, given prevailing market conditions; and (vi) precedent transactions involving the Company’s shares.
•Risk-free interest rate - The risk-free interest rate is calculated using the average of the published interest rates of U.S. Treasury zero coupon issues with maturities that are commensurate with the expected term.
•Expected term - The expected term of stock options has been determined in all periods presented using the simplified method, which uses the midpoint between the vesting date and the contractual term, as the Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate the expected term for service-based stock options.
•Expected volatility - Expected volatility is based on an analysis of reported data for a group of guideline publicly-traded companies. For this analysis, the Company selects companies with comparable characteristics including enterprise value, risk profiles, and with historical share price information sufficient to meet the expected life of the options. The Company determines expected volatility using an average of the historical volatilities of the guideline group of companies.
•Expected dividend yield - The expected dividend yield is based on the expected annual dividend as a percentage of the market value of the Company’s common shares as of the grant date.
The Company recognizes forfeitures as they occur, and any previously recognized compensation expense is reversed in the period of the forfeiture. See Note 21 - Stock Based Compensation.
New Accounting Pronouncements Adopted
In November 2023, the FASB issued ASU No. 2023-07 Segment Reporting (“Topic 280”): Improvements to Reportable Segment Disclosures. The new guidance expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, the title and position of the CODM, and an explanation of how the CODM uses the reported measure of segment profit or loss in assessing segment performance and deciding how to allocate resources. This guidance is effective for annual disclosures in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 31, 2024, and is to be applied retrospectively to all prior periods presented. The Company adopted ASU 2023-07 for the fiscal year ended December 31, 2024, which modified our annual disclosures but did not have an impact on the Company’s Consolidated Financial Statements.
New Accounting Pronouncements to be Adopted
In December 2023, the FASB issued ASU No 2023-09 Income Taxes (“Topic 740”): Improvements to Income Tax Disclosures Topic 740. The new guidance is intended to enhance the transparency of income tax disclosures, primarily related to rate reconciliation and income taxes paid information. This guidance is effective for fiscal years beginning after December 15, 2024. The guidance is effective on a prospective basis, though retrospective application is permitted. The Company expects the adoption of this ASU will impact only our disclosures with no impact to our consolidated financial condition or results of operations.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement (Subtopic 220-40): Reporting Comprehensive Income—Expense Disaggregation Disclosures, which enhances certain disclosure requirements related to expenses (including purchases of inventory, employee compensation, depreciation, amortization, and
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
depletion) in commonly presented expense captions (such as cost of sales, selling, general and administrative expenses, and research and development). This guidance is effective for the Company for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. This ASU will only affect our disclosures and will not change the expense captions the Company presents on its Consolidated Statements of Comprehensive Income.
Note 3 – Net Revenues
Net revenues by reportable segment and major type of good or service were as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| (in thousands) | 2024 | | 2023 | | 2022 |
| North America | | | | | |
| Equipment | $ | 911,160 | | | $ | 819,782 | | | $ | 835,100 | |
| Service parts | 114,482 | | | 101,679 | | | 102,405 | |
| Equipment financing | 48,142 | | | 42,906 | | | 29,347 | |
| Other | 35,350 | | | 32,395 | | | 28,442 | |
| Total North America Net revenues | 1,109,134 | | | 996,762 | | | 995,294 | |
| | | | | |
| International | | | | | |
| Equipment | 350,824 | | | 322,563 | | | 335,986 | |
| Service parts | 41,880 | | | 39,254 | | | 38,107 | |
| Equipment financing | 552 | | | 821 | | | 1,006 | |
| Other | 6,050 | | | 5,754 | | | 5,884 | |
| Total International Net revenues | 399,306 | | | 368,392 | | | 380,983 | |
| | | | | |
| Total Net revenues | $ | 1,508,440 | | | $ | 1,365,154 | | | $ | 1,376,277 | |
Equipment and service parts
The Company offers a full line of stand-alone laundry washers and dryers and related service parts. These products range from small residential washers and dryers to large commercial laundry equipment. Revenue from equipment and service part sales is recognized when the Company satisfies a performance obligation by transferring control of a product to a customer. Transfer of control generally takes place upon shipment to the customer. Revenue is measured based on the consideration that the Company expects to be entitled to in exchange for the products transferred. Sales are generally made with 30 – 120 day terms. The resulting receivables are recorded on the Consolidated Balance Sheet under Accounts receivable, net and Accounts receivable, net - restricted for securitization investors for those receivables that are sold to a securitization entity.
Sales incentive programs such as cash discounts, customer promotional allowances, and volume rebates are used to promote the sale of equipment and other products. The Company estimates its variable consideration related to sales incentive programs using the most likely amount. Revenues are recorded net of sales incentive allowances, and are based on factors specific to each customer’s program such as expected sales volume and rebate percentages. The Company maintains an accrual at the end of each period for the unpaid amount the customer is expected to earn related to such programs. As of December 31, 2024 and 2023, the related accrual balances were $23.1 million and $21.9 million, respectively. The accruals are recorded in Other current liabilities in the Consolidated Balance Sheet.
Shipping and handling costs associated with freight after control of a product has transferred to a customer are accounted for as fulfillment costs. The Company accrues for the shipping and handling costs in the same period that the related revenue is recognized.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
The Company offers standard, limited warranties on its products. These warranties provide assurance that the product will function as expected and are not separate performance obligations. The Company accounts for estimated warranty costs as a liability when control of the product transfers to the customer.
The Company sells an extended warranty to its customers that is a separate performance obligation as the Company stands by ready to perform additional warranty work not covered by the standard warranty. The Company defers the extended warranty revenue until the period covered by the extended warranty begins, and then recognizes extended warranty revenue ratably over the coverage period. The extended warranty contract liability was $1.0 million and $0.9 million as of December 31, 2024 and 2023, respectively.
The Company collects and remits taxes assessed by different governmental authorities that are both imposed on and concurrent with revenue producing transactions between the Company and its customers. The Company excludes these taxes from Net revenues.
Equipment financing
The Company offers an equipment financing program to end-customers who are primarily laundromat owners, in order to finance their purchase of new equipment. Typical terms for equipment financing receivables range from two to ten years. Interest income on finance receivables is recorded as earned over the life of the loan. See Note 8 - Securitization Activities for further discussion regarding asset-backed financing.
Other
Other revenue consists primarily of company-owned laundromat proceeds, scrap sale and field service revenue. Revenue from these sources is typically recognized at point of sale or when the service is performed. Additionally, other revenue includes sales of our digital products under distinct subscription agreements. The Company records revenue for digital product subscriptions ratably over the subscription coverage period.
Note 4 - Acquisitions
On July 1, 2024, the Company paid cash to acquire certain assets net of liabilities of Star Distributing Commercial Laundry Equipment, Inc. (“Star Distributing”), a leader in providing solutions for on-premises laundries, laundromats, and multi-housing applications and its parts business in Nashville, Tennessee. Prior to the acquisition, the Company had a preexisting relationship with Star Distributing in the normal course of business. At the acquisition date, the Company had a receivable of $1.1 million that was settled in connection with the acquisition.
On September 1, 2024, the Company paid cash to acquire certain assets net of liabilities of L&R Laundry, LLC DBA Alliance Laundry Equipment (“L&R Laundry”), a premier provider of solutions for on-premises laundries and laundromats, headquartered in Salt Lake City, Utah. Prior to the acquisition, the Company had a preexisting relationship with L&R Laundry in the normal course of business. At the acquisition date, the Company had a receivable of $2.1 million that was settled in connection with the acquisition.
On October 1, 2024, the Company paid cash to acquire certain assets net of liabilities of Bestway Distributing Company (“Bestway”), a leading distributor of on-premises laundry equipment in Corona, California. Prior to the acquisition, the Company had a preexisting relationship with Bestway in the normal course of business. At the acquisition date, the Company had a receivable of $0.2 million that was settled in connection with the acquisition.
The purchase price allocation for these acquisitions is complete.
On November 1, 2023, the Company paid cash to acquire certain assets net of liabilities of Statewide Machinery, Inc. (“Statewide”), a leader in providing solutions for on-premises laundries, laundromats, and multi-housing applications in Northern Pennsylvania, as well as Buffalo, Syracuse, Rochester and Albany, New York and is headquartered in Batavia, New York. Prior to the acquisition, the Company had a preexisting relationship with Statewide in the normal course of business. At the acquisition date, the Company had a receivable of $1.5 million that was settled in connection with the acquisition.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
On July 1, 2023, the Company paid cash to acquire certain assets net of liabilities of Dynamic Laundry Systems, Inc. (“DSS”), a distributor with more than three decades of experience in providing commercial laundry solutions in the Pacific Northwest and is headquartered in Kirkland, Washington. Prior to the acquisition, the Company had a preexisting relationship with DSS in the normal course of business. At the acquisition date, the Company had a receivable of $0.6 million that was settled in connection with the acquisition.
On April 1, 2023, the Company paid cash to acquire certain assets net of liabilities of Taylor Houseman, Inc. (“Taylor Houseman”), distributor with more than two decades of experience in providing commercial laundry solutions in the Northern California area and is headquartered in Pittsburg, California. Prior to the acquisition, the Company had a preexisting relationship with Taylor Houseman in the normal course of business. At the acquisition date, the Company had a receivable of $0.03 million that was settled in connection with the acquisition.
During 2022, we completed business combinations that were immaterial to the consolidated financial statements for an aggregate purchase price of $8.6 million.
The following table summarizes the aggregate purchase price allocation of the estimated fair value of assets acquired and liabilities assumed as of the acquisition date for these acquisitions.
| | | | | | | | | | | | | | |
| | | | Year Ended December 31, |
| (in thousands) | | | | 2024 | | 2023 |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Total purchase price | | | | $ | 29,697 | | | $ | 16,816 | |
| | | | | | |
| Allocation of purchase price: | | | | | | |
| Assets acquired: | | | | | | |
| Accounts receivables | | | | 2,102 | | | 1,992 | |
| Inventories, net | | | | 4,126 | | | 3,486 | |
| Property, plant, and equipment, net | | | | 706 | | | 1,129 | |
| Intangible assets - customer relationships | | | | 12,500 | | | 5,500 | |
Total assets acquired | | | | $ | 19,434 | | | $ | 12,107 | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Total liabilities assumed | | | | 1,021 | | | 1,331 | |
Total net assets acquired | | | | $ | 18,413 | | | $ | 10,776 | |
Goodwill | | | | 11,284 | | | 6,040 | |
Total purchase price allocation | | | | $ | 29,697 | | | $ | 16,816 | |
Goodwill and Intangible assets related to acquisitions are included in the North America reportable segment and are deductible for tax purposes over a 15 year period. The acquired customer relationship intangible assets were assigned a useful life of seven years. Goodwill recognized in connection with these acquisitions reflects the strategic and synergistic benefits expected be realized.
From the date of acquisition through December 31, 2024, the Consolidated Statements of Comprehensive Income reflected contributions from companies acquired during the year of approximately $8.2 million in Net revenues and $0.1 million in Net income. From the date of acquisition through December 31, 2023, the Consolidated Statements of Comprehensive Income reflected contributions from companies acquired during the year of approximately $10.8 million in Net revenues and $1.8 million in Net income. The acquisitions completed during 2024 and 2023 were immaterial to the consolidated financial statements.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Note 5 - Other Costs
The following table presents a summary of Other costs as shown in the Consolidated Statements of Comprehensive Income.
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| (in thousands) | 2024 | | 2023 | | 2022 |
| Restructuring expenses | $ | — | | | $ | — | | | $ | 793 | |
| Asset impairments | — | | | — | | | 12,633 | |
| Other | 494 | | | — | | | — | |
| | | | | |
| Total Other costs | $ | 494 | | | $ | — | | | $ | 13,426 | |
See Note 12 - Goodwill and Other Intangibles regarding the Company’s asset impairments.
Note 6 - Other Expenses, net
The following table presents a summary of Other expenses, net, as shown in the Consolidated Statements of Comprehensive Income.
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| (in thousands) | 2024 | | 2023 | | 2022 |
| Foreign exchange (gains)/losses on intercompany loans | $ | (4,654) | | | $ | 484 | | | $ | 1,931 | |
| Debt issuance cost write-offs and amendment expenses | 28,030 | | | — | | | 223 | |
| Non-service components of net periodic pension expense/(benefit) | — | | | 337 | | | (732) | |
| Pension settlement loss | $ | — | | | $ | 7,011 | | | $ | 4,619 | |
| | | | | |
| | | | | |
| Other expenses, net | $ | 23,376 | | | $ | 7,832 | | | $ | 6,041 | |
Foreign exchange (gains)/losses on intercompany loans result from intercompany loans where the lender or borrower’s functional currency differs from the loan denomination currency. During 2023, the Company completed termination proceedings for the pension plan and recognized a settlement loss of $7.0 million and $4.6 million for the years ended December 31, 2023 and 2022, respectively. See Note 18 - Pensions and Other Employee Benefits for further information.
Note 7 - Asset Backed Facilities
Securitized Equipment Financing
The Company maintains an internal financing organization primarily to assist end-user laundromat locations in financing Company branded equipment through the Company’s distributors in the United States and Canada. Alliance Laundry originates and administers the sale of equipment financing receivables through a special-purpose bankruptcy remote subsidiary, Alliance Laundry Equipment Receivables 2015 LLC (“ALER 2015”), and a trust (a qualified special purpose entity or “QSPE”), Alliance Laundry Equipment Receivables Trust 2015-A (“ALERT 2015A”). These transactions are financed by a revolving credit facility (the “Asset Backed Equipment Facility”) backed by equipment financing receivables originated by the Company. Alliance Laundry is permitted, from time to time, to sell certain equipment financing receivables to its special-purpose subsidiary, which in turn transfers them to the trust. On June 30, 2022 the Company entered the Seventh Amendment to the Asset Backed Equipment Facility to extend the term of the agreement until June 30, 2025. As a result, the Company incurred $1.2 million of fees which were capitalized and included in Debt issuance costs, net in the Consolidated Balance Sheets. These costs are being amortized over the three-year life of the facility, which approximates the effective interest method. On June 25, 2024, the Company entered into a Facility Limit Increase Agreement to increase the facility limit from a lender committed amount of $430.0 million to $460.0 million. On August 19, 2024, the Company entered the Eighth Amendment to the Asset Backed Equipment Facility to align the terms and financial covenants with the Credit Facility (see Note 13 - Derivative Financial Instruments).
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
The trust finances the acquisition of equipment financing receivables through borrowings under the Asset Backed Equipment Facility in the form of funding notes which are limited to an advance rate of approximately 88%. Additional advances under the Asset Backed Equipment Facility are subject to certain continuing conditions, including but not limited to: (i) covenant restrictions relating to the weighted average life, weighted average interest rate and the amount of fixed rate equipment financing receivables held by the trust; (ii) the absence of a rapid amortization event or event of default, as defined; (iii) the Company’s compliance, as servicer, with certain financial covenants and (iv) no event having occurred which materially and adversely affects the Company’s operations.
The risk of loss to the note purchasers under the Asset Backed Equipment Facility resulting from default or dilution on equipment financing receivables is mitigated by credit enhancement provided by the Company in the form of cash reserves and over-collateralization. The Company also retains the servicing rights and receives a monthly servicing fee for the equipment financing receivables sold at a 1.0% annual rate of the aggregate balance of such equipment financing receivables.
Under the Asset Backed Equipment Facility, interest payments on the variable funding notes are paid monthly at an interest rate equal to the daily simple SOFR (“Secured Overnight Financing Rate”) rate with an adjustment spread of 10 basis points plus a margin of 120 basis points, which was equivalent to 5.8% at December 31, 2024. If an event of default occurs, the otherwise applicable interest rate for the Asset Backed Equipment Facility will be increased by an amount equal to 200 basis points per annum. The lenders also earn an unused facility fee of 0.35% of the unfunded portion of each lender's commitment amount prior to a rapid amortization event or event of default.
After June 30, 2025, the trust will not be permitted to request new borrowings, and the outstanding borrowings will amortize over a period of two and a half years with any remaining balance due at maturity.
The equipment financing receivables typically have interest rates ranging primarily from Prime plus 0.49% to Prime plus 4.75% for variable rate equipment financing receivables and 4.00% to 11.50% for fixed-rate equipment financing receivables. The average interest rate for all equipment financing receivables at December 31, 2024 was 8.84% with terms ranging primarily from two to twelve years. The weighted-average remaining expected life of equipment financing receivables held by the trust was approximately 3.40 years at December 31, 2024. All equipment financing receivables allow the holder to prepay outstanding principal amounts without penalty.
Securitized Receivables Financing
Alliance Laundry, through a special-purpose bankruptcy remote subsidiary, Alliance Laundry Trade Receivables LLC (“ALTR LLC”), utilizes a revolving credit facility (the “Asset Backed Trade Receivables Facility”) backed by trade receivables originated by the Company. Under the Asset Backed Trade Receivables Facility, Alliance Laundry originates and simultaneously sells its trade receivables to its special-purpose subsidiary. On October 9, 2020, the Company entered into an amendment to the Asset Backed Trade Receivables Facility to extend the term of the agreement until December 8, 2022. On June 30, 2022, the Company entered an amendment to the Asset Backed Trade Receivables Facility to extend the term of the agreement until June 30, 2025, and increase the facility limit of $100.0 million to $120.0 million. The Company incurred $0.3 million of fees in connection with the amendment which were capitalized and included in Debt issuance costs, net in the Consolidated Balance Sheets. These costs are being amortized over three-year revolving life of the facility, which approximates the effective interest method.
The risk of loss to the trade receivables under the Asset Backed Trade Receivables Facility resulting from default or dilution on trade receivables is mitigated by credit enhancement provided by the Company in the form of over-collateralization.
Under the Asset Backed Trade Receivables Facility, interest payments on the variable funding notes are paid monthly at an interest rate equal to the daily 1-month SOFR rate with an adjustment spread of 10 basis points plus a margin of 110 basis points, which was 5.5% as of December 31, 2024. The lender also earns an unused facility fee of 0.35% of the unfunded portion of each lender’s commitment amount.
After June 30, 2025, ALTR LLC will not be permitted to request new borrowings, and the outstanding borrowings will amortize over 180 days with any remaining balance due at maturity.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Additional advances under the Asset Backed Facilities are subject to certain continuing conditions, including but not limited to: (i) covenant restrictions relating to the weighted average life, weighted average interest rate and the amount of fixed rate equipment financing receivables held by the trust; (ii) the absence of a rapid amortization event or event of default, as defined; (iii) the Company’s compliance, as servicer, with certain financial covenants and (iv) no event having occurred which materially and adversely affects the Company’s operations.
The variable funding notes issued under the Asset Backed Facilities will commence amortization, and borrowings under the Asset Backed Facilities will cease prior to the end of the Revolving Period, or June 30, 2025, upon the occurrence of certain “rapid amortization events” which include: (i) a borrowing base shortfall exists and remains uncured; (ii) delinquency, dilution, or default ratios on pledged receivables and equipment financing receivables exceeding certain specified ratios in any given month; (iii) the days sales outstanding on receivables exceed a specified number of days; (iv) the occurrence and continuance of an event of default or servicer default under the Asset Backed Facilities, including but not limited to, as servicer, a material adverse change in our business or financial condition and the Company’s compliance with certain required financial covenants; and (v) a number of other specified events. As of December 31, 2024, no rapid amortization events have occurred.
All the residual beneficial interests in the trust and ALTR LLC and cash flows remaining from the pool of receivables after payment of all obligations under the Asset Backed Facilities will accrue to the benefit of Alliance Laundry. The Company provides no support or recourse for the risk of loss relating to default on the assets transferred to the trust and ALTR LLC except for the retained interests and amounts of the letters of credit outstanding from time to time as credit enhancement.
The Company follows accounting standards relating to the consolidation of variable interest entities and accounting for transfers of financial assets. In evaluating the variable interest entity accounting guidance, the Company evaluated if the trust should be consolidated. The Company has concluded that it is the primary beneficiary of the trust as (1) it has the power to direct the activities of the trust that most significantly impact the trust's economic performance and (2) the Company has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the trust. As a result, the Company consolidates the trust in our financial statements.
Note 8 - Securitization Activities
The following lines of the Company’s Consolidated Balance Sheets are specific to the Company’s securitization and are restricted for securitization investors only:
•Restricted cash - for securitization investors
•Accounts receivable, net - restricted for securitization investors
•Equipment financing receivables, net - restricted for securitization investors (current and long-term)
•Asset backed borrowings - owed to securitization investors (current and long-term)
Certain aspects of the Company’s retained interest in the assets of the trust constitute intercompany positions which are eliminated in the preparation of the Company’s Consolidated Balance Sheets. Trust receivables underlying the Company’s retained interest are recorded in Accounts receivable, net - restricted for securitization investors and Equipment financing receivables, net - restricted for securitization investors.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Restricted Cash - for Securitization Investors
To protect the noteholders of the trust, additional collateral in the form of a cash reserve equal to 1.0% of the equipment financing receivable balances is maintained as well as a yield account for lower fixed rate loans. Additionally, collection accounts to facilitate the collection and disbursement of funds are maintained separately for accounts receivable and equipment financing receivables. The following table presents the components of restricted cash for securitization investors.
| | | | | | | | | | | |
| (in thousands) | December 31, 2024 | | December 31, 2023 |
| Cash reserve accounts | $ | 5,217 | | | $ | 4,802 | |
| Collection accounts - accounts receivable | 1,579 | | | 1,896 | |
| Collection accounts - equipment financing receivables | 20,163 | | | 17,449 | |
| Restricted cash - for securitization investors | $ | 26,959 | | | $ | 24,147 | |
Securitization Activities
The Company transfers accounts receivable and equipment financing receivables to its special-purpose bankruptcy remote subsidiaries in the ordinary course of business as part of its ongoing securitization activities. The Company receives a combination of cash and residual interests in the transferred assets in its securitization transactions.
The following table presents the Company’s residual interests in Accounts Receivable - restricted for securitization investors.
| | | | | | | | | | | |
| (in thousands) | December 31, 2024 | | December 31, 2023 |
| Accounts receivable - restricted for securitization investors | $ | 132,017 | | | $ | 142,522 | |
| Less: Allowance for accounts receivable credit losses | (1,957) | | | (2,171) | |
| Accounts receivable, net - restricted for securitization investors | 130,060 | | | 140,351 | |
| Less: Asset backed borrowings - owed to securitization investors | (93,772) | | | (99,040) | |
| Company's residual interest in securitized accounts receivable | $ | 36,288 | | | $ | 41,311 | |
The following table presents the Company’s residual interests in Equipment financing receivables, net - restricted for securitization investors.
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2024 | | December 31, 2023 |
| (in thousands) | Current | | Long-term | | Current | | Long-term |
| Equipment financing receivables - restricted for securitization investors | $ | 88,901 | | | $ | 422,054 | | | $ | 77,858 | | | $ | 380,131 | |
| Less: Allowance for equipment financing receivables credit losses | (613) | | | (4,382) | | | (351) | | | (839) | |
| Equipment financing receivables, net - restricted for securitization investors | 88,288 | | | 417,672 | | | 77,507 | | | 379,292 | |
| Less: Asset backed borrowings - owed to securitization investors | (77,090) | | | (382,910) | | | (68,237) | | | (347,959) | |
| Company's residual interest in securitized equipment financing receivables | $ | 11,198 | | | $ | 34,762 | | | $ | 9,270 | | | $ | 31,333 | |
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Asset Backed Borrowings - Owed to Securitization Investors
The asset backed borrowings owed to securitization investors in the Company’s Consolidated Balance Sheets represents the third-party noteholders’ interest in accounts receivable and equipment financing receivables. The following table presents the future minimum payments on asset backed borrowings.
| | | | | | | | | | | | | | | | | | | | |
| Year | | Related to Trade Receivables | | Related to Equipment Financing Receivables | | Total Securitization Debt |
| 2025 | | $ | 93,772 | | | $ | 77,090 | | | $ | 170,862 | |
| 2026 | | — | | | 73,307 | | | 73,307 | |
| 2027 | | — | | | 68,049 | | | 68,049 | |
| 2028 | | — | | | 61,503 | | | 61,503 | |
| 2029 | | — | | | 54,668 | | | 54,668 | |
| Thereafter | | — | | | 125,383 | | | 125,383 | |
| Securitization Debt | | $ | 93,772 | | | $ | 460,000 | | | $ | 553,772 | |
Credit Quality of Equipment Financing Receivables
Past due balances of equipment financing receivables represent the principal balance of loans and leases held with any payment amounts between 30 and 89 days past the contractual payment due date. Non-performing equipment financing receivables represent loans and leases that are generally more than 89 days delinquent. Non-performing receivables are included in the estimate of expected credit losses. The allowance is measured on a collective basis for equipment financing receivables with similar risk characteristics. The Company does not accrue interest income on non-performing equipment financing receivables. Finance income for non-performing equipment financing receivables is recognized on a cash basis.
The following table, shown in thousands, presents credit quality disclosures and an aging analysis of past due, non-performing and current equipment financing receivables by class and vintage:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2024 | | 2024 | | 2023 | | 2022 | | 2021 | | 2020 | | Prior | | Total |
| Securitized | | | | | | | | | | | | | | |
| 30-59 Days | | $ | 1,022 | | | $ | 234 | | | $ | 275 | | | $ | 49 | | | $ | 55 | | | $ | 126 | | | $ | 1,761 | |
| 60-89 Days | | 371 | | | 842 | | | — | | | 759 | | | — | | | $ | 132 | | | 2,104 | |
| Total past due accruing | | 1,393 | | | 1,076 | | | 275 | | | 808 | | | 55 | | | $ | 258 | | | 3,865 | |
| Current | | 173,629 | | | 134,152 | | | 81,055 | | | 48,562 | | | 24,282 | | | $ | 37,260 | | | 498,940 | |
| Over 89 Days non-performing | | 615 | | | 3,227 | | | 1,231 | | | 1,262 | | | 618 | | | $ | 1,197 | | | 8,150 | |
| Total Securitized | | $ | 175,637 | | | $ | 138,455 | | | $ | 82,561 | | | $ | 50,632 | | | $ | 24,955 | | | $ | 38,715 | | | $ | 510,955 | |
| Current period gross charge-offs | | — | | | 277 | | | 66 | | | 115 | | | 42 | | | $ | 384 | | | 884 | |
| | | | | | | | | | | | | | |
| Unsecuritized | | | | | | | | | | | | | | |
| 30-59 Days | | $ | — | | | $ | — | | | $ | — | | | $ | 49 | | | $ | — | | | $ | 28 | | | $ | 77 | |
| 60-89 Days | | — | | | — | | | — | | | — | | | — | | | 11 | | | 11 | |
| Total past due accruing | | — | | | — | | | — | | | 49 | | | — | | | 39 | | | 88 | |
| Current | | 1,308 | | | 60 | | | 1,792 | | | 3,275 | | | 76 | | | 5,527 | | | 12,038 | |
| Over 89 Days non-performing | | — | | | 27 | | | 310 | | | 414 | | | — | | | 248 | | | 999 | |
| Total Unsecuritized | | $ | 1,308 | | | $ | 87 | | | $ | 2,102 | | | $ | 3,738 | | | $ | 76 | | | $ | 5,814 | | | $ | 13,125 | |
| Current period gross charge-offs | | — | | | — | | | 6 | | | 302 | | | 38 | | | 387 | | | 733 | |
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2023 | | 2023 | | 2022 | | 2021 | | 2020 | | 2019 | | Prior | | Total |
| Securitized | | | | | | | | | | | | | | |
| 30-59 Days | | $ | 834 | | | $ | 1,170 | | | $ | 2,001 | | | $ | 6 | | | $ | 404 | | | $ | 176 | | | $ | 4,591 | |
| 60-89 Days | | 102 | | | 1,014 | | | 620 | | | — | | | — | | | $ | 38 | | | 1,774 | |
| Total past due accruing | | 936 | | | 2,184 | | | 2,621 | | | 6 | | | 404 | | | $ | 214 | | | 6,365 | |
| Current | | 169,192 | | | 108,932 | | | 64,809 | | | 39,086 | | | 45,800 | | | $ | 19,542 | | | 447,361 | |
| Over 89 Days non-performing | | 1,034 | | | 228 | | | 1,009 | | | 278 | | | 480 | | | $ | 1,234 | | | 4,263 | |
| Total Securitized | | $ | 171,162 | | | $ | 111,344 | | | $ | 68,439 | | | $ | 39,370 | | | $ | 46,684 | | | $ | 20,990 | | | $ | 457,989 | |
| Current period gross charge-offs | | $ | — | | | $ | — | | | $ | 4 | | | $ | 14 | | | $ | 87 | | | $ | 302 | | | $ | 407 | |
| | | | | | | | | | | | | | |
| Unsecuritized | | | | | | | | | | | | | | |
| 30-59 Days | | $ | — | | | $ | 19 | | | $ | 46 | | | $ | 12 | | | $ | 24 | | | $ | 16 | | | $ | 117 | |
| 60-89 Days | | — | | | — | | | — | | | — | | | 27 | | | — | | | 27 | |
| Total past due accruing | | — | | | 19 | | | 46 | | | 12 | | | 51 | | | 16 | | | 144 | |
| Current | | 158 | | | 2,596 | | | 5,385 | | | 4,163 | | | 2,311 | | | 3,515 | | | 18,128 | |
| Over 89 Days non-performing | | — | | | 353 | | | 889 | | | 63 | | | 261 | | | 458 | | | 2,024 | |
| Total Unsecuritized | | $ | 158 | | | $ | 2,968 | | | $ | 6,320 | | | $ | 4,238 | | | $ | 2,623 | | | $ | 3,989 | | | $ | 20,296 | |
| Current period gross charge-offs | | $ | — | | | $ | — | | | $ | 1 | | | $ | 17 | | | $ | 72 | | | $ | 122 | | | 212 | |
The Company elected to exclude accrued interest receivable from the amortized cost basis. At December 31, 2024 and 2023, accrued interest was $2.2 million and $2.3 million, respectively, which we report in Prepaid expenses and other current assets in the Consolidated Balance Sheets. The Company’s securitized equipment financing receivable losses, on a total portfolio basis, as a percentage of average balances outstanding were 0.2%, 0.1% and 0.1% for each of the years ended December 31, 2024, 2023 and 2022.
The following table presents activity in the allowance for losses related to equipment financing receivables held on the Consolidated Balance Sheets.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | Balance at Beginning of Period | | Current Period Provision | | Actual Write-Off’s | | Recoveries | | Impact of Foreign Exchange Rates | | Balance at End of Period |
| Unsecuritized Equipment Financing Receivables Portfolio | | | | | | | | | | |
| Period ended: | | | | | | | | | | | | |
| December 31, 2024 | | $ | 1,340 | | | 332 | | | (733) | | | 4 | | | (51) | | | $ | 892 | |
| December 31, 2023 | | $ | 1,147 | | | 285 | | | (212) | | | 83 | | | 37 | | | $ | 1,340 | |
| December 31, 2022 | | $ | 1,228 | | | 101 | | | (177) | | | 51 | | | (56) | | | $ | 1,147 | |
| | | | | | | | | | | | |
| Securitized Equipment Financing Receivables Portfolio - restricted for securitization investors | | | | | | | | | | |
| Period ended: | | | | | | | | | | | | |
| December 31, 2024 | | $ | 1,190 | | | 4,660 | | | (884) | | | 29 | | | — | | | $ | 4,995 | |
| December 31, 2023 | | $ | 691 | | | 900 | | | (407) | | | 6 | | | — | | | $ | 1,190 | |
| December 31, 2022 | | $ | 438 | | | 650 | | | (419) | | | 22 | | | — | | | $ | 691 | |
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Other Trust Items
The Company incurred $1.5 million and $3.4 million of capitalized debt issuance costs, associated with the refinancing of Asset Backed Facilities in 2022 and 2020, respectively. The following table presents the amortization expense and extinguishment of debt issuance costs.
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| (in thousands) | 2024 | | 2023 | | 2022 |
| Amortization expense and extinguishment of debt issuance costs | $ | 703 | | | $ | 703 | | | $ | 1,415 | |
Note 9 - Inventories
The following table summarizes our inventories as of December 31, 2024 and 2023:
| | | | | | | | | | | |
| (in thousands) | 2024 | | 2023 |
| Finished goods | $ | 63,528 | | | $ | 63,989 | |
| Raw materials | 52,948 | | | 57,697 | |
| Work in process | 18,007 | | | 17,737 | |
| Inventories, net | $ | 134,483 | | | $ | 139,423 | |
Note 10 - Property, Plant and Equipment
The following table summarizes our Property, Plant and Equipment as of December 31, 2024 and 2023:
| | | | | | | | | | | |
| (in thousands) | 2024 | | 2023 |
| Land | $ | 9,941 | | | $ | 10,069 | |
| Buildings and leasehold improvements | 149,651 | | | 146,562 | |
| Finance leases | 2,206 | | | 1,744 | |
| Machinery and equipment | 331,925 | | | 314,806 | |
| 493,723 | | | 473,181 | |
| Less: accumulated depreciation | (272,132) | | | (242,966) | |
| 221,591 | | | 230,215 | |
| Construction in progress | 26,750 | | | 15,376 | |
| Total Property, plant and equipment, net | $ | 248,341 | | | $ | 245,591 | |
Depreciation expense was $39.7 million, $38.6 million and $37.8 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Note 11 - Leases
We lease certain property, information technology equipment, warehouse equipment, vehicles and other equipment through operating leases. We recognize a lease liability and corresponding right-of-use (“ROU”) asset based on the present value of lease payments. To determine the present value of lease payments for our leases, we use our incremental borrowing rate based on information available on the lease commencement date. Our lease agreements may include options to extend or terminate the lease. When it is reasonably certain that we will exercise an option, we include the option in the recognition of ROU assets and lease liabilities. The Company used the short-term lease practical expedient which permits the Company to not capitalize leases with a term equal to or less than 12 months.
The Company has elected a practical expedient that allows it to include fixed non-lease components of lease payments for the purpose of calculating lease right-of-use assets and liabilities. Non-lease components that are not fixed are expensed as incurred as variable lease payments.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
The Company’s lease agreements do not provide an implicit rate to determine the present value of lease payments. As such, the Company uses its incremental borrowing rate to determine the present value of lease payments. The Company derives its incremental borrowing rate from information available at the lease commencement date, which represents a collateralized rate of interest the Company would have to pay to borrow over a similar term an amount equal to the lease payments in a similar economic environment.
We sublease certain real estate to third parties. Our sublease portfolio consists of operating leases, resulting in a nominal amount of sublease income for the year ended December 31, 2024 and 2023.
The components of lease expense were as follows:
| | | | | | | | | | | | |
| (in thousands) | December 31, 2024 | | December 31, 2023 | |
| Operating lease expense | $ | 7,181 | | | $ | 7,142 | | |
| Variable lease expense | 1,751 | | | 1,511 | | |
| Short-term lease expense | 2,284 | | | 1,252 | | |
| Total Operating lease expense | $ | 11,216 | | | $ | 9,905 | | |
The variable lease expenses generally include common area maintenance, property taxes and mileage.
Supplemental information related to leases was as follows:
| | | | | | | | | | | | |
| (in thousands) | December 31, 2024 | | December 31, 2023 | |
| Operating Leases | | | | |
| Operating lease right-of-use assets | $ | 17,080 | | $ | 19,287 | |
| Current liabilities | 5,502 | | 5,776 | |
| Long-term liabilities | 12,549 | | 14,614 | |
| | | | |
| Weighted average remaining lease term | | | | |
| Operating leases | 4.1 | | 4.6 | |
| | | | |
| Weighted Average discount rates | | | | |
| Operating leases | 5.6 | % | | 5.5 | % | |
| | | | |
| Supplemental Cash Flow Information | | | | |
| Cash paid for amounts included in the measurement of Operating lease liabilities | 6,112 | | 3,950 | |
| | | | |
| Operating lease ROU assets obtained in the exchange for Operating lease liabilities | 4,703 | | 3,009 | |
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Maturities of operating lease liabilities were as follows:
| | | | | |
| (in thousands) | December 31, 2024 |
| Amounts Due In | |
| 2025 | $ | 6,463 | |
| 2026 | 4,946 | |
| 2027 | 3,732 | |
| 2028 | 2,086 | |
| 2029 | 1,457 | |
| Thereafter | 1,713 | |
| Total lease payments | 20,397 | |
| Less: Imputed interest | (2,346) | |
Total | $ | 18,051 | |
Note 12 - Goodwill and Other Intangibles
Other Intangibles
The following table presents a summary of identifiable intangible assets as of December 31, 2024.
| | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Gross Amount | | Accumulated Amortization | | Net Amount | | Weighted Average Life Remaining |
| Identifiable intangible assets: | | | | | | | |
| Trademarks and tradenames, indefinite lives | $ | 407,005 | | | $ | — | | | $ | 407,005 | | | Indefinite |
| Trademarks and tradenames, definite lives | 14,207 | | | 9,017 | | | 5,190 | | | 4.50 years |
| Customer agreements and distributor network | 733,657 | | | 358,769 | | | 374,888 | | | 9.02 years |
| Engineering and manufacturing designs and processes | 64,382 | | | 60,053 | | | 4,329 | | | 0.67 years |
| Patents | 644 | | | 452 | | | 192 | | | 9.31 years |
| Computer software and other | 16,016 | | | 13,954 | | | 2,062 | | | 3.76 years |
| $ | 1,235,911 | | | $ | 442,245 | | | $ | 793,666 | | | |
The Company’s trademarks and tradenames have renewal terms and the costs to renew these intangible assets are expensed as incurred. At December 31, 2024, the trademarks have a weighted average time until the next renewal of 4.54 years.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
The following table presents a summary of identifiable intangible assets as of December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Gross Amount | | Accumulated Amortization | | Net Amount | | Weighted Average Life Remaining |
| Identifiable intangible assets: | | | | | | | |
| Trademarks and tradenames, indefinite lives | $ | 407,005 | | | $ | — | | | $ | 407,005 | | | Indefinite |
| Trademarks and tradenames, definite lives | 15,302 | | | 8,208 | | | 7,094 | | | 5.50 years |
| Customer agreements and distributor network | 729,562 | | | 320,680 | | | 408,882 | | | 10.05 years |
| Engineering and manufacturing designs and processes | 65,660 | | | 54,788 | | | 10,872 | | | 1.67 years |
| Patents | 644 | | | 420 | | | 224 | | | 9.84 years |
| Computer software and other | 15,435 | | | 13,600 | | | 1,835 | | | 4.10 years |
| $ | 1,233,608 | | | $ | 397,696 | | | $ | 835,912 | | | |
The Company’s indefinite-lived intangible assets are the Speed Queen, Huebsch and UniMac trademarks, which were assigned a value resulting from the BDT Transaction in 2015. The trademarks were determined to have an indefinite useful life as the Company expects to continue to use these assets for the foreseeable future.
The indefinite-lived trademarks are tested for impairment at least annually and more frequently if an event occurs which indicates the intangible asset may be impaired. The Company performs the annual impairment test of its indefinite-lived intangible assets on October 1 of each year and more frequently if an event occurs which indicates intangible assets may be impaired. The impairment test consists of a comparison of the fair value of the intangible asset with its carrying value amount. An impairment loss is recognized if the carrying amount of an intangible asset exceeds its fair value in an amount equal to that excess, but not to exceed the carrying amount of the intangible asset. The fair value of the tradenames and trademarks is determined with the assistance of a third party using the relief-from-royalty method.
Based on the impairment tests, the Company did not record an impairment charge for the years ended December 31, 2024 and 2023. However, during the year ended December 31, 2022, the Company evaluated market changes related to the UniMac distribution network and as a result reduced the long-term growth rates of the financial forecast and the license royalty rate utilized in the valuation. Additionally, the discount rate increased as a result of macroeconomic factors, including rising risk free interest rates. As a result, the Company calculated a fair value of $59.0 million for the UniMac trademark, which was less than carrying value of $71.0 million. Consequently, the Company recorded an impairment charge of $12.0 million in Other costs in the Consolidated Statements of Comprehensive Income for the year ended December 31, 2022. The fair values of the Speed Queen and Huebsch trademarks were in excess of their carrying values as of December 31, 2024, 2023 and 2022.
Amortization expense of the Company’s definite-lived intangibles consisted of the following.
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| (in thousands) | 2024 | | 2023 | | 2022 |
| Amortization expense | $ | 50,515 | | | $ | 50,151 | | | $ | 49,491 | |
Estimated amortization expense for existing definite-lived intangible assets beginning in 2025 is expected to be approximately $48.4 million, $44.0 million, $43.8 million, $42.6 million and $41.4 million for each of the years in the succeeding five-year period ending December 31, 2029. Estimated amortization expense can be affected by various factors including future acquisitions or divestitures of trademark, licensing or distribution rights.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Goodwill
The following table presents the changes in carrying amount of goodwill by reporting unit. There has been no goodwill allocated to the Retail Operations or Latin America reporting units, therefore these reporting units have been excluded from this presentation.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | North America | | Europe | | Asia | | Middle East & Africa | | Consolidated |
Balance, December 31, 2022(1) | $ | 580,420 | | | $ | 52,716 | | | $ | 14,329 | | | $ | 8,990 | | | $ | 656,455 | |
| Goodwill acquired | 6,041 | | | — | | | — | | | — | | | 6,041 | |
| Measurement period adjustments | (3,154) | | | — | | | — | | | — | | | (3,154) | |
| Currency translation | — | | | 722 | | | 12 | | | 36 | | | 770 | |
Balance, December 31, 2023(1) | $ | 583,307 | | | $ | 53,438 | | | $ | 14,341 | | | $ | 9,026 | | | $ | 660,112 | |
| Goodwill acquired | 11,284 | | | — | | | — | | | — | | | 11,284 | |
| Measurement period adjustments | (34) | | | — | | | — | | | — | | | (34) | |
| Currency translation | — | | | (4,481) | | | (75) | | | (226) | | | (4,782) | |
Balance, December 31, 2024(1) | $ | 594,557 | | | $ | 48,957 | | | $ | 14,266 | | | $ | 8,800 | | | $ | 666,580 | |
__________________
(1)The carrying amount of goodwill is presented net of accumulated impairment losses of $95.8 million, $104.1 million, and $102.7 million as of December 31, 2024, 2023 and 2022, respectively.
On October 1 of each year, and more frequently if an event occurs which indicates goodwill may be impaired, the Company performs an annual impairment test of its goodwill. Based on the impairment tests, the Company did not record an impairment charge for the years ended December 31, 2024, 2023 or 2022.
Note 13 - Derivative Financial Instruments
Derivative instruments are accounted for at fair value. The accounting for changes in the fair value of a derivative depends on the intended use, designation and type of the derivative instrument. The Company does not designate any of its derivatives as hedges and, as such, records all changes in fair values as a component of earnings.
Using derivative instruments means assuming counterparty credit risk. Counterparty credit risk relates to the loss the Company could incur if a counterparty were to default on a derivative contract. The Company primarily deals with investment grade counterparties and monitors its overall credit risk and exposure to individual counterparties. The Company does not anticipate nonperformance by any counterparties. The amount of counterparty credit exposure is the unrealized gains, if any, on such derivative contracts. The Company does not require, nor does it post collateral, or security, on such contracts.
The Company is exposed to certain risks relating to its ongoing business operations. As a result, the Company enters into derivative transactions to manage these exposures. The primary risks managed through the use of derivative instruments are fluctuations in interest rates, foreign currency exchange rates and commodity prices. Fluctuations in these rates and prices can affect the Company’s operating results and financial condition. The Company manages the exposure to these market risks through operating and financing activities and through the use of derivative financial instruments. The Company does not enter into derivative financial instruments for trading or speculative purposes.
Interest Rate Risk
Borrowings outstanding under the Term Loan totaled $2,075 million at December 31, 2024. Borrowings under the Term Loan bear interest, at the option of Alliance Laundry, at a rate equal to an applicable margin plus (a) the adjusted base rate or (b) the eurocurrency rate (both rates as defined in the Credit Agreement). The applicable margins for the Term Loan are currently 2.50% with respect to adjusted base rate loans and 3.50% with respect to eurocurrency loans. An assumed 10% increase/decrease in the SOFR interest rate in effect at December 31, 2024 would increase/decrease annual interest expense by $6.4 million on the non-hedged portion of the borrowing. See
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Note 19 - Debt for further information regarding the 2023 Amendment replacing the use of LIBOR with Term SOFR as the benchmark rate as a result of the benchmark transition event that took place on April 1, 2023.
Effective September 3, 2024, the Company entered into a $600.0 million interest rate swap agreement to hedge a portion of our interest rate risk related to our long-term borrowings. Under the swap, which matures on September 1, 2027, the Company pays a fixed rate of 3.61% and receives or pays monthly interest payments based upon a comparison to the one-month SOFR rate.
Effective August 24, 2018, the Company entered into four separate $100.0 million interest rate swap agreements with various banks to hedge a portion of our interest rate risk related to our long-term borrowings. Under these swaps, which matured on September 3, 2024, the Company pays a fixed rate ranging from 2.76% to 2.77% and receives or pays monthly interest payments based upon a comparison to the one-month LIBOR rate. During the first quarter of 2023, the Company amended or replaced the existing interest rate swaps to replace the use of LIBOR with Term SOFR effective starting April 3, 2023.
Interest rate caps are in place as part of the Asset Backed Facilities to limit the Company’s exposure to interest rate increases which may adversely affect the overall performance of the Company’s equipment financing activities. The interest rate cap strike rates are 5.30%, 5.19% and 5.00%.
Foreign Currency Risk
The Company has manufacturing, sales, and distribution facilities in the Czech Republic, China and Thailand. The Company also has various sales and distribution facilities in Brazil, France, Spain, Italy, Germany and the United Arab Emirates. The Company also makes investments and enters into transactions denominated in foreign currencies. The vast majority of the Company’s international sales from its domestic operations are denominated in U.S. dollars. However, the Company is exposed to transactional and translational foreign exchange risk related to its foreign operations.
Regarding transactional foreign exchange risk, the Company from time to time enters into certain forward exchange contracts to reduce the variability of the earnings and cash flow impacts of foreign denominated receivables and payables. The Company does not designate these contracts as hedge transactions. Accordingly, the mark-to-market impact of these contracts is recorded each period to current earnings. At December 31, 2024, and 2023, the Company had no outstanding foreign currency contracts and $0.1 million notional value foreign currency contracts, respectively.
The Company’s primary translation exchange risk exposures at December 31, 2024 were the euro, Czech koruna, and Thai baht. Amounts invested in non-U.S. based subsidiaries are translated into US dollars at the exchange rate in effect at period end. The resulting translation adjustments are recorded in accumulated other comprehensive income/(loss) as foreign currency translation adjustments.
Commodity Risk
The Company is subject to the effects of changing raw material and component costs caused by movements in underlying commodity prices. The Company purchases raw materials and components containing various commodities including nickel, zinc, aluminum and copper. The Company generally buys these raw materials and components based upon market prices that are established with the vendor as part of the procurement process.
From time to time, the Company enters into contracts with its vendors to lock in commodity prices for various periods to limit its near-term exposure to fluctuations in raw material and component prices. In addition, the Company enters into commodity forward contracts, for commodities such as nickel, copper and aluminum, to reduce the variability on its earnings and cash flows of purchasing raw materials containing such commodities. The Company does not designate these contracts as hedge transactions. Accordingly, the mark-to-market impacts of these contracts are recorded each period to current earnings. At December 31, 2024, the Company was managing $1.7 million notional value of nickel forward contracts. At December 31, 2023, the Company was managing $0.2 million notional value of copper forward contracts and $1.0 million notional value of nickel forward contracts.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
The Company presents its derivatives at gross fair values in the Consolidated Balance Sheets and does not maintain derivative contracts which would require financial instrument or collateral balances. The following tables summarize the fair value of the Company’s outstanding derivative contracts included within the Consolidated Balance Sheets.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2024 | | | | |
| | Fair Value (Level 2) | | | | |
| (in thousands) | | Notional
Amount | | Assets | | Liabilities | | Location on
Balance Sheet | | Term |
| Undesignated derivatives: | | | | | |
| Interest rate swap | | $ | 600,000 | | | $ | 6,805 | | | $ | — | | | Prepaid expenses and other current assets and Other assets | | Through 9/1/27 |
| Commodity hedges | | 1,742 | | | — | | | 34 | | | Other current liabilities | | Various through 12/31/25 |
| | | | | | | | | | |
| Interest rate cap | | 67,441 | | | 191 | | | — | | | Other long-term assets | | Various through 9/15/31 |
Total undesignated derivatives | | | | $ | 6,996 | | | $ | 34 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2023 | | | | |
| | Fair Value (Level 2) | | | | |
| (in thousands) | | Notional
Amount | | Assets | | Liabilities | | Location on
Balance Sheet | | Term |
| Undesignated derivatives: | | | | | |
| Interest rate swap | | $ | 400,000 | | | $ | 6,105 | | | $ | — | | | Prepaid expenses and other current assets and Other assets | | Various through 9/3/24 |
| Commodity hedges | | 105 | | | 11 | | | 125 | | | Prepaid expenses and other current assets and Other current liabilities | | Various through 6/4/24 |
| | | | | | | | | | |
| Foreign currency hedges | | — | | | — | | | 74 | | | Other current liabilities | | Various through 12/29/23 |
| Interest rate cap | | 71,429 | | | 334 | | | — | | | Other long-term assets | | Various through 9/15/31 |
Total undesignated derivatives | | | | $ | 6,450 | | | $ | 199 | | | | | |
The following table presents the combined cash and non-cash effects of derivative instruments on the Company’s Consolidated Statements of Comprehensive Income.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Location in Consolidated Statements of Comprehensive Income | | Gain/(Loss) Recognized on
Undesignated Derivatives |
| (in thousands) | | | Year Ended December 31, |
| Undesignated Derivatives | | | 2024 | | 2023 | | 2022 |
| Interest rate swap | | Interest expense | | $ | 10,778 | | | $ | 2,899 | | | $ | 25,671 | |
| Foreign currency hedges | | Cost of sales | | (730) | | | 65 | | | 1,039 | |
| Commodity hedges | | Cost of sales | | (147) | | | (113) | | | 1,583 | |
| Interest rate cap | | Interest expense | | 38 | | | 368 | | | 307 | |
| | | | $ | 9,939 | | | $ | 3,219 | | | $ | 28,600 | |
Changes in the fair value of the derivative contracts are included as a non-cash adjustment to net income in the operating activities section in the Consolidated Statements of Cash Flows.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Note 14 - Fair Value Measurements
The fair value of the Company’s term debt approximates carrying amounts. As of December 31, 2024, and 2023, the Company’s fair value of long-term debt was $2,085.4 million and $1,271.2 million, respectively, using Level 2 inputs.
Derivatives are recorded at fair value based upon third-party quotes, see Note 13 - Derivative Financial Instruments for further information.
Note 15 - Other Current Liabilities
The following table presents the major components of Other current liabilities.
| | | | | | | | | | | |
| (in thousands) | December 31, 2024 | | December 31, 2023 |
| Salaries, wages and other employee benefits | $ | 40,493 | | | $ | 34,639 | |
| Warranty reserve | 26,561 | | | 20,805 | |
| Accrued interest | 5,787 | | | 27,380 | |
| Accrued sales incentives | 23,704 | | | 23,693 | |
| Income taxes | 15,000 | | | 15,123 | |
| Other current liabilities | 26,714 | | | 23,307 | |
| $ | 138,259 | | | $ | 144,947 | |
Note 16 - Income Taxes
The Company uses the asset and liability method of accounting for income taxes whereby deferred income taxes are recorded for the future tax consequences attributable to differences between the financial statement and tax bases of assets and liabilities. Deferred income tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred income tax assets and liabilities are revalued to reflect new tax rates during the periods in which rate changes are enacted. Management believes, based on the operating earnings in prior years, expected reversals of taxable temporary differences and reliance on future earnings, that it is more likely than not that the majority of the recorded net deferred tax assets are fully realizable.
There are various factors that may cause the Company’s tax assumptions to change in the near term and as a result the Company may have to increase or decrease its valuation allowance against net deferred income tax assets. The Company cannot predict whether future U.S. federal, foreign and state income tax laws and regulations might be passed that could have a material effect on its results of operations. The Company assesses the impact of significant changes to the U.S. federal, foreign and state income tax laws and regulations on a regular basis and updates the assumptions and estimates used to prepare its Consolidated Financial Statements when new regulations and legislation are enacted.
Geographic sources of Income before taxes is as follows.
| | | | | | | | | | | | | | | | | |
| (in thousands) | December 31, 2024 | | December 31, 2023 | | December 31, 2022 |
| Domestic | $ | 61,941 | | | $ | 53,071 | | | $ | 74,776 | |
| Foreign | 61,508 | | | 51,384 | | | 41,248 | |
| $ | 123,449 | | | $ | 104,455 | | | $ | 116,024 | |
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
The Provision for income taxes consisted of the following.
| | | | | | | | | | | | | | | | | |
| (in thousands) | December 31, 2024 | | December 31, 2023 | | December 31, 2022 |
| Current: | | | | | |
| Federal | $ | 35,839 | | | $ | 29,585 | | | $ | 21,456 | |
| State | 7,142 | | | 6,732 | | | 2,641 | |
| Foreign | 13,790 | | | 9,238 | | | 6,551 | |
| Total current | 56,771 | | | 45,555 | | | 30,648 | |
| Deferred: | | | | | |
| Federal | (23,948) | | | (18,757) | | | (12,167) | |
| State | (5,021) | | | (5,386) | | | (1,452) | |
| Foreign | (2,672) | | | (5,186) | | | (655) | |
| Total deferred | (31,641) | | | (29,329) | | | (14,274) | |
| Provision for income taxes | $ | 25,130 | | | $ | 16,226 | | | $ | 16,374 | |
The following table presents the reconciliation between tax expense at the U.S. federal statutory income tax rate and the effective income tax rate for income before taxes.
| | | | | | | | | | | | | | | | | |
| December 31, 2024 | | December 31, 2023 | | December 31, 2022 |
| | | | | |
| Statutory U.S. federal tax rate | 21.0 | % | | 21.0 | % | | 21.0 | % |
| State taxes, net of federal benefit | 1.4 | % | | 1.8 | % | | 1.3 | % |
| Foreign rate differential | (0.9) | % | | (1.9) | % | | (1.7) | % |
| Change in unrecognized tax benefit | 0.3 | % | | 0.9 | % | | 0.4 | % |
| Valuation allowance | (7.2) | % | | (0.2) | % | | (2.0) | % |
| Rate change | (0.9) | % | | (1.9) | % | | 0.9 | % |
| Foreign tax credit | (3.5) | % | | (2.7) | % | | (0.2) | % |
| U.S. tax on foreign earnings | 5.1 | % | | 5.2 | % | | 2.6 | % |
| Provision to Return | 5.9 | % | | (4.1) | % | | — | % |
| Research and development tax credit | (0.6) | % | | (0.9) | % | | (0.7) | % |
| Stock compensation | (0.2) | % | | (0.1) | % | | (7.4) | % |
| Foreign-derived intangible income deduction | (1.1) | % | | (1.3) | % | | (0.9) | % |
| BEPS Pillar Two tax | 1.0 | % | | — | % | | — | % |
| Other, net | 0.1 | % | | (0.3) | % | | 0.8 | % |
| Effective income tax rate | 20.4 | % | | 15.5 | % | | 14.1 | % |
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
The following table presents the temporary differences which give rise to the deferred tax assets and liabilities.
| | | | | | | | | | | | | |
| (in thousands) | December 31, 2024 | | December 31, 2023 | | |
| Deferred income tax liabilities: | | | | | |
| Goodwill | $ | (35,022) | | | $ | (35,368) | | | |
Intangible assets | (186,575) | | | (199,195) | | | |
Property, plant and equipment | (13,047) | | | (17,966) | | | |
| Other | (5,851) | | | (4,095) | | | |
| Deferred income tax liabilities | (240,495) | | | (256,624) | | | |
| | | | | |
| Deferred income tax assets: | | | | | |
| Inventory | 1,808 | | | 1,923 | | | |
| | | | | |
Debt issuance costs | 4,766 | | | 580 | | | |
| Warranty reserves | 12,725 | | | 10,671 | | | |
| Net operating loss and credit carry forwards | 22,608 | | | 33,887 | | | |
| Other assets | 6,096 | | | 4,886 | | | |
| Pensions and employee benefits | 5,626 | | | 5,334 | | | |
| Interest limitation | 18,868 | | | 11,845 | | | |
| Research and development costs | 13,627 | | | 11,275 | | | |
| Other | 505 | | | 150 | | | |
| Gross deferred income tax assets | 86,629 | | | 80,551 | | | |
| Less: valuation allowance | (14,017) | | | (23,915) | | | |
| Deferred income tax assets | 72,612 | | | 56,636 | | | |
| | | | | |
| Net deferred income tax liability | $ | (167,883) | | | $ | (199,988) | | | |
The Company has recorded valuation allowances for certain tax attributes and other net deferred tax assets. At this time, sufficient uncertainty exists regarding the future realization of these net deferred tax assets. A valuation allowance in the amount of $14.0 million has been recorded against the deferred tax assets for the US foreign tax credit and the losses in various countries where future earnings are not assured. If, in the future, the Company believes that it is more likely than not that these deferred tax benefits will be realized, the valuation allowances will be reversed and recognized in income.
At December 31, 2024, the Company does not have any U.S. federal and state net operating loss carryforwards. The Company’s U.S. federal and state credit carryforwards were approximately $2.4 million and $5.8 million, respectively. The federal credit carryforwards will expire in 6-10 years. The state credit carryforwards will expire in 1-15 years.
As of December 31, 2024, the Company has foreign net operating loss carryforwards of $62.7 million, of which $51.7 million has a valuation allowance reserve. The remaining foreign net operating loss carryforward of $11.0 million is expected to be fully utilized prior to expiration.
No income taxes have been provided on undistributed earnings of foreign subsidiaries that are deemed to be permanently reinvested at December 31, 2024. In addition to the one-time transition tax imposed on all accumulated foreign undistributed earnings through December 31, 2017, undistributed earnings of foreign subsidiaries as of December 31, 2024 may still be subject to certain taxes upon repatriation, primarily where foreign withholding taxes apply. We assert indefinite reinvestment related to investments in certain foreign subsidiaries and conclude investments in other foreign subsidiaries should not give rise to additional income tax.
The Company has approximately $4.5 million of unrecognized tax benefits as of December 31, 2024, which, if recognized, would impact the effective tax rate. The Company does not anticipate that the net amount of
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
unrecognized tax benefits will change significantly during the next twelve months. The Company’s policy is to accrue interest and penalties related to unrecognized tax benefits in income tax expense. Accrued interest and penalties related to the reserve for uncertain tax positions were $0.8 million at December 31, 2024, $0.5 million at December 31, 2023, and $0.3 million at December 31, 2022. The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Tax years which remain subject to examination by tax authorities for the Company’s significant tax jurisdictions include 2019 and after for the United States, 2021 and after for Belgium, 2021 and after for the Czech Republic, and 2019 and after for Luxembourg.
The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| (in thousands) | 2024 | | 2023 | | 2022 |
| Beginning balance | $ | 4,381 | | | $ | 3,497 | | | $ | 3,069 | |
| Additions based on tax positions related to the current year | 499 | | | 660 | | | 542 | |
| | | | | |
| Subtractions based on lapse of statute | (279) | | | (105) | | | (350) | |
| | | | | |
| (Subtractions)/additions based on tax positions related to the prior year | (55) | | | 329 | | | 236 | |
| Ending balance | $ | 4,546 | | | $ | 4,381 | | | $ | 3,497 | |
Tax Holidays
In Thailand, we have been granted a long-term tax holiday which is scheduled to expire in 2026. The following table presents the effects of income tax expense exemptions available to the Company.
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| (in thousands, except per share amounts) | 2024 | | 2023 | | 2022 |
| Tax benefit related to tax holidays | $ | 2,917 | | | $ | 3,547 | | | $ | 3,320 | |
| Impact of tax holiday on basic net income per share | $ | 2.43 | | | $ | 2.94 | | | $ | 2.72 | |
| Impact of tax holiday on diluted net income per share | $ | 2.38 | | | $ | 2.90 | | | $ | 2.66 | |
Note 17 - Product Warranties
The Company offers product warranties to its commercial and Commercial In-Home customers depending upon the specific product type and the product use. Standard product warranties vary from one to seven years. The standard warranty program includes replacement of defective components. Additionally, the standard warranty covers labor costs for repairs solely related to Commercial In-Home equipment.
The Company records an estimate for future warranty related costs based on the projected incident rates of occurrence and projected cost per incident. The carrying amount of the Company’s warranty liability is adjusted as necessary based on an analysis of these and other factors.
The following table presents the changes in the carrying amount of the total product warranty liability.
| | | | | | | | | | | |
| Year Ended December 31, |
| (in thousands) | 2024 | | 2023 |
| Balance at beginning of period | $ | 43,653 | | | $ | 37,204 | |
| Currency translation adjustment | (126) | | | 25 | |
| Accruals charged to earnings | 32,406 | | | 26,990 | |
| Payments made during the period | (24,146) | | | (20,566) | |
| Balance at end of period | $ | 51,787 | | | $ | 43,653 | |
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Product warranty of $26.6 million and $20.8 million is recorded in Other current liabilities in the Consolidated Balance Sheets as of December 31, 2024 and 2023, respectively. Product warranty of $25.2 million and $22.9 million is recorded in Other long-term liabilities in the Consolidated Balance Sheets as of December 31, 2024 and 2023, respectively.
Note 18 - Pensions and Other Employee Benefits
Defined benefit pension plan
We maintained a defined benefit pension plan covering certain U.S. employees whose hire date was on or before January 1, 2009, for salaried employees, or January 1, 2006 for hourly employees. On February 1, 2022, the Board of Directors approved an amendment to freeze benefits and terminate the salaried and hourly pension plan. The plan discontinued accruing benefits on March 31, 2022 and termination was effective April 30, 2022.
During 2022, the Company offered participants the option to be fully paid out in a lump sum or to be paid over time through an annuity. Lump sum settlement elections were fully satisfied in 2022, with payments of $26.3 million made from plan assets. In 2023, the Company finalized an insurance placement for the annuity purchasers in the amount of $36.3 million. Additionally, the Company contributed $2.0 million to the pension plan and reduced the liability thereunder to zero.
For the periods ended December 31, 2023 and 2022, the Company recorded a charge of $6.9 million and $4.6 million, respectively, related to the termination of the pension plan in the Consolidated Statements of Comprehensive Income. The costs were primarily comprised of the pre-tax losses from the pension plan that were recorded and held in Accumulated other comprehensive income/(loss).
The following table presents the components of pension expense.
| | | | | | | | | | | | | |
| | | Year Ended December 31, |
| (in thousands) | | | 2023 | | 2022 |
| Service cost benefits earned during the period | | | $ | — | | | $ | 137 | |
| Interest cost on projected benefit obligation | | | 466 | | | 1,955 | |
| Expected return on plan assets | | | (129) | | | (2,687) | |
| Amortization of net actuarial losses | | | 66 | | | — | |
| Settlement loss | | | 6,945 | | | 4,619 | |
Net pension loss | | | $ | 7,348 | | | $ | 4,024 | |
The following table presents the assumptions used in determining net pension benefit cost.
| | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2023 | | 2022 |
| Discount rate | | | 5.20 | % | | 2.70 | % |
| Expected long-term rate of return on assets | | | 2.01 | % | | 3.65 | % |
The Company used a 2.0% long-term rate of return on assets assumption in determining the net pension benefit cost for 2023.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
The following table presents the changes in the plan’s benefit obligation, the fair value of plan assets, and the plan’s funded status.
| | | | | | | |
| (in thousands) | | | 2023 |
| Change in benefit obligation: | | | |
| Benefit obligation at beginning of period | | | $ | 37,205 | |
| Service cost | | | — | |
| Interest cost | | | 466 | |
| Actuarial loss | | | 336 | |
| Benefits paid | | | (1,171) | |
| Plan termination settlements | | | (36,836) | |
| Benefit obligation at end of period | | | $ | — | |
| | | |
| Change in plan assets: | | | |
| Fair value of plan assets at beginning of period | | | $ | 36,063 | |
| Actual return on plan assets | | | (6) | |
| Employer contributions | | | 1,950 | |
| Benefits paid | | | (1,171) | |
| Plan termination settlements | | | (36,836) | |
| Fair value of plan assets at end of period | | | $ | — | |
| | | |
| Funded status (liability) | | | $ | — | |
| | | |
| | | |
| | | |
| | | |
| | | |
Post-retirement benefits
In the U.S., the Company also provides post-retirement benefit plans including health care, salary continuation and death benefits for eligible retirees and their dependents. Alliance Laundry’s healthcare benefits cover retired employees upon early retirement up to age 65. The retiree medical plan’s eligibility changed effective December 31, 2015. Non-union employees must have attained age 55 and 15 years of service by December 31, 2015 in order to be eligible for future retiree medical benefits. Prior to the change, employees with more than 10 years of service were eligible for these benefits if they reach age 62 while working for the Company. Retiree health plans are paid for in part by retiree contributions and are adjusted annually. Benefits are provided through various insurance companies whose charges are based either on the benefits paid during the year or annual premiums.
The following table presents the components of other post-retirement benefit cost.
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| (in thousands) | 2024 | | 2023 | | 2022 |
| Service cost benefits earned during the period | $ | 104 | | | $ | 95 | | | $ | 148 | |
| Interest cost on projected benefit obligation | 66 | | | 66 | | | 49 | |
| Amortization of prior service (credit) | (21) | | | (21) | | | (21) | |
| Amortization of net actuarial (gain) | (125) | | | (126) | | | (88) | |
| Net other post-retirement benefit cost | $ | 24 | | | $ | 14 | | | $ | 88 | |
The assumed discount rates used in determining the net other post-retirement benefit cost were 5.00%, 5.20%, and 2.70% for the year ended December 31, 2024, 2023 and 2022, respectively.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
The following table provides a reconciliation of benefit obligations, plan assets, and the funded status of the net other post-retirement benefit plans.
| | | | | | | | | | | |
| 2024 | | 2023 |
| Change in benefit obligation: | | | |
| Benefit obligation at beginning of period | $ | 1,370 | | | $ | 1,552 | |
| Service cost | 104 | | | 95 | |
| Interest cost | 66 | | | 66 | |
| Actuarial gain | (240) | | | (328) | |
| Benefits paid | (197) | | | (15) | |
| Benefit obligation at end of period | $ | 1,103 | | | $ | 1,370 | |
| | | |
| Change in plan assets: | | | |
| Contributions | $ | 197 | | | $ | 15 | |
| Benefits paid | (197) | | | (15) | |
| Fair value of plan assets at end of year | $ | — | | | $ | — | |
| | | |
| Funded status (liability) | $ | (1,103) | | | $ | (1,370) | |
| | | |
| Amounts recognized in Consolidated Balance Sheets: | | | |
| Other current liabilities | $ | (159) | | | $ | (187) | |
| Other long-term liabilities | (944) | | | (1,183) | |
| $ | (1,103) | | | $ | (1,370) | |
The assumed discount rates used to determine the net other post-retirement benefit obligation were 5.6% at December 31, 2024 and 5.0% at December 31, 2023. The Company uses a December 31 measurement date for these plans.
Annual rates of increase in the per capita cost of covered healthcare benefits of 6.9% and 6.3% were assumed in 2024 and 2023, respectively, to determine the benefit obligation at the end of the year. The rates in 2024 and 2023 are assumed to decrease gradually to 4.0% until 2047 and remain at that level thereafter.
The following table presents the projected benefit payments from the plans.
| | | | | | | | |
| Year | | Other Benefits |
| 2025 | | $ | 159 | |
| 2026 | | 125 | |
| 2027 | | 138 | |
| 2028 | | 128 | |
| 2029 | | 88 | |
| 2030 and beyond | | 465 | |
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
The following table is a roll forward showing changes to amounts recognized in Accumulated other comprehensive (loss)/income.
| | | | | | | | | | | | | | | | | |
| Pension Benefits | | Other Benefits | | Total |
| Balances at December 31, 2022 | $ | (4,813) | | | $ | 1,635 | | | $ | (3,178) | |
| Net gain | — | | | 328 | | | 328 | |
| Amortization of net gain | — | | | (126) | | | (126) | |
| Other recognition of prior service (credit) | — | | | (21) | | | (21) | |
| Settlement loss recognized | 6,538 | | | — | | | 6,538 | |
| Deferred tax | (1,725) | | | (45) | | | (1,770) | |
| Balances at December 31, 2023 | — | | | 1,771 | | | 1,771 | |
| Net gain | — | | | 240 | | | 240 | |
| Amortization of net gain | — | | | (125) | | | (125) | |
| Other recognition of prior service (credit) | — | | | (21) | | | (21) | |
| Deferred tax | — | | | (23) | | | (23) | |
| Balances at December 31, 2024 | $ | — | | | $ | 1,842 | | | $ | 1,842 | |
Eligible U.S. employees are able to participate in the Alliance Laundry Systems Capital Appreciation Plan (“ALCAP”). ALCAP is a qualified plan under Sections 401(a) and 401(k) of the Internal Revenue Code. In addition, the Company makes a discretionary annual contribution to the ALCAP equal to one and a half percent of salaries and wages, subject to statutory limits, for eligible union personnel. Under the terms of ALCAP, covered employees are allowed to contribute up to 50 percent of their pay on a pre-tax basis up to the limit established by the Internal Revenue Service. The Company matches 100 percent of the first six percent of the employee’s contributions for all non-union personnel. The Company matches 50 percent of the first six percent of the employee’s contributions for all union personnel. Total expense for ALCAP, including discretionary contributions, was $7.1 million, $6.6 million and $6.7 million for the year ended December 31, 2024, 2023 and 2022, respectively.
Note 19 - Debt
The following table presents the Company’s debt, other than debt related to securitization activities discussed in Note 7 - Asset Backed Facilities and Note 8 - Securitization Activities.
| | | | | | | | | | | |
| (in thousands) | December 31, 2024 | | December 31, 2023 |
Term Loan due August 2031 (7.84% as of December 31, 2024) | $ | 2,075,000 | | | $ | — | |
| Term Loan due October 2027 | — | | | 1,268,000 | |
| | | |
| Thailand Revolving Credit Facility | — | | | 5,831 | |
| | | |
| Finance lease obligations | 359 | | | 412 | |
| Gross long-term debt | 2,075,359 | | | 1,274,243 | |
| Less: current portion of Term Loan | (20,750) | | | (14,000) | |
| Less: current portion of Thailand Revolving Credit Facility | — | | | (5,831) | |
| | | |
| Less: current portion of finance lease obligations | (146) | | | (143) | |
| Less: unamortized debt issuance costs on Term Loan | (6,725) | | | (11,277) | |
| Less: unamortized original issue discount on Term Loan | (13,193) | | | (5,438) | |
| Long-term debt, net | $ | 2,034,545 | | | $ | 1,237,554 | |
The Company’s effective interest rate on our Term Loan was 7.98% as of December 31, 2024, after taking into account the impact of issuance costs. The weighted average interest rate on the Thailand Revolving Credit Facility was 4.58% as of December 31, 2023.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Credit Facility
On August 19, 2024, Alliance Holdings entered into a credit agreement, by and among Alliance Holdings, Alliance Laundry as the Borrower (“Borrower”), the lenders party thereto and Citibank, as Administrative Agent (the “Credit Agreement”). The Credit Agreement provides for (i) an initial Term Loan facility (the “Term Loan”) in the aggregate principal amount of $2,075.0 million and (ii) initial revolving credit facilities (the “RCF” and, together with the Term Loan, the “Credit Facility”) of $250.0 million principal amount of revolving commitments, with $225.0 million issuable in U.S. Dollars or Euros and $25.0 million issuable in Thai Baht, with a $102.2 million sub-limit for issuance of letters of credit and a $25.0 million sub-limit for swingline loans. At closing, the Borrower borrowed $2,075.0 million of aggregate principal of the Term Loan and did not borrow under the RCF. Upon closing, the Borrower used the net proceeds of the Term Loan to repay outstanding borrowings under its existing credit facility at the time and to fund a stockholder dividend distribution. The Term Loan was issued with an original issue discount of 50 basis points. Interest is payable no less frequently than quarterly at the rate of SOFR plus 3.5% (or the applicable base rate plus 2.5%), with a 0.0% SOFR floor. Interest under the RCF accrues at the rate of SOFR plus 3.25% (or the applicable base rate plus 2.25%). As of December 31, 2024, the interest rate under the RCF was 7.8%. Additionally, a commitment fee based upon the Company’s leverage ratio is charged on the unused portion of the commitments under the RCF. As of December 31, 2024, the commitment fee was 0.375%.
The Term Loan matures on August 19, 2031, and it requires installment principal repayments equal to 1.00% of the aggregate principal per annum, paid quarterly, with the outstanding balance due on the maturity date. The Credit Agreement requires certain mandatory prepayments, including from asset sales and, beginning with the fiscal year ending December 31, 2025, annual prepayments of the Term Loan with 50% of the Company’s Excess Cash Flow, which steps down to 25% if the Company’s net leverage ratio is below 4.75:1 and to 0% if the net leverage ratio is below 4.5:1. Excess Cash Flow is defined in the Credit Agreement as consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), adjusted for the net change in working capital for the fiscal year, less other specified deductions such as debt and debt service payments, and interest and taxes paid in cash. Working capital is defined as current assets excluding cash and cash equivalents less current liabilities excluding current portion of long term debt and various other adjustments. Outstanding balances are fully prepayable on a voluntary basis, in whole or in part, without premium or penalty. The RCF matures on August 19, 2029, and it does not require any installment principal repayments or mandatory commitment reductions. Outstanding balances under the RCF are fully prepayable on a voluntary basis, in whole or in part, and commitments may be terminated, in whole or in part, in each case without premium or penalty. Obligations under the Credit Agreement are secured by substantially all of the Company.
The Credit Agreement contains covenants that are customary for similar credit arrangements, including, among other things, covenants relating to: (i) financial reporting and notification, (ii) payment of obligations, (iii) compliance with applicable laws, (iv) notification of certain events, and (v) certain covenants limiting the ability of the Borrower and its subsidiaries to, among other things, sell or transfer assets, consummate fundamental changes, incur or guarantee indebtedness or liens, make investments, or enter into transactions with affiliates. The Company is in compliance with all covenants as of December 31, 2024.
The RCF is available, subject to certain conditions, for general corporate purposes in the ordinary course of business and for other transactions permitted under the Credit Agreement. A portion of the RCF not in excess of $102.0 million is available for the issuance of letters of credit. Letters of credit issued on the Company’s behalf under the RCF were $2.0 million for the period ending December 31, 2023. There were no letters of credit outstanding and the RCF was not drawn as of December 31, 2024.
Prior Refinanced Debt
On October 9, 2020, Alliance Holdings entered into a credit agreement, by and among Alliance Holdings, Alliance Laundry as the Borrower, the lenders party thereto and UBS AG, as Administrative Agent (the “Prior Credit Agreement”). The Prior Credit Agreement provided for (i) an initial term loan facility in the aggregate principal amount of $1,325.0 million and (ii) an initial revolving facility of $125.0 million principal amount of revolving commitments. This term loan, set to mature in 2027, was paid off early in 2024 with proceeds from the term loan associated with the Credit Agreement entered into on August 19, 2024.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
On December 2018, an indirect wholly-owned subsidiary of the Company, Alliance Laundry (Thailand) Company Limited, entered into a 7.5 million Thai Baht revolving credit facility (“Thailand Revolving Credit Facility”). The Thailand Revolving Credit Facility was terminated on August 8, 2024.
Other Debt
As discussed in greater detail in Note 8 - Securitization Activities, the Company had total debt outstanding of $553.8 million and $515.2 million related to its securitization activities as of December 31, 2024 and December 31, 2023, respectively.
In July 2020, a subsidiary of the Company, Alliance do Brasil Maquinas DE Lavanderia Ltda., entered into an import financing agreement with the Banco Santander (Brasil) S.A. (“Brazil Import Loan”). The loan is guaranteed by the Company through a letter of credit in the amount of $2.0 million. The loan allows for a $2.0 million maximum of issuances and a maturity of two years after each draw. The loan is used to fund laundry equipment purchases. Effective December 12, 2024, the Brazil Import letter of credit was terminated.
Debt Issuance Costs and Original Issue Discount
In August 2024, the Company incurred $32.8 million of fees in connection with the New Credit Agreement amendment. These fees were expensed and included in Other Expenses, net in the Consolidated Statements of Comprehensive Income. The Company also capitalized $10.4 million for original issuance discount related to the New Credit Agreement, which is included in Long-term debt, net in the Condensed Consolidated Balance Sheets. Additionally, the Company wrote off a portion of the unamortized debt issuance costs and original issuance discounts related to the Prior Credit Agreement, resulting in additional expense of $2.8 million. This amount was also recorded in Other expenses, net in the Consolidated Statements of Comprehensive Income for the current period.
The following table presents a summary of other disclosure items related to the Company’s debt.
| | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| (dollars in thousands) | | 2024 | | 2023 | | 2022 |
| Amortization expense - debt issuance costs | | $ | 4,856 | | | $ | 3,542 | | | $ | 2,921 | |
| Amortization expense - original issue discount | | $ | 2,620 | | | $ | 1,620 | | | $ | 1,298 | |
Debt Maturities and Liquidity Considerations
The aggregate scheduled maturities of long-term debt in subsequent years, are as follows:
| | | | | | | | |
| Year | | Amount Due |
| 2025 | | $ | 20,896 | |
| 2026 | | 20,853 | |
| 2027 | | 20,823 | |
| 2028 | | 20,777 | |
| 2029 | | 20,760 | |
| Thereafter | | 1,971,250 | |
| | 2,075,359 | |
| Less: Current portion | | (20,896) | |
| Less: unamortized debt issuance costs on Term Loan | | (6,725) | |
| Less: unamortized original issue discount on Term Loan | | (13,193) | |
| Long-term debt | | $ | 2,034,545 | |
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Note 20 - Stockholders' Equity
Dividends
On August 14, 2024, the Company’s board of directors approved a special dividend totaling $900.0 million to common stockholders and warrant holders of record as of August 13, 2024 and subsequently paid in 2024.
Preferred Stock
We are authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series; to establish the number of shares included within each series; to fix the rights, preferences and privileges of the shares of each wholly unissued series and any related qualifications, limitations or restrictions; and to increase or decrease the number of shares of any series (but not below the number of shares of a series then outstanding) without any further vote or action by our stockholders. As of December 31, 2024 and 2023, there were 2,000,000 shares of $0.01 par value preferred stock authorized for issuance, including 1,000,000 designated as Series A preferred shares, with no shares issued or outstanding.
Common Stock
Our Amended and Restated Certificate of Incorporation authorizes us to issue 4,000,000 shares of common stock.
Accumulated Other Comprehensive (Loss)/Income
The following table presents the changes in Accumulated other comprehensive (loss)/income by component, net of tax.
| | | | | | | | | | | | | | | | | |
| Pension Liability, and Other Post-retirement Benefits, Net | | Foreign Currency Translation | | Total |
| Balance as of January 1, 2022 | $ | (3,403) | | | $ | 31,868 | | | $ | 28,465 | |
| Other comprehensive (loss)/income before reclassifications | (3,162) | | | (14,643) | | | (17,805) | |
| Amounts reclassified from accumulated other comprehensive (loss)/income | 3,387 | | | — | | | 3,387 | |
| Net other comprehensive (loss)/income | 225 | | | (14,643) | | | (14,418) | |
| Balance as of December 31, 2022 | (3,178) | | | 17,225 | | | 14,047 | |
| Other comprehensive (loss)/income before reclassifications | 68 | | | 6,620 | | | 6,688 | |
| Amounts reclassified from accumulated other comprehensive (loss)/income | 4,881 | | | — | | | 4,881 | |
| Net other comprehensive (loss)/income | 4,949 | | | 6,620 | | | 11,569 | |
| Balance as of December 31, 2023 | 1,771 | | | 23,845 | | | 25,616 | |
| Other comprehensive (loss)/income before reclassifications | 149 | | | (27,439) | | | (27,290) | |
| Amounts reclassified from accumulated other comprehensive (loss)/income | (78) | | | — | | | (78) | |
| Net other comprehensive (loss)/income | 71 | | | (27,439) | | | (27,368) | |
| Balance as of December 31, 2024 | $ | 1,842 | | | $ | (3,594) | | | $ | (1,752) | |
The following table presents the effect of the reclassifications out of Accumulated other comprehensive (loss)/income on the Consolidated Statements of Comprehensive Income.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
| | | | | | | | | | | | | | | | | |
| Gain/(loss) Reclassified |
| Year Ended December 31, |
| (in thousands) | 2024 | | 2023 | | 2022 |
| Pension and post-retirement benefits, pre-tax: | | | | | |
Amortization of prior service credit(1) | $ | (21) | | | $ | (21) | | | $ | 21 | |
Amortization of actuarial gain(1) | 125 | | | 60 | | | 88 | |
Settlement loss(2) | — | | | (6,538) | | | (4,619) | |
| Reclassification before tax | 104 | | | (6,499) | | | (4,510) | |
| Tax provision/(benefit) | 26 | | | (1,618) | | | (1,123) | |
| Total reclassification from accumulated other comprehensive (loss)/income | $ | 78 | | | $ | (4,881) | | | $ | (3,387) | |
__________________
(1)Amortization of prior service credit and actuarial gain are included in the Company’s net pension benefit cost, which is allocated between Cost of sales and Selling, general and administrative expenses within the Company’s Consolidated Statements of Comprehensive Income.
(2)Settlement loss is included in Other expenses, net within the Company’s Consolidated Statements of Comprehensive Income. Refer to Note 18 - Pensions and Other Employee Benefits, for more information.
Note 21 - Stock Based Compensation
In August 2024, the Company paid a dividend to common stockholders and warrant holders of $900.0 million. Correspondingly, the exercise prices (0.698 conversion factor) and the number of share options (1.433 conversion factor) granted under the 2015 Stock Option Plan that were still outstanding as of August 16, 2024 were adjusted due to anti-dilutive clauses in the agreements. The fair value of the option awards, the vesting periods and the classification of the awards remained the same; therefore, modification accounting was not applied.
ALH 2015 Stock Option Plan
In 2015, ALH established a stock option plan (the “2015 Stock Option Plan”) authorizing 82,659 share options subject to adjustments for stock splits, stock dividends and certain other transactions or events. As of December 31, 2024, a total of 182,390 shares options were authorized under the plan, reflecting adjustments for stock dividends and other transactions. Under the plan, options have a term of 10 years and an exercise price equal to 100% of the fair market value of the Company’s common stock at the grant date. Granted time-based options vest in five equal annual installments of the stated vesting commencement date with the potential for accelerated vesting upon a change in control of ALH. Granted performance-based options vest in connection with a liquidity event, including a public offering, subject to the Company’s principal stockholders, BDT, receiving aggregate proceeds in excess of a deemed investment threshold as we all a specific rate of return. When options are exercised, the Company issues new shares of common stock.
The Company accounts for the 2015 Stock Option Plan awards under the equity classification model as the Company expects to share settle the awards. ASC 718, Compensation - Stock Compensation, requires that a company measure the fair market value of the awards as of the grant date. The Company has elected to recognize the compensation cost on a straight-line basis over the requisite service period of the award.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
The following table presents a summary of the Company’s stock option activity related to the 2015 Stock Option Plan.
| | | | | | | | | | | | | | | | | | | | | | | |
| Share Options | | Weighted Average Exercise Price
(Per Share) | | Weighted Average Remaining Contractual Term | | Aggregate Intrinsic Value
(in millions) |
| Options outstanding as of December 31, 2023 | 70,895 | | | $ | 1,254.34 | | | | | |
| Granted | 103 | | | 2,425.93 | | | | | |
| Exercised | (2,110) | | | 1,020.32 | | | | | |
| Forfeited | (4,264) | | | 1,570.86 | | | | | |
| Subtotal before cash dividend adjustment | 64,624 | | | $ | 1,248.12 | | | | | |
| Adjustment for cash dividend paid | 28,006 | | | | | | | |
| Granted after cash dividend | 405 | | | 1,728.49 | | | | | |
| Exercised after cash dividend | (2,226) | | | 966.85 | | | | | |
| Forfeited after cash dividend | (1,901) | | | 966.45 | | | | | |
| Options outstanding as of December 31, 2024 | 88,908 | | | $ | 866.40 | | | 5.3 | | $ | 80.20 | |
| Options exercisable as of December 31, 2024 | 42,343 | | | $ | 675.71 | | | 3.86 | | $ | 46.20 | |
For the year ended December 31, 2024, the Company issued 254 time-based options and 254 performance-based options.
For performance-based options, the Company uses the Monte-Carlo valuation simulation to measure the grant date fair value. For service-based options, the Company uses the Black-Scholes option price model to measure the grant date fair value. Assumptions used to determine fair value of each option were based upon historical and standard industry valuation practices and methodology. A summary of the weighted average assumptions are as follows.
| | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 |
| Expected volatility | 37.00 | % | | 38.00 | % | | 45.00 | % |
| Expected dividend yield | 0.00 | % | | 0.00 | % | | 0.00 | % |
| Expected forfeiture rate | 0.00 | % | | 0.00 | % | | 0.00 | % |
| Expected term of option | 6.5 years | | 6.5 years | | 6.5 years |
| Risk-free rate of return | 3.56 | % | | 4.12 | % | | 1.97 | % |
The weighted-average grant date fair value of time-based options issued under the 2015 Stock Option Plan were $657.57, $834.93, and $557.52 per share option for the respective 2024, 2023, and 2022 periods. The weighted-average grant date fair value of performance-based options issued under the 2015 Stock Option plan was $284.24, $341.00, and $466.76 per share option for the respective 2024, 2023, and 2022 periods.
At December 31, 2024, the Company had approximately $4.4 million of total unrecognized compensation cost related to unvested time-based stock options granted to employees, to be recognized over a weighted average period of 2.3 years. At December 31, 2023, the Company had approximately $8.5 million of total unrecognized compensation cost related to unvested time-based stock options granted, to be recognized over a weighted average period of 2.9 years. Additionally, the Company had approximately $10.2 million and $11.8 million of total unrecognized compensation cost related to unvested performance-based stock options granted to employees for the years ended December 31, 2024 and 2023, respectively. No expense was recognized for these awards in 2024, 2023, or 2022, as achievement of the performance conditions was not considered probable.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
The following table presents a summary of other disclosure items related to the 2015 Stock Option Plan and 2012 Stock Option Plan.
| | | | | | | | | | | | | | | | | |
| Year Ended
December 31, 2024 | | Year Ended
December 31, 2023 | | Year Ended
December 31, 2022 |
| Intrinsic value of options exercised | $ | 4,700 | | | $ | 865 | | | $ | 76,437 | |
| | | | | |
| | | | | |
| Compensation expense recognized | $ | 3,263 | | | $ | 3,344 | | | $ | 3,140 | |
Compensation expense is included in Selling, general and administrative expenses within the Consolidated Statements of Comprehensive Income.
Note 22 - Earnings Per Share
Basic net income per share of common stock is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share of common stock is computed by including the basic weighted-average shares of common stock outstanding adjusted for the effects of all dilutive potential shares of common stock, which include, if dilutive, outstanding stock awards. The computation of diluted earnings per share excludes the effect of the potential exercise of stock-based awards, including Stock Options, when the effect of the potential exercise would be anti-dilutive. The dilutive impact of the stock options is determined by applying the treasury stock method.
The Company issued penny warrants, exercisable after the original issuance date, granting the holders the right to purchase common shares of the Company with par value of $0.01 per share at an issuance price of $0.01 per share. The Company had 319,121 outstanding perpetual warrants as of December 31, 2024, 2023, and 2022, with an exercise price of $0.01. Given the nominal exercise price, the warrants are considered to be outstanding in the context of basic net income per share of common stock, and thus are included in the computation of basic and diluted net income per share of common stock as of December 31, 2024, 2023, and 2022. The holder of a warrant is entitled to receive all dividends or other distributions payable on the common shares unless a corresponding adjustment is made to the number of common shares issuable upon exercise of the warrant and the exercise price of the warrants.
Basic and diluted net income per share of common stock were calculated as follows:
| | | | | | | | | | | | | | | | | |
| (in thousands, except per share amounts) | For the Year Ended December 31, |
| 2024 | | 2023 | | 2022 |
| Numerator | | | | | |
| Income available to common stockholders (basic and diluted) | $ | 98,319 | | | $ | 88,229 | | | $ | 99,650 | |
| | | | | |
| Denominator | | | | | |
| Weighted-average number of common shares outstanding | 882,226 | | | 885,715 | | | 902,680 | |
| Weighted-average number of warrants outstanding | 319,121 | | | 319,121 | | | 319,121 | |
| Basic — weighted average number of shares outstanding | 1,201,347 | | | 1,204,836 | | | 1,221,801 | |
| | | | | |
| Effect of dilutive securities - time-vested options | 26,339 | | | 17,994 | | | 24,289 | |
| Diluted — weighted average number of shares outstanding | 1,227,686 | | | 1,222,830 | | | 1,246,090 | |
| | | | | |
| Earnings per share | | | | | |
| Basic | $ | 81.84 | | | $ | 73.23 | | | $ | 81.56 | |
| Diluted | $ | 80.08 | | | $ | 72.15 | | | $ | 79.97 | |
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
The following potential ordinary shares, presented based on amounts outstanding at the end of the period, were excluded from the calculation of diluted net income per share of common stock because including them would have had an anti-dilutive effect:
| | | | | | | | | | | | | | | | | |
| For the Year Ended December 31, |
| 2024 | | 2023 | | 2022 |
| | | | | |
| Time vesting options | — | | | 1,002 | | | 1,073 | |
| Performance vesting options | 33,294 | | | 26,430 | | | 24,524 | |
Note 23 - Segment Information
The Company’s Chief Operating Decision Maker (CODM) is our Chief Executive Officer. The Company operates through two reportable segments in accordance with ASC 280, Segment Reporting: North America (United States and Canada) and International (all other global markets). This structure reflects how the CODM evaluates performance and allocates resources. Across both reportable segments, we manufacture and sell commercial laundry equipment suitable for diverse applications, ranging from small chassis products installed in laundromats, multi-housing facilities and residential settings, to large industrial units designed for institutional laundry applications.
The CODM uses Adjusted EBITDA as the primary measure of segment profit and loss to evaluate the Company’s financial performance against expected results and to allocate resources, including capital investment and potential acquisitions. Adjusted EBITDA is a non-GAAP financial measure that is defined as net income excluding interest income/expense, income taxes, depreciation and amortization. Adjusted EBITDA is also adjusted for the discrete items that management excluded in analyzing the segments’ operating performance, such as refinancing and debt related costs, share-based compensation, strategic transaction costs, foreign exchange on intercompany loans and other non-recurring items which management believes are not indicative of the Company’s ongoing operating performance. Management believes Adjusted EBITDA is the best measure to help users of its financial statements evaluate our operating performance and facilitates more meaningful comparisons with industry peers. Adjusted EBITDA is not intended to serve as an alternative to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies.
Sales between reportable segments are not provided to the CODM, and as such, inter-segment sales are not disclosed.
Assets are physically maintained primarily in the United States, Czech Republic, and Thailand. Total assets by segment are not presented in the table below as the CODM is not provided total assets by reportable segment as the CODM does not evaluate, manage, or measure performance of segments using total assets.
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
The following table presents the results of operations for the Company’s reportable segments, reconciled to consolidated Income before taxes.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2024 | | Year Ended December 31, 2023 | | Year Ended December 31, 2022 |
| North America | | International | | Total | | North America | | International | | Total | | North America | | International | | Total |
| Net revenues | $ | 1,109,134 | | | $ | 399,306 | | | $ | 1,508,440 | | | $ | 996,762 | | | $ | 368,392 | | | $ | 1,365,154 | | | $ | 995,294 | | | $ | 380,983 | | | $ | 1,376,277 | |
Cost of sales(1) | 700,743 | | | 254,043 | | | | | 654,936 | | | 235,931 | | | | | 695,506 | | | 262,085 | | | |
Other segment items(2) | 90,612 | | | 42,115 | | | | | 76,435 | | | 38,059 | | | | | 72,095 | | | 36,105 | | | |
| | | | | | | | | | | | | | | | | |
| Adjusted EBITDA | $ | 317,779 | | | $ | 103,148 | | | $ | 420,927 | | | $ | 265,391 | | | $ | 94,402 | | | $ | 359,793 | | | $ | 227,693 | | | $ | 82,793 | | | $ | 310,486 | |
| Reconciling items: | | | | | | | | | | | | | | | | | |
| Interest expense, net | | | | | (132,001) | | | | | | | (123,397) | | | | | | | (58,099) | |
| Depreciation and amortization | | | | | (90,169) | | | | | | | (88,704) | | | | | | | (87,284) | |
| Refinancing and debt related costs | | | | | (33,217) | | | | | | | — | | | | | | | (223) | |
| Foreign exchange gain/(loss) on intercompany loans | | | | | 4,654 | | | | | | | (484) | | | | | | | (1,931) | |
| Shared-based compensation | | | | | (3,263) | | | | | | | (3,343) | | | | | | | (3,144) | |
| Strategic transaction costs | | | | | (5,803) | | | | | | | (1,083) | | | | | | | (437) | |
| Pension termination costs | | | | | — | | | | | | | (7,011) | | | | | | | (4,619) | |
| Corporate and other | | | | | (37,679) | | | | | | | (31,316) | | | | | | | (38,725) | |
| Income before taxes | | | | | $ | 123,449 | | | | | | | $ | 104,455 | | | | | | | $ | 116,024 | |
__________________
(1)Consists of Cost of sales, Cost of sales - related parties and Equipment financing expenses
(2)Other segment items for each reportable segment includes:
North America - engineering, sales and marketing, information technology, and certain other overhead expenses.
International - engineering, sales and marketing, information technology, and certain other overhead expenses.
Geographic Information
The following table presents the Company’s geographic data for net revenues. Geographic disclosures were determined based on the location of where the sale originated.
| | | | | | | | | | | | | | | | | |
| For the Year Ended December 31, |
| 2024 | | 2023 | | 2022 |
| Net revenues: | | | | | |
| United States | $ | 1,195,479 | | | $ | 1,087,271 | | | $ | 1,124,138 | |
| Czech Republic | 142,961 | | | 120,737 | | | 133,824 | |
| Thailand | 72,497 | | | 72,065 | | | 56,328 | |
| All other countries | 97,503 | | | 85,081 | | | 61,987 | |
| Total Net revenues | $ | 1,508,440 | | | $ | 1,365,154 | | | $ | 1,376,277 | |
Long-lived assets, which consist of property, plant and equipment and right-of-use assets, are presented in the table below as of December 31, 2024 and 2023. These assets are disclosed based on their physical location, with the table summarizing all countries that represent at least 10% of our consolidated long-lived assets:
| | | | | | | | | | | |
| For the Year Ended December 31, |
| 2024 | | 2023 |
| Long-lived assets: | | | |
| United States | $ | 181,926 | | | $ | 180,928 | |
| Czech Republic | 37,976 | | | 42,662 | |
| Thailand | 40,397 | | | 36,447 | |
| All other countries | 5,122 | | | 4,841 | |
| Total long-lived assets | $ | 265,421 | | | $ | 264,878 | |
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
Note 24 - Supplier Financing
The Company entered into a supplier financing arrangement with a third-party financial institution which allows participating suppliers the ability to request early payment for eligible receivables due from the Company at their sole discretion. The Company’s obligations to its suppliers, including amounts due and scheduled payment terms, are not impacted by a suppliers’ decision to sell amounts under the arrangement. Payment terms with our suppliers, which we deem to be commercially reasonable, range from 0 to 120 days. Outstanding payment obligations subject to the Company’s supplier finance program at December 31, 2024 and December 31, 2023 were $12.0 million and $31.7 million, respectively, and are included in Accounts payable in the Consolidated Balance Sheets.
The following table presents the changes in outstanding obligations under supplier financing arrangements:
| | | | | |
| (in thousands) | Supplier Financing Obligations |
| Obligations outstanding at December 31, 2023 | $ | 31,691 | |
| New obligations | 43,368 | |
| Payments against supplier obligations | (63,088) | |
| |
| Obligations outstanding at December 31, 2024 | $ | 11,971 | |
Note 25 - Commitments and Contingencies
Purchase Obligations
In the normal course of business, we enter into non-cancelable purchase commitments with various parties, mainly for raw materials, operational services and utilities. As of December 31, 2024, we had non-cancelable purchase obligations with a term of 12 months or longer as follows (in thousands):
| | | | | | | | |
| | Amount |
| 2025 | | $ | 211,600 | |
| 2026 | | $ | 184,720 | |
| 2027 | | $ | 51,400 | |
| 2028 | | $ | 2,516 | |
| 2029 | | $ | 1,500 | |
| Thereafter | | $ | — | |
| Total | | $ | 451,736 | |
Legal Matters
The Company is subject to various other claims and contingencies arising out of the normal course of business, including those relating to governmental investigations and proceedings, commercial transactions, product liability, employee related matters, antitrust, safety, health, taxes, environmental and other matters. Litigation is subject to many uncertainties and the outcome of individual litigated matters is not predictable with assurance. It is possible that some litigation matters for which reserves have not been established could be decided unfavorably to us, and that any such unfavorable decisions could have a material adverse effect on our consolidated financial condition, results of operations and cash flows.
Note 26 - Related Parties
The Company has entered into various transactions with related parties. During the year-ended December 31, 2024, and in connection with the Company’s refinancing, an arrangement fee of $5.2 million was paid to BDT from the proceeds of the Term Loan, which is included in Other expense, net - related parties in the Consolidated Statements of Comprehensive Income. See Note 19 - Debt for more information on the Company’s debt and financing arrangements. In August 2024, the Company declared and issued a dividend to its ordinary common
ALH HOLDING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024, 2023 and 2022
(Dollar amounts in thousands unless otherwise indicated)
stockholders, which included a $841.7 million dividend to BDT Badger Holdings, LLC (“Badger”) and $58.3 million in dividends to management common stockholders. Also, the Company’s Board of Directors has members that are employees of BDT, which the Company paid $0.3 million for the years ended December 31, 2024, 2023, 2022, respectively. Entities affiliated with BDT hold a controlling interest in a vendor that the Company purchases raw materials from. The Company made purchases of $6.2 million and $5.5 million from this vendor during the years ended December 31, 2024 and 2023, respectively, included in inventory and cost of sales. As of December 31, 2024 and 2023, the Company had amounts due to this vendor of $1.3 million and $1.5 million, respectively, included in Accounts payable - related parties in the Consolidated Balance Sheets.
Note 27 - Subsequent Events
Subsequent events were evaluated through July 29, 2025, which is the date the financial statements were available for issuance.
In February 2025, we finalized an amendment to our Credit Agreement, which reduced the applicable margin on the Term Loan and RCF. The result is an interest rate on our Term Loan of SOFR plus a margin of 2.75% and an interest rate on our RCF of SOFR plus a margin of 2.50%. Additionally, we incorporated opportunities for further margin reductions contingent upon achieving improvements in our leverage ratio.
Effective April 1, 2025, the Company entered into a $150.0 million interest rate swap agreement to hedge a portion of our interest rate risk related to our long-term borrowings. Under the swap, which matures on April 3, 2028, the Company pays a fixed rate of 3.36% and receives or pays monthly interest payments based upon a comparison to the one-month SOFR rate.
On May 1, 2025, the Company entered into an amendment to the Asset Backed Equipment Facility to increase the facility limit from a lender committed amount of $460.0 million to $500.0 million, with an additional uncommitted increase of $30.0 million available. The amendment extended the agreement until May 1, 2028 and removed the adjustment spread of 10 basis points.
On May 1, 2025, the Company entered into an amendment to the Asset Backed Trade Receivables Facility, which extended the agreement until May 1, 2028 and removed the adjustment spread of 10 basis points.
On June 30, 2025, all outstanding warrants held by BDT were exercised and net settled for 319,119.688 shares of common stock.
Note 28 - Legal Entity Name Change (unaudited)
On August 8, 2025, ALH Holding Inc. filed a Certificate of Amendment to its Certificate of Incorporation to change its name to Alliance Laundry Holdings Inc.
ALH Holding Inc.
Schedule II - Valuation and Qualifying Accounts
(in thousands)
Allowance for Credit Losses - Accounts receivable, net:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Balance at Beginning of Period | | Charges to Expense | | Deductions | | Impact of Foreign Exchange Rates | | Balance at End of Period |
| December 31, 2024 | $ | 2,172 | | | 2,153 | | | 1,776 | | | 114 | | | $ | 2,663 | |
| December 31, 2023 | $ | 3,049 | | | 890 | | | 1,700 | | | (67) | | | $ | 2,172 | |
| December 31, 2022 | $ | 3,807 | | | 1,076 | | | 1,732 | | | (102) | | | $ | 3,049 | |
Tax valuation allowance reserves:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at Beginning of Period | | Charges (Credits) to Expense | | Deductions | | | | Balance at End of Period |
| December 31, 2024 | $ | 23,915 | | | (9,898) | | | — | | | | | $ | 14,017 | |
| December 31, 2023 | $ | 23,417 | | | 498 | | | — | | | | | $ | 23,915 | |
| December 31, 2022 | $ | 27,857 | | | (4,440) | | | — | | | | | $ | 23,417 | |
ALLIANCE LAUNDRY HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)
| | | | | | | | | | | |
| June 30, 2025 | | December 31, 2024 |
| Assets | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 222,587 | | | $ | 154,682 | |
| Restricted cash | 1,689 | | | 6,401 | |
| Restricted cash - for securitization investors | 17,181 | | | 26,959 | |
| Accounts receivable, net | 114,366 | | | 92,150 | |
| Inventories, net | 152,923 | | | 133,494 | |
| Inventories, net - related parties | 835 | | | 989 | |
| Accounts receivable, net - restricted for securitization investors | 162,605 | | | 130,060 | |
| Equipment financing receivables, net | 4,118 | | | 4,600 | |
| Equipment financing receivables, net - restricted for securitization investors | 89,884 | | | 88,288 | |
| Prepaid expenses and other current assets | 34,187 | | | 30,534 | |
| Total current assets | 800,375 | | | 668,157 | |
| | | |
| Equipment financing receivables, net | 6,971 | | | 7,633 | |
| Property, plant, and equipment, net | 246,972 | | | 248,341 | |
| Operating lease right-of-use assets | 16,333 | | | 17,080 | |
| Equipment financing receivables, net - restricted for securitization investors | 432,041 | | | 417,672 | |
| Deferred income tax asset, net | 3,416 | | | 3,220 | |
| Debt issuance costs, net | 3,938 | | | 2,793 | |
| Goodwill | 674,756 | | | 666,580 | |
| Intangible assets, net | 777,085 | | | 793,666 | |
| Other long-term assets | 2,995 | | | 6,963 | |
| Total assets | $ | 2,964,882 | | | $ | 2,832,105 | |
| | | |
| Liabilities and Stockholders' Deficit | | | |
| Current liabilities: | | | |
| Current portion of long-term debt | $ | 20,872 | | | $ | 20,896 | |
| | | |
| Accounts payable | 163,855 | | | 141,808 | |
| Accounts payable - related parties | 1,496 | | | 1,338 | |
| Asset backed borrowings - owed to securitization investors | 195,371 | | | 170,862 | |
| Current operating lease liabilities | 5,432 | | | 5,502 | |
| Other current liabilities | 122,176 | | | 138,259 | |
| Total current liabilities | 509,202 | | | 478,665 | |
| | | |
| Long-term debt, net | 2,035,732 | | | 2,034,545 | |
| Asset backed borrowings - owed to securitization investors | 387,898 | | | 382,910 | |
| Deferred income tax liability | 161,942 | | | 171,103 | |
| Long-term operating lease liabilities | 11,820 | | | 12,549 | |
| Other long-term liabilities | 34,783 | | | 29,661 | |
| Total liabilities | 3,141,377 | | | 3,109,433 | |
| | | |
| Stockholders' deficit: | | | |
| Commitments and contingencies (See Note 17) | | | |
| Redeemable preferred stock, $0.01 par value, 2,000,000 shares authorized, no shares issued or outstanding | — | | | — | |
| Common stock, $0.01 par value, 4,000,000 shares authorized, 1,656,435 and 1,335,276 issued, respectively, and 1,202,164 and 882,329, outstanding, respectively | 17 | | | 13 | |
| Additional paid-in capital | 193,516 | | | 191,794 | |
| Retained earnings | 79,790 | | | 31,527 | |
| Treasury Stock, at cost, 454,271 and 452,947 shares, respectively | (501,252) | | | (498,910) | |
| Accumulated other comprehensive income/(loss) | 51,434 | | | (1,752) | |
| Total stockholders' deficit | (176,495) | | | (277,328) | |
| Total liabilities and stockholders’ deficit | $ | 2,964,882 | | | $ | 2,832,105 | |
The accompanying notes are an integral part of the financial statements.
ALLIANCE LAUNDRY HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | |
| | | Six Months Ended June 30, |
| | | | | 2025 | | 2024 |
| Net revenues: | | | | | | | |
| Equipment, service parts and other | | | | | $ | 812,472 | | | $ | 704,660 | |
| Equipment financing | | | | | 24,285 | | | 24,349 | |
| Net revenues | | | | | 836,757 | | | 729,009 | |
| Costs and expenses: | | | | | | | |
| Cost of sales | | | | | 498,256 | | | 439,875 | |
| Cost of sales - related parties | | | | | 3,082 | | | 2,995 | |
| Equipment financing expenses | | | | | 16,209 | | | 16,410 | |
| Gross profit | | | | | 319,210 | | | 269,729 | |
| | | | | | | |
| Selling, general, and administrative expenses | | | | | 150,727 | | | 124,824 | |
| Selling, general, and administrative expenses - related parties | | | | | 150 | | | 150 | |
| | | | | | | |
| Total operating expenses | | | | | 150,877 | | | 124,974 | |
| Operating income | | | | | 168,333 | | | 144,755 | |
| | | | | | | |
| Interest expense, net | | | | | 84,288 | | | 58,431 | |
| Other expenses/(income), net | | | | | 20,908 | | | (230) | |
| | | | | | | |
| Income before taxes | | | | | 63,137 | | | 86,554 | |
| Provision for income taxes | | | | | 14,874 | | | 18,977 | |
| Net income | | | | | $ | 48,263 | | | $ | 67,577 | |
| | | | | | | |
| Comprehensive income: | | | | | | | |
| Net income | | | | | $ | 48,263 | | | $ | 67,577 | |
| Foreign currency translation adjustment | | | | | 53,186 | | | (19,249) | |
| | | | | | | |
| Comprehensive income | | | | | $ | 101,449 | | | $ | 48,328 | |
| | | | | | | |
| Net income per share attributable to common stockholders: | | | | | | | |
| Basic | | | | | $ | 40.16 | | | $ | 56.26 | |
| Diluted | | | | | $ | 39.22 | | | $ | 55.30 | |
| | | | | | | |
| Weighted average number of common shares outstanding | | | | | | | |
| Basic | | | | | 1,202 | | | 1,201 | |
| Diluted | | | | | 1,231 | | | 1,222 | |
The accompanying notes are an integral part of the financial statements.
ALLIANCE LAUNDRY HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
| | | | | | | | | | | | | | | |
| | | Six Months Ended June 30, |
| | | | | 2025 | | 2024 |
| Cash flows from operating activities: | | | | | | | |
| Net income | | | | | $ | 48,263 | | | $ | 67,577 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
| Depreciation and amortization | | | | | 45,958 | | | 44,909 | |
| Amortization and extinguishment of debt issuance costs | | | | | 1,145 | | | 2,592 | |
| Amortization of original issue discount | | | | | 807 | | | 1,037 | |
| Non-cash interest expense | | | | | 9,006 | | | 4,219 | |
| Non-cash loss on commodity & foreign exchange contracts, net | | | | | 227 | | | 348 | |
| Non-cash foreign exchange loss/(income), net | | | | | 19,854 | | | (230) | |
| Non-cash stock-based compensation | | | | | 1,771 | | | 1,776 | |
| | | | | | | |
| Loss on sale of property, plant, and equipment | | | | | 318 | | | 360 | |
| Provision for credit losses | | | | | 2,480 | | | 886 | |
| Deferred income taxes | | | | | (11,697) | | | (7,586) | |
| | | | | | | |
| Changes in assets and liabilities, net of the effects of acquisitions: | | | | | | | |
| Accounts and equipment financing receivables, net | | | | | (11,351) | | | (10,803) | |
| Accounts receivable - restricted for securitization investors | | | | | (32,665) | | | (19,712) | |
| Inventories, net | | | | | (14,036) | | | (11,015) | |
| Inventories, net - related party | | | | | 154 | | | 27 | |
| Equipment financing receivables, net - restricted for securitization investors | | | | | (13,043) | | | (16,579) | |
| Other assets | | | | | (4,244) | | | (3,573) | |
| Accounts payable | | | | | 23,346 | | | (7,390) | |
| Accounts payable - related parties | | | | | 158 | | | (108) | |
| Other liabilities | | | | | (15,754) | | | (10,101) | |
| Net cash provided by operating activities | | | | | 50,697 | | | 36,634 | |
| | | | | | | |
| Cash flows from investing activities: | | | | | | | |
| Capital expenditures | | | | | (16,597) | | | (10,447) | |
| Acquisition of businesses, net of cash acquired | | | | | (3,084) | | | (1,682) | |
| Proceeds on disposition of assets | | | | | 137 | | | 93 | |
| Originations of equipment financing receivables, net - restricted for securitization investors | | | | | (40,516) | | | (41,897) | |
| Collections of equipment financing receivables, net - restricted for securitization investors | | | | | 35,949 | | | 36,238 | |
| Net cash used in investing activities | | | | | (24,111) | | | (17,695) | |
| | | | | | | |
| Cash flows from financing activities: | | | | | | | |
| | | | | | | |
| Payments on revolving line of credit borrowings | | | | | — | | | (5,527) | |
| | | | | | | |
| Payments on long-term borrowings | | | | | — | | | (107,000) | |
| Cash paid for debt establishment and amendment fees | | | | | (1,877) | | | — | |
| Increase in asset backed borrowings owed to securitization investors | | | | | 116,622 | | | 89,698 | |
| Decrease in asset backed borrowings owed to securitization investors | | | | | (87,124) | | | (75,890) | |
| Repurchase of common stock | | | | | (2,342) | | | (99) | |
| Taxes paid related to net share settlement of stock options | | | | | (70) | | | (1,105) | |
| Net proceeds from stock options exercised | | | | | 25 | | | 82 | |
| Net cash provided by/(used) in financing activities | | | | | 25,234 | | | (99,841) | |
| | | | | | | |
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | | | | | 1,595 | | | (4,092) | |
| | | | | | | |
| Increase/(Decrease) in cash, cash equivalents, and restricted cash | | | | | 53,415 | | | (84,994) | |
| Cash, cash equivalents, and restricted cash at beginning of period | | | | | 188,042 | | | 209,969 | |
| Cash, cash equivalents, and restricted cash at end of period | | | | | $ | 241,457 | | | $ | 124,975 | |
| | | | | | | |
| Reconciliation of cash, cash equivalents, and restricted cash to the Condensed Consolidated Balance Sheet: | | | | | | | |
| Cash and cash equivalents | | | | | $ | 222,587 | | | $ | 102,736 | |
| Restricted cash | | | | | 1,689 | | | 1,540 | |
| Restricted cash - for securitization investors | | | | | 17,181 | | | 20,699 | |
| Total cash, cash equivalents, and restricted cash shown in the Statement of Cash Flows | | | | | $ | 241,457 | | | $ | 124,975 | |
| | | | | | | |
| Supplemental disclosure of cash flow information: | | | | | | | |
| Cash paid for interest | | | | | $ | 76,651 | | | $ | 52,105 | |
| Cash paid for interest - to securitized investors | | | | | $ | 15,517 | | | $ | 16,905 | |
| Cash paid for income taxes | | | | | $ | 30,593 | | | $ | 34,070 | |
| | | | | | | |
| Supplemental disclosure of investing and financing non-cash activities: | | | | | | | |
| Capital expenditures included in accounts payable | | | | | $ | 1,905 | | | $ | 2,055 | |
The accompanying notes are an integral part of the financial statements.
ALLIANCE LAUNDRY HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY/(DEFICIT)
(unaudited)
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Accumulated Other | | Total |
| (Six months ended June 30, 2024) | Common Stock | | Paid-in Capital | | Treasury Stock | | Retained Earnings | | Comprehensive Income/(loss) | | Stockholders' Equity/(Deficit) |
| Balances at December 31, 2023 | 13 | | | 823,618 | | | (497,465) | | | 199,148 | | | 25,616 | | | 550,930 | |
| Net income | — | | | — | | | — | | | 67,577 | | | — | | | 67,577 | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | (19,249) | | | (19,249) | |
| | | | | | | | | | | |
| Exercise of stock options and taxes paid for net share settlement | — | | | (1,105) | | | — | | | — | | | — | | | (1,105) | |
| Exercise of stock options | — | | | 82 | | | — | | | — | | | — | | | 82 | |
| Repurchase of common stock | — | | | — | | | (99) | | | — | | | — | | | (99) | |
| Share-based compensation | — | | | 1,776 | | | — | | | — | | | — | | | 1,776 | |
| Balances at June 30, 2024 | 13 | | | 824,371 | | | (497,564) | | | 266,725 | | | 6,367 | | | 599,912 | |
| | | | | | | | | | | |
| (Six months ended June 30, 2025) | | | | | | | | | | | |
| Balances at December 31, 2024 | 13 | | | 191,794 | | | (498,910) | | | 31,527 | | | (1,752) | | | (277,328) | |
| Net income | — | | | — | | | — | | | 48,263 | | | — | | | 48,263 | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | 53,186 | | | 53,186 | |
| | | | | | | | | | | |
| Exercise of warrants | 3 | | | (3) | | | — | | | — | | | — | | | — | |
| Exercise of stock options and taxes paid for net share settlement | 1 | | | (71) | | | — | | | — | | | — | | | (70) | |
| Exercise of stock options | — | | | 25 | | | — | | | — | | | — | | | 25 | |
| Repurchase of common stock | — | | | — | | | (2,342) | | | — | | | — | | | (2,342) | |
| Share-based compensation | — | | | 1,771 | | | — | | | — | | | — | | | 1,771 | |
| Balances at June 30, 2025 | 17 | | | 193,516 | | | (501,252) | | | 79,790 | | | 51,434 | | | (176,495) | |
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
Note 1 - Basis of Presentation
Description of Business
On August 31, 2015, BDT Capital Partners, LLC (“BDT”), Ontario Teachers’ Pension Plan Board (“OTPP”), and members of our management indirectly acquired 100% of the outstanding equity interests in Alliance Laundry Holdings LLC ("Alliance Holdings") through the merger of Alliance Laundry Holdings Inc. (“ALH” or the “Company”) and Rally Acquisition Corporation. ALH was the surviving entity. The Company refers to the acquisition and merger as the “BDT Transaction”. As a result of the BDT Transaction, all the outstanding equity interests of Alliance Laundry Systems LLC ("Alliance Laundry") are owned by Alliance Holdings and all the equity interests of Alliance Holdings are owned by ALH.
During the fourth quarter of 2015, BDT syndicated a portion of its equity interests in ALH to select strategic co-investors (“co-investors”). Simultaneous with these transactions, BDT and the co-investors contributed all their equity interests into BDT Badger Holdings, LLC (“Badger”), an investment fund for the purpose of holding equity interests in ALH. In July 2017, the Company repurchased the preferred and common shares outstanding of ALH held by OTPP.
Basis of Presentation
The interim condensed consolidated financial statements of ALH and consolidated subsidiaries have been prepared by the Company and are unaudited. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States have been condensed or omitted as permitted for reporting of interim financial statements. The interim condensed consolidated financial statements are unaudited; however, in the opinion of management, such interim condensed consolidated financial statements reflect all adjustments, consisting solely of normal and recurring adjustments, necessary for a fair statement of its financial position, results of operations, and cash flows for the interim periods presented. The condensed consolidated financial statements as presented should be read in conjunction with our consolidated financial statements presented in our audited Annual Report for the Year Ended December 31, 2024. Results for interim periods are not necessarily indicative of future results.
Significant Accounting Policies
A comprehensive discussion of our critical accounting policies and management estimates is included in our audited consolidated financial statements for the year ended December 31, 2024.
Allowance for Credit Losses - Equipment Financing Receivables
The allowance for credit losses is an estimate of losses inherent to the Company’s equipment financing receivables portfolio. The Company’s estimate includes accounts that have been individually identified as impaired and estimated credit losses over a pool of receivables where it is probable that certain receivables in the pool are impaired but that the individual accounts cannot yet be identified. When determining estimates of probable credit loss or whether an account is impaired, management takes into consideration numerous quantitative and qualitative factors such as historical loss experience, credit risk, portfolio duration and economic conditions. The Company determined that there is a limited correlation between expected credit losses and forecasted economic conditions based on a correlation analysis performed to compare historical losses to various economic conditions, such as real gross domestic product, inflation rate and unemployment rate. On an ongoing basis, the Company monitors credit quality based on past-due status as there is a meaningful correlation between the past-due status of customers and the risk of credit loss.
The Company determines that an equipment financing receivable is impaired when it is expected that it will be unable to collect all amounts due according to the contractual terms of the loan or lease. These equipment financing receivables are collateral–dependent and measurement of impairment is based upon the estimated fair value of collateral. The determination of the allowance for credit losses is based on an analysis of historical loss experience and reflects an amount which, in the Company’s judgment, is adequate to provide for probable credit losses. When a financing receivable is non-performing, aged greater than 89 days and the Company has exhausted all efforts of
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
collection, the receivable is deemed to be uncollectible and is charged off and deducted from the allowance. The allowance is increased for recoveries and by charges to earnings.
Fair Value of Other Financial Instruments
Current accounting guidance defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. It also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources while unobservable inputs (lowest level) reflect internally developed market assumptions. In accordance with the guidance, fair value measurements are classified under the following hierarchy:
•Level 1 - Quoted prices for identical instruments in active markets.
•Level 2 - Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.
•Level 3 - Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable.
When available, the Company uses quoted market prices to determine fair value and classifies such measurements within Level 1. In some cases where market prices are not available, the Company makes use of observable market-based inputs to calculate fair value, in which case the measurements are classified within Level 2. If quoted or observable market prices are not available, fair value is based upon internally developed models that use, where possible, current market-based parameters such as interest rates, yield curves and currency rates. These measurements are classified within Level 3.
Fair value measurements are classified according to the lowest level input or value-driver that is significant to the valuation. A measurement may therefore be classified within Level 3 even though there may be significant inputs that are readily observable.
New Accounting Pronouncements to be Adopted
In December 2023, the FASB issued ASU No 2023-09 Income Taxes (“Topic 740”): Improvements to Income Tax Disclosures Topic 740. The new guidance is intended to enhance the transparency of income tax disclosures, primarily related to rate reconciliation and income taxes paid information. This guidance is effective for fiscal years beginning after December 15, 2024. This guidance is effective on a prospective basis, though retrospective application is permitted. The Company expects the adoption of this ASU will impact only our disclosures with no impact to our consolidated financial condition or results of operations.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement (Subtopic 220-40): Reporting Comprehensive Income—Expense Disaggregation Disclosures, which enhances certain disclosure requirements related to expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, selling, general and administrative expenses, and research and development). This guidance is effective for the Company for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. This ASU will only affect our disclosures and will not change the expense captions the Company presents on its Consolidated Statements of Comprehensive Income.
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
Note 2 – Net Revenues
Net revenues by reportable segment and major type of good or service were as follows:
| | | | | | | | | | | | | | | |
| | | Six Months Ended June 30, |
| (in thousands) | | | | | 2025 | | 2024 |
| North America | | | | | | | |
| Equipment | | | | | $ | 515,633 | | | $ | 431,303 | |
| Service parts | | | | | 62,666 | | | 56,845 | |
| Equipment financing | | | | | 24,093 | | | 24,037 | |
| Other | | | | | 19,022 | | | 17,651 | |
| Total North America Net revenues | | | | | $ | 621,414 | | | $ | 529,836 | |
| | | | | | | |
| International | | | | | | | |
| Equipment | | | | | $ | 189,009 | | | $ | 173,882 | |
| Service parts | | | | | 23,259 | | | 21,968 | |
| Equipment financing | | | | | 192 | | | 312 | |
| Other | | | | | 2,883 | | | 3,011 | |
| Total International Net revenues | | | | | $ | 215,343 | | | $ | 199,173 | |
| | | | | | | |
| Total Net revenues | | | | | $ | 836,757 | | | $ | 729,009 | |
Equipment and service parts
The Company offers a full line of stand-alone laundry washers and dryers and related service parts. These products range from small residential washers and dryers to large commercial laundry equipment. Revenue from equipment and service part sales is recognized when the Company satisfies a performance obligation by transferring control of a product to a customer. Transfer of control generally takes place upon shipment to the customer. Revenue is measured based on the consideration that the Company expects to be entitled to in exchange for the products transferred. Sales are generally made with 30 – 120 day terms. The resulting receivables are recorded on the Condensed Consolidated Balance Sheet under Accounts receivable, net and Accounts receivable, net restricted for securitization investors for those receivables that are sold to a securitization entity.
Sales incentive programs such as cash discounts, customer promotional allowances, and volume rebates are used to promote the sale of equipment and other products. The Company estimates its variable consideration related to sales incentive programs using the most likely amount. Revenues are recorded net of sales incentive allowances, and are based on factors specific to each customer’s program such as expected sales volume and rebate percentages. The Company maintains an accrual at the end of each period for the unpaid amount the customer is expected to earn related to such programs. As of June 30, 2025 and December 31, 2024, the related accrual balances were $22.1 million and $23.1 million, respectively. The accruals are recorded in Other current liabilities in the Consolidated Balance Sheet.
Shipping and handling costs associated with freight after control of a product has transferred to a customer are accounted for as fulfillment costs. The Company accrues for the shipping and handling costs in the same period that the related revenue is recognized.
The Company offers standard, limited warranties on its products. These warranties provide assurance that the product will function as expected and are not separate performance obligations. The Company accounts for estimated warranty costs as a liability when control of the product transfers to the customer.
The Company sells an extended warranty to its customers that is a separate performance obligation as the Company stands by ready to perform additional warranty work not covered by the standard warranty. The Company
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
defers the extended warranty revenue until the period covered by the extended warranty begins, and then recognizes extended warranty revenue ratably over the coverage period. The extended warranty contract liability was $1.0 million at June 30, 2025 and $1.0 million at December 31, 2024.
The Company collects and remits taxes assessed by different governmental authorities that are both imposed on and concurrent with revenue producing transactions between the Company and its customers. The Company excludes these taxes from Net revenues.
Equipment financing
The Company offers an equipment financing program to end-customers who are primarily laundromat owners in order to finance their purchase of new equipment. Typical terms for equipment financing receivables range from two to ten years. Interest income on finance receivables is recorded as earned over the life of the loan. See Note 5 - Securitization Activities for further discussion regarding asset-backed financing.
Other
Other revenue consists primarily of company-owned laundromat proceeds, scrap sales, field service revenue and technology fee revenue. Revenue from these sources is typically recognized at point of sale or when the service is performed.
Note 3 - Other Expenses/(Income), net
The following table presents a summary of Other expenses/(income), net, as shown in the Condensed Consolidated Statements of Comprehensive Income.
| | | | | | | | | | | | | | |
| | Six Months Ended June 30, |
| (in thousands) | | | | 2025 | | 2024 |
| Foreign exchange losses/(gains) on intercompany loans | | | | $ | 19,854 | | | $ | (230) | |
| Debt issuance cost write-offs and amendment expenses | | | | 1,054 | | | — | |
| | | | | | |
| | | | | | |
| Other expenses/(income), net | | | | $ | 20,908 | | | $ | (230) | |
Foreign exchange losses/(gains) on intercompany loans result from intercompany loans where the lender or borrower’s functional currency differs from the loan denomination currency. During 2025, $1.1 million of debt issuance cost were incurred. See Note 11 - Debt for further information.
Note 4 - Asset Backed Facilities
Securitized Equipment Financing
The Company maintains an internal financing organization primarily to assist end-user laundromat locations in financing Company branded equipment through the Company’s distributors in the United States and Canada. Alliance Laundry originates and administers the sale of equipment financing receivables through a special-purpose bankruptcy remote subsidiary, Alliance Laundry Equipment Receivables 2015 LLC (“ALER 2015”), and a trust (a qualified special purpose entity or “QSPE”), Alliance Laundry Equipment Receivables Trust 2015-A (“ALERT 2015A”). These transactions are financed by a revolving credit facility (the “Asset Backed Equipment Facility”) backed by equipment financing receivables originated by the Company. Alliance Laundry is permitted, from time to time, to sell certain equipment financing receivables to its special-purpose subsidiary, which in turn transfers them to the trust. On May 1, 2025, the Company entered into an amendment to the Asset Backed Equipment Facility to increase the facility limit from a lender committed amount of $460.0 million to $500.0 million, with an additional uncommitted increase of $30.0 million available. The amendment extended the term until May 1, 2028 and removed the adjustment spread of 10 basis points. As a result, the Company incurred $1.6 million of fees which were capitalized and included in Debt issuance costs, net line of the Consolidated Balance Sheets. These costs are being amortized over the three-year life of the facility, which approximates the effective interest method.
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
The trust finances the acquisition of equipment financing receivables through borrowings under the Asset Backed Equipment Facility in the form of funding notes which are limited to an advance rate of approximately 88%. Under the Asset Backed Equipment Facility, interest payments on the variable funding notes are paid monthly at an interest rate equal to the daily simple SOFR ("Secured Overnight Financing Rate") rate plus a margin of 120 basis points, which was equivalent to 5.6% at June 30, 2025. If an event of default occurs, the otherwise applicable interest rate for the Asset Backed Equipment Facility will be increased by an amount equal to 200 basis points per annum. The lenders also earn an unused facility fee of 0.35% of the unfunded portion of each lender's commitment amount prior to a rapid amortization event or event of default.
The equipment financing receivables typically have interest rates ranging primarily from Prime plus 0.25% to Prime plus 4.75% for variable rate equipment financing receivables and 4.50% to 11.50% for fixed-rate equipment financing receivables. The average interest rate for all equipment financing receivables at June 30, 2025 was 9.02% with terms ranging primarily from two to twelve years. The weighted-average remaining expected life of equipment financing receivables held by the trust was approximately 3.39 years at June 30, 2025. All equipment financing receivables allow the holder to prepay outstanding principal amounts without penalty.
Securitized Receivables Financing
Alliance Laundry, through a special-purpose bankruptcy remote subsidiary, Alliance Laundry Trade Receivables LLC (“ALTR LLC”), utilizes a revolving credit facility (the “Asset Backed Trade Receivables Facility”) backed by trade receivables originated by the Company. Under the Asset Backed Trade Receivables Facility, Alliance Laundry originates and simultaneously sells its trade receivables to its special-purpose subsidiary. On June 30, 2022, the Company entered an amendment to the Asset Backed Trade Receivables Facility to extend the term of the agreement until June 30, 2025, and increase the facility limit of $100.0 million to $120.0 million. On May 1, 2025, the Company entered into an amendment to the Asset Backed Trade Receivables Facility, which extended the agreement until May 1, 2028. After May 1, 2028, ALTR LLC will not be permitted to request new borrowings, and the outstanding borrowings will amortize over 180 days with any remaining balance due at maturity. The Company incurred $0.3 million of fees in connection with the amendment which were capitalized and included in the Debt issuance costs, net line of the Consolidated Balance Sheets. These costs are being amortized over three-year revolving life of the facility, which approximates the effective interest method.
Under the Asset Backed Trade Receivables Facility, interest payments on the variable funding notes are paid monthly at an interest rate equal to the daily 1-month SOFR rate plus a margin of 110 basis points, which was 5.4% as of June 30, 2025. The lender also earns an unused facility fee of 0.35% of the unfunded portion of each lender's commitment amount. The Company consolidates the trust, including the assets and liabilities associated with the sale of accounts and equipment financing receivables, into its Consolidated Financial Statements.
The Company follows accounting standards relating to the consolidation of variable interest entities and accounting for transfers of financial assets. In evaluating the variable interest entity accounting guidance, the Company evaluated if the trust should be consolidated. The Company has concluded that it is the primary beneficiary of the trust as (1) it has the power to direct the activities of the trust that most significantly impact the trust's economic performance and (2) the Company has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the trust. As a result, the Company consolidates the trust in these financial statements.
Note 5 - Securitization Activities
The following lines of the Company’s Condensed Consolidated Balance Sheets are specific to the Company’s securitization and are restricted for securitization investors only:
•Restricted cash - for securitization investors
•Accounts receivable - restricted for securitization investors
•Equipment financing receivables, net - restricted for securitization investors (current and long-term)
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
•Asset backed borrowings - owed to securitization investors (current and long-term)
Certain aspects of the Company’s retained interest in the assets of the trust constitute intercompany positions which are eliminated in the preparation of the Company’s Condensed Consolidated Balance Sheets. Trust receivables underlying the Company’s retained interest are recorded in Accounts receivable, net - restricted for securitization investors and Equipment financing receivables, net - restricted for securitization investors.
Restricted Cash - for Securitization Investors
To protect the noteholders of the trust, additional collateral in the form of a cash reserve equal to 1.0% of the equipment financing receivable balances is maintained as well as a yield account for lower fixed rate loans. Additionally, collection accounts to facilitate the collection and disbursement of funds are maintained separately for accounts receivable and equipment financing receivables. The following table presents the components of restricted cash for securitization investors.
| | | | | | | | | | | |
| (in thousands) | June 30, 2025 | | December 31, 2024 |
| Cash reserve accounts | $ | 5,281 | | | $ | 5,217 | |
| Collection accounts - accounts receivable | 1,408 | | | 1,579 | |
| Collection accounts - equipment financing receivables | 10,492 | | | 20,163 | |
| Restricted cash - for securitization investors | $ | 17,181 | | | $ | 26,959 | |
Securitization Activities
The Company transfers accounts receivable and equipment financing receivables to its special-purpose bankruptcy remote subsidiaries in the ordinary course of business as part of its ongoing securitization activities. The Company receives a combination of cash and residual interests in the transferred assets in its securitization transactions.
The following table presents the Company’s residual interests in Accounts Receivable - restricted for securitization investors.
| | | | | | | | | | | |
| (in thousands) | June 30, 2025 | | December 31, 2024 |
| Accounts receivable - restricted for securitization investors | $ | 164,345 | | | $ | 132,017 | |
| Less: Allowance for accounts receivable credit losses | (1,740) | | | (1,957) | |
| Accounts receivable, net - restricted for securitization investors | 162,605 | | | 130,060 | |
| Less: Asset backed borrowings - owed to securitization investors | (116,543) | | | (93,772) | |
| Company's residual interest in securitized accounts receivable | $ | 46,062 | | | $ | 36,288 | |
The following table presents the Company’s residual interests in Equipment financing receivables, net - restricted for securitization investors.
| | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2025 | | December 31, 2024 |
| (in thousands) | Current | | Long-term | | Current | | Long-term |
| Equipment financing receivables - restricted for securitization investors | $ | 90,799 | | | $ | 436,818 | | | $ | 88,901 | | | $ | 422,054 | |
| Less: Allowance for equipment financing receivables credit losses | (915) | | | (4,777) | | | (613) | | | (4,382) | |
| Equipment financing receivables, net - restricted for securitization investors | 89,884 | | | 432,041 | | | 88,288 | | | 417,672 | |
| Less: Asset backed borrowings - owed to securitization investors | (78,828) | | | (387,898) | | | (77,090) | | | (382,910) | |
| Company's residual interest in securitized equipment financing receivables | $ | 11,056 | | | $ | 44,143 | | | $ | 11,198 | | | $ | 34,762 | |
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
Asset Backed Borrowings - Owed to Securitization Investors
The asset backed borrowings owed to securitization investors in the Company’s Condensed Consolidated Balance Sheets represents the third-party noteholders’ interest in accounts receivable and equipment financing receivables.
Credit Quality of Equipment Financing Receivables
Interest income is accrued as earned on outstanding balances. Fees earned and incremental direct costs incurred upon origination of equipment financing are not significant for any period presented. Past due balances of equipment financing receivables represent the principal balance of loans and leases held with any payment amounts between 30 and 89 days past the contractual payment due date. Non-performing equipment financing receivables represent loans and leases that are generally more than 89 days delinquent. The allowance is measured on a collective basis for equipment financing receivables with similar risk characteristics. The Company does not accrue interest income on non-performing equipment financing receivables. Finance income for non-performing equipment financing receivables is recognized on a cash basis.
The following tables, shown in thousands, present an aging analysis of past due, non-performing, and current equipment financing receivables by class and vintage:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2025 | | 2025 | | 2024 | | 2023 | | 2022 | | 2021 | | Prior | | Total |
| Securitized | | | | | | | | | | | | | | |
| 30-59 Days | | $ | — | | | $ | 1,757 | | | $ | — | | | $ | — | | | $ | 205 | | | $ | — | | | $ | 1,962 | |
| 60-89 Days | | — | | | 53 | | | — | | | 7 | | | 15 | | | — | | | 75 | |
| Total past due accruing | | — | | | 1,810 | | | — | | | 7 | | | 220 | | | $ | — | | | 2,037 | |
| Current | | 84,426 | | | 157,111 | | | 116,811 | | | 69,938 | | | 39,446 | | | $ | 48,676 | | | 516,408 | |
| Over 89 Days non-performing | | — | | | 1,273 | | | 4,049 | | | 1,705 | | | 1,126 | | | $ | 1,019 | | | 9,172 | |
| Total Securitized | | $ | 84,426 | | | $ | 160,194 | | | $ | 120,860 | | | $ | 71,650 | | | $ | 40,792 | | | $ | 49,695 | | | $ | 527,617 | |
| Current period gross charge-offs | | — | | | — | | | 13 | | | — | | | 556 | | | 398 | | | 967 | |
| Unsecuritized | | | | | | | | | | | | | | |
| 30-59 Days | | $ | — | | | $ | — | | | $ | — | | | $ | 38 | | | $ | 4 | | | $ | 50 | | | $ | 92 | |
| 60-89 Days | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Total past due accruing | | — | | | — | | | — | | | 38 | | | 4 | | | 50 | | | 92 | |
| Current | | 922 | | | 1,207 | | | 51 | | | 1,611 | | | 2,770 | | | 4,302 | | | 10,863 | |
| Over 89 Days non-performing | | — | | | — | | | 28 | | | 320 | | | 90 | | | 635 | | | 1,073 | |
| Total Unsecuritized | | $ | 922 | | | $ | 1,207 | | | $ | 79 | | | $ | 1,969 | | | $ | 2,864 | | | $ | 4,987 | | | $ | 12,028 | |
| Current period gross charge-offs | | — | | | — | | | — | | | | | 62 | | | 7 | | | 69 | |
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2024 | | 2024 | | 2023 | | 2022 | | 2021 | | 2020 | | Prior | | Total |
| Securitized | | | | | | | | | | | | | | |
| 30-59 Days | | $ | 1,022 | | | $ | 234 | | | $ | 275 | | | $ | 49 | | | $ | 55 | | | $ | 126 | | | $ | 1,761 | |
| 60-89 Days | | 371 | | | 842 | | | — | | | 759 | | | — | | | 132 | | | 2,104 | |
| Total past due accruing | | 1,393 | | | 1,076 | | | 275 | | | 808 | | | 55 | | | $ | 258 | | | 3,865 | |
| Current | | 173,629 | | | 134,152 | | | 81,055 | | | 48,562 | | | 24,282 | | | $ | 37,260 | | | 498,940 | |
| Over 89 Days non-performing | | 615 | | | 3,227 | | | 1,231 | | | 1,262 | | | 618 | | | $ | 1,197 | | | 8,150 | |
| Total Securitized | | $ | 175,637 | | | $ | 138,455 | | | $ | 82,561 | | | $ | 50,632 | | | $ | 24,955 | | | $ | 38,715 | | | $ | 510,955 | |
| Current period gross charge-offs | | | | 277 | | | 66 | | | 115 | | | 42 | | | 384 | | | 884 | |
| Unsecuritized | | | | | | | | | | | | | | |
| 30-59 Days | | $ | — | | | $ | — | | | $ | — | | | $ | 49 | | | $ | — | | | $ | 28 | | | $ | 77 | |
| 60-89 Days | | — | | | — | | | — | | | — | | | — | | | 11 | | | 11 | |
| Total past due accruing | | — | | | — | | | — | | | 49 | | | — | | | 39 | | | 88 | |
| Current | | 1,308 | | | 60 | | | 1,792 | | | 3,275 | | | 76 | | | 5,527 | | | 12,038 | |
| Over 89 Days non-performing | | — | | | 27 | | | 310 | | | 414 | | | — | | | 248 | | | 999 | |
| Total Unsecuritized | | $ | 1,308 | | | $ | 87 | | | $ | 2,102 | | | $ | 3,738 | | | $ | 76 | | | $ | 5,814 | | | $ | 13,125 | |
| Current period gross charge-offs | | — | | | — | | | 6 | | | 302 | | | 38 | | | 387 | | | 733 | |
The Company elected to exclude accrued interest receivable from the amortized cost basis. Accrued interest was $2.2 million as of June 30, 2025 and December 31, 2024, which we report in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.
The following tables present activity in the allowance for losses related to equipment financing receivables held on the Condensed Consolidated Balance Sheets. Refer to Note 2 to the consolidated financial statements included in our in our audited consolidated financial statements for the year ended December 31, 2024 for further discussion of our allowance for credit losses.
| | | | | | | | | | | |
| (in thousands) | Unsecuritized Equipment Financing Receivables Portfolio | | Securitized Equipment Financing Receivables Portfolio |
| Balance, December 31, 2024 | $ | 892 | | | $ | 4,995 | |
| Current period provisions | (97) | | | 1,643 | |
| Actual write-offs | (69) | | | (967) | |
| Recoveries | 105 | | | 21 | |
| Impact of foreign exchange rates | 85 | | | — | |
| Balance, June 30, 2025 | $ | 916 | | | $ | 5,692 | |
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
| | | | | | | | | | | |
| (in thousands) | Unsecuritized Equipment Financing Receivables Portfolio | | Securitized Equipment Financing Receivables Portfolio |
| Balance, December 31, 2023 | $ | 1,340 | | | $ | 1,190 | |
| Current period provisions | (147) | | | 720 | |
| Actual write-offs | 11 | | | (351) | |
| Recoveries | 157 | | | — | |
| Impact of foreign exchange rates | (35) | | | — | |
| Balance, June 30, 2024 | $ | 1,326 | | | $ | 1,559 | |
Other Trust Items
The Company incurred $1.9 million of capitalized debt issuance costs, associated with the refinancing of Asset Backed Facilities in 2025. The following table presents the amortization expense related to debt issuance costs.
| | | | | | | | | | | | | | | |
| | | Six Months Ended June 30, |
| (in thousands) | | | | | 2025 | | 2024 |
| Amortization expense | | | | | $ | 469 | | | $ | 352 | |
Note 6 - Inventories
The following table summarizes our inventories as of June 30, 2025 and December 31, 2024.
| | | | | | | | | | | |
| (in thousands) | June 30, 2025 | | December 31, 2024 |
| Finished goods | $ | 74,219 | | | $ | 63,528 | |
| Raw materials | $ | 61,988 | | | $ | 52,948 | |
| Work in process | 17,551 | | | 18,007 | |
| Inventories, net | $ | 153,758 | | | $ | 134,483 | |
Note 7 - Derivative Financial Instruments
Derivative instruments are accounted for at fair value. The accounting for changes in the fair value of a derivative depends on the intended use, designation and type of the derivative instrument. The Company does not designate any of its derivatives as hedges and, as such, records all changes in fair values as a component of earnings. Cash flow activity associated with the Company's derivative financial instruments is recorded in Cash flows from operating activities on the Consolidated statement of Cash Flows.
Using derivative instruments means assuming counterparty credit risk. Counterparty credit risk relates to the loss the Company could incur if a counterparty were to default on a derivative contract. The Company primarily deals with investment grade counterparties and monitors its overall credit risk and exposure to individual counterparties. The Company does not anticipate nonperformance by any counterparties. The amount of counterparty credit exposure is the unrealized gains, if any, on such derivative contracts. The Company does not require, nor does it post collateral, or security, on such contracts.
The Company is exposed to certain risks relating to its ongoing business operations. As a result, the Company enters into derivative transactions to manage these exposures. The primary risks managed through the use of derivative instruments are fluctuations in interest rates, foreign currency exchange rates and commodity prices. Fluctuations in these rates and prices can affect the Company’s operating results and financial condition. The Company manages the exposure to these market risks through operating and financing activities and through the use of derivative financial instruments. The Company does not enter derivative financial instruments for trading or speculative purposes.
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
Interest Rate Risk.
Borrowings outstanding under the Term Loan totaled $2,075.0 million at June 30, 2025. Borrowings under the Term Loan bear interest, at the option of Alliance Laundry, at a rate equal to an applicable margin plus (a) the adjusted base rate or (b) the eurocurrency rate (both rates as defined in the Credit Agreement). The applicable margins for the Term Loan are currently 2.50% with respect to adjusted base rate loans and 3.50% with respect to eurocurrency loans. An assumed 10% increase/decrease in the SOFR interest rate in effect at June 30, 2025 would increase/decrease annual interest expense $5.7 million on the non-hedged portion of the borrowing.
Effective September 3, 2024, the Company entered into a $600.0 million interest rate swap agreements to hedge a portion of our interest rate risk related to our long-term borrowings. Under these swaps, which mature on September 1, 2027, the Company pays a fixed rate of 3.61% and receives or pays monthly interest payments based upon a comparison to the one-month SOFR rate.
Effective April 1, 2025, the Company entered into a $150.0 million interest rate swap agreement to hedge a portion of our interest rate risk related to our long-term borrowings. Under the swap, which matures on April 3, 2028, the Company pays a fixed rate of 3.36% and receives or pays monthly interest payments based upon a comparison to the one-month SOFR rate.
Interest rate caps are in place as part of the Asset Backed Facilities to limit the Company’s exposure to interest rate increases which may adversely affect the overall performance of the Company’s equipment financing activities. The interest rate cap strike rates are 5.30%, 5.19% and 5.00%.
Foreign Currency Risk.
The Company has manufacturing, sales, and distribution facilities in the Czech Republic, China and Thailand. The Company also has various sales and distribution facilities in Brazil, France, Spain, Italy, Germany and the United Arab Emirates. The Company also makes investments and enters into transactions denominated in foreign currencies. The vast majority of the Company’s international sales from its domestic operations are denominated in US dollars. However, the Company is exposed to transactional and translational foreign exchange risk related to its foreign operations.
Regarding transactional foreign exchange risk, the Company from time to time enters into certain forward exchange contracts to reduce the variability of the earnings and cash flow impacts of foreign denominated receivables and payables. The Company does not designate these contracts as hedge transactions. Accordingly, the mark-to-market impact of these contracts is recorded each period to earnings. At June 30, 2025, the Company was not managing any foreign currency contracts.
The Company’s primary translation exchange risk exposure is the euro, Czech koruna, and Thai baht. Amounts invested in non-U.S. based subsidiaries are translated into US dollars at the exchange rate in effect at period end. The resulting translation adjustments are recorded in accumulated other comprehensive income as foreign currency translation adjustments.
The Company presents its derivatives at gross fair values in the Condensed Consolidated Balance Sheets and does not maintain derivative contracts which would require financial instrument or collateral balances. The
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
following tables summarize the fair value of the Company’s outstanding derivative contracts included within the Condensed Consolidated Balance Sheets.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2025 | | | | |
| Fair Value (Level 2) | | | | |
| (in thousands) | Notional Amount | | Assets | | Liabilities | | Location on
Balance Sheet | | Term |
| Undesignated derivatives: | | | | | | | | | |
| Interest rate swap | $ | 750,000 | | | $ | 108 | | | $ | 2,170 | | | Prepaid expenses, Other current assets, Other assets, Long-term liabilities and other current liabilities | | Various through 4/3/2028 |
| Commodity hedges | 2,062 | | | 24 | | | 68 | | | Prepaid expenses and Other current liabilities | | Various through 12/31/25 |
| | | | | | | | | |
| Interest rate cap | 60,939 | | | 53 | | | — | | | Other long-term assets | | Various through 9/15/31 |
Total undesignated derivatives | | | $ | 185 | | | $ | 2,238 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2024 | | | | |
| Fair Value (Level 2) | | | | |
| (in thousands) | Notional Amount | | Assets | | Liabilities | | Location on
Balance Sheet | | Term |
| Undesignated derivatives: | | | | | | | | | |
| Interest rate swap | $ | 600,000 | | | $ | 6,805 | | | $ | — | | | Prepaid expenses and other current assets and Other assets | | Through 9/1/27 |
| Commodity hedges | 1,742 | | | — | | | 34 | | | Other current liabilities | | Various through 12/31/25 |
| | | | | | | | | |
| Interest rate cap | 67,441 | | | 191 | | | — | | | Other long-term assets | | Various through 9/15/31 |
Total undesignated derivatives | | | $ | 6,996 | | | $ | 34 | | | | | |
The following table presents the combined cash and non-cash effects of derivative instruments on the Company’s Condensed Consolidated Statements of Comprehensive Income.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | (Loss)/Gain Recognized on
Undesignated Derivatives |
| (in thousands) | | | | | | Six Months Ended June 30, |
| Undesignated Derivatives | | Location in Statement of Income | | | | | | 2025 | | 2024 |
| Interest rate swap | | Interest expense | | | | | | $ | (6,328) | | | $ | 1,213 | |
| Foreign currency hedges | | Cost of sales | | | | | | (221) | | | (411) | |
| Commodity hedges | | Cost of sales | | | | | | (10) | | | (76) | |
| Interest rate cap | | Interest expense | | | | | | (138) | | | 70 | |
| | | | | | | | $ | (6,697) | | | $ | 796 | |
See Note 5 - Securitization Activities under Other Trust Items for disclosures related to the Company’s interest rate cap.
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
Note 8 - Other Current Liabilities
The following table presents the major components of Other current liabilities.
| | | | | | | | | | | |
| (in thousands) | June 30, 2025 | | December 31, 2024 |
| Salaries, wages and other employee benefits | $ | 33,151 | | | $ | 40,493 | |
| Warranty reserve | 27,295 | | | 26,561 | |
| Accrued interest | 2,562 | | | 5,787 | |
| Accrued sales incentives | 22,112 | | | 23,704 | |
| Income taxes | 11,163 | | | 15,000 | |
| Other current liabilities | 25,893 | | | 26,714 | |
| $ | 122,176 | | | $ | 138,259 | |
Note 9 - Income Taxes
During the second quarter of 2025, the Company calculated its effective tax rate to be 23.6% and 21.9% as of June 30, 2025 and June 30, 2024, respectively. The increase in our effective tax rate is primarily due to an increase in income from regions with higher tax jurisdictions during 2025.
At the end of each interim period, the Company makes an estimate of the effective tax rate expected to be applicable for the full fiscal year and the impact of discrete items, if any, and adjusts the quarterly rate as necessary. The Company releases income tax effects from Accumulated other comprehensive (loss)/income when individual assets or liabilities are sold, terminated or extinguished.
The Company has approximately $4.8 million of unrecognized tax benefits as of June 30, 2025 which, if recognized, would impact the effective tax rate. The Company’s policy is to accrue interest and penalties related to unrecognized tax benefits in income tax expense. As of June 30, 2025, accrued interest and penalties related to the reserve for uncertain tax positions were $0.9 million.
Tax years which remain subject to examination by tax authorities for the Company’s significant tax jurisdictions include 2019 and after for the United States and Luxembourg and 2021 and after for Belgium and the Czech Republic.
Note 10 – Product Warranties
The Company offers product warranties to its commercial and Commercial In-Home customers depending upon the specific product type and the product use. Standard product warranties vary from one to seven years. The standard warranty program includes replacement of defective components. Additionally, the standard warranty covers labor costs for repairs solely related to Commercial In-Home equipment.
The Company records an estimate for future warranty related costs based on the projected incident rates of occurrence and projected cost per incident. The carrying amount of the Company’s warranty liability is adjusted as necessary based on an analysis of these and other factors.
The following table presents the changes in the carrying amount of the total product warranty liability.
| | | | | | | | | | | |
| (in thousands) | June 30, 2025 | | December 31, 2024 |
| Balance at beginning of period | $ | 51,787 | | | $ | 43,653 | |
| Currency translation adjustment | 226 | | | (126) | |
| Accruals charged to earnings | 18,587 | | | 32,406 | |
| Payments made during the period | (14,372) | | | (24,146) | |
| Balance at end of period | $ | 56,228 | | | $ | 51,787 | |
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
Product warranty of $27.3 million and $26.6 million is recorded in Other current liabilities in the Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024, respectively. Product warranty of $28.9 million and $25.2 million is recorded in Other long-term liabilities in the Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024, respectively.
Note 11 - Debt
The following table presents the Company’s debt, other than debt related to securitization activities discussed in Note 4 - Asset Backed Facilities and Note 5 - Securitization Activities.
| | | | | | | | | | | |
| (in thousands) | June 30, 2025 | | December 31, 2024 |
Term Loan due August 2031 (6.83% and 7.84% as of June 30, 2025 and December 31, 2024, respectively) | $ | 2,075,000 | | | $ | 2,075,000 | |
| | | |
| | | |
| Finance lease obligations | 303 | | | 359 | |
| Gross long-term debt | 2,075,303 | | | 2,075,359 | |
| Less: current portion of Term Loan | (20,750) | | | (20,750) | |
| | | |
| | | |
| | | |
| Less: current portion of finance lease obligations | (122) | | | (146) | |
| Less: unamortized debt issuance costs on Term Loan | (6,313) | | | (6,725) | |
| Less: unamortized original issue discount on Term Loan | (12,386) | | | (13,193) | |
| Long-term debt, net | $ | 2,035,732 | | | $ | 2,034,545 | |
Credit Facility
On August 19, 2024, Alliance Holdings entered into a credit agreement, by and among the Alliance Holdings, Alliance Laundry as the Borrower (“Borrower”), the lenders party thereto and Citibank, as Administrative Agent (the “Credit Agreement”). The Credit Agreement provides for (i) an initial Term Loan facility (the “Term Loan”) in the aggregate principal amount of $2,075.0 million and (ii) an initial revolving credit facilities (the “RCF” and, together with the Term Loan, the “Credit Facility”) of $250.0 million principal amount of revolving commitments, with $225.0 million issuable in U.S. Dollars or Euros and $25.0 million issuable in Thai Baht, with a $102.0 million sub-limit for issuance of letters of credit and a $25.0 million sub-limit for swingline loans. The Term Loan was issued with an original issue discount of 50 basis points. Interest is payable no less frequently than quarterly at the rate of SOFR plus 3.5% (or the applicable base rate plus 2.5%), with a 0.0% SOFR floor. Interest under the RCF accrues at the rate of SOFR plus 3.25% (or the applicable base rate plus 2.25%). On February 20, 2025, we finalized an amendment to our Credit Agreement, which reduced the applicable margin on the Term Loan and RCF. The result is an interest rate on our Term Loan of SOFR plus 2.75% and an interest rate on our RCF of SOFR plus 2.50%. Additionally, we incorporated opportunities for further margin reductions contingent upon achieving improvements in our leverage ratio. The company incurred $1.0 million of fees in connection with the amendment. These fees were expensed and included in Other Expenses/(Income), net in the Condensed Consolidated Statement of Comprehensive Income. As of June 30, 2025, the interest rate under the RCF was 6.57%. Additionally, a commitment fee based upon the Company’s leverage ratio is charged on the unused portion of the commitments under the RCF. As of June 30, 2025, the commitment fee was 0.25%.
The Term Loan matures on August 19, 2031, and it requires installment principal repayments equal to 1.00% of the aggregate principal per annum, paid quarterly, with the outstanding balance due on the maturity date. The Credit Agreement requires certain mandatory prepayments, including from asset sales and, beginning with the fiscal year ending December 31, 2025, annual prepayments of the Term Loan with 50% of the Company’s Excess Cash Flow, which steps down to 25% if the Company’s net leverage ratio is below 4.75:1 and to 0% if the net leverage ratio is below 4.5:1. Excess Cash Flow is defined in the Credit Agreement as consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), adjusted for the net change in working capital for the fiscal year, less other specified deductions such as debt and debt service payments, and interest and taxes paid in cash. Working capital is defined as current assets excluding cash and cash equivalents less current liabilities excluding current portion of long term debt and various other adjustments. Outstanding balances are fully prepayable on a voluntary basis, in whole or in part, without premium or penalty. The RCF matures on August 19, 2029, and it does not require any installment principal repayments or mandatory commitment reductions. Outstanding balances under
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
the RCF are fully prepayable on a voluntary basis, in whole or in part, and commitments may be terminated, in whole or in part, in each case without premium or penalty. Obligations under the Credit Agreement are secured by substantially all of the Company.
The Credit Agreement contains covenants that are customary for similar credit arrangements, including, among other things, covenants relating to: (i) financial reporting and notification, (ii) payment of obligations, (iii) compliance with applicable laws, (iv) notification of certain events, and (v) certain covenants limiting the ability of the Borrower and its subsidiaries to, among other things, sell or transfer assets, consummate fundamental changes, incur or guarantee indebtedness or liens, make investments, or enter into transactions with affiliates. The Company is in compliance with all covenants as of June 30, 2025.
The RCF is available, subject to certain conditions, for general corporate purposes in the ordinary course of business and for other transactions permitted under the Credit Agreement. A portion of the RCF not in excess of $102.0 million is available for the issuance of letters of credit. There were no letters of credit outstanding and the RCF was not drawn as of June 30, 2025 and December 31, 2024.
Other Debt
As discussed in greater detail in Note 5 - Securitization Activities, the Company had total debt outstanding of $583.3 million and $553.8 million related to its securitization activities as of June 30, 2025 and December 31, 2024, respectively.
Debt Issuance Costs and Original Issue Discount
The following tables present a summary of other disclosure items related to the Company’s debt.
| | | | | | | | | | | | | | |
| | | | Six Months Ended June 30, |
| (in thousands) | | | | 2025 | | 2024 |
| Amortization expense - debt issuance costs | | | | $ | 676 | | | $ | 2,938 | |
| Amortization expense - original issue discount | | | | 807 | | | 1,373 | |
Note 12 – Accumulated Other Comprehensive Income/(Loss)
The following tables present the changes in Accumulated other comprehensive income/(loss) by component, net of tax.
| | | | | | | | | | | |
| Other Post-Retirement Benefits, Net |
| Six Months Ended June 30, |
| (in thousands) | 2025 | | 2024 |
| Balance at beginning of period | $ | 1,842 | | | $ | 1,771 | |
| | | |
| Amounts reclassified from accumulated other comprehensive income/(loss) | — | | | — | |
| Net other comprehensive income | — | | | — | |
| Balance at end of period | $ | 1,842 | | | $ | 1,771 | |
| | | | | | | | | | | |
| Foreign Currency Translation |
| Six Months Ended June 30, |
| (in thousands) | 2025 | | 2024 |
| Balance at beginning of period | $ | (3,594) | | | $ | 23,845 | |
| Other comprehensive income/(loss) before reclassifications | 53,186 | | | (19,249) | |
| | | |
| Net other comprehensive income/(loss) | 53,186 | | | (19,249) | |
| Balance at end of period | $ | 49,592 | | | $ | 4,596 | |
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
Note 13 - Stock Based Compensation
The following table presents a summary of the Company’s stock option activity.
| | | | | | | | | | | | | | | | | |
| Share Options | | Weighted Average Exercise Price (Per Share) | | Weighted Average Remaining Contractual Term |
| Options outstanding as of December 31, 2024 | 88,908 | | | $ | 866.40 | | | |
| Granted | 7,790 | | | 1,758.61 | | | |
| Exercised | (3,157) | | | 612.86 | | | |
| Forfeited | (2,815) | | | 1,446.39 | | | |
| Options outstanding as of June 30, 2025 | 90,726 | | | $ | 933.84 | | | 5.22 | |
| Options exercisable as of June 30, 2025 | 41,621 | | | $ | 708.80 | | | 3.66 | |
For the six months ended June 30, 2025, the company issued 3,895 time-based vesting options and 3,895 performance-based vesting options.
At June 30, 2025, the Company had approximately $4.8 million of total unrecognized compensation cost related to non-vested, time-based stock options granted. That cost is expected to be recognized over a weighted average period of 3.4 years. Additionally, the Company had approximately $10.4 million of total unrecognized compensation cost related to non-vested performance-based stock option grants as of June 30, 2025. No expense has been recognized for these awards as achievement of the performance conditions was not considered probable.
Note 14 - Earnings Per Share
Basic net income per share of common stock is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share of common stock is computed by including the basic weighted-average shares of common stock outstanding adjusted for the effects of all dilutive potential shares of common stock, which include, if dilutive, outstanding stock awards. The computation of diluted earnings per share excludes the effect of the potential exercise of stock-based awards, including Stock Options, when the effect of the potential exercise would be anti-dilutive. The dilutive impact of the stock options is determined by applying the treasury stock method.
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
Basic and diluted net income per share of common stock were calculated as follows:
| | | | | | | | | | | | | | | | | |
| (in thousands, except per share amounts) | | | Six Months Ended June 30, |
| | | | | 2025 | | 2024 |
| Numerator | | | | | | | |
| Income available to common stockholders (basic and diluted) | | | | | $ | 48,263 | | | $ | 67,577 | |
| | | | | | | |
| Denominator | | | | | | | |
| Weighted-average number of common shares outstanding | | | | | 884,548 | | | 881,963 | |
| Weighted-average number of warrants outstanding | | | | | 317,358 | | | 319,121 | |
| Basic — weighted average number of shares outstanding | | | | | 1,201,906 | | | 1,201,084 | |
| | | | | | | |
| Effect of dilutive securities time-vested options | | | | | 28,822 | | | 20,856 | |
| Diluted — weighted average number of shares outstanding | | | | | 1,230,728 | | | 1,221,940 | |
| | | | | | | |
| Earnings per share | | | | | | | |
| Basic | | | | | $ | 40.16 | | | $ | 56.26 | |
| Diluted | | | | | $ | 39.22 | | | $ | 55.30 | |
Note 15 - Segment Information
The Company’s Chief Operating Decision Maker (CODM) is our Chief Executive Officer. The Company operates through two reportable segments in accordance with ASC 280, Segment Reporting: North America (United States and Canada) and International (all other global markets). This structure reflects how the CODM evaluates performance and allocates resources. Across both reportable segments, we manufacture and sell commercial laundry equipment suitable for diverse applications, ranging from small chassis products installed in laundromats, multi-housing facilities and residential settings, to large industrial units designed for institutional laundry applications.
The CODM uses Adjusted EBITDA as the primary measure of segment profit and loss to evaluate the Company’s financial performance against expected results and to allocate resources, including capital investment and potential acquisitions. Adjusted EBITDA is a non-GAAP financial measure that is defined as net income excluding interest income/expense, income taxes, depreciation and amortization. Adjusted EBITDA is also adjusted for the discrete items that management excluded in analyzing the segments’ operating performance, such as refinancing and debt related costs, share-based compensation, strategic transaction costs, foreign exchange on intercompany loans and other non-recurring items which management believes are not indicative of the Company’s ongoing operating performance. Management believes Adjusted EBITDA is the best measure to help users of its financial statements evaluate our operating performance and facilitates more meaningful comparisons with industry peers. Adjusted EBITDA is not intended to serve as an alternative to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies.
Assets are physically maintained primarily in the United States, Czech Republic, and Thailand. Total assets by segment are not presented in the table below as the CODM is not provided total assets by reportable segment as the CODM does not evaluate, manage, or measure performance of segments using total assets.
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
The following table presents the results of operations for the Company’s reportable segments:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2025 | | Six Months Ended June 30, 2024 |
| (in thousands) | North America | | International | | Total | | North America | | International | | Total |
| Net revenues | $ | 621,414 | | | $ | 215,343 | | | $ | 836,757 | | | $ | 529,836 | | | $ | 199,173 | | | $ | 729,009 | |
Cost of sales(1) | 387,455 | | | 128,421 | | | | | 333,925 | | | 124,360 | | | |
Other segment items(2) | 56,381 | | | 21,228 | | | | | 39,614 | | | 18,492 | | | |
| Adjusted EBITDA | $ | 177,578 | | | $ | 65,694 | | | $ | 243,272 | | | $ | 156,297 | | | $ | 56,321 | | | $ | 212,618 | |
| Reconciling items: | | | | | | | | | | | |
| Interest expense, net | | | | | (84,288) | | | | | | | (58,431) | |
| Depreciation and amortization | | | | | (45,958) | | | | | | | (44,909) | |
| Refinancing and debt related costs | | | | | (1,054) | | | | | | | — | |
| Foreign exchange gain/(loss) on intercompany loans | | | | | (19,854) | | | | | | | 230 | |
| Shared-based compensation | | | | | (1,771) | | | | | | | (1,776) | |
| Strategic transaction costs | | | | | (3,044) | | | | | | | (4,668) | |
| | | | | | | | | | | |
| Corporate and other | | | | | (24,166) | | | | | | | (16,510) | |
| Income before taxes | | | | | $ | 63,137 | | | | | | | $ | 86,554 | |
__________________
(1)Consists of Cost of sales, Cost of sales - related parties and Equipment financing expenses.
(2)Other segment items for each reportable segment includes:
North America - engineering, sales and marketing, information technology, and certain other overhead expenses.
International - engineering, sales and marketing, information technology, and certain other overhead expenses.
Note 16 - Supplier Financing Arrangements
The Company entered into a supplier financing arrangement with a third-party financial institution which allows participating suppliers the ability to request early payment for eligible receivables due from the Company at their sole discretion. The Company’s obligations to its suppliers, including amounts due and scheduled payment terms, are not impacted by a suppliers’ decision to sell amounts under the arrangement. Payment terms with our suppliers, which we deem to be commercially reasonable, range from 0 to 120 days. Outstanding payment obligations subject to the Company's supplier finance program at June 30, 2025 and December 31, 2024 were $12.1 million and $12.0 million, respectively, are included in Accounts payable in the Condensed Consolidated Balance Sheets.
The following tables present the changes in outstanding obligations under supplier financing arrangements:
| | | | | |
| (in thousands) | June 30, 2025 |
| Obligations outstanding at December 31, 2024 | $ | 11,971 | |
| New obligations | 24,308 | |
| Payments against supplier obligations | (24,159) | |
| |
| Obligations outstanding at June 30, 2025 | $ | 12,120 | |
| | | | | |
| (in thousands) | June 30, 2024 |
| Obligations outstanding at December 31, 2023 | $ | 31,691 | |
| New obligations | 20,240 | |
| Payments against supplier obligations | (40,986) | |
| Obligations outstanding at June 30, 2024 | $ | 10,945 | |
ALLIANCE LAUNDRY HOLDINGS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands unless otherwise indicated)
Note 17 - Commitments and Contingencies
The Company is subject to various other claims and contingencies arising out of the normal course of business, including those relating to governmental investigations and proceedings, commercial transactions, product liability, employee related matters, antitrust, safety, health, taxes, environmental and other matters. Litigation is subject to many uncertainties and the outcome of individual litigated matters is not predictable with assurance. It is possible that some litigation matters for which reserves have not been established could be decided unfavorably to us, and that any such unfavorable decisions could have a material adverse effect on our financial condition, results of operations and cash flows.
Note 18 - Related Parties
The Company has entered into various transactions with related parties. The Company’s Board of Directors has members that are employees of BDT, which the Company paid $0.2 million for the six months ended June 30, 2025 and 2024, respectively. Management fees are classified as Selling, general and administrative expenses in the Company's Condensed Consolidated Statements of Comprehensive Income. Entities affiliated with BDT hold a controlling interest in a vendor that the Company purchases raw materials from. The Company made purchases of $2.9 million and $3.0 million from this vendor during the six months ended June 30, 2025 and 2024, respectively, included in inventory and cost of sales. As of June 30, 2025 and December 31, 2024, the Company had amounts due to this vendor of $1.5 million and $1.3 million, respectively, included in Accounts payable - related parties in the Consolidated Balance Sheets.
Note 19 - Subsequent Events
The Company evaluates events occurring subsequent to the date of the financial statements in determining the accounting for and disclosure of transactions and events that affect the financial statements. Subsequent events have been evaluated through August 21, 2025, which is the date the financial statements were available to be issued.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. This bill amends key business tax provisions including the “GILTI” provision, other international provisions, interest deduction limitations and reinstates the option to immediately expense research and experimental expenditures. The Company is currently in the process of evaluating the potential impact of OBBBA on its financial position and results of operations.
On August 1, 2025, the Company acquired certain assets net of liabilities of Metropolitan Laundry Machinery Sales Inc., a leading distributor of laundry equipment headquartered in South Richmond Hill, New York servicing the metro New York area.
On August 8, 2025, ALH Holding Inc. filed a Certificate of Amendment to its Certificate of Incorporation to change its name to Alliance Laundry Holdings Inc.
On August 21, 2025, we finalized an amendment to our Credit Agreement, which reduced the applicable margin on the Term Loan and RCF. The result is an interest rate on our Term Loan of SOFR plus a margin of 2.25% and an interest rate on our RCF of SOFR plus a margin of 2.25%. Additionally, we incorporated opportunities for further margin reductions contingent upon achieving improvements in our leverage ratio and rating agency upgrades.
Shares
Alliance Laundry Holdings Inc.
Common Stock
Preliminary Prospectus
| | | | | |
| BofA Securities | J.P. Morgan |
| | | | | | | | | | | | | | | | | |
| Baird | BDT & MSD | BMO Capital Markets | Citigroup | Goldman Sachs & Co. LLC | UBS Investment Bank |
| | | | | | | | |
CIBC Capital Markets | | Fifth Third Securities |
, 2025
Through and including , 2025 (25 days after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This delivery is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.
PART II
Information Not Required in Prospectus
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses, other than the underwriting discount, payable in connection with the offering contemplated by this registration statement. All of the fees set forth below are estimates except for the SEC registration fee, the FINRA filing fee and the stock exchange listing fee.
| | | | | |
| Payable by the registrant |
| SEC registration fee | $ | | * |
| FINRA filing fee | $ | | * |
NYSE listing fee | $ | | * |
| Printing and engraving expenses | $ | | * |
| Legal fees and expenses | $ | | * |
| Accounting fees and expenses | $ | | * |
| Transfer agent and registrar fees and expenses | $ | | * |
| Miscellaneous fees and expenses | $ | | * |
| Total | $ | | * |
__________________
*To be furnished by amendment.
Item 14. Indemnification of Directors and Officers.
Limitation of personal liability of directors and indemnification
Section 145 of the General Corporation Law of the State of Delaware (the “DGCL”) provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to the registrant. The DGCL provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. Our amended and restated certificate of incorporation and amended and restated bylaws will provide for indemnification by us of our directors and officers to the fullest extent permitted by the DGCL.
Section 102(b)(7) of the DGCL permits a corporation to provide in its certificate of incorporation that a director or officer of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, except for liability (1) for any breach of the director’s or officer’s duty of loyalty to the corporation or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) in the case of directors, for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL or (4) for any transaction from which the director or officer derived an improper personal benefit. Our amended and restated certificate of incorporation will provide for such limitation of liability. The effect of this provision will be to eliminate our rights and those of our stockholders (through stockholders’ derivative suits on our behalf) to recover monetary damages against a director or officer for breach of the fiduciary duty of care as a director or officer, including breaches resulting from negligent or grossly negligent behavior, except as restricted by Section 102(b)(7) of the DGCL. However, this provision will not limit or eliminate or rights or the rights of any stockholder to seek non-monetary relief, such as injunction or rescission, in the event of a breach of a director’s or officer’s duty of care.
We maintain standard policies of insurance under which coverage is provided (a) to our directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act and (b) to us with respect to payments which may be made by us to such officers and directors pursuant to the above indemnification provision
or otherwise as a matter of law. Our amended and restated bylaws will provide that we will indemnify our directors and officers to the fullest extent permitted by the DGCL and must also pay expenses incurred in defending any such proceeding in advance of its final disposition upon delivery of an undertaking by or on behalf of such director or officer to repay all amounts so advanced if it should be determined ultimately that such director or officer is not entitled to be indemnified under this section or otherwise.
We expect that the underwriting agreement, the form of which will be filed as an exhibit to this registration statement, will provide for indemnification of directors and officers of Alliance Laundry Holdings by the underwriters against certain liabilities.
We may enter into customary indemnification agreements with our current directors and executive officers. These agreements will require us to indemnify these individuals to the fullest extent permitted under the DGCL against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. We also intend to enter into indemnification agreements with our future directors and executive officers.
Item 15. Recent Sales of Unregistered Securities.
Within the past three years, we have engaged in the following transactions that were not registered under the Securities Act. Share amounts have been adjusted to give effect to a -for-1 forward stock split effected on , 2025.
(a) Equity compensation
Since , 2022, we have granted to our directors, employees and consultants (i) options to purchase shares of our common stock with per share exercise prices ranging from $ to $ under our 2015 Stock Option Plan and (ii) shares underlying options to purchase shares of our common stock have been canceled or forfeited and shares underlying options to purchase shares of our common stock have been exercised resulting in the issuance of shares of our common stock (reflecting cashless exercise where applicable) under our 2015 Stock Option Plan. In August 2025, we sold an aggregate of shares of our common stock with an aggregate purchase price of $500,000 issued pursuant to our 2015 Stock Purchase Plan.
The offers, sales and issuances of the securities described in this Item 15(a) were exempt from registration under the Securities Act under either Rule 701, in that the transactions were under compensatory benefit plans and contracts relating to compensation, or under Section 4(a)(2) of the Securities Act, in that the transactions were between an issuer and certain employees and did not involve any public offering within the meaning of Section 4(a)(2). The recipients of such securities were our employees, directors or consultants. Appropriate legends were affixed to the securities issued in these transactions.
(b) Warrants
In August 2015, we issued warrants to our principal stockholder to purchase up to shares of common stock (subject to adjustment) at an exercise price of $0.01 per share and exercisable at any time after the original issue date. On June 30, 2025, the warrants were exercised on a cashless basis, and shares of common stock were issued pursuant to the warrants.
The offers, sales and issuances of the securities described in this Item 15(b) were exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions. All recipients had adequate access, through their relationships with us, to information about our company.
Item 16. Exhibits and Financial Statement Schedules.
(a)Exhibits: The list of exhibits set forth under “Exhibit Index” at the end of this registration statement is incorporated herein by reference. (b)Financial Statement Schedules: See “Index to Consolidated Financial Statements” included on page F-1 for a for a list of the financial statement schedules included in this registration statement. All schedules not identified above have been omitted because they are not required, are inapplicable or the information is included in the consolidated financial statements or the related notes contained in this registration statement. Item 17. Undertakings.
The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1)For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2)For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
Exhibit Index
| | | | | | | | |
| Exhibit Number | | Exhibit Description |
| | |
| 1.1* | | Form of Underwriting Agreement |
| | |
| 3.1 | | |
| | |
| 3.2 | | |
| | |
| 4.1 | | |
| | |
| 5.1* | | Opinion of Cravath, Swaine & Moore LLP |
| | |
| 10.1 | | |
| | |
10.2+ | | |
| | |
10.3+ | | |
| | |
10.4+ | | |
| | |
10.5+ | | Omnibus Amendment and Assignment, Assumption and Resignation Agreement, dated June 8, 2018, by and among Alliance Laundry Equipment Receivables Trust 2015-A, Alliance Laundry Systems LLC, Alliance Laundry Equipment Receivables 2015 LLC, The Bank of New York Mellon, as Indenture Trustee, PNC Bank, National Association, as successor Administrative Agent, and each Note Purchaser and Funding Agent thereto |
| | |
10.6+ | | |
| | |
10.7+ | | |
| | |
10.8+ | | |
| | |
10.9+ | | |
| | |
10.10+ | | |
| | |
10.11+ | | |
| | |
| | | | | | | | |
10.12+ | | |
| | |
| 10.13 | | |
| | |
10.14+ | | |
| | |
| 10.15 | | |
| | |
| 10.16 | | |
| | |
| 10.17 | | |
| | |
10.18† | | |
| | |
10.19† | | |
| | |
10.20† | | |
| | |
10.21† | | |
| | |
10.22† | | |
| | |
10.23† | | |
| | |
10.24† | | |
| | |
10.25† | | |
| | |
10.26† | | |
| | |
10.27† | | |
| | |
10.28†* | | Alliance Laundry Holdings Inc. 2025 Omnibus Incentive Compensation Plan |
| | |
10.29†* | | Alliance Laundry Holdings Inc. 2025 Employee Stock Purchase Plan |
| | |
10.30† | | |
| | |
10.31† | | |
| | |
| 21.1 | | |
| | |
| 23.1 | | |
| | |
| 23.2* | | Consent of Cravath, Swaine & Moore LLP (contained in its opinion filed as Exhibit 5.1 hereto) |
| | |
| 24.1 | | |
| | |
99.1* | | Consent to be Named as a Director Nominee |
| | |
| 107 | | |
| | |
_____________________
*To be filed by amendment.
†Indicates management contract or compensatory plan.
+Certain schedules and similar attachments to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant undertakes to furnish supplementally a copy of any omitted schedule to the SEC upon request.
Signatures
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Ripon, Wisconsin on September 12, 2025.
| | | | | |
Alliance Laundry Holdings Inc. |
| |
| By: | /s/ Michael D. Schoeb |
| Name: | Michael D. Schoeb |
| Title: | Chief Executive Officer and Director |
Signatures and Powers of Attorney
Each of the undersigned officers and directors of Alliance Laundry Holdings Inc. hereby severally constitutes and appoints Michael D. Schoeb and Samantha L. Hannan, and each of them acting alone, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, and in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462 under the Securities Act, and to file the same, with all exhibits thereto and other documents in connection therewith, with the SEC and any applicable securities exchange or securities self-regulatory body, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them individually, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| | | | | | | | | | | | | | | | | |
| Signature | | Title | | Date |
| | | | | |
| By: | /s/ Michael D. Schoeb | | Chief Executive Officer and Director | | |
| Michael D. Schoeb | | (Principal Executive Officer) | | September 12, 2025 |
| | | | | |
| By: | /s/ Dean Nolden | | Chief Financial Officer | | |
| Dean Nolden | | (Principal Financial Officer) | | September 12, 2025 |
| | | | | |
| By: | /s/ Brian Sikora | | Chief Accounting Officer | | |
| Brian Sikora | | (Principal Accounting Officer) | | September 12, 2025 |
| | | | | |
| By: | /s/ Clyde B. Anderson | | | | |
| Clyde B. Anderson | | Director | | September 12, 2025 |
| | | | | |
| By: | /s/ Timothy J. FitzGerald | | | | |
| Timothy J. FitzGerald | | Director | | September 12, 2025 |
| | | | | |
| By: | /s/ Phyllis A. Knight | | | | |
| Phyllis A. Knight | | Director | | September 12, 2025 |
| | | | | |
| By: | /s/ Narasimha Nayak | | | | |
| Narasimha Nayak | | Director | | September 12, 2025 |
| | | | | |
| By: | /s/ Robert L. Verigan | | | | |
| Robert L. Verigan | | Director | | September 12, 2025 |
| | | | | |
FOURTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
of
ALLIANCE LAUNDRY HOLDINGS INC.
(Pursuant to Section 242 and 245 of
the General Corporation Law of the State of Delaware)
Alliance Laundry Holdings Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:
FIRST: The name of the Corporation is Alliance Laundry Holdings Inc. Its original certificate of incorporation was filed with the Secretary of State of the State of Delaware on December 3, 2004 (the “Original Certificate”), which Original Certificate was amended and restated on January 27, 2005 by the filing of an amended and restated certificate of incorporation (the “First Amended and Restated Certificate”), which First Amended and Restated Certificate was amended and restated on December 21, 2007 by the filing of a second amended and restated certificate of incorporation (the “Second Amended and Restated Certificate”), which Second Amended and Restated Certificate was amended and restated on August 31, 2015 by the filing of a third amended and restated certificate of incorporation (as amended by the Certificate of Amendment of the Third Amended and Restated Certificate of Incorporation dated December 28, 2015, the Certificate of Amendment of the Third Amended and Restated Certificate of Incorporation dated August 8, 2025 and the Certificate of Amendment of the Third Amended and Restated Certificate of Incorporation dated [●], 2025, the “Third Amended and Restated Certificate”, and the Original Certificate, as amended and restated by the First Amended and Restated Certificate, the Second Amended and Restated Certificate and the Third Amended and Restated Certificate, the “Existing Certificate”).
SECOND: This Fourth Amended and Restated Certificate of Incorporation (this “Certificate of Incorporation”) amends and restates in its entirety the Corporation’s Existing Certificate, as currently in effect, and has been duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware (as from time to time in effect, the “General Corporation Law”), by written consent of the holders of the outstanding stock of the Corporation in accordance with the provisions of Section 228 of the General Corporation Law. The effective date of this Certificate of Incorporation shall be the date it is filed with the Secretary of State of the State of Delaware.
THIRD: This Certificate of Incorporation amends and restates in its entirety the Existing Certificate of the Corporation to read as follows:
1. Name. The name of the Corporation is Alliance Laundry Holdings Inc.
2. Address; Registered Office and Agent. The address of the Corporation’s registered office in the State of Delaware is c/o Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, State of Delaware 19801 and the name of its registered agent at such address is The Corporation Trust Company.
3. Purposes. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law.
4. Number of Shares.
4.1. The total number of shares of all classes of stock that the Corporation shall have authority to issue is [●] shares, consisting of: (i) [●] shares of common stock, with the par value of $0.01 per share (the “Common Stock”) and (ii) [●] shares of preferred stock, with the par value of $0.01 per share (the “Preferred Stock”).
4.2. Subject to the rights of the holders of any one or more series of Preferred Stock then outstanding, the number of authorized shares of any class of the Common Stock or the Preferred Stock may be increased or decreased, in each case by the affirmative vote of the holders of a majority of the total voting power of the issued and outstanding shares of capital stock of the Corporation entitled to vote thereon, voting together as a single class, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law, and no vote of the holders of any class of the Common Stock or the Preferred Stock voting separately as a class will be required therefor. Notwithstanding the immediately preceding sentence, the number of authorized shares of any particular class may not be decreased below the number of shares of such class then outstanding, plus the number of shares of Common Stock issuable in connection with the exercise of outstanding options, warrants, exchange rights, conversion rights or similar rights for such class.
5. Classes of Shares. The designation, relative rights, preferences and limitations of the shares of each class of stock are as follows:
5.1. Common Stock.
(i) Voting Rights.
(1) Each holder of Common Stock will be entitled to one vote for each share of Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote, except that, to the fullest extent permitted by law, holders of shares of Common Stock, as such, will have no voting power with respect to, and will not be entitled to vote on, any amendment to this Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) that relates solely to the terms of any outstanding Preferred Stock if the holders of such Preferred Stock are entitled to vote as a separate class thereon under this Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) or under General Corporation Law.
(2) Except as otherwise required in this Certificate of Incorporation or by applicable law, the holders of Common Stock will vote together as a single class on all matters (or, if any holders of Preferred Stock are entitled to vote together with the holders of Common Stock, as a single class with the holders of Preferred Stock).
(ii) Dividends; Stock Splits or Combinations. Subject to applicable law and the rights, if any, of the holders of any outstanding series of Preferred Stock or any class or series of stock having a preference senior to or the right to participate with the Common Stock with respect to the payment of dividends, dividends of cash or property may be declared and paid on the Common Stock out of the assets of the Corporation that are by law available therefor, at the times and in the amounts as the board of directors of the Corporation (the “Board”) in its discretion may determine.
(iii) Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation and of the preferential and other amounts, if any, to which the holders of Preferred Stock are entitled, if any, the holders of all outstanding shares of Common Stock will be entitled to receive, pari passu, an amount per share equal to the par value thereof, and thereafter the holders of all outstanding shares of Common Stock will be entitled to receive the remaining assets of the Corporation available for distribution ratably in proportion to the number of shares of Common Stock.
5.2. Preferred Stock. Shares of Preferred Stock may be issued from time to time in one or more series of any number of shares; provided that the aggregate number of shares issued and not retired of any and all such series shall not exceed the total number of shares of Preferred Stock hereinabove authorized, and with such powers, including voting powers, if any, and the designations, preferences and relative, participating, optional or other special rights, if any, and any qualifications, limitations or restrictions thereof, all as shall hereafter be stated and expressed in the resolution or resolutions providing for the designation and issue of such shares of Preferred Stock from time to time adopted by the Board pursuant to authority so to do which is hereby expressly vested in the Board. The powers, including voting powers, if any, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. Each series of shares of Preferred Stock: (i) may have such voting rights or powers, full or limited, if any, (ii) may be subject to redemption at such time or times and at such prices, if any, (iii) may be entitled to receive dividends (which may be cumulative or noncumulative) at such rate or rates, on such conditions and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or series of stock, if any, (iv) may have such rights upon the voluntary or involuntary liquidation, winding-up or dissolution of, upon any distribution of the assets of, or in the event of any merger, sale or consolidation of, the Corporation, if any, (v) may be made convertible into or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of stock of the Corporation (or any other securities of the Corporation or any other Person) at such price or prices or at such rates of exchange and with such adjustments, if any, (vi) may be entitled to the benefit of a sinking fund to be applied to the
purchase or redemption of shares of such series in such amount or amounts, if any, (vii) may be entitled to the benefit of conditions and restrictions upon the creation of indebtedness of the Corporation or any subsidiary, upon the issue of any additional shares (including additional shares of such series or of any other series) and upon the payment of dividends or the making of other distributions on, and the purchase, redemption or other acquisition by the Corporation or any subsidiary of, any outstanding shares of the Corporation, if any, (viii) may be subject to restrictions on transfer or registration of transfer, or on the amount of shares that may be owned by any Person or group of Persons and (ix) may have such other relative, participating, optional or other special rights, qualifications, limitations or restrictions thereof, if any; all as shall be stated in said resolution or resolutions of the Board providing for the designation and issue of such shares of Preferred Stock.
6. Board of Directors.
6.1. Number of Directors.
(i) The business and affairs of the Corporation shall be managed by, or under the direction of, the Board. Unless and except to the extent that the Third Amended and Restated By-laws of the Corporation (as such By-laws may be amended from time to time, the “By-laws”) shall so require, the election of the directors of the Corporation (the “Directors”) need not be by written ballot. Except as otherwise provided for or fixed pursuant to the provisions of Section 5.2 of this Certificate of Incorporation relating to the rights of the holders of any series of Preferred Stock to elect additional Directors, the total number of Directors constituting the entire Board shall be not less than five (5) nor more than thirteen (13), with the then authorized number of Directors constituting the entire Board being fixed from time to time by the Board; provided, that for as long as the Stockholders Agreement is in effect, the number of Directors shall never be less than the aggregate number of Directors that the Principal Stockholder is entitled to nominate from time to time pursuant to Section 1.01 thereof.
(ii) During any period when the holders of any series of Preferred Stock have the right to elect additional Directors as provided for or fixed pursuant to the provisions of Section 5.2 (“Preferred Stock Directors”), upon the commencement, and for the duration, of the period during which such right continues: (A) the then total authorized number of Directors shall automatically be increased by such specified number of Preferred Stock Directors, and the holders of the related Preferred Stock shall be entitled to elect the Preferred Stock Directors pursuant to the provisions of the Board’s designation for the series of Preferred Stock and (B) each such Preferred Stock Director shall serve until such Preferred Stock Director’s successor shall have been duly elected and qualified, or until such Preferred Stock Director’s right to hold such office terminates pursuant to such provisions, whichever occurs earlier, subject to his or her earlier death, disability, resignation, retirement, disqualification, or removal from office. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect Preferred Stock Directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such Preferred Stock Directors elected by the holders of such Preferred Stock, or elected to fill any vacancies resulting from the death, disability, resignation,
retirement, disqualification or removal from office of such Preferred Stock Directors, shall forthwith terminate and the total and authorized number of Directors shall be reduced accordingly.
6.2. Staggered Board. The Board (other than Preferred Stock Directors) shall be divided into three (3) classes, as nearly equal in number as possible, designated Class I, Class II and Class III. Class I Directors shall initially serve until the first annual meeting of stockholders following the adoption of this Certificate of Incorporation; Class II Directors shall initially serve until the second annual meeting of stockholders following the adoption of this Certificate of Incorporation; and Class III Directors shall initially serve until the third annual meeting of stockholders following the adoption of this Certificate of Incorporation. Commencing with the first annual meeting of stockholders following the adoption of this Certificate of Incorporation, each Director of each class the term of which shall then expire shall be elected to hold office for a term ending on the date of the third annual meeting of stockholders next following the annual meeting at which such Director was elected. In case of any increase or decrease, from time to time, in the number of Directors (other than Preferred Stock Directors), the number of Directors in each class shall be apportioned as nearly equal as possible. The Board is authorized to designate the members of the Board in office at the time of adoption of this Certificate of Incorporation or at the time of the creation of a new directorship as Class I Directors, Class II Directors or Class III Directors. In making such designation, the Board shall equalize, as nearly as possible, the number of Directors in each class. In the event of any change in the number of Directors, the Board shall apportion any newly created directorships among, or reduce the number of directorships in, such class or classes as shall equalize, as nearly as possible, the number of Directors in each class. In no event will a decrease in the number of Directors shorten the term of any incumbent Director.
6.3. Vacancies and Newly Created Directorships. Subject to the rights of the holders of any one or more series of Preferred Stock then outstanding and subject to the terms of the Stockholders Agreement (as long as such agreement is in effect), newly created directorships resulting from any increase in the authorized number of Directors or any vacancies on the Board resulting from death, disability, resignation, retirement, disqualification, removal from office or other cause may be nominated by the Chair and shall be filled by (a) if the Majority Ownership Requirement is no longer met, the affirmative vote of a majority of the remaining Director or Directors then in office, even if less than a quorum of the Board, or (b) until the Majority Ownership Requirement is no longer met, the affirmative vote of a majority of the remaining Director or Directors then in office, even if less than a quorum, or, if the Principal Stockholder elects, by a plurality of the stockholders pursuant to Section 2.10 of the By-laws. Any Director so chosen shall hold office until the next election of the class for which such Director shall have been chosen and until his or her successor shall be duly elected and qualified or until such Director’s earlier death, disability, resignation, retirement, disqualification or removal from office. In no event will a decrease in the number of Directors shorten the term of any incumbent Director. Notwithstanding the foregoing, for as long as the Stockholders Agreement is in effect, any vacancy caused by the death, disability, resignation, retirement, disqualification or removal from office of any BDT Director (as defined in the Stockholders Agreement) shall, at the Principal Stockholder’s option, be filled solely by (x) the Principal Stockholder in a written
instrument delivered to the Corporation or (y) a majority of the remaining Directors, even if less than a quorum, in accordance with the Stockholders Agreement, so long as, after giving effect to the filling of such vacancy, the number of BDT Directors in office does not exceed the number of Directors the Principal Stockholder is entitled to nominate pursuant to Section 1.01 of the Stockholders Agreement. Any Director elected to fill a newly created directorship or vacancy in accordance with the preceding provisions of this Section 6.3 shall hold office until the next annual meeting of stockholders held to elect the class of Directors to which such Director is elected and until his or her successor is duly elected and qualified or until his or her earlier death, disability, resignation, retirement, disqualification or removal from office.
6.4. Term and Removal of Directors. Each Director shall hold office until the annual meeting at which such Director’s term expires and until his or her successor is duly elected and qualified, or until his or her earlier death, disability, resignation, retirement, disqualification or removal from office. No decrease in the number of Directors shall shorten the term of any incumbent Director. Except for Preferred Stock Directors and subject to the terms of the Stockholders Agreement (as long as such agreement is in effect), any individual Director may be removed from office only by the affirmative vote of the holders of two-thirds (66 2/3%) of the total voting power of the issued and outstanding Voting Stock, voting together as a single class, and, for so long as the Board is classified as provided in Section 6.2, no such Director may be removed without cause; provided, however, that until the Majority Ownership Requirement is no longer met, any Director may be removed with or without cause by the affirmative vote of the holders of a majority of the total voting power of the issued and outstanding Voting Stock, voting together as a single class.
6.5. Chair. For so long as the Principal Stockholder beneficially owns at least 25.0% of the issued and outstanding shares of Common Stock, the Principal Stockholder shall, and the Corporation shall take all action necessary to ensure that the Principal Stockholder shall, have the right to appoint (including by filling any vacancy in the position of Chair) a then-serving Director as the Chair and to remove any person serving as Chair from such position. For so long as the Principal Stockholder beneficially owns at least 25.0% of the issued and outstanding shares of Common Stock, the Corporation shall not amend, supplement or otherwise modify, and shall take all actions necessary to ensure that the Corporate Governance Guidelines are not amended, supplemented or otherwise modified, with respect to the role, responsibilities or duties of the Chair without the consent of the Principal Stockholder.
6.6. Lead Director. For so long as the Principal Stockholder beneficially owns at least 25.0% of the issued and outstanding shares of Common Stock, the Principal Stockholder shall, and the Corporation shall take all action necessary to ensure that the Principal Stockholder shall, have the right to appoint (including by filling any vacancy in the position of Lead Director) a then-serving Director as the Lead Director and to remove any person serving as Lead Director from such position. For so long as the Principal Stockholder beneficially owns at least 25.0% of the issued and outstanding shares of Common Stock, the Corporation shall not amend, supplement or otherwise modify, and shall take all actions necessary to ensure that the Corporate Governance Guidelines are not amended, supplemented or otherwise modified, with respect to
the role, responsibilities or duties of the Lead Director without the consent of the Principal Stockholder.
6.7. Committees. For so long as the Principal Stockholder is entitled to elect at least one Director pursuant to Section 1.01 of the Stockholders Agreement, the Principal Stockholder shall have the power to appoint or direct the appointment of at least one BDT Director to each committee of the Board, subject to any restrictions on the right of any BDT Director to serve on any such committee set forth in Section 1.05 of the Stockholders Agreement.
7. Meetings of Stockholders.
7.1. Action by Written Consent. From and after the date that the Majority Ownership Requirement is no longer met, any action required or permitted to be taken by the stockholders of the Corporation may be effected only at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders. Until the Majority Ownership Requirement is no longer met, any action required or permitted to be taken by the stockholders of the Corporation may be effected without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is or are signed by the holders of issued and outstanding Voting Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of stock entitled to vote thereon were present and voted, voting together as a single class, in lieu of a duly called annual or special meeting of stockholders.
7.2. Meetings of Stockholders.
(i) An annual meeting of stockholders for the election of Directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting shall be held at such place, on such date, and at such time as the Board shall determine.
(ii) Subject to any special rights of the holders of any series of Preferred Stock, and to the requirements of applicable law, from and after the date that the Majority Ownership Requirement is no longer met, special meetings of stockholders of the Corporation may be called at any time by or at the direction of (1) the Board pursuant to a written resolution adopted by a majority of the total number of Directors that the Corporation would have if there were no vacancies, (2) the Chair or (3) the Chief Executive Officer. Until the Majority Ownership Requirement is no longer met, special meetings of stockholders of the Corporation may be called at any time by or at the direction of (1) the Board pursuant to a written resolution adopted by a majority of the total number of Directors that the Corporation would have if there were no vacancies, (2) the Chair, (3) the Chief Executive Officer or (4) the holders of a majority of the total voting power of the Voting Stock. Except as set forth in this Section 7.2(ii), a special meeting may not be called by any other person or persons and any power of stockholders to call a special meeting of stockholders is specifically denied. Any business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting.
7.3. No Cumulative Voting; Election of Directors by Written Ballot. There shall be no cumulative voting in the election of Directors. Unless and except to the extent that the By-laws shall so require, the election of the Directors need not be by written ballot.
8. Business Combinations.
8.1. Section 203 of the General Corporation Law. The Corporation expressly elects not to be governed by Section 203 of the General Corporation Law and the restrictions and limitations set forth therein.
8.2. Interested Stockholder Transactions. Notwithstanding anything to the contrary set forth in this Certificate of Incorporation, the Corporation shall not engage in any Business Combination at any point in time at which any of the Corporation’s Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act with any Interested Stockholder for a period of three years following the time that such stockholder became an Interested Stockholder, unless:
(i) prior to such time that such stockholder became an Interested Stockholder, the Board of Directors approved either the Business Combination or the transaction which resulted in such stockholder becoming an Interested Stockholder;
(ii) upon consummation of the transaction which resulted in the stockholder becoming an Interested Stockholder, the Interested Stockholder owned at least 85.0% of the Voting Stock of the Corporation issued and outstanding at the time the transaction commenced, excluding for purposes of determining the Voting Stock outstanding (but not the outstanding Voting Stock owned by the Interested Stockholder) those shares owned by (1) persons who are Directors and also officers and (2) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
(iii) at or subsequent to such time that such stockholder became an Interested Stockholder, the Business Combination is approved by the Board of Directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least two-thirds (66 2/3%) of the voting power of the issued and outstanding shares of capital stock of the Corporation which is not owned by such Interested Stockholder.
9. Limitation of Liability.
9.1. To the fullest extent permitted under the General Corporation Law, as amended from time to time, no Director or officer of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director or officer of the Corporation. Notwithstanding the preceding sentence, such limitation will not apply, except to the extent permitted by the General Corporation Law, to (i) any breach of a Director’s or officer’s duty of loyalty to the Corporation or its stockholders, (ii) acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) in the case of Directors, any unlawful payment of a dividend or unlawful stock repurchase or
redemption, as provided in Section 174 of the General Corporation Law or (iv) any transaction from which the Director or officer derived an improper personal benefit.
9.2. Any amendment or repeal of Section 9.1 shall not adversely affect any right or protection of a Director or officer of the Corporation hereunder in respect of any act or omission occurring prior to the time of such amendment or repeal.
9.3. Any reference to an officer of the Corporation in this Article 9 shall be deemed to refer exclusively to the Chair, Chief Executive Officer, President, Vice Presidents, Secretary, Treasurer and any other officers of the Corporation appointed pursuant to Section 5.01 of the Corporation’s By-laws.
10. Indemnification.
10.1. Right to Indemnification. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended to increase the scope of such coverage, any Person (a “Covered Person”) who was or is a party or is threatened to be made a party to or otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he or she, or a Person for whom he or she is the legal representative, is or was a Director or officer of the Corporation or, while a Director or officer of the Corporation, is or was serving at the request of the Corporation as a Director, officer, employee, agent or trustee of another entity or enterprise, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including, without limitation, attorneys’ fees and expenses, judgments, fines, excise taxes or penalties under the Employee Retirement Income Security Act of 1974, as amended, and amounts paid or to be paid in settlement) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except as otherwise provided in Section 10.3 with respect to Proceedings to enforce rights to indemnification or advancement of expenses or with respect to any compulsory counterclaim brought by such indemnitee, the Corporation shall be required to indemnify a Covered Person in connection with a Proceeding (or part thereof) commenced by such Covered Person only if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized by the Board.
Any reference to an officer of the Corporation in this Article 10 shall be deemed to refer exclusively to the Chair, Chief Executive Officer, President, Vice Presidents, Secretary, Treasurer and any other officers of the Corporation appointed pursuant to Section 5.01 of the Corporation’s By-laws, and any reference to an officer of any other entity or other enterprise shall be deemed to refer exclusively to an officer appointed by the board of directors or equivalent governing body of such other entity pursuant to the certificate of incorporation and by-laws or equivalent organizational documents of such other entity or enterprise.
10.2. Prepayment of Expenses. To the fullest extent permitted by applicable law, the Corporation shall pay the expenses (including attorneys’ fees) incurred by a Covered Person in appearing at, participating in or defending any Proceeding in advance of its final disposition or in connection with a Proceeding brought to establish or enforce a right to
indemnification or advancement of expenses under this Article 10 (which shall be governed by Section 10.3); provided, however, that to the extent required by applicable law or in the case of advance made in a Proceeding brought to establish or enforce a right to indemnification or advancement, such payment of expenses in advance of the final disposition of the Proceeding shall be made solely upon receipt of an undertaking by the Covered Person to repay all amounts advanced if it should be ultimately determined that the Covered Person is not entitled to be indemnified or entitled to advancement of expenses under this Article 10 or otherwise.
10.3. Claims. If a claim for indemnification or advancement of expenses under this Article 10 is not paid in full within thirty (30) days after a written claim therefor by the Covered Person has been received by the Corporation, the Covered Person may file suit to recover the unpaid amount of such claim or to obtain an advancement of expenses, as applicable. To the fullest extent permitted by law, if successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Covered Person shall be entitled to be paid the expense of prosecuting or defending such claim. In any such action the Corporation shall have the burden of proving that the Covered Person is not entitled to the requested indemnification or advancement of expenses under applicable law. In (i) any suit brought by a Covered Person to enforce a right to indemnification hereunder (but not in a suit brought by a Covered Person to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, such Person has not met any applicable standard for indemnification set forth in the General Corporation Law. Neither the failure of the Corporation (including by its Directors who are not parties to such action, a committee of such Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Covered Person is proper in the circumstances because the Covered Person has met the applicable standard of conduct set forth in the General Corporation Law, nor an actual determination by the Corporation (including by its Directors who are not parties to such action, a committee of such Directors, independent legal counsel or its stockholders) that the Covered Person has not met such applicable standard of conduct, shall create a presumption that such Person has not met the applicable standard of conduct or, in the case of such a suit brought by the Covered Person, be a defense to such suit.
10.4. Nonexclusivity of Rights. The rights conferred on any Covered Person by this Article 10 shall not be exclusive of any other rights that such Covered Person may have or hereafter acquire under any statute, provision of this Certificate of Incorporation, the By-laws, agreement, vote of stockholders or disinterested Directors or otherwise.
10.5. Other Sources. Subject to Section 10.6, the Corporation’s obligation, if any, to indemnify or to advance expenses to any Covered Person who was or is serving at its request as a director, officer, employee or agent of another entity or enterprise shall be reduced by any amount such Covered Person may collect as indemnification or advancement of expenses from such other entity or enterprise.
10.6. Indemnitor of First Resort. In all events, (i) the Corporation hereby agrees that it is the indemnitor of first resort (i.e., its obligation to a Covered Person to provide advancement and/or indemnification to such Covered Person is primary and any obligation of the Principal Stockholder (including any Affiliate thereof other than the Corporation) to provide advancement or indemnification hereunder or under any other indemnification agreement (whether pursuant to contract, by-laws or charter), or any obligation of any insurer of the Principal Stockholder to provide insurance coverage, for the same expenses, liabilities, judgments, penalties, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such expenses, liabilities, judgments, penalties, fines and amounts paid in settlement) incurred by such Covered Person are secondary) and (ii) if the Principal Stockholder (or any Affiliate thereof, other than the Corporation) pays or causes to be paid, for any reason, any amounts otherwise indemnifiable hereunder or under any other indemnification agreement (whether pursuant to contract, by-laws or charter) with such Covered Person, then (x) the Principal Stockholder (or such Affiliate, as the case may be) shall be fully subrogated to all rights of such Covered Person with respect to such payment, (y) the Covered Person shall execute all papers reasonably required and shall do all things that may be reasonably necessary to secure such rights, including the execution of such documents as may be necessary to enable the Principal Stockholder (or such Affiliate, as the case may be) effectively to bring suit to enforce such rights and (z) the Corporation shall fully indemnify, reimburse and hold harmless the Principal Stockholder (or such Affiliate, as the case may be) for all such payments actually made by the Principal Stockholder (or such Affiliate, as the case may be). The Principal Stockholder (and any Affiliate thereof) shall be a third-party beneficiary with respect to this Section 10.6, entitled to enforce this Section 10.6.
10.7. Amendment or Repeal. Any amendment or repeal of the foregoing provisions of this Article 10 shall not adversely affect any right or protection hereunder of any Covered Person in respect of any act or omission occurring prior to the time of such amendment or repeal.
10.8. Other Indemnification and Prepayment of Expenses. This Article 10 shall not limit the right of the Corporation, to the extent and in the manner permitted by applicable law, to indemnify and to advance expenses to Persons other than Covered Persons when and as authorized by appropriate corporate action.
10.9. Reliance. Covered Persons who after the date of the adoption of this provision become or remain a Covered Person described in this Article 10 will be conclusively presumed to have relied on the rights to indemnity, advancement of expenses and other rights contained in this Article 10 in entering into or continuing the service. The rights to indemnification and to the advancement of expenses conferred in this Article 10 will apply to claims made against any Covered Person described in this Article 10 arising out of acts or omissions in respect of the Corporation or one of its subsidiaries that occurred or occur both prior and subsequent to the adoption hereof. The rights conferred upon Covered Persons in this Article 10 shall be contract rights and such rights shall continue as to a Covered Person who has ceased to be a Director or officer and shall inure to the benefit of the Covered Person’s heirs, executors and administrators. Any amendment, alteration or repeal of this Article 10 that
adversely affects any right of a Covered Person or its successors shall be prospective only and shall not limit, eliminate or impair any such right with respect to any Proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment or repeal.
10.10. Insurance. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any Director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such Person against such expense, liability or loss under the General Corporation Law.
11. Adoption, Amendment or Repeal of By-Laws. In furtherance and not in limitation of the powers conferred by law, the Board is expressly authorized to make, alter, amend or repeal the By-laws subject to the power of the stockholders of the Corporation entitled to vote with respect thereto to make, alter, amend or repeal the By-laws; provided, that with respect to the powers of stockholders entitled to vote with respect thereto to make, alter, amend or repeal the By-laws, from and after the date that the Principal Stockholder no longer maintains beneficial ownership of at least 40.0% of the aggregate issued and outstanding Common Stock (the “Specified Trigger Date”), in addition to any other vote otherwise required by law, the affirmative vote of the holders of two-thirds (66 2/3%) of the total voting power of the issued and outstanding Voting Stock, voting together as a single class, shall be required to make, alter, amend or repeal the By-laws.
12. Adoption, Amendment and Repeal of Certificate. Subject to Article 5, the Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the General Corporation Law, and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, Directors or any other Persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended, are granted and held subject to this reservation. Notwithstanding anything to the contrary contained in this Certificate of Incorporation, and notwithstanding that a lesser percentage may be permitted from time to time by applicable law, no provision of Articles 6, 7, 8, 9, 10, 11, 12, 13 or 15 or any definitions used in such Articles that are defined in Article 16 may be altered, amended or repealed in any respect, nor may any provision or By-laws inconsistent therewith be adopted, unless in addition to any other vote required by this Certificate of Incorporation or otherwise required by law, (i) prior to the Specified Trigger Date, such alteration, amendment, repeal or adoption is approved by, in addition to any other vote otherwise required by law, the affirmative vote of the holders of a majority of the total voting power of the issued and outstanding Voting Stock, voting together as a single class and (ii) from and after the Specified Trigger Date, such alteration, amendment, repeal or adoption is approved by, in addition to any other vote otherwise required by law, the affirmative vote of the holders of two-thirds (66 2/3%) of the total voting power of the issued and outstanding Voting Stock, voting together as a single class, at a meeting of the stockholders called for that purpose.
13. Forum for Adjudication of Disputes. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have, or declines to accept, subject matter jurisdiction, another state court or a federal court located within the State of Delaware) shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any Director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the General Corporation Law or any provision of this Certificate of Incorporation, (iv) any action to interpret, apply, enforce or determine the validity of this Certificate of Incorporation or the By-laws or (v) any action asserting a claim governed by the internal affairs doctrine. The provisions of this Article 13 do not apply to claims arising under the Securities Act or the Exchange Act. Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for resolutions of any complaint asserting a cause of action arising under the Securities Act. Any Person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of consent to the provision of this Article 13.
14. Severability. If any provision or provisions of this Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Certificate of Incorporation (including, without limitation, each such portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its Directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.
15. Corporate Opportunity.
15.1. To the maximum extent permitted by law, the Corporation waives, on behalf of itself and its subsidiaries, the application of the doctrine of corporate opportunity or any other analogous doctrine, with respect to the Principal Stockholder, any non-employee Directors or any of their respective Affiliates (each, a “Specified Party”) and no Specified Party will have any duty to (i) refrain from engaging in a corporate opportunity in the same or similar lines of business in which the Corporation or its Affiliates from time to time is engaged or proposes to engage, (ii) present such opportunity to the Corporation before otherwise engaging in it or offering it to another entity, unless such opportunity was offered to a Specified Party that is a Director in his or her capacity as a Director or (iii) refrain from otherwise competing, directly or indirectly, with the Corporation or any of its subsidiaries.
15.2. In addition to and notwithstanding Section 15.1, a corporate opportunity shall not be deemed to be a potential corporate opportunity for the Corporation if it is a business opportunity the Corporation is not financially able or contractually permitted or legally able to undertake, or that is, from its nature, not in the line of the Corporation’s business or is of no practical advantage to it or that is one in which the Corporation has no interest or reasonable expectancy.
16. Definitions. As used in this Certificate of Incorporation, unless the context otherwise requires or as set forth in another Article or Section of this Certificate of Incorporation, the term:
(a) “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person; provided, that (i) neither the Corporation nor any of its subsidiaries will be deemed an Affiliate of any stockholder of the Corporation or any of such stockholders’ Affiliates and (ii) no stockholder of the Corporation will be deemed an Affiliate of any other stockholder of the Corporation, in each case, solely by reason of any investment in the Corporation or any rights conferred on such stockholder pursuant to the Stockholders Agreement (including any representatives of such stockholder serving on the Board).
(b) “Associate” means, when used to indicate a relationship with any Person: (i) any corporation, partnership, unincorporated association or other entity of which such Person is a director, manager, officer or partner or is, directly or indirectly, the owner of 20.0% or more of the outstanding Voting Stock of such corporation, partnership, unincorporated association or other entity, (ii) any trust or other estate in which such Person has at least a 20.0% beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity and (iii) any relative or spouse of such Person, or any relative of such spouse, who has the same residence as such Person.
(c) “beneficial owner”, including the terms “beneficially own” and “beneficial ownership”, when used with respect to any stock, shall have the meaning set forth in Rules 13d-3 and 13d-5 under the Exchange Act.
(d) “Board” is defined in Section 5.1(ii).
(e) “Business Combination” means (i) any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation (A) with an Interested Stockholder, or (B) with any other corporation, partnership, unincorporated association or other entity if the merger or consolidation is caused by an Interested Stockholder and, as a result of such merger or consolidation, Section 8.2 is not applicable to the surviving entity, (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with an Interested Stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to 10.0% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or
the aggregate market value of all the outstanding shares of capital stock of the Corporation, (iii) any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any stock of the Corporation or of such subsidiary to an Interested Stockholder, except: (A) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the Interested Stockholder became such, (B) pursuant to a merger under Section 251(g) (or any successor provision thereto) of the General Corporation Law, (C) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which security is distributed pro rata to all holders of a class or series of stock of the Corporation subsequent to the time the Interested Stockholder became such, (D) pursuant to an exchange offer by the Corporation to purchase stock made on the same terms to all holders of said stock or (E) any issuance or transfer of stock by the Corporation; provided, however, that in no case under items (C) through (E) of this subsection (iii) shall there be an increase in the Interested Stockholder’s proportionate share of the stock of any class or series of the Corporation or of the Voting Stock of the Corporation (except as a result of immaterial changes due to fractional share adjustments), (iv) any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series, or securities convertible or exchangeable (or similar) into the stock of any class or series, of the Corporation or of any such subsidiary which is owned by an Interested Stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by an Interested Stockholder or (v) any receipt by an Interested Stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in subsections (i) through (iv) above) provided by or through the Corporation or any direct or indirect majority-owned subsidiary.
(f) “By-laws” is defined in Section 6.1(i).
(g) “Certificate of Incorporation” is defined in the recitals.
(h) “Chair” means the Chair of the Board, as such position is described in the Corporate Governance Guidelines.
(i) “Chief Executive Officer” means the Chief Executive Officer of the Corporation.
(j) “Common Stock” is defined in Section 4.1.
(k) “control”, including the terms “controlling” and “controlled”, with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of such subject Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.
(l) “Corporate Governance Guidelines” means the Corporation’s corporate governance guidelines, as may be amended, supplemented or otherwise modified from time to time.
(m) “Corporation” is defined in the recitals.
(n) “Covered Person” is defined in Section 10.1.
(o) “Director” is defined in Section 6.1(i).
(p) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor law or statute, together with the rules and regulations promulgated thereunder.
(q) “Existing Certificate” is defined in the recitals.
(r) “First Amended and Restated Certificate” is defined in the recitals.
(s) “General Corporation Law” is defined in the recitals.
(t) “Interested Stockholder” means any Person (other than the Corporation and any direct or indirect majority-owned subsidiary of the Corporation) that (i) is the owner of 15.0% or more of the outstanding Voting Stock of the Corporation, or (ii) is an Affiliate or Associate of the Corporation and was the owner of 15.0% or more of the outstanding Voting Stock of the Corporation at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such Person is an Interested Stockholder, and the Affiliates and Associates of such Person. Notwithstanding anything in this Article 16 to the contrary, the term “Interested Stockholder” shall not include: (w) the Principal Stockholder or any of its current and future Affiliates (so long as such Affiliate remains an Affiliate) or Associates, including any investment funds managed, directly or indirectly, by the Principal Stockholder or any other Person with whom any of the foregoing are acting as a group or in concert for the purpose of acquiring, holding, voting or disposing of shares of capital stock of the Corporation, (x) any Person who acquires ownership of fifteen percent (15.0%) or more of the then-outstanding Voting Stock of the Corporation directly or indirectly from the Principal Stockholder, and excluding, for the avoidance of doubt, any Person who acquires Voting Stock of the Corporation through a broker transaction executed on any securities exchange or other over-the-counter market or pursuant to an underwritten public offering, (y) a stockholder that becomes an Interested Stockholder inadvertently and (A) as soon as practicable divests itself of ownership of sufficient shares so that such stockholder ceases to be an Interested Stockholder and (B) would not, at any time within the three-year period immediately prior to a Business Combination between the Corporation and such stockholder, have been an Interested Stockholder but for the inadvertent acquisition of ownership or (z) any Person whose ownership of shares in excess of the 15.0% limitation set forth herein is the result of any action taken solely by the Corporation; provided, however, that such Person specified in this clause (z) shall be an Interested Stockholder if thereafter such Person acquires additional shares of Voting Stock of the Corporation, except as a result of further corporate action not caused, directly or indirectly, by such Person. For the purpose of determining whether a Person is an Interested Stockholder, the
Voting Stock of the Corporation deemed to be outstanding shall include stock deemed to be owned by the Person through application of the definition of “owner” below but shall not include any other unissued stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.
(u) “Lead Director” means the Lead Director of the Board, if any, as such position is described in the Corporate Governance Guidelines.
(v) “Majority Ownership Requirement” means the beneficial ownership by the Principal Stockholder of shares of Common Stock representing at least a majority of the aggregate issued and outstanding shares of Common Stock.
(w) “Original Certificate” is defined in the recitals.
(x) “owner”, including the terms “own” and “owned”, when used with respect to any stock, means a Person that individually or with or through any of its Affiliates or Associates: (i) beneficially owns such stock, directly or indirectly, (ii) has (A) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates until such tendered stock is accepted for purchase or exchange or (B) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the owner of any stock because of such Person’s right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to ten or more Persons or (iii) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in clause (B) of subsection (ii) above), or disposing of such stock with any other Person that beneficially owns, or whose Affiliates or Associates beneficially own, directly or indirectly, such stock.
(y) “Permitted Transferee” means (i) in the case of any transferor that is not a natural person, any Person that is an Affiliate of such transferor and (ii) in the case of any transferor that is a natural person, (A) any Person to whom Common Stock is transferred from such transferor (1) by will or the laws of descent and distribution or (2) by gift without consideration of any kind; provided that, in the case of clause (2), such transferee is the spouse, the lineal descendant, sibling, parent, heir, executor, administrator, testamentary trustee, legatee or beneficiary of such transferor, (B) a trust that is for the exclusive benefit of such transferor or its Permitted Transferees under (A) above or (C) any institution qualified as tax-exempt under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
(z) “Person” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity.
(aa) “Preferred Stock” is defined in Section 4.1.
(bb) “Preferred Stock Directors” is defined in Section 6.1(ii).
(cc) “Principal Stockholder” means BDT Badger Holdings, LLC and its Affiliates that are not natural Persons and its and their respective successors and Permitted Transferees that are not natural Persons.
(dd) “Proceeding” is defined in Section 10.1.
(ee) “Second Amended and Restated Certificate” is defined in the recitals.
(ff) “Securities Act” means the Securities Act of 1933, as amended, and any successor law or statute, together with the rules and regulations promulgated thereunder.
(gg) “Specified Party” is defined in Section 15.1.
(hh) “Specified Trigger Date” is defined in Article 11.
(ii) “Stockholders Agreement” means the Stockholders Agreement, dated as of [●], 2025, by and among the Corporation and BDT Badger Holdings, LLC and the other Persons who may become parties thereto from time to time, as it may be amended, supplemented or otherwise modified from time to time.
(jj) “Third Amended and Restated Certificate” is defined in the recitals.
(kk) “Voting Stock” means stock of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a corporation, any equity interest entitled to vote generally in the election of the governing body of such entity. Every reference to a percentage or proportion of Voting Stock shall refer to such percentage or other proportion of the votes of such Voting Stock.
[Remainder of the page is blank]
IN WITNESS WHEREOF, this Fourth Amended and Restated Certificate of Incorporation of Alliance Laundry Holdings Inc. has been duly executed by the officer below this [●] day of [●], 2025.
[Signature Page to Amended and Restated Certificate of Incorporation]
THIRD AMENDED AND RESTATED BY-LAWS
of
ALLIANCE LAUNDRY HOLDINGS INC.
(A Delaware Corporation)
TABLE OF CONTENTS
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| Page |
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| ARTICLE 1 |
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| Definitions |
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| ARTICLE 2 |
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| Stockholders |
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| SECTION 2.01. Place of Meetings | 3 |
| SECTION 2.02. Annual Meetings; Stockholder Proposals | 4 |
| SECTION 2.03. Special Meetings | 7 |
| SECTION 2.04. Record Date | 7 |
| SECTION 2.05. Notice of Meetings of Stockholders | 8 |
| SECTION 2.06. Waivers of Notice | 9 |
| SECTION 2.07. Notice by Electronic Transmission | 9 |
| SECTION 2.08. List of Stockholders | 10 |
| SECTION 2.09. Quorum of Stockholders; Adjournment | 10 |
| SECTION 2.10. Voting; Proxies | 11 |
| SECTION 2.11. Voting Procedures and Inspectors at Meetings of Stockholders | 11 |
| SECTION 2.12. Conduct of Meetings; Adjournment | 12 |
| SECTION 2.13. Order of Business | 13 |
| SECTION 2.14. Written Consent of Stockholders Without a Meeting | 13 |
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| ARTICLE 3 |
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| Directors |
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| SECTION 3.01. General Powers | 13 |
| SECTION 3.02. Term of Office | 13 |
| SECTION 3.03. Nominations of Directors | 14 |
| SECTION 3.04. Nominee and Director Qualifications | 17 |
| SECTION 3.05. Resignation | 18 |
| SECTION 3.06. Compensation | 18 |
| SECTION 3.07. Regular Meetings | 18 |
| SECTION 3.08. Special Meetings | 18 |
| SECTION 3.09. Telephone Meetings | 18 |
| SECTION 3.10. Adjourned Meetings | 18 |
| SECTION 3.11. Notice Procedure | 19 |
| SECTION 3.12. Waiver of Notice | 19 |
| | | | | |
| SECTION 3.13. Chair | 19 |
| SECTION 3.14. Organization | 19 |
| SECTION 3.15. Quorum of Directors | 19 |
| SECTION 3.16. Action by Majority Vote | 19 |
| SECTION 3.17. Action Without Meeting | 20 |
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| ARTICLE 4 |
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| Committees of the Board |
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| ARTICLE 5 |
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| Officers |
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| SECTION 5.01. Positions; Election | 20 |
| SECTION 5.02. Term of Office | 21 |
| SECTION 5.03. Chief Executive Officer | 21 |
| SECTION 5.04. President | 21 |
| SECTION 5.05. Vice Presidents | 22 |
| SECTION 5.06. Secretary | 22 |
| SECTION 5.07. Treasurer | 22 |
| SECTION 5.08. Assistant Secretaries and Assistant Treasurers | 23 |
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| ARTICLE 6 |
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| General Provisions |
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| SECTION 6.01. Certificates Representing Shares | 23 |
| SECTION 6.02. Transfer and Registry Agents | 23 |
| SECTION 6.03. Lost, Stolen or Destroyed Certificates | 23 |
| SECTION 6.04. Form of Records | 23 |
| SECTION 6.05. Seal | 23 |
| SECTION 6.06. Fiscal Year | 24 |
| SECTION 6.07. Amendments | 24 |
| SECTION 6.08. Conflict with Applicable Law or Certificate of Incorporation | 24 |
ARTICLE 1
Definitions
As used in these By-laws, unless the context otherwise requires, the term:
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person; provided, that (i) neither the Corporation nor any of its subsidiaries will be deemed an Affiliate of any stockholder of the Corporation or any of such stockholders’ Affiliates and (ii) no stockholder of the Corporation will be deemed an Affiliate of any other stockholder of the Corporation, in each case, solely by reason of any investment in the Corporation or any rights conferred on such stockholder pursuant to the Stockholders Agreement (including any representatives of such stockholder serving on the Board).
“Assistant Secretary” means an Assistant Secretary of the Corporation.
“Assistant Treasurer” means an Assistant Treasurer of the Corporation.
“beneficial owner”, including the terms “beneficially own” and “beneficial ownership”, when used with respect to any stock, shall have the meaning set forth in Rules 13d-3 and 13d-5 under the Exchange Act.
“Board” means the Board of Directors of the Corporation.
“By-laws” means the By-laws of the Corporation, as amended and restated from time to time.
“Certificate of Incorporation” means the Certificate of Incorporation of the Corporation, as amended and restated from time to time.
“Chair” means the Chair of the Board.
“Chief Executive Officer” means the Chief Executive Officer of the Corporation.
“Common Stock” means the common stock, par value $0.01 per share, of the Corporation.
“control”, including the terms “controlling” and “controlled”, with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of such subject Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.
“Corporation” means Alliance Laundry Holdings Inc.
“Derivative” is defined in Section 2.02(d)(iii).
“Directors” means the directors of the Corporation.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor law or statute, and the rules and regulations promulgated thereunder.
“General Corporation Law” means the General Corporation Law of the State of Delaware, as amended.
“law” means any U.S. or non-U.S. federal, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a governmental authority (including any department, court, agency or official, or non-governmental self-regulatory organization, agency or authority and any political subdivision or instrumentality thereof).
“Nominating Stockholder” is defined in Section 3.03(b).
“Notice of Business” is defined in Section 2.02(c).
“Notice of Nomination” is defined in Section 3.03(c).
“Notice Record Date” is defined in Section 2.04(a).
“Office of the Corporation” means the executive office of the Corporation, anything in Section 131 of the General Corporation Law to the contrary notwithstanding.
“Permitted Transferee” means (i) in the case of any transferor that is not a natural person, any Person that is an Affiliate of such transferor and (ii) in the case of any transferor that is a natural person, (A) any Person to whom Common Stock is transferred from such transferor (1) by will or the laws of descent and distribution or (2) by gift without consideration of any kind; provided that, in the case of clause (2), such transferee is the spouse, the lineal descendant, sibling, parent, heir, executor, administrator, testamentary trustee, legatee or beneficiary of such transferor, (B) a trust that is for the exclusive benefit of such transferor or its Permitted Transferees under (A) above or (C) any institution qualified as tax-exempt under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
“Person” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity.
“President” means the President of the Corporation.
“Principal Stockholder” means BDT Badger Holdings, LLC and its Affiliates that are not natural Persons and its and their respective successors and Permitted Transferees that are not natural Persons.
“Proponent” is defined in Section 2.02(d)(i).
“Public Disclosure” of any date or other information means disclosure thereof by a press release reported by the Dow Jones News Services, Associated Press or comparable U.S. national news service or in a document publicly filed by the Corporation with the SEC pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
“SEC” means the Securities and Exchange Commission.
“Secretary” means the Secretary of the Corporation.
“Stockholder Associated Person” means, with respect to any Stockholder, (i) any other beneficial owner of stock of the Corporation that is owned by such Stockholder and (ii) any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Stockholder or such beneficial owner.
“Stockholder Business” is defined in Section 2.02(b).
“Stockholder Information” is defined in Section 2.02(d)(iii).
“Stockholder Nominees” is defined in Section 3.03(b).
“Stockholders” means the stockholders of the Corporation.
“Stockholders Agreement” means the Stockholders Agreement, dated as of [●], 2025, by and among the Corporation and BDT Badger Holdings, LLC and the other Persons who may become parties thereto from time to time, as it may be amended, supplemented or otherwise modified from time to time.
“Treasurer” means the Treasurer of the Corporation.
“Vice President” means a Vice President of the Corporation.
“Voting Commitment” is defined in Section 3.04.
“Voting Record Date” is defined in Section 2.04(a).
ARTICLE 2
Stockholders
SECTION 2.01. Place of Meetings. Meetings of Stockholders may be held within or without the State of Delaware, at such place or solely by means of remote communication (including webcast) or otherwise, as may be designated by the Board from time to time. In the absence of any such designation or determination, Stockholders’ meetings shall be held at the Corporation’s principal executive office.
SECTION 2.02. Annual Meetings; Stockholder Proposals.
(a) A meeting of Stockholders for the election of Directors and other business, subject to this Section 2.02, shall be held annually at such date and time as may be designated by the Board from time to time.
(b) At an annual meeting of the Stockholders, only business (other than business relating to the nomination or election of Directors, which is governed by Section 3.03) that has been properly brought before the annual Stockholder meeting in accordance with the procedures set forth in this Section 2.02 shall be conducted. To be properly brought before an annual meeting of Stockholders, such business must be brought before the annual meeting (i) by or at the direction of the Board or any committee thereof (including pursuant to the notice of such meeting) or (ii) by a Stockholder who (A) was a Stockholder of record of the Corporation when the notice required by this Section 2.02 is delivered to the Secretary and at the time of the annual meeting, (B) is entitled to vote at the annual meeting and (C) complies with the notice and other provisions of this Section 2.02. Subject to Section 2.02(i), and except with respect to nominations or elections of Directors, which are governed by Section 3.03, Section 2.02(b)(ii) is the exclusive means by which a Stockholder may bring business before an annual meeting of Stockholders; provided that if Rule 14a-8 of the Exchange Act (or any successor rule) is applicable, a Stockholder may not bring business before any annual meeting if the Stockholder fails to meet the requirements of such rule. Any business brought before an annual meeting in accordance with Section 2.02(b)(ii) is referred to as “Stockholder Business.”
(c) Subject to Section 2.02(i), at any annual meeting of Stockholders, all proposals of Stockholder Business must be made by timely written notice given by or on behalf of a Stockholder of record of the Corporation (the “Notice of Business”) and must otherwise be a proper matter for Stockholder action. To be timely, the Notice of Business must be delivered personally or mailed to, and received at, the Office of the Corporation, addressed to the Secretary, by no earlier than one hundred and twenty (120) days and no later than ninety (90) days before the first anniversary of the date of the prior year’s annual meeting of Stockholders; provided, however, that if (i) the annual meeting of Stockholders is advanced by more than thirty (30) days, or delayed by more than sixty (60) days, from the first anniversary of the prior year’s annual meeting of Stockholders or (ii) no annual meeting was held during the prior year, the notice by the Stockholder to be timely must be received (A) no earlier than one hundred and twenty (120) days before such annual meeting and (B) no later than the later of ninety (90) days before such annual meeting and the tenth day after the day on which the notice of such annual meeting was made by mail or Public Disclosure; provided, further, that, solely for the purposes of the notice requirements under this Section 2.02(c), with respect to the annual meeting of Stockholders of the Corporation for 2026, the date of the preceding year’s annual meeting of Stockholders shall be deemed to be [●], 2025. In no event shall an adjournment, postponement or deferral, or Public Disclosure of an adjournment, postponement or deferral, of an annual Stockholder meeting commence a new time period (or extend any time period) for the giving of the Notice of Business.
(d) The Notice of Business must set forth:
(i) the name and record address of each Stockholder proposing Stockholder Business (the “Proponent”), as they appear on the Corporation’s books;
(ii) the name and address of any Stockholder Associated Person;
(iii) as to each Proponent and any Stockholder Associated Person, a reasonable description of (A) the class or series and number of shares of stock of the Corporation directly or indirectly held of record and beneficially owned by the Proponent or Stockholder Associated Person (including any class or series of shares of stock of the Corporation as to which such person has a right to acquire or to beneficially own in the future), (B) the date such shares of stock were acquired (or the right to so acquire them was obtained) and the investment intent therefor, (C) any pledge by such Proponent or Stockholder Associated Person with respect to any such shares of stock, (D) any agreement, arrangement or understanding, direct or indirect, with respect to such Stockholder Business between or among the Proponent, any Stockholder Associated Person or any others (including their names) acting in concert with any of the foregoing, (E) any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, hedging transactions, warrant, convertible security, stock appreciation right or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class of securities and/or borrowed or loaned shares) that has been entered into, directly or indirectly, as of the date of the Proponent’s notice by, or on behalf of, the Proponent or any Stockholder Associated Person, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of the Proponent or any Stockholder Associated Person with respect to shares of stock of the Corporation or with a value derived in whole or in part from the value or decrease in value of any class or series of stock of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of stock of the Corporation or otherwise (a “Derivative”), (F) in reasonable detail any proxy (including revocable proxies), contract, arrangement, understanding or other relationship pursuant to which the Proponent or Stockholder Associated Person has a right to vote any shares of stock of the Corporation, (G) any rights to dividends on the stock of the Corporation owned beneficially by the Proponent or Stockholder Associated Person that are separated or separable from the underlying stock of the Corporation, (H) any proportionate interest in stock of the Corporation or Derivatives held, directly or indirectly, by a general or limited partnership in which the Proponent or Stockholder Associated Person is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (I) any performance-related fees (other than an asset-based fee) that the Proponent or Stockholder Associated Person is entitled to based on any increase or decrease in the value of stock of the Corporation or Derivatives thereof, if any, as of the date of such notice. The information specified in Section 2.02(d)(i) to (iii) is referred to herein as “Stockholder Information”;
(iv) Stockholder Information with respect to any stock or other interests of the Corporation held by members of the Proponent’s or Stockholder Associated Person’s immediate family sharing the same household;
(v) a representation to the Corporation that each Proponent is a holder of record of stock of the Corporation entitled to vote at the annual meeting and intends to appear in person or by proxy at the annual meeting to propose such Stockholder Business;
(vi) a brief description of the Stockholder Business desired to be brought before the annual meeting, the text of the proposal (including the text of any resolutions proposed for consideration and, if such business includes a proposal to amend the By-laws, the language of the proposed amendment) and the reasons for conducting such Stockholder Business at the annual meeting;
(vii) any material interest of each Proponent and any Stockholder Associated Person in such Stockholder Business;
(viii) a representation to the Corporation as to whether the Proponent intends (A) to deliver a proxy statement and form of proxy to holders of at least the percentage of the Corporation’s issued and outstanding capital stock required to approve or adopt such Stockholder Business (which representation must include a statement as to whether the Proponent intends to solicit the requisite percentage of the voting power of the Corporation’s stock under Rule 14a-19 of the Exchange Act) or (B) otherwise to solicit proxies from the Stockholders in support of such Stockholder Business;
(ix) all other information that would be required to be filed with the SEC if the Proponents or Stockholder Associated Persons were participants in a solicitation subject to Section 14 of the Exchange Act; and
(x) a representation and covenant for the benefit of the Corporation that the Proponents shall provide any other information reasonably requested by the Corporation.
(e) The Proponents shall also provide any other information reasonably requested by the Corporation within ten (10) business days after such request.
(f) In addition, the Proponent shall further update and supplement the information provided to the Corporation in the Notice of Business or upon the Corporation’s request pursuant to Section 2.02(e) as needed, so that such information shall be true and correct as of the record date for the annual meeting and as of the date that is ten (10) business days before the annual meeting or any adjournment or postponement thereof. Such update and supplement must be delivered personally or mailed to, and received at, the Office of the Corporation, addressed to the Secretary, by no later than five (5) business days after the record date for the annual meeting (in the case of the update and supplement required to be made as of the record date), and not later than seven (7) business days before the date for the annual meeting (in the case of the update and
supplement required to be made as of ten (10) business days before the annual meeting or any adjournment or postponement thereof).
(g) The person presiding over the annual meeting shall, if the facts warrant, determine and declare to the annual meeting that business was not properly brought before the annual meeting in accordance with the procedures set forth in this Section 2.02, and, if he or she should so determine, he or she shall so declare to the annual meeting and any such business not properly brought before the annual meeting shall not be transacted.
(h) If the Proponent (or a qualified representative of the Proponent) does not appear at the annual meeting of Stockholders to present the Stockholder Business, such business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 2.02, to be considered a qualified representative of the Stockholder, a person must be a duly authorized officer, manager or partner of such Stockholder or must be authorized by a writing executed by such Stockholder or an electronic transmission delivered by such Stockholder to act for such Stockholder as proxy at the annual meeting of Stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the annual meeting of Stockholders.
(i) The notice requirements of this Section 2.02 shall be deemed satisfied with respect to Stockholder proposals that have been properly brought under Rule 14a-8 of the Exchange Act and that are included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting. Further, nothing in this Section 2.02 shall be deemed to affect any rights of the holders of any series of preferred stock of the Corporation pursuant to any applicable provision of the Certificate of Incorporation.
(j) Notwithstanding anything to the contrary in this Section 2.02, so long as the Stockholders Agreement is in effect, the Principal Stockholder shall not be subject to the notice and other requirements set forth in this Section 2.02 with respect to the proposal of any business at any meeting of Stockholders.
SECTION 2.03. Special Meetings. Special meetings of the Stockholders may be called only in the manner set forth in the Certificate of Incorporation. Notice of every special meeting of the Stockholders shall state the purpose or purposes of such meeting. Except as otherwise required by law, the business conducted at a special meeting of Stockholders shall be limited exclusively to the business set forth in the Corporation’s notice of meeting, and the individual or group calling such meeting shall have exclusive authority to determine the business included in such notice.
SECTION 2.04. Record Date.
(a) For the purpose of determining the Stockholders entitled to notice of any meeting of Stockholders or any adjournment thereof, unless otherwise required by the Certificate of Incorporation or applicable law, the Board may fix a record date (the “Notice Record Date”), which record date shall not precede the date on which the resolution fixing the record date was
adopted by the Board and shall not be more than sixty (60) or less than ten (10) days before the date of such meeting. The Notice Record Date shall also be the record date for determining the Stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such Notice Record Date, that a later date on or before the date of the meeting shall be the date for making such determination (the “Voting Record Date”). For the purposes of determining the Stockholders entitled to express consent to corporate action in writing without a meeting, unless otherwise required by the Certificate of Incorporation or applicable law, the Board may fix a record date, which record date shall not precede the date on which the resolution fixing the record date was adopted by the Board and shall not be more than ten (10) days after the date on which the record date was fixed by the Board. For the purposes of determining the Stockholders entitled to (i) receive payment of any dividend or other distribution or allotment of any rights, (ii) exercise any rights in respect of any change, conversion or exchange of stock or (iii) take any other lawful action, unless otherwise required by the Certificate of Incorporation or applicable law, the Board may fix a record date, which record date shall not precede the date on which the resolution fixing the record date was adopted by the Board and shall not be more than sixty (60) days prior to such action.
(b) If no such record date is fixed:
(i) the record date for determining Stockholders entitled to notice of, and to vote at, a meeting of Stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held;
(ii) the record date for determining Stockholders entitled to express consent to corporate action in writing without a meeting (unless otherwise provided in the Certificate of Incorporation), when no prior action by the Board is required by applicable law, shall be the first day on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with applicable law; and when prior action by the Board is required by applicable law, the record date for determining Stockholders entitled to express consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board takes such prior action; and
(iii) when a determination of Stockholders of record entitled to notice of, or to vote at, any meeting of Stockholders has been made as provided in this Section 2.04, such determination shall apply to any adjournment thereof, unless the Board fixes a new Voting Record Date for the adjourned meeting, in which case the Board shall also fix such Voting Record Date or a date earlier than such date as the new Notice Record Date for the adjourned meeting.
SECTION 2.05. Notice of Meetings of Stockholders. Whenever, under the provisions of applicable law, the Certificate of Incorporation or these By-laws, Stockholders are required or permitted to take any action at a meeting, notice shall be given stating the place, if any, date and hour of the meeting; the means of remote communication, if any, by which Stockholders and proxy holders may be deemed to be present in person and vote at such meeting; the Voting
Record Date, if such date is different from the Notice Record Date; and, in the case of a special meeting, the purposes for which the meeting is called. Unless otherwise provided by these By-laws or applicable law, notice of any meeting shall be given, not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each Stockholder entitled to vote at such meeting as of the Notice Record Date. If mailed, such notice shall be deemed to be given when deposited in the U.S. mail, with postage prepaid, and directed to the Stockholder at its address as it appears on the records of the Corporation. An affidavit of the Secretary, an Assistant Secretary or the transfer agent of the Corporation that the notice required by this Section 2.05 has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. If a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. Any business that might have been transacted at the meeting as originally called may be transacted at the adjourned meeting. If, however, the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each Stockholder of record entitled to vote at the meeting. If, after the adjournment, a new Voting Record Date is fixed for the adjourned meeting, the Board shall fix a new Notice Record Date in accordance with Section 2.04(b)(iii) hereof and shall give notice of such adjourned meeting to each Stockholder entitled to vote at such meeting as of the Notice Record Date.
SECTION 2.06. Waivers of Notice. Whenever the giving of any notice to Stockholders is required by applicable law, the Certificate of Incorporation or these By-laws, a waiver thereof, given by the person entitled to said notice, whether before or after the event as to which such notice is required, shall be deemed equivalent to notice. Attendance by a Stockholder at a meeting shall constitute a waiver of notice of such meeting except when the Stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting has not been lawfully called or convened. Neither the business to be transacted at, nor the purposes of, any annual or special meeting of the Stockholders need be specified in any waiver of notice.
SECTION 2.07. Notice by Electronic Transmission.
(a) Without limiting the manner by which notice otherwise may be given effectively to Stockholders, any notice to Stockholders given by the Corporation under any provisions of the General Corporation Law, the Certificate of Incorporation or these By-laws may be given in writing directed to the Stockholder’s mailing address (or by electronic transmission directed to the Stockholder’s electronic mail address, as applicable) as it appears on the records of the Corporation and shall be given (i) if mailed, when the notice is deposited in the U.S. mail, postage prepaid, (ii) if delivered by courier service, the earlier of when the notice is received or left at such Stockholder’s address or (iii) if given by electronic mail, when directed to such Stockholder’s electronic mail address unless the Stockholder has notified the Corporation in writing or by electronic transmission of an objection to receiving notice by electronic mail. A notice by electronic mail must include a prominent legend that the communication is an important notice regarding the Corporation.
(b) Without limiting the manner by which notice otherwise may be given effectively to Stockholders, any notice to Stockholders given by the Corporation under any provision of the General Corporation Law, the Certificate of Incorporation or these By-laws shall be effective if given by a form of electronic transmission consented to by the Stockholder to whom the notice is given. Any such consent shall be revocable by the Stockholder by written notice or electronic transmission to the Corporation. Notwithstanding the provisions of this Section 2.07, the Corporation may give a notice by electronic mail in accordance with the first paragraph of this Section 2.07 without obtaining the consent required by this Section 2.07.
(c) Any notice given pursuant to the preceding paragraph shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the Stockholder has consented to receive notice, (ii) if by a posting on an electronic network together with separate notice to the Stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice and (iii) if by any other form of electronic transmission, when directed to the Stockholder.
(d) Notwithstanding the foregoing, a notice may not be given by an electronic transmission from and after the time that (i) the Corporation is unable to deliver by such electronic transmission two (2) consecutive notices given by the Corporation and (ii) such inability becomes known to the Secretary or an Assistant Secretary of the Corporation or to the transfer agent or other person responsible for the giving of notice; provided, however, that the inadvertent failure to discover such inability shall not invalidate any meeting or other action.
(e) An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
SECTION 2.08. List of Stockholders. The Secretary shall prepare and make available, at least ten (10) days before every meeting of Stockholders, a complete, alphabetical list of the Stockholders entitled to vote at the meeting, and showing the address of each Stockholder and the number of shares registered in the name of each Stockholder. Such list may be examined by any Stockholder, the Stockholder’s agent or attorney, at the Stockholder’s expense, for any purpose germane to the meeting, for a period of at least ten (10) days prior to the meeting, during ordinary business hours at the principal place of business of the Corporation or on a reasonably accessible electronic network as provided by applicable law. If the meeting is to be held at a place, the list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any Stockholder who is present. If the meeting is held solely by means of remote communication, the list shall also be open for inspection as provided by applicable law. Except as provided by applicable law, the stock ledger shall be the only evidence as to who are the Stockholders entitled to examine the list of Stockholders or to vote in person or by proxy at any meeting of Stockholders. The Corporation shall not be required to include electronic contact information on any such list.
SECTION 2.09. Quorum of Stockholders; Adjournment. Except as otherwise provided by these By-laws, at each meeting of Stockholders, the presence in person or by proxy of the holders of a majority of the voting power of all issued and outstanding shares of stock entitled to
vote at the meeting of Stockholders shall constitute a quorum for the transaction of any business at such meeting, except that, where a separate vote by a class or series of classes of shares is required, a quorum shall consist of no less than a majority of the voting power of all issued and outstanding shares of stock of such class or series of classes, as applicable. In the absence of a quorum, (i) the holders of a majority in voting power of the shares of stock present in person or represented by proxy at any meeting of Stockholders, including an adjourned meeting, or (ii) the person presiding over such meeting, in each case, may adjourn such meeting to another time and place. Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of Directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity.
SECTION 2.10. Voting; Proxies. Unless otherwise provided by the General Corporation Law or in the Certificate of Incorporation, every Stockholder entitled to vote at any meeting of Stockholders shall be entitled to one vote for each share of stock held by such Stockholder which has voting power upon the matter in question. At any meeting of Stockholders, all matters other than the election of Directors, except as otherwise provided by the Certificate of Incorporation, these By-laws or any applicable law, and subject to the terms of the Stockholders Agreement, shall be decided by the affirmative vote of a majority in voting power of shares of stock present in person or represented by proxy and entitled to vote thereon. At all meetings of Stockholders for the election of Directors, a plurality of the votes cast shall be sufficient to elect Directors. Each Stockholder entitled to vote at a meeting of Stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such Stockholder by proxy authorized by an instrument in writing or by a transmission as permitted by law, including Rule 14a-19 under the Exchange Act, filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy expressly provides for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only so long as, it is coupled with an interest sufficient in law to support an irrevocable power. A Stockholder may revoke any proxy that is not irrevocable by attending the meeting and voting in person or by delivering to the Secretary a revocation of the proxy or by delivering a new proxy bearing a later date. Any Stockholder directly or indirectly soliciting proxies from other Stockholders must use a proxy card color other than white, which shall be reserved for the exclusive use by the Board.
SECTION 2.11. Voting Procedures and Inspectors at Meetings of Stockholders. The Board, in advance of any meeting of Stockholders, shall appoint one or more inspectors, who may be employees of the Corporation, to act at the meeting and make a written report thereof. The Board may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall (a) ascertain the number of shares outstanding and the voting power of each, (b)
determine the shares represented at the meeting and the validity of proxies and ballots, (c) count all votes and ballots, (d) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors and (e) certify their determination of the number of shares represented at the meeting and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of their duties. Unless otherwise provided by the Board, the date and time of the opening and the closing of the polls for each matter upon which the Stockholders will vote at a meeting shall be determined by the person presiding at the meeting and shall be announced at the meeting. No ballot, proxies, votes or any revocation thereof or change thereto, shall be accepted by the inspectors after the closing of the polls unless the Court of Chancery of the State of Delaware upon application by a Stockholder shall determine otherwise. In determining the validity and counting of proxies and ballots cast at any meeting of Stockholders, the inspectors may consider such information as is permitted by applicable law. No person who is a candidate for office at an election may serve as an inspector at such election.
SECTION 2.12. Conduct of Meetings; Adjournment. The Board may adopt such rules and procedures for the conduct of Stockholder meetings as it deems appropriate. At each meeting of Stockholders, the Chair or, in the absence of the Chair, the Chief Executive Officer or, in the absence of the Chair and the Chief Executive Officer, the President or, if there is no Chair, Chief Executive Officer or President, or if they are absent, a Vice President and, in the case that more than one Vice President shall be present, that Vice President designated by the Board (or in the absence of any such designation, the most senior Vice President present), shall preside over the meeting. Except to the extent inconsistent with the rules and procedures as adopted by the Board, the person presiding over the meeting of Stockholders shall have the right and authority to convene, adjourn and reconvene the meeting from time to time, to prescribe such additional rules and procedures and to do all such acts as, in the judgment of such person, are appropriate for the proper conduct of the meeting. Such rules and procedures, whether adopted by the Board or prescribed by the person presiding over the meeting, may include (a) the establishment of an agenda or order of business for the meeting, (b) rules and procedures for maintaining order at the meeting and the safety of those present, (c) limitations on attendance at or participation in the meeting to Stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the person presiding over the meeting shall determine, (d) restrictions on entry to the meeting after the time fixed for the commencement thereof and (e) limitations on the time allotted to questions or comments by participants. The person presiding over any meeting of Stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, may determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, he or she shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board or the person presiding over the meeting, meetings of Stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. The Secretary or, in his or her absence, one of the Assistant Secretaries, shall act as secretary of the meeting. If none of the officers above designated to act as the person presiding over the meeting or as secretary of the meeting shall be present, a person presiding over the meeting or a secretary of the meeting, as the case may be, shall be designated
by the Board and, if the Board has not so acted, in the case of the designation of a person to act as secretary of the meeting, designated by the person presiding over the meeting.
SECTION 2.13. Order of Business. The order of business at all meetings of Stockholders shall be as determined by the person presiding over the meeting.
SECTION 2.14. Written Consent of Stockholders Without a Meeting. If, and only if, the Certificate of Incorporation expressly permits action to be taken at any annual or special meeting of Stockholders without a meeting, without prior notice and without a vote, then a consent or consents in writing, setting forth the action to be so taken, shall be signed by the holders of issued and outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered (by hand or by certified or registered mail, return receipt requested) to the Corporation by delivery to its registered office in the State of Delaware, the Office of the Corporation or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of Stockholders are recorded. Every written consent shall bear the date of signature of each Stockholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered in the manner required by this Section 2.14, written consents signed by a sufficient number of holders to take action are delivered to the Corporation as aforesaid. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall, to the extent required by applicable law, be given to those Stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the Corporation.
ARTICLE 3
Directors
SECTION 3.01. General Powers. The business and affairs of the Corporation shall be managed by, or under the direction of, the Board. The Board may adopt such rules and procedures, not inconsistent with the Certificate of Incorporation, these By-laws or applicable law, as it may deem proper for the conduct of its meetings and the management of the Corporation.
SECTION 3.02. Term of Office. The Board shall consist of members as determined in accordance with the Certificate of Incorporation. Subject to obtaining any required stockholder votes or consents under the Stockholders Agreement and except as otherwise provided by the Stockholders Agreement (as long as such agreement is in effect), each Director shall hold office until a successor is duly elected and qualified or until the Director’s earlier death, disability, resignation, retirement, disqualification or removal from office.
SECTION 3.03. Nominations of Directors.
(a) Subject to Section 3.03(k) and obtaining any required stockholder votes or consents under the Stockholders Agreement and except as otherwise provided by the Stockholders Agreement (as long as such agreement is in effect), only persons who are nominated in accordance with the procedures set forth in this Section 3.03 are eligible for election as Directors.
(b) Nominations of persons for election to the Board may only be made at a meeting properly called for the election of Directors and only (i) by or at the direction of the Board or any committee thereof (including pursuant to the notice of such meeting) or (ii) by a Stockholder who (A) was a Stockholder of record of the Corporation when the notice required by this Section 3.03 is delivered to the Secretary and at the time of the meeting, (B) is entitled to vote for the election of Directors at the meeting and (C) complies with the notice and other provisions of this Section 3.03. Subject to Section 3.03(k) and obtaining any required stockholder votes or consents under the Stockholders Agreement and except as otherwise provided by the Stockholders Agreement (as long as such agreement is in effect), Section 3.03(b)(ii) is the exclusive means by which a Stockholder may nominate a person for election to the Board. Persons nominated in accordance with Section 3.03(b)(ii) are referred to as “Stockholder Nominees.” A Stockholder nominating persons for election to the Board is referred to as the “Nominating Stockholder.”
(c) Subject to Section 3.03(k) and obtaining any required stockholder votes or consents under the Stockholders Agreement and except as otherwise provided by the Stockholders Agreement (as long as such agreement is in effect), all nominations of Stockholder Nominees must be made by timely written notice given by or on behalf of a Stockholder of record of the Corporation (the “Notice of Nomination”). To be timely, the Notice of Nomination must be delivered personally or mailed to, and received at, the Office of the Corporation, addressed to the Secretary, by:
(i) in the case of the nomination of a Stockholder Nominee for election to the Board at an annual meeting of Stockholders, no earlier than one hundred and twenty (120) days and no later than ninety (90) days before the first anniversary of the date of the prior year’s annual meeting of Stockholders; provided, however, that if (A) the annual meeting of Stockholders is advanced by more than thirty (30) days, or delayed by more than sixty (60) days, from the first anniversary of the prior year’s annual meeting of Stockholders or (B) no annual meeting was held during the prior year, the notice by the Stockholder to be timely must be received (1) no earlier than one hundred and twenty (120) days before such annual meeting and (2) no later than the later of ninety (90) days before such annual meeting and the tenth day after the day on which the notice of such annual meeting was made by mail or Public Disclosure; provided, further, that, solely for the purposes of the notice requirements under this Section 3.03(c), with respect to the annual meeting of Stockholders of the Corporation for 2026, the date of the preceding year’s annual meeting of Stockholders shall be deemed to be [●], 2025; and
(ii) in the case of the nomination of a Stockholder Nominee for election to the Board at a special meeting of Stockholders, no earlier than one hundred and twenty (120) days before and no later than the later of ninety (90) days before such special meeting and the tenth day after the day on which the notice of such special meeting was made by mail or Public Disclosure.
(d) Notwithstanding anything to the contrary, if the number of Directors to be elected to the Board at a meeting of Stockholders is increased and there is no Public Disclosure by the Corporation naming the nominees for the additional directorships at least one hundred (100) days before the first anniversary of the preceding year’s annual meeting, a Notice of Nomination shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered personally and received at the Office of the Corporation, addressed to the attention of the Secretary, no later than the close of business on the tenth day following the day on which such Public Disclosure is first made by the Corporation.
(e) In no event shall an adjournment, postponement or deferral, or Public Disclosure of an adjournment, postponement or deferral, of an annual or special meeting commence a new time period (or extend any time period) for the giving of the Notice of Nomination.
(f) The Notice of Nomination must set forth:
(i) the Stockholder Information with respect to each Nominating Stockholder and Stockholder Associated Person;
(ii) Stockholder Information with respect to any stock or other interests of the Corporation held by members of the Nominating Stockholder’s or Stockholder Associated Person’s immediate family sharing the same household;
(iii) a representation to the Corporation that each Nominating Stockholder is a holder of record of stock of the Corporation entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to propose such nomination;
(iv) all information regarding each Stockholder Nominee and Stockholder Associated Person that would be required to be disclosed in a solicitation of proxies subject to Section 14 of the Exchange Act, including (A) the written consent of each Stockholder Nominee (1) to being named as a nominee of the Nominating Stockholder, (2) to being named in the Corporation’s form of proxy pursuant to Rule 14a-19 of the Exchange Act and (3) to serving as a Director of the Corporation if elected and (B) a completed signed questionnaire, representation and agreement required by Section 3.04;
(v) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among a Nominating Stockholder, Stockholder Associated Person or their respective associates, or others acting in concert therewith, including all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the Nominating Stockholder, Stockholder
Associated Person or any person acting in concert therewith were the “registrant” for purposes of such rule and the Stockholder Nominee were a director or executive of such registrant;
(vi) a representation to the Corporation as to whether the Nominating Stockholder intends (A) to deliver a proxy statement and form of proxy to holders of at least the percentage of the Corporation’s issued and outstanding capital stock required to approve the nomination (which representation must include a statement as to whether the Nominating Stockholder intends to solicit the requisite percentage of the voting power of the Corporation’s stock under Rule 14a-19 of the Exchange Act) or (B) otherwise to solicit proxies from the Stockholders in support of such nomination;
(vii) all other information that would be required to be filed with the SEC if the Nominating Stockholders or Stockholder Associated Persons were participants in a solicitation subject to Section 14 of the Exchange Act; and
(viii) a representation and covenant for the benefit of the Corporation that the Nominating Stockholders shall provide any other information reasonably requested by the Corporation.
(g) The Nominating Stockholders shall also provide any other information reasonably requested by the Corporation within ten (10) business days after such request.
(h) In addition, the Nominating Stockholders shall further update and supplement the information provided to the Corporation in the Notice of Nomination or upon the Corporation’s request pursuant to Section 3.03(g) as needed, so that such information shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days before the meeting or any adjournment or postponement thereof. Such update and supplement must be delivered personally or mailed to, and received at, the Office of the Corporation, addressed to the Secretary, by no later than five (5) business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later than seven (7) business days before the date for the meeting (in the case of the update and supplement required to be made as of ten (10) business days before the meeting or any adjournment or postponement thereof). No later than five (5) business days prior to the annual meeting or any adjournment or postponement thereof, the Nominating Stockholders shall provide the Corporation with reasonable evidence that the Nominating Stockholders have met the requirements of Rule 14a‑19 of the Exchange Act. The failure to timely provide such update and supplement shall result in the Stockholder Nominee no longer being eligible for consideration at the annual meeting. If a Nominating Stockholder fails to comply with the requirements of Rule 14a‑19 of the Exchange Act (including because the Nominating Stockholder fails to provide the Corporation with all information or notices required by Rule 14a‑19 of the Exchange Act), then the Stockholder Nominees proposed by such Nominating Stockholder shall be ineligible for election at the annual meeting and any votes or proxies in respect of such nomination shall be disregarded, notwithstanding that such proxies may have been received by the Corporation and counted for the purposes of determining quorum.
(i) The person presiding over the meeting shall, if the facts warrant, determine and declare to the meeting that the nomination was not made in accordance with the procedures set forth in this Section 3.03, and, if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded.
(j) If the Stockholder (or a qualified representative of the Stockholder) does not appear at the applicable Stockholder meeting to nominate the Stockholder Nominees, such nomination shall be disregarded and such business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 3.03, to be considered a qualified representative of the Stockholder, a person must be a duly authorized officer, manager or partner of such Stockholder or must be authorized by a writing executed by such Stockholder or an electronic transmission delivered by such Stockholder to act for such Stockholder as proxy at the meeting of Stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of Stockholders.
(k) Nothing in this Section 3.03 shall be deemed to affect any rights of the holders of any series of preferred stock of the Corporation pursuant to any applicable provision of the Certificate of Incorporation.
(l) Notwithstanding anything to the contrary in this Section 3.03, so long as the Principal Stockholder is entitled to nominate at least one BDT Director (as defined in the Stockholders Agreement) to the Board in accordance with Article 1 of the Stockholders Agreement, and subject to the satisfaction of the terms and conditions thereof, the Principal Stockholder shall have the rights related to the nomination of any BDT Directors as set forth in Section 1.01 of the Stockholders Agreement, and such nominations shall not be subject to the requirements set forth in this Section 3.03.
SECTION 3.04. Nominee and Director Qualifications. Unless the Board determines otherwise or the Stockholders Agreement provides otherwise (as long as such agreement is in effect), to be eligible to be a nominee for election or reelection as a Director, a person must deliver (in accordance with the time periods prescribed for delivery of notice by the Board) to the Secretary at the Office of the Corporation a written questionnaire with respect to the background, qualification, stock ownership and independence of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (a) is not and will not become a party to (i) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person will act or vote as a Director on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (ii) any Voting Commitment that could limit or interfere with such person’s ability to comply with such person’s fiduciary duties as a Director under applicable law, (b) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a Director that has not
been disclosed therein, (c) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading and other policies and guidelines of the Corporation that are applicable to Directors and (d) if elected as a Director of the Corporation, intends to serve the entire term until the next meeting at which such candidate could face re-election.
SECTION 3.05. Resignation. Any Director may resign at any time by notice given in writing or by electronic transmission to the Corporation. Such resignation shall take effect at the date of receipt of such notice or at such later time as is therein specified, and, unless otherwise specified in such resignation, the acceptance of such resignation shall not be necessary to make it effective. Vacancies shall be filled in accordance with the terms of the Certificate of Incorporation.
SECTION 3.06. Compensation. Each Director, in consideration of his or her service as such, shall be entitled to receive from the Corporation such amount per annum or such fees (payable in cash or equity) for attendance at Directors’ meetings, or both, as the Board may from time to time determine, together with reimbursement for the reasonable out-of-pocket expenses, if any, incurred by such Director in connection with the performance of his or her duties. Each Director who shall serve as a member of any committee of Directors in consideration of serving as such shall be entitled to such additional amount per annum or such fees for attendance at committee meetings, or both, as the Board may from time to time determine, together with reimbursement for the reasonable out-of-pocket expenses, if any, incurred by such Director in the performance of his or her duties. Nothing contained in this Section 3.06 shall preclude any Director from serving the Corporation or its subsidiaries in any other capacity and receiving proper compensation therefor.
SECTION 3.07. Regular Meetings. Regular meetings of the Board may be held without notice at such times and at such places within or without the State of Delaware as may be determined from time to time by the Board or its Chair.
SECTION 3.08. Special Meetings. Special meetings of the Board may be held at such times and at such places within or without the State of Delaware as may be determined by the Chair or the Chief Executive Officer on at least twenty-four (24) hours’ notice to each Director given by one of the means specified in Section 3.11 hereof other than by mail, or on at least three (3) days’ notice if given by mail.
SECTION 3.09. Telephone Meetings. Board or Board committee meetings may be held by means of telephone conference or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation by a Director in a meeting pursuant to this Section 3.09 shall constitute presence in person at such meeting.
SECTION 3.10. Adjourned Meetings. A majority of the Directors present at any meeting of the Board, including an adjourned meeting, whether or not a quorum is present, may adjourn and reconvene such meeting to another time and place. At least twenty-four (24) hours’ notice of any adjourned meeting of the Board shall be given to each Director whether or not
present at the time of the adjournment, if such notice shall be given by one of the means specified in Section 3.11 hereof other than by mail, or at least three (3) days’ notice if by mail. Any business may be transacted at an adjourned meeting that might have been transacted at the meeting as originally called.
SECTION 3.11. Notice Procedure. Subject to Sections 3.08, 3.10 and 3.12 hereof, whenever notice is required to be given to any Director by applicable law, the Certificate of Incorporation or these By-laws, such notice shall be deemed given effectively if given in person or by telephone, mail or electronic mail addressed to such Director at such Director’s address or email address, as applicable, as it appears on the records of the Corporation, facsimile or by other means of electronic transmission.
SECTION 3.12. Waiver of Notice. Whenever the giving of any notice to Directors is required by applicable law, the Certificate of Incorporation or these By-laws, a waiver thereof, in writing signed by the Director entitled to the notice, whether before or after such notice is required, shall be deemed equivalent to notice. Attendance by a Director at a meeting shall constitute a waiver of notice of such meeting except when the Director attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting was not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special Board or committee meeting need be specified in any waiver of notice.
SECTION 3.13. Chair. The Chair shall exercise such powers and perform such duties as shall be determined from time to time by the Board, except as otherwise provided by the Certificate of Incorporation and subject to the terms of the Stockholders Agreement.
SECTION 3.14. Organization. At each meeting of the Board, the Chair or, in the absence of the Chair, the Chief Executive Officer shall preside. The Secretary shall act as secretary at each meeting of the Board. If the Secretary is absent from any meeting of the Board, an Assistant Secretary shall perform the duties of secretary at such meeting; and in the absence from any such meeting of the Secretary and all Assistant Secretaries, the person presiding at the meeting may appoint any person to act as secretary of the meeting.
SECTION 3.15. Quorum of Directors. The presence in person of a majority of the total members of Board; provided that one of such members present is either the Chair or the Chief Executive Officer (if the Chief Executive Officer is then a member of the Board), shall be necessary and sufficient to constitute a quorum for the transaction of business at any meeting of the Board.
SECTION 3.16. Action by Majority Vote. Except as otherwise expressly required by these By-laws, or the Certificate of Incorporation, the vote of a majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board; provided that to the extent one or more Directors recuses himself or herself from an act, the act of a majority of the remaining Directors present shall be the act of the Board.
SECTION 3.17. Action Without Meeting. Unless otherwise restricted by these By-laws, any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if all Directors or members of such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writings or electronic transmissions are filed with the minutes of proceedings of the Board or committee.
ARTICLE 4
Committees of the Board
Unless otherwise provided in the Certificate of Incorporation, and subject to the rights of holders of any series of preferred stock of the Corporation and the terms of the Stockholders Agreement, the Board may, by resolution, designate one or more committees, each committee to consist of one or more of the Directors of the Corporation. The Board may, by resolution, adopt charters for one or more of such committees. The Board may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. If a member of a committee shall be absent from any meeting, or disqualified from voting thereat, the remaining member or members present at the meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may, by a unanimous vote, appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent permitted by applicable law, and to the extent provided in the resolution of the Board designating such committee or the charter for such committee, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers that may require it to the extent so authorized by the Board, but no such committee shall have the power or authority to (a) approve or adopt, or recommend to the Stockholders, any action or matter (other than the election or removal of directors) expressly required by the General Corporation Law to be submitted to Stockholders for approval or (b) adopt, amend or repeal any By-law of the Corporation. The Board may remove any Director from any committee at any time, with or without cause. Unless the Board provides otherwise, at all meetings of such committee, a majority of the then authorized members of the committee shall constitute a quorum for the transaction of business, and the vote of a majority of the members of the committee present at any meeting at which there is a quorum shall be the act of the committee. Each committee shall keep regular minutes of its meetings. Unless the Board provides otherwise, each committee designated by the Board may make, alter and repeal rules and procedures for the conduct of its business. In the absence of such rules and procedures, each committee shall conduct its business in the same manner as the Board conducts its business pursuant to Article 3.
ARTICLE 5
Officers
SECTION 5.01. Positions; Election. The Board may from time to time elect officers of the Corporation, which may include a Chief Executive Officer, President, Vice Presidents, Secretary, Treasurer and any other officers as it may deem proper or may delegate to any elected
officer of the Corporation the power to appoint and remove any such officers and to prescribe their respective terms of office, authorities and duties. Any number of offices may be held by the same person. Should the Corporation or any of its subsidiaries enter into any management services or similar agreement with another entity (each as may be amended, supplemented, restated or replaced from time to time), the officers of the Corporation may be the officers or employees of such entity to the extent permitted by applicable law.
SECTION 5.02. Term of Office. Each officer of the Corporation shall hold office for such terms as may be determined by the Board or, except with respect to his or her own office, the Chief Executive Officer, or until such officer’s successor is elected and qualifies or until such officer’s earlier death, disability, resignation, retirement, disqualification or removal from office. Any officer may resign at any time upon written notice to the Corporation. Such resignation shall take effect at the date of receipt of such notice or at such later time as is therein specified, and, unless otherwise specified, the acceptance of such resignation shall not be necessary to make it effective. The resignation of an officer shall be without prejudice to the contract rights of the Corporation, if any. Any officer may be removed at any time with or without cause by the Board or, in the case of appointed officers, by any elected officer upon whom such power of removal shall have been conferred by the Board. Any vacancy occurring in any office of the Corporation may be filled by the Board or, in the case of appointed officers, by any elected officer upon whom such power of appointment shall have been conferred by the Board. The election or appointment of an officer shall not of itself create contract rights.
SECTION 5.03. Chief Executive Officer. The Chief Executive Officer shall have general supervision over, and direction of, the business and affairs of the Corporation, subject, however, to the control of the Board and of any duly authorized committee of the Board. The Chief Executive Officer shall preside at all meetings of the Stockholders and at all meetings of the Board at which the Chair is not present. The Chief Executive Officer may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts and other instruments, except in cases in which the signing and execution thereof shall be expressly delegated by the Board or by these By-laws to some other officer or agent of the Corporation, or shall be required by applicable law otherwise to be signed or executed and, in general, the Chief Executive Officer shall perform all duties incident to the office of Chief Executive Officer of a corporation and such other duties as may be determined from time to time by the Board.
SECTION 5.04. President. The President shall have duties incident to the office of President, and any other duties as may from time to time be assigned to the President by the Chief Executive Officer (if the President and Chief Executive Officer are not the same person) or the Board and subject to the control of the Chief Executive Officer (if the President and Chief Executive Officer are not the same person) and the Board in each case. The President shall preside at all meetings of the Stockholders at which the Chair and the Chief Executive Officer are not present. The President may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts and other instruments, except in cases in which the signing and execution thereof shall be expressly delegated by the Board or by these By-laws to some other officer or agent of the Corporation, or shall be required by applicable law otherwise to be signed or executed.
SECTION 5.05. Vice Presidents. Vice Presidents shall have the duties incident to the office of Vice President and any other duties that may from time to time be assigned to the Vice President by the Chief Executive Officer, the President or the Board. A Vice President shall preside at all meetings of the Stockholders at which the Chair, the Chief Executive Officer and the President are not present. Any Vice President may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts and other instruments, except in cases in which the signing and execution thereof shall be expressly delegated by the Board or by these By-laws to some other officer or agent of the Corporation, or shall be required by applicable law otherwise to be signed or executed.
SECTION 5.06. Secretary. The Secretary shall attend all meetings of the Board and of the Stockholders, record all the proceedings of the meetings of the Board and of the Stockholders in a book to be kept for that purpose and perform like duties for committees of the Board, when required. The Secretary shall give, or cause to be given, notice of all special meetings of the Board and of the Stockholders and perform such other duties as may be prescribed by the Board, the Chief Executive Officer or the President. The Secretary shall have custody of the corporate seal of the Corporation and the Secretary or an Assistant Secretary shall have authority to affix the same on any instrument that may require it, and when so affixed, the seal may be attested by the signature of the Secretary or by the signature of such Assistant Secretary. The Board may give general authority to any other officer to affix the seal of the Corporation and to attest the same by such officer’s signature. The Secretary or an Assistant Secretary may also attest all instruments signed by the Chair, Chief Executive Officer, President or any Vice President. The Secretary shall have charge of all the books, records and papers of the Corporation relating to its organization and management, see that the reports, statements and other documents required by applicable law are properly kept and filed and, in general, perform all duties incident to the office of secretary of a corporation and such other duties as may from time to time be assigned to the Secretary by the Board, the Chief Executive Officer or the President.
SECTION 5.07. Treasurer. The Treasurer shall have charge and custody of, and be responsible for, all funds, securities and notes of the Corporation, receive and give receipts for moneys due and payable to the Corporation from any sources whatsoever, deposit all such moneys and valuable effects in the name and to the credit of the Corporation in such depositaries as may be designated by the Board, against proper vouchers, cause such funds to be disbursed by checks or drafts on the authorized depositaries of the Corporation signed in such manner as shall be determined by the Board and be responsible for the accuracy of the amounts of all moneys so disbursed, regularly enter or cause to be entered in books or other records maintained for the purpose full and adequate account of all moneys received or paid for the account of the Corporation, have the right to require from time to time reports or statements giving such information as the Treasurer may desire with respect to any and all financial transactions of the Corporation from the officers or agents transacting the same, render to the Chief Executive Officer, the President or the Board, whenever the Chief Executive Officer, the President or the Board shall require the Treasurer so to do, an account of the financial condition of the Corporation and of all financial transactions of the Corporation, disburse the funds of the Corporation as ordered by the Board and, in general, perform all duties incident to the office of
Treasurer of a corporation and such other duties as may from time to time be assigned to the Treasurer by the Board, the Chief Executive Officer or the President.
SECTION 5.08. Assistant Secretaries and Assistant Treasurers. Assistant Secretaries and Assistant Treasurers shall perform such duties as shall be assigned to them by the Secretary or by the Treasurer, respectively, or by the Board, the Chief Executive Officer or the President.
ARTICLE 6
General Provisions
SECTION 6.01. Certificates Representing Shares. The shares of stock of the Corporation may be represented by certificates or all of such shares shall be uncertificated shares that may be evidenced by a book-entry system maintained by the registrar of such stock, or a combination of both. If shares are represented by certificates (if any), such certificates shall be in the form approved by the Board. The certificates representing shares of stock of each class shall be signed by, or in the name of, the Corporation by the Chair, the Chief Executive Officer, the President or any Vice President, and by the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer. Any or all such signatures may be facsimiles. Although any officer, transfer agent or registrar whose manual or facsimile signature is affixed to such a certificate ceases to be such officer, transfer agent or registrar before such certificate has been issued, it may nevertheless be issued by the Corporation with the same effect as if such officer, transfer agent or registrar were still such at the date of its issue.
SECTION 6.02. Transfer and Registry Agents. The Corporation may from time to time maintain one or more transfer offices or agents and registry offices or agents at such place or places as may be determined from time to time by the Board.
SECTION 6.03. Lost, Stolen or Destroyed Certificates. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate or his legal representative to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.
SECTION 6.04. Form of Records. Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be maintained on any information storage device or method; provided that the records so kept can be converted into clearly legible paper form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect such records pursuant to applicable law.
SECTION 6.05. Seal. The corporate seal shall have the name of the Corporation inscribed thereon and shall be in such form as may be approved from time to time by the Board. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced.
SECTION 6.06. Fiscal Year. The fiscal year of the Corporation shall be determined by the Board.
SECTION 6.07. Amendments. These By-laws may be altered, amended or repealed in accordance with the Certificate of Incorporation and the General Corporation Law.
SECTION 6.08. Conflict with Applicable Law or Certificate of Incorporation. These By-laws are adopted subject to any applicable law and the Certificate of Incorporation. Whenever these By-laws may conflict with any applicable law or the Certificate of Incorporation, such conflict shall be resolved in favor of such law or the Certificate of Incorporation.
THIS CERTIFIES THAT
is the owner of
C U S I P
DATED
COUNTERSIGNED AND REGISTERED:
COMPUTERSHARE TRUST COMPANY, N.A.
TRANSFER AGENT AND REGISTRAR,
FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF
Alliance Laundry Holdings Inc. (hereinafter called the “Company”), transferable on the books of the
Company in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. This
Certificate and the shares represented hereby, are issued and shall be held subject to all of the provisions of the
Certificate of Incorporation, as amended, and the By-Laws, as amended, of the Company (copies of which are on
file with the Company and with the Transfer Agent), to all of which each holder, by acceptance hereof, assents.
This Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Company and the facsimile signatures of its duly authorized officers.
COMMON STOCK
PAR VALUE $.01
COMMON STOCK
SEE REVERSE FOR CERTAIN DEFINITIONS
Certificate
Number
Shares
.
Alliance Laundry Holdings Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
FACSIMILE SIGNATURE TO COME
FACSIMILE SIGNATURE TO COME
President
Secretary By
AUTHORIZED SIGNATURE
Alliance Laundry Holdings Inc.
12/3/2004
DELAWARE
CORPORATE
X X X X X X X X X
D D-M M M-Y Y Y Y
* * 000000* * * * * * * * * * * * * * * * * *
* * * 000000* * * * * * * * * * * * * * * * *
* * * * 000000* * * * * * * * * * * * * * * *
* * * * * 000000* * * * * * * * * * * * * * *
* * * * * * 000000* * * * * * * * * * * * * *
** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample
**** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David
Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander
David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr.
Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample ****
Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample
**** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David
Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander
David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr.
Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample ****
Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Sample **** Mr. Sample
**000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**S
hares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**
Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000
**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****0000
00**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****00
0000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****
000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****
000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****
000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****
000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****
***ZERO HUNDRED THOUSAND
ZERO HUNDRED AND ZERO***
MR. SAMPLE & MRS. SAMPLE &
MR. SAMPLE & MRS. SAMPLE
Z Q|CERT#|COY|CLS|R G S T R Y|ACCT#| TRANS TYPE |RUN#|TRANS#
ZQ00000000
Certificate Numbers
1234567890/1234567890
1234567890/1234567890
1234567890/1234567890
1234567890/1234567890
1234567890/1234567890
1234567890/1234567890
Total Transaction
N u m /No.
123456
D e n o m .
123456
Total
1234567
MR A SAMPLE
DESIGNATION (IF ANY)
ADD 1
ADD 2
ADD 3
ADD 4
PO Box 43004, Providence RI 02940-3004
C U S I P/IDENTIFIER X X X X X X XX X
Holder ID X X X X X X X X X X
Insurance Value 1,000,000.00
Number of Shares 123456
DTC 12345678 123456789012345
THIS CERTIFICATE IS TRANSFERABLE IN
CITIES DESIGNATED BY THE TRANSFER
AGENT, AVAILABLE ONLINE AT
www.computershare.com
The IRS requires that the named transfer agent (“we”) report the cost basis of certain shares or units acquired after January 1, 2011. If your shares or units are covered by the legislation, and you requested to sell or transfer the shares or units using a specific cost basis calculation method, then we have processed as you requested. If you did not specify a cost basis calculation method, then we have defaulted to the first in, first out (FIFO) method. Please consult your tax advisor if you need additional information about cost basis.
If you do not keep in contact with the issuer or do not have any activity in your account for the time period specified by state law, your property may become subject to state unclaimed property laws and transferred to the appropriate state.
.
ALLIANCE LAUNDRY HOLDINGS INC.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS, A SUMMARY OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OF THE COMPANY AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND RIGHTS, AND THE VARIATIONS IN RIGHTS, PREFERENCES AND LIMITATIONS DETERMINED FOR EACH SERIES, WHICH ARE FIXED BY THE CERTIFICATE OF INCORPORATION OF THE COMPANY, AS AMENDED, AND THE RESOLUTIONS OF THE BOARD OF DIRECTORS OF THE COMPANY, AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO DETERMINE VARIATIONS FOR FUTURE SERIES. SUCH REQUEST MAY BE MADE TO THE OFFICE OF THE SECRETARY OF THE COMPANY OR TO THE TRANSFER AGENT. THE BOARD OF DIRECTORS MAY REQUIRE THE OWNER OF A LOST OR DESTROYED STOCK CERTIFICATE, OR HIS LEGAL REPRESENTATIVES, TO GIVE THE COMPANY A BOND TO INDEMNIFY IT AND ITS TRANSFER AGENTS AND REGISTRARS AGAINST ANY CLAIM THAT MAY BE MADE AGAINST THEM ON ACCOUNT OF THE ALLEGED LOSS OR DESTRUCTION OF ANY SUCH CERTIFICATE.
For US purposes the following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common U N I F GIFT MIN ACT -.............................................Custodian.................................................
(
C u s t) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors Act.........................................................
(State)
JT TEN - as joint tenants with right of survivorship U N I F T R F MIN ACT -.............................................Custodian (until age.................................)
and not as tenants in common (C u s t)
..............................under Uniform Transfers to Minors Act....................
(Minor) (State)
Additional abbreviations may also be used though not in the above list.
For value received, ____________________________ hereby sell, assign and transfer unto
_______________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________
_________________________________________________________________________________________________________________________ Shares
________________________________________________________________________________________________________________________ Attorney
Dated: ________________________________________ 20_________________
Signature: _________________________________________________________
Signature: _________________________________________________________
Signature(s) Guaranteed: Medallion Guarantee Stamp
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15.
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE, OF ASSIGNEE)
of the common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
to transfer the said stock on the books of the within-named Company with full power of substitution in the premises.
Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate, in every particular, without alteration or enlargement, or any change whatever.
Exhibit 10.1
Execution Version
2025 REVOLVING FACILITY REPRICING AMENDMENT
This 2025 Revolving Facility Repricing Amendment dated as of August 21, 2025 (this “Amendment”), is by and among ALLIANCE LAUNDRY HOLDINGS LLC, a Delaware limited liability company (“Holdings”), ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company (the “Borrower”), ALLIANCE LAUNDRY (THAILAND) COMPANY LIMITED (the “Thai Borrower” and together with the Borrower, the “Borrowers”), CITIBANK, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”) and each Initial Revolving Facility Lender, Issuing Bank and Swingline Lender (each as defined in the Amended Credit Agreement (as defined below)) who has delivered a signature page hereto pursuant to Section 9.08 of the Existing Credit Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the Borrowers, Holdings, the Lenders from time to time party thereto and the Administrative Agent are parties to that certain Credit Agreement dated as of August 19, 2024 (as amended by the 2025 Refinancing Term B Facility Amendment dated as of February 20, 2025 the 2025 Revolving Facility Repricing Amendment dated as of February 20, 2025, the 2025-2 Refinancing Term B Facility Amendment dated as of August 21, 2025 and as further amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the Amendment Effective Date (as defined below), the “Existing Credit Agreement”).
WHEREAS, in accordance with this Amendment and pursuant to Section 9.08 of the Existing Credit Agreement, Holdings, the Borrowers and the Initial Revolving Facility Lenders, Issuing Banks and Swingline Lenders party hereto (which constitute 100% of the Initial Revolving Facility Lenders, Issuing Banks and Swingline Lenders as of the Amendment Effective Date) desire to further modify the Existing Credit Agreement to amend the Applicable Margin for the Initial Revolving Facility Loans as further set forth herein.
Accordingly, in accordance with Section 9.08 of the Existing Credit Agreement, the Borrowers, Holdings, the Administrative Agent and the Initial Revolving Facility Lenders, Issuing Banks and Swingline Lenders party hereto agree as follows:
ARTICLE I
DEFINITIONS; INITIAL REVOLVING FACILITY
Section 1.01. Definitions. Unless otherwise defined herein, capitalized terms defined in the Existing Credit Agreement after giving effect to this Amendment (the “Amended Credit Agreement”) have the same meanings when used in this Amendment.
ARTICLE II
AMENDMENTS TO THE EXISTING CREDIT AGREEMENT
Section 2.01. Amendments. Each of the parties hereto agrees that, effective on the Amendment Effective Date, the Existing Credit Agreement shall be amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in the pages of the Existing Credit Agreement attached as Exhibit A hereto.
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND FUNDING; EFFECT
Section 3.01. Conditions to Effectiveness of this Amendment. This Amendment shall become effective on the first date (the “Amendment Effective Date”) on which the following conditions precedent are satisfied (or waived by the Administrative Agent and all of the Initial Revolving Facility Lenders party hereto):
(a) Execution and Delivery of this Amendment. The Administrative Agent (or its counsel) shall have received from Holdings, each Borrower, each Initial Revolving Facility Lender, each Issuing Bank and each Swingline Lender (i) a counterpart of this Amendment signed on behalf of such party or (ii) written evidence reasonably satisfactory to the Administrative Agent (which may include delivery of a signed signature page of this Amendment by facsimile or other means of electronic transmission (e.g., “pdf”) that such party has signed a counterpart of this Amendment.
(b) Payment of Expenses. The Administrative Agent shall have received reimbursement or payment of all reasonable and documented out-of-pocket expenses (including reasonable and documented out-of-pocket fees, charges and disbursements of Paul Hastings LLP) of the Administrative Agent required to be reimbursed or paid by the Loan Parties hereunder or under any Loan Document on or prior to the Amendment Effective Date, in each case, to the extent invoiced at least three Business Days prior to the Amendment Effective Date.
(c) Closing Certificates; Good Standing Certificates. The Administrative Agent (or its counsel) shall have received (i) customary certificates of the Secretary or Assistant Secretary or similar officer of each Loan Party party hereto dated the Amendment Effective Date and certifying that (1)(x) attached thereto is true and complete copies of the organizational documents of such Loan Parties or (y) that no modifications have been made to such organization documents delivered on the Closing Date or thereafter to the Administrative Agent and (2) attached thereto are customary resolutions or other evidence of authorization and incumbency of authorized officers of such Loan Parties and (ii) certificates of good standing from the secretary of state of the state of organization of such Loan Party.
(d) Legal Opinion. The Administrative Agent (or its counsel) shall have received, on behalf of itself and the Initial Revolving Facility Lenders party hereto, a customary written opinion of Davis Polk & Wardwell LLP, as New York counsel for the Loan Parties (A) dated as of the Amendment Effective Date, (B) addressed to the Administrative Agent and the Initial Revolving Facility Lenders on the Amendment Effective Date and (C) in form and substance reasonably satisfactory to the Administrative Agent covering such matters relating to this Amendment and the other Loan Documents as the Administrative Agent shall reasonably request.
(e) Know Your Customer; AML. To the extent such documentation has not been delivered previously, the Administrative Agent shall have received at least three (3) Business Days prior to the Amendment Effective Date all documentation and other information about any Loan Party required by U.S. regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act, and if any Borrower qualifies as a “legal entity customer” under the “Beneficial Ownership Regulations” (31 CFR §1010.230), a Beneficial Ownership Certification in relation to such Borrower that has been reasonably requested in writing by the Administrative Agent at least five Business Days prior to the Amendment Effective Date.
For purposes of determining compliance with the conditions specified in this Section 3.01, each Initial Revolving Facility Lender, Issuing Bank and Swingline Lender party hereto shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to such Initial Revolving Facility Lenders, Issuing Banks or Swingline Lenders (as applicable), unless an officer of the Administrative Agent responsible for the transactions contemplated by this Amendment shall have received notice from such Initial Revolving Facility Lender, Issuing Bank or Swingline Lender prior to the Amendment Effective Date specifying its objection thereto. Without limitation of the foregoing, each Initial Revolving Facility Lender, Issuing Bank and Swingline Lender party hereto, the Administrative Agent and each of the other parties hereto acknowledge and irrevocably agree that each of the conditions set forth in this Section 3.01 has been satisfied (or waived by the Administrative Agent and each Initial Revolving Facility Lender, Issuing Bank and Swingline Lender party hereto) and that the Amendment Effective Date is August 21, 2025.
Section 3.02. Effects of this Amendment.
(a) On the Amendment Effective Date, the Existing Credit Agreement will be automatically amended to reflect the amendments thereto provided for in this Amendment. The rights and obligations of the parties hereto shall be governed (i) prior to the Amendment Effective Date, by the Existing Credit Agreement and (ii) on and after the Amendment Effective Date, by this Amendment and the Amended Credit Agreement. Once the Amendment Effective Date has occurred, all references to the Existing Credit Agreement in any document, instrument, agreement, or writing shall be deemed to refer to the Amended Credit Agreement.
(b) Each of Holdings and the Borrowers, on behalf of themselves and each other Loan Party, hereby (i) ratifies and reaffirms all of its payment and performance obligations (including with respect to the Guarantors, the “Guaranteed Obligations”), contingent or otherwise, under each of the Loan Documents to which it is a party, and (ii) ratifies and reaffirms the Guaranteed Obligations, each grant of a lien on, or security interest in, its property made pursuant to the Loan Documents (including, without limitation, the grant of security made by each Loan Party pursuant to each Security Document) and confirms that such Guaranteed Obligations, liens and security interests continue to guarantee and secure the Secured Obligations, in each case, on and subject to the terms and conditions set forth in the Amended Credit Agreement and the other Loan Documents.
(c) Other than as specifically provided herein, this Amendment shall not operate as a waiver or amendment of any right, power or privilege of the Administrative Agent or any Lender under the Existing Credit Agreement or any other Loan Document or of any other term or condition of the Existing Credit Agreement or any other Loan Document, nor shall the entering into of this Amendment preclude the Administrative Agent and/or any Lender from refusing to enter into any further waivers or amendments with respect thereto. This Amendment is not intended by any of the parties hereto to be interpreted as a course of dealing which would in any way impair the rights or remedies of the Administrative Agent or any Lender except as expressly stated herein, and no Lender shall have any obligation to extend credit to the Borrowers other than pursuant to the strict terms of the Existing Credit Agreement and the other Loan Documents, as amended or supplemented to date (including by means of this Amendment). Except as specifically amended by this Amendment, the Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.
(d) This Amendment shall constitute a “Loan Document” for all purposes of the Existing Credit Agreement and the other Loan Documents and shall be construed, administered and applied in accordance with all of the terms and provisions of the Existing Credit Agreement (and, following the date hereof, the Amended Credit Agreement). From and after the Amendment Effective Date, each reference in the Existing Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of like import, and each reference to the Existing Credit Agreement in any other Loan Document shall be deemed a reference to the Amended Credit Agreement.
(e) This Amendment shall not constitute a novation of the Existing Credit Agreement or any other Loan Document.
(f) By its execution and delivery of this Amendment, each Initial Revolving Facility Lender, Issuing Bank and Swingline Lender party hereto hereby (i) authorizes, directs and instructs the Administrative Agent to execute and deliver on its behalf this Amendment, (ii) confirms and ratifies its indemnification obligations set forth in Section 8.07 of the Existing Credit Agreement as applicable to the execution and delivery by the Administrative Agent of this Amendment and the performance of its obligations hereunder, and (iii) acknowledges and agrees that the Administrative Agent shall rely on the foregoing authorization, direction, instruction, confirmation and ratification to execute and deliver this Amendment.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Borrowers. In order to induce the Administrative Agent and the Initial Revolving Facility Lenders, Issuing Banks and Swingline Lenders party hereto to enter into this Amendment, the Borrowers and Holdings represent and warrant, as of the Amendment Effective Date, as set forth below:
(a) Authorization. The execution, delivery and performance by the Borrowers and Holdings of this Amendment (a) have been duly authorized by all corporate, partnership, limited liability company action or similar action required to be obtained by the Borrowers and Holdings and (b) will not (i) violate (A) any material provision of law, statute, rule or regulation applicable to the Borrowers and Holdings, (B) the certificate or articles of incorporation or formation or other constitutive documents (including any partnership, limited liability company or operating agreements or by-laws) of the Borrowers and Holdings, (C) any applicable order of any court or any rule, regulation or order of any Governmental Authority applicable to the Borrowers and Holdings or (D) any provision of any indenture, material agreement or other material instrument to which the Borrowers or Holdings is a party or by which any of them or any of their property is or may be bound, (ii) result in a breach of or constitute (alone or with due notice or lapse of time or both) a default under, give rise to a right of or result in any cancellation or acceleration of any right or obligation (including any payment) under such indenture, material agreement or other material instrument, where any such conflict, violation or breach or default referred to in this Section 4.01(a) would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or (iii) result in the creation or imposition of any Lien upon or with respect to any property or assets now owned or hereafter acquired by the Borrowers or Holdings, other than the Liens created by the Loan Documents and Permitted Liens.
(b) Enforceability. This Amendment has been duly executed and delivered by Holdings and the Borrowers and constitutes a legal, valid and binding obligation of the Borrowers and Holdings enforceable against the Borrowers or Holdings in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or other similar laws affecting creditors’ rights generally, (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), (iii) implied covenants of good faith and fair dealing and (iv) the Legal Reservations.
(c)Representations and Warranties. The representations and warranties contained in Article III of the Amended Credit Agreement shall be true and correct in all material respects (other than representations and warranties qualified as to materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the Amendment Effective Date; provided that any representations and warranties which expressly relate to a given date or period shall be required only to be true and correct in
all material respects (other than representations and warranties qualified as to materiality or Material Adverse Effect, which shall be true and correct in all respects) as of such respective date or for the respective period, as the case may be.
ARTICLE V
MISCELLANEOUS
Section 5.01. Headings. The various headings of this Amendment are included for convenience of reference only and shall not affect the interpretation of this Amendment or any provision hereof.
Section 5.02. Execution in Counterparts; Electronic Execution. This Amendment may be executed in two or more counterparts, each of which shall constitute an original but all of which, when taken together, shall constitute but one contract, and shall become effective as provided in Section 3.01. Delivery of an executed counterpart to this Amendment by facsimile transmission (or other electronic transmission pursuant to procedures approved by the Administrative Agent) shall be as effective as delivery of a manually signed original. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or by email as a “.pdf” or “.tif” attachment shall be effective as delivery of a manually executed counterpart of this Amendment. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in this Amendment or any other document to be signed in connection with this Amendment and the transactions contemplated hereby shall be deemed to include electronic signatures, electronic records or the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
Section 5.03. Successors and Assigns. The provisions of this Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns to the extent such successors and assignees are permitted successors and assignees as provided in Section 8.09 or 9.04 of the Amended Credit Agreement.
Section 5.04. Amendments and Waivers. Neither this Amendment nor any terms hereof may be amended, supplemented, waived or modified except in accordance with the provisions of Section 9.08 of the Amended Credit Agreement.
Section 5.05. Governing Law. THIS AMENDMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSES OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, INCLUDING BUT NOT LIMITED TO THE VALIDITY, INTERPRETATION, CONSTRUCTION, BREACH, ENFORCEMENT OR TERMINATION HEREOF AND THEREOF, AND WHETHER ARISING IN CONTRACT OR TORT OR OTHERWISE, SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THEREOF (OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1401 AND SECTION 5-1402).
Section 5.06. Submission to Jurisdiction; Waivers. This Amendment shall further be subject to the provisions of Section 9.15 of the Amended Credit Agreement mutatis mutandis.
Section 5.07. Waiver of Right to Trial by Jury. This Amendment shall further be subject to the provisions of Section 9.11 of the Amended Credit Agreement mutatis mutandis.
Section 5.08. Entire Agreement. This Amendment, the other Loan Documents and the agreements regarding certain fees referred to herein constitute the entire contract between the parties relative to the subject matter hereof. Any previous agreement among or representations from the parties or their Affiliates with respect to the subject matter hereof is superseded by this Amendment and the other Loan Documents. Nothing in this Amendment or in the other Loan Documents, expressed or implied, is intended to confer upon any party other than the parties hereto and thereto any rights, remedies, obligations or liabilities under or by reason of this Amendment or the other Loan Documents.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties have duly executed this Amendment on the day and year first written above.
| | | | | | | | |
| ALLIANCE LAUNDRY HOLDINGS |
| LLC, as Holdings |
| | |
| | |
| By: | /s/ Dean Nolden |
| Name: Dean Nolden |
| Title: Chief Financial Officer |
| | |
| ALLIANCE LAUNDRY SYSTEMS |
| LLC, as Borrower |
| | |
| | |
| By: | /s/ Dean Nolden |
| Name: Dean Nolden |
| Title: Chief Financial Officer |
[Signature Page to 2025-2 Revolving Facility Repricing Amendment]
| | | | | | | | |
| ALLIANCE LAUNDRY (THAILAND) |
| COMPANY LIMITED, as Thai Borrower |
| |
| |
| By: | /s/ Benjamin Leo Dobbs |
| Name: Benjamin Leo Dobbs |
| Title: Director |
[Signature Page to 2025-2 Revolving Facility Repricing Amendment]
| | | | | | | | | | | |
| ADMINISTRATIVE AGENT: |
| | | |
| CITIBANK N.A., |
| as Administrative Agent |
| | | |
| By: | /s/ Karan Kapoor |
| | Name: | Karan Kapoor |
| | Title: | Authorized Signatory |
[Signature Page to 2025-2 Revolving Facility Repricing Amendment]
| | | | | | | | | | | |
| CITIBANK, N.A., |
| as an Initial Revolving Facility Lender, an Issuing |
| Bank and a Swingline Lender |
| | | |
| By: | /s/ Karan Kapoor |
| | Name: | Karan Kapoor |
| | Title: | Authorized Signatory |
[Signature Page to 2025-2 Revolving Facility Repricing Amendment]
| | | | | | | | | | | |
| CITIBANK, N.A. BANGKOK BRANCH, |
| as an Initial Revolving Facility Lender, an Issuing Bank |
| | | |
| | | |
| | | |
| | | |
| By: | /s/ Achara Leevanichayakul |
| | | |
| | Name: Achara Leevanichayakul |
| | Title: Thailand Global Network Banking Head |
[Signature Page to 2025-2 Revolving Facility Repricing Amendment]
| | | | | | | | | | | |
| JPMORGAN CHASE BANK, N.A., |
| as an Initial Revolving Facility Lender and an Issuing Bank |
| | | |
| | | |
| | | |
| | | |
| By: | /s/ Zachary Blaner |
| | | |
| | Name: Zachary Blaner |
| | Title: Vice President |
[Signature Page to 2025-2 Revolving Facility Repricing Amendment]
| | | | | | | | | | | |
| UBS, AG STAMFORD BRANCH |
| as an Initial Revolving Facility Lender and an Issuing Bank |
| | | |
| | | |
| | | |
| | | |
| By: | /s/ Larcy Naval |
| | | |
| | Name: Larcy Naval |
| | Title: Director |
| | | |
| | | |
| By: | /s/ Joselin Fernandes |
| | | |
| | Name: Joselin Fernandes |
| | Title: Director |
[Signature Page to 2025-2 Revolving Facility Repricing Amendment]
| | | | | | | | | | | |
| BANK OF AMERICA, N.A., |
| as an Initial Revolving Facility Lender and an Issuing Bank |
| | | |
| | | |
| | | |
| | | |
| By: | /s/ Craig DelDuca |
| | | |
| | Name: Craig DelDuca |
| | Title: Credit Officer |
[Signature Page to 2025-2 Revolving Facility Repricing Amendment]
| | | | | | | | | | | |
| MORGAN STANLEY SENIOR FUNDING, INC., |
| as an Initial Revolving Facility Lender and an Issuing Bank |
| | | |
| | | |
| | | |
| | | |
| By: | /s/ Jack Kuhns |
| | | |
| | Name: Jack Kuhns |
| | Title: Vice President |
[Signature Page to 2025-2 Revolving Facility Repricing Amendment]
| | | | | | | | | | | |
| BANK OF MONTREAL, |
| as an Initial Revolving Facility Lender and an Issuing Bank |
| | | |
| | | |
| | | |
| | | |
| By: | /s/ Andrew Berryman |
| | | |
| | Name: Andrew Berryman |
| | Title: Director |
[Signature Page to 2025-2 Revolving Facility Repricing Amendment]
EXHIBIT A: Amended Credit Agreement
[See attached]
Exhibit A
Conformed through 2025-2 Refinancing Term B Revolving Facility Repricing Amendment dated August 21, 2025
CREDIT AGREEMENT
dated as of August 19, 2024
as amended on February 20, 2025
as further amended on February 20, 2025
as further amended on August 21, 2025
as further amended on August 21, 2025
by and among
ALLIANCE LAUNDRY HOLDINGS LLC,
as Holdings,
ALLIANCE LAUNDRY SYSTEMS LLC,
as the Borrower,
ALLIANCE LAUNDRY (THAILAND) COMPANY LIMITED,
as Thai Borrower,
THE LENDERS AND ISSUING BANKS PARTY HERETO FROM TIME TO TIME,
CITIBANK, N.A.,
as Administrative Agent,
CITIBANK, N.A.,
BMO CAPITAL MARKETS CORP.,
BOFA SECURITIES, INC.,
JPMORGAN CHASE BANK, N.A.,
MORGAN STANLEY SENIOR FUNDING, INC.
and
UBS SECURITIES LLC,
as Joint Lead Arrangers and Joint Bookrunners
| | | | | | | | | | | |
| | | Page |
| | | |
ARTICLE I Definitions | 1 |
| | | |
| Section 1.01 | Defined Terms | 1 |
| Section 1.02 | Terms Generally | 85 |
| Section 1.03 | Effectuation of Transaction | 87 |
| Section 1.04 | Limited Condition Transactions; Pro Forma Calculations; Certain Other Matters | 87 |
| Section 1.05 | Timing of Payment or Performance | 89 |
| Section 1.06 | Times of Day | 89 |
| Section 1.07 | Divisions | 89 |
| Section 1.08 | Accounting Terms; GAAP | 89 |
| Section 1.09 | Exchange Rates; Currency Equivalent | 90 |
| Section 1.10 | Additional Alternative Currencies | 92 |
| Section 1.11 | Change of Currency | 93 |
| Section 1.12 | Additional Borrowers; the Borrower as Representative | 93 |
| | | |
ARTICLE II The Credits | 94 |
| | | |
| Section 2.01 | Commitments | 94 |
| Section 2.02 | Loans and Borrowings | 95 |
| Section 2.03 | Requests for Borrowings | 96 |
| Section 2.04 | Swingline Loans | 97 |
| Section 2.05 | Letters of Credit | 98 |
| Section 2.06 | Funding of Borrowings | 105 |
| Section 2.07 | Interest Elections | 106 |
| Section 2.08 | Termination and Reduction of Commitments | 108 |
| Section 2.09 | Maturity of Loans; Evidence of Debt | 108 |
| Section 2.10 | Scheduled Repayments of Term Loans | 109 |
| Section 2.11 | Voluntary and Mandatory Prepayment of Loans | 109 |
| Section 2.12 | Fees | 113 |
| Section 2.13 | Interest | 115 |
| Section 2.14 | Benchmark Replacements | 116 |
| Section 2.15 | Increased Costs | 117 |
| Section 2.16 | Break Funding Payments | 118 |
| Section 2.17 | Taxes | 119 |
| Section 2.18 | Payments Generally; Pro Rata Treatment; Sharing of Set-offs | 122 |
| Section 2.19 | Mitigation Obligations; Replacement of Lenders | 124 |
| Section 2.20 | Illegality | 125 |
| Section 2.21 | Incremental Commitments | 125 |
| Section 2.22 | Extensions | 128 |
| Section 2.23 | Refinancing Amendments | 130 |
| Section 2.24 | Certain Adjustments | 134 |
| Section 2.25 | Defaulting Lender | 134 |
| | | |
ARTICLE III Representations and Warranties | 136 |
| | | |
| Section 3.01 | Organization; Powers | 136 |
| Section 3.02 | Authorization | 137 |
| Section 3.03 | Enforceability | 137 |
| Section 3.04 | Governmental Approvals | 137 |
| | | | | | | | | | | |
| Section 3.05 | Financial Statements | 138 |
| Section 3.06 | No Material Adverse Effect | 138 |
| Section 3.07 | Title to Properties | 138 |
| Section 3.08 | [Reserved]. | 138 |
| Section 3.09 | Litigation; Compliance with Laws | 139 |
| Section 3.10 | Federal Reserve Regulations | 139 |
| Section 3.11 | Investment Company Act | 139 |
| Section 3.12 | Use of Proceeds | 139 |
| Section 3.13 | Taxes | 140 |
| Section 3.14 | No Material Misstatements | 140 |
| Section 3.15 | Employee Benefit Plans | 140 |
| Section 3.16 | Environmental Matters | 141 |
| Section 3.17 | Security Documents | 141 |
| Section 3.18 | Solvency | 143 |
| Section 3.19 | Intellectual Property | 143 |
| Section 3.20 | [Reserved] | 143 |
| Section 3.21 | USA PATRIOT Act; Sanctions; OFAC | 143 |
| Section 3.22 | Foreign Corrupt Practices Act | 143 |
| | | |
ARTICLE IV Conditions of Lending | 144 |
| | | |
| Section 4.01 | All Credit Events. | 144 |
| Section 4.02 | First Credit Event | 144 |
| | | |
ARTICLE V Affirmative Covenants | 146 |
| | | |
| Section 5.01 | Existence; Business and Properties | 146 |
| Section 5.02 | Insurance | 146 |
| Section 5.03 | Taxes | 148 |
| Section 5.04 | Financial Statements, Reports, etc. | 148 |
| Section 5.05 | Litigation and Other Notices | 150 |
| Section 5.06 | Compliance with Laws | 151 |
| Section 5.07 | Maintaining Records; Access to Properties and Inspections | 151 |
| Section 5.08 | Use of Proceeds | 151 |
| Section 5.09 | Compliance with Environmental Laws | 151 |
| Section 5.10 | Further Assurances; Additional Security | 152 |
| Section 5.11 | Rating | 154 |
| Section 5.12 | Post-Closing | 154 |
| Section 5.13 | Ownership of Material Intellectual Property | 155 |
| Section 5.14 | Business of the Borrower and the Subsidiaries | 155 |
| Section 5.15 | Maintenance of Fiscal Year | 155 |
| Section 5.16 | Transactions with Affiliates | 155 |
| Section 5.17 | Lender Calls | 158 |
| Section 5.18 | Holdings Covenant | 158 |
| | | |
ARTICLE VI Negative Covenants | 159 |
| | | |
| Section 6.01 | Indebtedness | 159 |
| Section 6.02 | Liens | 167 |
| Section 6.03 | [Reserved] | 172 |
| Section 6.04 | Investments, Loans and Advances | 172 |
| Section 6.05 | Mergers, Consolidations, Sales of Assets and Acquisitions | 176 |
| Section 6.06 | Dividends and Distributions | 180 |
| | | |
| | | | | | | | | | | |
| Section 6.07 | [Reserved] | 183 |
| Section 6.08 | [Reserved] | 183 |
| Section 6.09 | Limitation on Payments and Modifications of Indebtedness; Etc | 183 |
| Section 6.10 | [Reserved] | 187 |
| Section 6.11 | Financial Covenant | 187 |
| | | |
ARTICLE VII Events of Default | 187 |
| | | |
| Section 7.01 | Events of Default | 187 |
| Section 7.02 | Treatment of Certain Payments | 191 |
| Section 7.03 | Right to Cure | 191 |
| | | |
ARTICLE VIII The Agents | 192 |
| | | |
| Section 8.01 | Appointment | 192 |
| Section 8.02 | Delegation of Duties | 193 |
| Section 8.03 | Exculpatory Provisions | 193 |
| Section 8.04 | Reliance by Agents | 194 |
| Section 8.05 | Notice of Default | 195 |
| Section 8.06 | Non-Reliance on Agents and Other Lenders | 195 |
| Section 8.07 | Indemnification | 195 |
| Section 8.08 | Agent in Its Individual Capacity | 196 |
| Section 8.09 | Successor Agents | 196 |
| Section 8.10 | Arrangers and Bookrunners | 197 |
| Section 8.11 | Security Documents, Collateral Agent and Intercreditor Agreement | 197 |
| Section 8.12 | Right to Realize on Collateral and Enforce Guarantees | 198 |
| Section 8.13 | Withholding Tax | 198 |
| Section 8.14 | Erroneous Payment | 199 |
| Section 8.15 | Certain ERISA Matters | 201 |
| Section 8.16 | Ineligible Institutions, Affiliate Lenders, Etc | 202 |
| | | |
ARTICLE IX Miscellaneous | 203 |
| | | |
| Section 9.01 | Notices; Communications | 203 |
| Section 9.02 | Survival of Agreement | 203 |
| Section 9.03 | [Reserved] | 204 |
| Section 9.04 | Successors and Assigns | 204 |
| Section 9.05 | Expenses; Indemnity | 209 |
| Section 9.06 | Right of Set-off | 211 |
| Section 9.07 | Applicable Law | 211 |
| Section 9.08 | Waivers; Amendment | 211 |
| Section 9.09 | Interest Rate Limitation | 217 |
| Section 9.10 | Entire Agreement | 217 |
| Section 9.11 | WAIVER OF JURY TRIAL | 218 |
| Section 9.12 | Severability | 218 |
| Section 9.13 | Counterparts; Electronic Execution of Assignments and Certain Other Documents | 218 |
| Section 9.14 | Headings | 219 |
| Section 9.15 | Jurisdiction; Consent to Service of Process | 219 |
| Section 9.16 | Confidentiality | 219 |
| Section 9.17 | Platform; Borrower Materials | 220 |
| Section 9.18 | Release of Liens and Guarantees | 221 |
| Section 9.19 | Conflicts with Permitted Securitization Financings and Foreign Customer Finance Programs | 223 |
| | | |
| | | | | | | | | | | |
| Section 9.20 | USA PATRIOT Act Notice | 223 |
| Section 9.21 | Affiliate Lenders | 223 |
| Section 9.22 | [Reserved] | 224 |
| Section 9.23 | [Reserved] | 224 |
| Section 9.24 | Acknowledgment and Consent to Bail-In of Affected Financial Institutions | 225 |
| Section 9.25 | No Advisory or Fiduciary Responsibility | 225 |
| Section 9.26 | Acknowledgement Regarding Any Supported QFCs | 226 |
| Section 9.27 | Judgment Currency | 227 |
| | | | | |
| Exhibits and Schedules |
| |
| Exhibit A | Form of Assignment and Acceptance |
| Exhibit B | Form of Administrative Questionnaire |
| Exhibit C-1 | Form of Borrowing Request |
| Exhibit C-2 | Form of Swingline Borrowing Request |
| Exhibit D | Form of Interest Election Request |
| Exhibit E | Form of Permitted Loan Purchase Assignment and Acceptance |
| Exhibit F-1 | Form of Non-Bank Tax Certificate (Lenders/Non-Partnerships) |
| Exhibit F-2 | Form of Non-Bank Tax Certificate (Lenders/Partnerships) |
| Exhibit F-3 | Form of Non-Bank Tax Certificate (Participants/Non-Partnerships) |
| Exhibit F-4 | Form of Non-Bank Tax Certificate (Participants/Partnerships) |
| Exhibit G | Form of Solvency Certificate |
| Exhibit H | Form of Prepayment Notice |
| Exhibit I | Form of Compliance Certificate |
| Exhibit J-1 | Form of Term Note |
| Exhibit J-2 | Form of Revolving Note |
| Exhibit K-1 | Form of Acceptable Permitted Junior Intercreditor Agreement |
| Exhibit K-2 | Form of Acceptable Permitted Pari Passu Intercreditor Agreement |
| Exhibit L | Form of Thai Borrowing Receipt |
| |
| Schedule 1.01(A) | Certain Excluded Equity Interests |
| Schedule 1.01(B) | Closing Date Immaterial Subsidiaries |
| Schedule 1.01(C) | Existing Roll-Over Letters of Credit and Bank Guarantees |
| Schedule 1.01(D) | Closing Date Unrestricted Subsidiaries |
| Schedule 1.01(E) | Mortgaged Properties |
| Schedule 1.01(F) | Existing Cash Management Banks and Hedge Banks |
| Schedule 2.01 | Commitments |
| Schedule 2.05(l) | Specified Letter of Credit Sublimit |
| Schedule 3.04 | Governmental Approvals |
| Schedule 3.09 | Litigation; Compliance with Laws |
| Schedule 3.13 | Taxes |
| Schedule 3.16 | Environmental Matters |
| Schedule 5.12 | Post-Closing Items |
| Schedule 5.16 | Transactions with Affiliates |
| Schedule 6.01 | Indebtedness |
| Schedule 6.02(a) | Liens |
| Schedule 6.04 | Investments |
| Schedule 9.01 | Notice Information |
THIS CREDIT AGREEMENT, dated as of August 19, 2024 (as amended pursuant to that certain 2025 Refinancing Amendment (as defined below), that certain 2025 Revolving Facility Repricing Amendment (as defined below), that certain 2025-2 Refinancing Amendment (as defined below), that certain 2025-2 Revolving Facility Repricing Amendment (as defined below) and as further amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms hereof, this “Agreement”), by and among ALLIANCE LAUNDRY HOLDINGS LLC, a Delaware limited liability company (“Holdings”), ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company (the “Borrower”), ALLIANCE LAUNDRY (THAILAND) COMPANY LIMITED (the “Thai Borrower”), the LENDERS party hereto from time to time and CITIBANK, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”) for the Lenders and Collateral Agent for the Secured Parties.
RECITALS
WHEREAS, in connection with the consummation of the Transactions (as defined herein), the Borrower has requested that the Lenders and the Issuing Banks hereunder extend credit in the form of (a) Initial Term B Loans in an original aggregate principal amount equal to $2,075,000,000, (b) an Initial USD Revolving Facility in an original aggregate committed principal amount of $225,000,000, and (c) an Initial Thai Baht Revolving Facility in an original aggregate committed principal amount of $25,000,000, in each case subject to increase as provided herein; and
WHEREAS, the Lenders and the Issuing Banks are willing to extend such credit to the Borrower and the Thai Borrower on the terms and subject to the conditions set forth herein.
WHEREAS, Holdings, the Borrower, the Administrative Agent and the 2025 Refinancing Term B Facility Lenders party thereto entered into that certain 2025 Refinancing Term B Facility Amendment (the “2025 Refinancing Amendment”), dated as of February 20, 2025 (the “2025 Refinancing Amendment Effective Date”).
WHEREAS, pursuant to the 2025 Refinancing Amendment, Holdings and the Borrower requested the 2025 Refinancing Term B Facility Lenders extend credit to the Borrower in the form of 2025 Refinancing Term B Loans (which constituted Refinancing Term Loans under this Agreement (including Section 2.23 hereof) substantially concurrent with the effectiveness of the 2025 Refinancing Amendment) in an original aggregate principal amount equal to $2,075,000,000.00, the proceeds of which were used on the 2025 Refinancing Amendment Effective Date to Refinance in full the Initial Term B Loans outstanding immediately prior to the 2025 Refinancing Amendment Effective Date, as set forth herein and therein.
WHEREAS, Holdings, the Borrower, the Administrative Agent and the 2025-2 Refinancing Term B Facility Lenders party thereto entered into that certain 2025-2 Refinancing Term B Facility Amendment (the “2025-2 Refinancing Amendment”), dated as of August 21, 2025 (the “2025-2 Refinancing Amendment Effective Date”).
WHEREAS, pursuant to the 2025-2 Refinancing Amendment, Holdings and the Borrower requested the 2025-2 Refinancing Term B Facility Lenders extend credit to the Borrower in the form of 2025-2 Refinancing Term B Loans (which constituted Refinancing Term Loans under this Agreement (including Section 2.23 hereof) substantially concurrent with the effectiveness of the 2025-2 Refinancing Amendment) in an original aggregate principal amount equal to $2,075,000,000, the proceeds of which were used on the 2025-2 Refinancing Amendment Effective Date to Refinance in full the Initial Term B
Loans outstanding immediately prior to the 2025-2 Refinancing Amendment Effective Date, as set forth herein and therein.
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
Definitions
Section 1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings specified below:
“2025 Refinancing Amendment” has the meaning assigned to such term in the Recitals to this Agreement.
“2025 Refinancing Amendment Effective Date” has the meaning assigned to such term in the Recitals to this Agreement.
“2025 Refinancing Term B Facility” shall mean the 2025 Refinancing Term B Facility Commitments and the 2025 Refinancing Term B Loans made hereunder pursuant to the 2025 Refinancing Amendment.
“2025 Refinancing Term B Facility Commitments” shall have the meaning assigned to such term in the 2025 Refinancing Amendment. The aggregate amount of the 2025 Refinancing Term B Facility Commitments as of the 2025 Refinancing Amendment Effective Date is $2,075,000,000.00.
“2025 Refinancing Term B Facility Lender” shall have the meaning assigned to such term in the 2025 Refinancing Amendment.
“2025 Refinancing Term B Loans” shall have the meaning assigned to such term in the 2025 Refinancing Amendment. For the avoidance of doubt, all 2025 Refinancing Term B Loans outstanding immediately prior to the 2025-2 Refinancing Amendment Effective Date were refinanced in full by the 2025-2 Refinancing Term B Loans on the 2025-2 Refinancing Amendment Effective Date.
“2025 Revolving Facility Repricing Amendment” means the 2025 Revolving Facility Repricing Amendment dated as of February 20, 2025 among Holdings, the Borrowers, the Administrative Agent and each Initial Revolving Facility Lender, Issuing Bank and Swingline Lender.
“2025 Revolving Facility Repricing Amendment Effective Date” shall mean February 20, 2025.
“2025-2 Refinancing Amendment” has the meaning assigned to such term in the Recitals to this Agreement.
“2025-2 Refinancing Amendment Effective Date” has the meaning assigned to such term in the Recitals to this Agreement.
“2025-2 Refinancing Term B Facility” shall mean the 2025-2 Refinancing Term B Facility Commitments and the 2025-2 Refinancing Term B Loans made hereunder pursuant to the 2025-2 Refinancing Amendment.
“2025-2 Refinancing Term B Facility Commitments” shall have the meaning assigned to such term in the 2025-2 Refinancing Amendment. The aggregate amount of the 2025-2 Refinancing Term B Facility Commitments as of the 2025-2 Refinancing Amendment Effective Date is $2,075,000,000.
“2025-2 Refinancing Term B Facility Lender” shall have the meaning assigned to such term in the 2025-2 Refinancing Amendment.
“2025-2 Refinancing Term B Loans” shall have the meaning assigned to such term in the 2025-2 Refinancing Amendment.
“2025-2 Revolving Facility Repricing Amendment” means the 2025-2 Revolving Facility Repricing Amendment dated as of August 21, 2025 among Holdings, the Borrowers, the Administrative Agent and each Initial Revolving Facility Lender, Issuing Bank and Swingline Lender.
“2025-2 Revolving Facility Repricing Amendment Effective Date” shall mean August 21, 2025.
“ABR” shall mean, for any day, a fluctuating rate of interest per annum equal to the highest of (a) the Federal Funds Effective Rate in effect for such day plus 0.50%, (b) the Prime Rate in effect on such day and (c) Term SOFR plus 1.0%; provided that (i) in the case of Initial Revolving Facility Loans, if ABR shall be less than the Floor, such interest rate shall be deemed to be the Floor and (ii) in the case of Initial Term B Loans, if ABR shall be less than the applicable Floor, such interest rate shall be deemed to be such Floor. Any change in such rate due to a change in the Prime Rate, the Federal Funds Effective Rate or Term SOFR shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or Term SOFR, as the case may be.
“ABR Borrowing” shall mean a Borrowing comprised of ABR Loans.
“ABR Loan” shall mean any ABR Term Loan, ABR Revolving Loan or Swingline Loan.
“ABR Revolving Facility Borrowing” shall mean a Borrowing comprised of ABR Revolving Loans.
“ABR Revolving Loan” shall mean any Revolving Facility Loan bearing interest at a rate determined by reference to the ABR in accordance with the provisions of Article II.
“ABR Term Loan” shall mean any Term Loan bearing interest at a rate determined by reference to the ABR in accordance with the provisions of Article II.
“ABR Term SOFR Determination Day” has the meaning assigned to such term in the definition of “Term SOFR”.
“Additional Borrower” has the meaning assigned to such term in Section 1.12(a).
“Adjusted EURIBOR” shall mean, with respect to any Eurocurrency Borrowing denominated in Euro for any Interest Period, an interest rate per annum equal to (a) the EURIBOR in effect for such Interest Period divided by (b) one minus the Statutory Reserves applicable to such Eurocurrency
Borrowing, if any; provided that, in the case of the Initial Revolving Facility Loans, if the Adjusted EURIBOR shall be less than the applicable Floor, such interest rate shall be deemed to be such Floor.
“Adjusted Term SOFR” means for purposes of any calculation, the rate per annum equal to Term SOFR for such calculation, provided that (i) in the case of Initial Revolving Facility Loans, if the Adjusted Term SOFR shall be less than the Floor, such interest rate shall be deemed to be the Floor and (ii) in the case of Initial Term B Loans, if the Adjusted Term SOFR shall be less than the applicable Floor, such interest rate shall be deemed to be such Floor.
“Adjustment Date” shall have the meaning assigned to such term in the definition of “Pricing Grid.”
“Administrative Agent” shall have the meaning assigned to such term in the introductory paragraph of this Agreement, together with its permitted successors and assigns.
“Administrative Agent Fee Letter” shall mean the Agency Fee Letter dated as of August 1, 2024 among the Administrative Agent and the Borrower.
“Administrative Agent Fees” shall have the meaning assigned to such term in Section 2.12(c).
“Administrative Questionnaire” shall mean an Administrative Questionnaire in the form of Exhibit B or such other form supplied by the Administrative Agent.
“Affected Financial Institution” shall mean (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” shall mean, when used with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. None of the Administrative Agent, the Arrangers, any Lender (other than any Affiliate Lender or any Debt Fund Affiliate) or any of their respective Affiliates shall be considered an Affiliate of Holdings or any subsidiary thereof.
“Affiliate Lender” shall have the meaning assigned to such term in Section 9.21(a).
“Agents” shall mean the Administrative Agent and the Collateral Agent.
“Agreement” shall have the meaning assigned to such term in the introductory paragraph of this Agreement, as may be amended, restated, supplemented or otherwise modified from time to time.
“Agreement Currency” has the meaning assigned to such term in Section 9.27.
“ALH” shall mean Alliance Laundry Holdings Inc., a Delaware corporation.
“ALH Preferred Equity” shall mean any Preferred Equity Interests issued by any Parent Entity after the Closing Date.
“ALH Thailand” means Alliance Laundry (Thailand) Company Limited.
“Alternative Currency” shall mean, collectively, (a) Euros, (b) solely with respect to Borrowings by, or issuance of Letters of Credit for, the Thai Borrower under the Thai Baht Revolving Facility, Thai Baht and (c) each other currency (other than Euros, Thai Baht (in the case of the Thai Baht Revolving
Facility) or Dollars) that is approved for use in accordance with Section 1.10 in connection with Revolving Facility Loans, Letters of Credit or Swingline Loans, as the case may be.
“Alternative Currency Equivalent” shall mean at any time, with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Alternative Currency as determined by the Administrative Agent or the Issuing Bank, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of such Alternative Currency with Dollars.
“ALTR LLC” shall have the meaning assigned to such term in the definition of “Securitization Entity.”
“Anti-Corruption Laws” shall have the meaning assigned to such term in Section 3.22.
“Applicable Thai Baht Revolver Commitment Fee Rate” shall mean for any day 0.375% per annum; provided, however, that on and after the first Adjustment Date occurring after delivery of the financial statements and any Compliance Certificate required by Section 5.04 upon the completion of one full fiscal quarter of the Borrower after the Closing Date, the “Applicable Thai Baht Revolver Commitment Fee Rate” will be determined pursuant to the Pricing Grid.
“Applicable USD Revolver Commitment Fee Rate” shall mean for any day 0.375% per annum; provided, however, that on and after the first Adjustment Date occurring after delivery of the financial statements and any Compliance Certificate required by Section 5.04 upon the completion of one full fiscal quarter of the Borrower after the Closing Date, the “Applicable USD Revolver Commitment Fee Rate” will be determined pursuant to the Pricing Grid.
“Applicable Date” shall have the meaning assigned to such term in Section 2.24(a).
“Applicable Margin” shall mean for any day (i) with respect to any Initial USD Revolving Facility Loan, (x) prior to (but excluding) the 2025 Revolving Facility Repricing Amendment Effective Date, 3.25% per annum in the case of any Term SOFR Loan or Eurocurrency Loan and 2.25% per annum in the case of any ABR Loan; provided, however, that on and after the first Adjustment Date occurring after delivery of the financial statements and any Compliance Certificate required by Section 5.04 upon the completion of one full fiscal quarter of the Borrower after the Closing Date, the “Applicable Margin” with respect to any Initial USD Revolving Facility Loan will be determined pursuant to the Pricing Grid and, (y) from and after (and including) the 2025 Revolving Facility Repricing Amendment Effective Date but prior to the 2025-2 Revolving Facility Repricing Amendment Effective Date, 2.50% per annum in the case of any Term SOFR Loan or Eurocurrency Loan and 1.50% per annum in the case of any ABR Loan; provided, however, that on and after the first Adjustment Date occurring after delivery of the financial statements and any Compliance Certificate required by Section 5.04 upon the completion of the first fiscal quarter of the Borrower after the 2025 Revolving Facility Repricing Amendment Effective Date, the “Applicable Margin” with respect to any Initial USD Revolving Facility Loan will be determined pursuant to the Pricing Grid and (z) from and after (and including) the 2025-2 Revolving Facility Repricing Amendment Effective Date, 2.25% per annum in the case of any Term SOFR Loan or Eurocurrency Loan and 1.25% per annum in the case of any ABR Loan; provided, however, that on and after the first Adjustment Date occurring after delivery of the financial statements and any Compliance Certificate required by Section 5.04 upon the completion of the first fiscal quarter of the Borrower after the 2025-2 Revolving Facility Repricing Amendment Effective Date, the “Applicable Margin” with respect to any Initial USD Revolving Facility Loan will be determined pursuant to the Pricing Grid, (ii) with respect to any Initial Thai Baht Revolving Facility Loan, (x) prior to (but excluding) the 2025
Revolving Facility Repricing Amendment Effective Date, 3.25% per annum in the case of any Term SOFR Loan or RFR Loan and 2.25% per annum in the case of any ABR Loan; provided, however, that on and after the first Adjustment Date occurring after delivery of the financial statements and any Compliance Certificate required by Section 5.04 upon the completion of one full fiscal quarter of the Borrower after the Closing Date, the “Applicable Margin” with respect to any Initial Thai Baht Revolving Facility Loan will be determined pursuant to the Pricing Grid and, (y) from and after (and including) the 2025 Revolving Facility Repricing Amendment Effective Date but prior to the 2025-2 Revolving Facility Repricing Amendment Effective Date, 2.50% per annum in the case of any Term SOFR Loan or RFR Loan and 1.50% per annum in the case of any ABR Loan; provided, however, that on and after the first Adjustment Date occurring after delivery of the financial statements and any Compliance Certificate required by Section 5.04 upon the completion of the first fiscal quarter of the Borrower after the 2025 Revolving Facility Repricing Amendment Effective Date, the “Applicable Margin” with respect to any Initial Thai Baht Revolving Facility Loan will be determined pursuant to the Pricing Grid and (z) from and after (and including) the 2025-2 Revolving Facility Repricing Amendment Effective Date, 2.25% per annum in the case of any Term SOFR Loan or RFR Loan and 1.25% per annum in the case of any ABR Loan; provided, however, that on and after the first Adjustment Date occurring after delivery of the financial statements and any Compliance Certificate required by Section 5.04 upon the completion of one fiscal quarter of the Borrower after the 2025-2 Revolving Facility Repricing Amendment Effective Date, the “Applicable Margin” with respect to any Initial Thai Baht Revolving Facility Loan will be determined pursuant to the Pricing Grid, (iii) solely prior to the 2025 Refinancing Amendment Effective Date, with respect to any Initial Term B Loan, 3.50% per annum in the case of any Term SOFR Loan and 2.50% per annum in the case of any ABR Loan; provided, however, that on and after the first Adjustment Date occurring after delivery of the financial statements and any Compliance Certificate required by Section 5.04 upon the completion of one full fiscal quarter of the Borrower after the Closing Date, the “Applicable Margin” with respect to any Initial Term B Loan will be determined pursuant to the Pricing Grid, (iv) from and after the 2025 Refinancing Amendment Effective Date but prior to the 2025-2 Refinancing Amendment Effective Date, with respect to any Initial Term B Loans, 2.75% per annum in the case of any Term SOFR Loan and 1.75% per annum in the case of any ABR Loan; provided, however, that on and after the first Adjustment Date occurring after delivery of the financial statements and any Compliance Certificate required by Section 5.04 upon the completion of the first fiscal quarter of the Borrower after the 2025 Refinancing Amendment Effective Date, the “Applicable Margin” with respect to any Initial Term B Loan will be determined pursuant to the Pricing Grid and (v) from and after the 2025-2 Refinancing Amendment Effective Date, with respect to any Initial Term B Loans, 2.25% per annum in the case of any Term SOFR Loan and 1.25% per annum in the case of any ABR Loan; provided, however, that on and after the first Adjustment Date occurring after delivery of the financial statements and any Compliance Certificate required by Section 5.04 upon the completion of the first fiscal quarter of the Borrower after the 2025-2 Refinancing Amendment Effective Date, the “Applicable Margin” with respect to any Initial Term B Loan will be determined pursuant to the Pricing Grid.
“Applicable Period” shall mean, with respect to any Excess Cash Flow Period, (i) such Excess Cash Flow Period and (ii) at the election of the Borrower with respect to any specified deduction to Excess Cash Flow or the ECF Payment Amount, the period from the end of such Excess Cash Flow Period until the date of required prepayment pursuant to Section 2.11(c) with respect to such Excess Cash Flow Period.
“Approved Fund” shall have the meaning assigned to such term in Section 9.04(b)(ii).
“Arranger Fee Letter” shall mean the Arranger Fee Letter dated as of August 1, 2024 among the Arrangers and the Borrower.
“Arrangers” shall mean, (x) with respect to the Initial Term Loans issued on the Closing Date, collectively, Citibank, N.A., BMO Capital Markets Corp., BofA Securities, Inc., JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, in their capacities as joint lead arrangers and joint bookrunners and (y) with respect to the 2025 Refinancing Term B Facility, Citigroup Global Markets Inc., BMO Capital Markets Corp., BofA Securities, Inc., JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, in their capacity as joint lead arrangers and (z) with respect to the 2025-2 Refinancing Term B Facility, Citibank, N.A., BMO Capital Markets Corp., BofA Securities, Inc., JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, in their capacity as joint lead arrangers and joint bookrunners.
“Asset Sale” shall mean any loss, damage, destruction or condemnation of, or any Disposition (including any sale and leaseback of assets) to any Person of, any asset or assets of the Borrower or any Loan Party.
“Assignee” shall have the meaning assigned to such term in Section 9.04(b)(i).
“Assignment and Acceptance” shall mean an assignment and acceptance entered into by a Lender and an Assignee, and accepted by the Administrative Agent and the Borrower (if required by Section 9.04), in the form of Exhibit A or such other form (including electronic documentation generated by use of an electronic platform) as shall be approved by the Administrative Agent and reasonably satisfactory to the Borrower.
“Availability Period” shall mean, (a) with respect to the Initial USD Revolving Facility Commitments, the period from and including the Closing Date to but excluding the earlier of the Initial USD Revolving Facility Maturity Date and the date of termination of all of the Initial USD Revolving Facility Commitments, (b) with respect to the Initial Thai Baht Revolving Facility Commitments, the period from and including the Closing Date to but excluding the earlier of the Initial Thai Baht Revolving Facility Maturity Date and the date of termination of all of the Initial Thai Baht Revolving Facility Commitments and (c) with respect to any other Class of Revolving Facility Commitments, the period from and including the effective date for such Class of Revolving Facility Commitments to but excluding the earlier of the Revolving Facility Maturity Date for such Class and the date of termination of the Revolving Facility Commitments of such Class.
“Available RDP Reallocation Amount” shall mean the amount of Restricted Debt Payments that may be made at the time of determination pursuant to Section 6.09(b)(F) minus (in each case unless reallocated or reclassified in accordance with this Agreement) the Available RDP Reallocation Amount utilized by the Borrower on or prior to such time of determination to make additional Investments pursuant to Section 6.04(ii).
“Available RP Capacity Amount” shall mean the amount of Restricted Payments that may be made at the time of determination pursuant to Section 6.06 minus the aggregate amount of the Available RP Capacity Amount utilized by the Borrower or any Subsidiary to incur outstanding Indebtedness and/or Liens pursuant to Section 6.01(hh) and/or Section 6.02(ii), without duplication.
“Available RP Reallocation Amount” shall mean the amount of Restricted Payments that may be made at the time of determination pursuant to Section 6.06(j) minus (in each case unless reallocated or reclassified in accordance with this Agreement) the Available RP Reallocation Amount utilized by the
Borrower on or prior to such time of determination to (x) make additional Investments pursuant to Section 6.04(ii) or (y) make additional Restricted Debt Payments pursuant to Section 6.09(b)(F).
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if such Benchmark is a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (y) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark pursuant to this Agreement, in each case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 2.14(d).
“Available Unused Commitment” shall mean, (a) with respect to a USD Revolving Facility Lender under any Class of USD Revolving Facility Commitments at any time, an amount equal to the amount by which (x) the applicable USD Revolving Facility Commitment of such USD Revolving Facility Lender in respect of that Class of USD Revolving Facility Commitments at such time exceeds (y) the applicable USD Revolving Facility Credit Exposure of such USD Revolving Facility Lender in respect of that Class at such time and (b) with respect to a Thai Baht Revolving Facility Lender under any Class of Thai Baht Revolving Facility Commitments at any time, an amount equal to the amount by which (x) the applicable Thai Baht Revolving Facility Commitment of such Thai Baht Revolving Facility Lender in respect of that Class of Thai Baht Revolving Facility Commitments at such time exceeds (y) the applicable Thai Baht Revolving Facility Credit Exposure of such Thai Baht Revolving Facility Lender in respect of that Class at such time.
“Available URS Reallocation Amount” shall mean the amount of Investments in Unrestricted Subsidiaries that may be made at the time of determination pursuant to Section 6.04(ee) minus (in each case unless reallocated or reclassified in accordance with this Agreement) the Available URS Reallocation Amount utilized by the Borrower on or prior to such time of determination to make additional Investments pursuant to Section 6.04(ii).
“Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” shall mean (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their Affiliates (other than through liquidation, administration or other insolvency proceedings).
“BDT Badger” shall mean BDT Badger Holdings, LLC, a Delaware limited liability company.
“BDT Investor” shall mean BDT Capital Partners, LLC and its Controlled Investment Affiliates.
“Benchmark” shall mean (a) with respect to Dollars, initially, the Term SOFR Reference Rate and (b) with respect to Euros, initially, EURIBOR, (c) with respect to Thai Baht, initially, THOR and (d) with respect to any other Alternative Currency, initially, any benchmark for the determination of a rate of interest for Loans denominated in such Alternative Currency; provided that, if a replacement of any
Benchmark has occurred pursuant to Section 2.14, then such Benchmark shall be replaced with the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate. Any reference to “Benchmark” shall include, as applicable, the published component used in the calculation thereof.
“Benchmark Replacement” shall mean, with respect to any Benchmark Transition Event, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:
(a) with respect to Dollars, Daily Simple SOFR; or
(b) the sum of (i) the alternate benchmark rate that has been jointly selected by the Administrative Agent and the Borrower giving due consideration to (x) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by the Relevant Governmental Body or (y) any evolving or then-prevailing market convention for determining a rate of interest as a replacement to the then-current Benchmark syndicated credit facilities denominated in the applicable currency at such time and (ii) the Benchmark Replacement Adjustment.
If the Benchmark Replacement as determined pursuant to clause (a) or (b) above would be less than the applicable Floor (if any), then the applicable Benchmark Replacement will be deemed to be the applicable Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” shall mean, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for each applicable Interest Period, the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) that has been jointly selected by the Administrative Agent and the Borrower giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current Benchmark with the applicable Unadjusted Benchmark Replacement for syndicated credit facilities denominated in the applicable currency at such time.
“Benchmark Replacement Conforming Changes” shall mean, with respect to either the use or administration of Term SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “ABR,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of Section 2.16 and other technical, administrative or operational matters) that the Administrative Agent, in consultation with the Borrower, decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Administrative Agent, in consultation with
the Borrower, decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Benchmark Replacement Date” shall mean the earlier to occur of the following events with respect to the then-current Benchmark: (i) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the then-current Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or the published component used in the calculation thereof); or (ii) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which all Available Tenors of such Benchmark (or the published component used in the calculation thereof) have been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative; provided that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (3) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date. For the avoidance of doubt, if such Benchmark is a term rate, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (i) or (ii) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” shall mean the occurrence of one or more of the following events with respect to the then-current Benchmark:
1.a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof);
2.a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof); or
3.a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such Benchmark (or such component thereof) or, if such Benchmark is a term
rate, all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.
For the avoidance of doubt, if such Benchmark is a term rate, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” shall mean, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to the then-current Benchmark and solely to the extent that the then-current Benchmark has not been replaced with a Benchmark Replacement, the period (x) beginning at the time that such Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.14 and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document pursuant to Section 2.14.
“Beneficial Ownership Certification” shall mean a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230.
“Benefit Plan” shall mean any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan.”
“Big Boy Letter” shall mean a letter from a Lender acknowledging that (i) an assignee may have information regarding Holdings, the Borrower and its Subsidiaries, their ability to perform the Loan Obligations or any other material information that has not previously been disclosed to the Administrative Agent and the Lenders (“Excluded Information”), (ii) the Excluded Information may not be available to such Lender, (iii) such Lender has independently and without reliance on any other party made its own analysis and determined to assign Term Loans to such assignee pursuant to Section 9.04 notwithstanding its lack of knowledge of the Excluded Information and (iv) such Lender permanently waives and releases any and all claims it may have against the Administrative Agent, such assignee (and its Affiliates), Holdings, the Borrower and its Subsidiaries with respect to the nondisclosure of the Excluded Information; or otherwise in form and substance reasonably satisfactory to such assignee, the Administrative Agent and assigning Lender.
“Board of Directors” shall mean, as to any Person, the board of directors or other governing body of such Person, or if such Person is owned or managed by a single entity, the board of directors or other governing body of such entity.
“Bona Fide Debt Fund” shall mean any debt fund, investment vehicle, regulated bank or non-regulated lending entity that is primarily engaged in making, purchasing, holding or otherwise investing in commercial loans or bonds and/or similar extensions of credit in the ordinary course of business (and not primarily engaged in investing in distressed or opportunistic decisions) and which is managed, sponsored or advised by any Person controlling, controlled by or under common control with (a) any bona fide business competitor of Holdings or the Borrower and/or any of its Subsidiaries or (b) any Affiliate of such competitor, but, in each case, with respect to which no personnel involved with any
investment in such Person or the management, control or operation of such Person (i) makes, has the right to make or participates with others in making any investment decisions with respect to such Person or (ii) has access to any information (other than information that is publicly available) relating to Holdings, the Borrower or its Subsidiaries or any entity that forms a part of any of their respective businesses; it being understood and agreed that the term “Bona Fide Debt Fund” shall not include any Person that is separately identified to the Arrangers or the Administrative Agent in accordance with clause (i) of the definition of “Ineligible Institution” or any reasonably identifiable Affiliate of any such Person on the basis of such Affiliate’s name.
“Bookrunners” shall mean (x) with respect to the Initial Term Loans issued on the Closing Date, the Joint Bookrunners, (y) with respect to the 2025 Refinancing Term B Facility, Citigroup Global Markets Inc., in its capacity as sole bookrunner and (z) with respect to the 2025-2 Refinancing Term B Loans, the Joint Bookrunners.
“Borrower” shall have the meaning assigned to such term in the recitals hereto.
“Borrower Materials” shall have the meaning assigned to such term in Section 9.17(a).
“Borrowing” shall mean a group of Loans of a single Type under a single Facility, and made on a single date and, in the case of Term SOFR Loans or Eurocurrency Loans, as to which a single Interest Period is in effect.
“Borrowing Minimum” shall mean (a) in the case of Term SOFR Loans or Eurocurrency Loans, an amount the Dollar Equivalent of which is $1,000,000, (b) in the case of ABR Loans, $1,000,000 and (c) in the case of Swingline Loans or RFR Loans, an amount the Dollar Equivalent of which is $500,000.
“Borrowing Multiple” shall mean (a) in the case of Term SOFR Loans or Eurocurrency Loans, an amount the Dollar Equivalent of $250,000, (b) in the case of ABR Loans, an amount in the Dollar Equivalent of which is $250,000 and (c) in the case of Swingline Loans or RFR Loans, an amount the Dollar Equivalent of which is $100,000.
“Borrowing Request” shall mean a request by the Borrower or the Thai Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit C-1 or another form approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent).
“Budget” shall have the meaning assigned to such term in Section 5.04(e).
“Business Day” shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that when used in connection with a (i) Eurocurrency Loan denominated in Euros, including any interest rate settings as to any such Eurocurrency Loan, any fundings, disbursements, settlements and payments in Euros in respect of any such Eurocurrency Loan, or any other dealings in Euros to be carried out pursuant to this Agreement in respect of any such Eurocurrency Loan, the term “Business Day” shall mean a TARGET Day, (ii) Term SOFR Loan, including any interest rate settings as to any such Term SOFR Loan, any fundings, disbursements, settlements and payments in such currency in respect of any such Term SOFR Loan, or any other dealings in such currency to be carried out pursuant to this Agreement in respect of any such Term SOFR Loan, the term “Business Day” shall mean a U.S. Government Securities Business Day or (iii) RFR Loan, including any interest rate settings as to any such Eurocurrency Loan, any fundings, disbursements, settlements and payments in Thai Baht in respect of any such RFR Loan, or
any other dealings in Thai Baht to be carried out pursuant to this Agreement in respect of any such RFR Loan, the term “Business Day” shall also exclude any day on which banks are authorized or required by law to be closed in Bangkok, Thailand.
“Capital Expenditures” shall mean, for any Person in respect of any period, the aggregate of all expenditures incurred by such Person during such period that, in accordance with GAAP, are or should be included in “additions to property, plant or equipment” or similar items reflected in the statement of cash flows of such Person.
“Capitalized Software Expenditures” shall mean, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by a Person during such period in respect of licensed or purchased software or internally developed software and software enhancements that, in accordance with GAAP, are or are required to be reflected as capitalized costs on the consolidated balance sheet of such Person and its subsidiaries.
“Captive Insurance Subsidiary” shall mean any Subsidiary of the Borrower subject to regulation as an insurance company (or any Subsidiary thereof).
“Cash Collateralize” shall mean to pledge and deposit with or deliver to the Collateral Agent, for the benefit of one or more of the Issuing Banks or Lenders, as collateral for Revolving L/C Exposure or obligations of the Lenders to fund participations in respect of Revolving L/C Exposure, cash or deposit account balances or, if the Administrative Agent and each applicable Issuing Bank shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and each applicable Issuing Bank. “Cash Collateral”, “Cash Collateralization” and “Cash Collateralized” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.
“Cash Interest Coverage Ratio” shall mean on any date, the ratio of EBITDA to Consolidated Ratio Interest Expense of the Borrower and its Subsidiaries for the applicable Test Period.
“Cash Management Agreement” shall mean any agreement to provide to Holdings, the Borrower or any Subsidiary cash management services for collections, treasury management services (including controlled disbursement, overdraft, automated clearing house fund transfer services, cash pooling and concentration, return items and interstate depository network services), any demand deposit, payroll, trust or operating account relationships, commercial credit cards, merchant card, purchase or debit cards, non-card e-payables services, supplier financing, and other cash management services, including electronic funds transfer services, lockbox services, stop payment services and wire transfer services.
“Cash Management Bank” shall mean any Person that, at the time it enters into a Cash Management Agreement (or on the Closing Date), is (or is an Affiliate of a Person that is) (a) an Agent, an Arranger, a Lender or an Affiliate of any such Person, in each case, in its capacity as a party to such Cash Management Agreement, regardless of whether any such Person shall thereafter cease to be an Agent, an Arranger or a Lender or an Affiliate of any of the foregoing, (b) from time to time identified to the Administrative Agent by the Borrower in writing as a Cash Management Bank hereunder or (c) listed in Schedule 1.01(F).
“Change of Control” shall be deemed to occur if:
(a) (i) at any time prior to a Qualified IPO, the Permitted Holders in the aggregate shall at any time cease to have, directly or indirectly, the power to vote or direct the voting of at least a
majority of the Voting Stock of the Borrower or (ii) at any time on and after a Qualified IPO, any Person, entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act as in effect on the Closing Date, but excluding (A) any employee benefit plan of such Person, entity or “group” and its subsidiaries and any Person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan and (B) any underwriter in connection with any Qualified IPO), other than the Permitted Holders (or any holding company parent of the Borrower owned directly or indirectly by the Permitted Holders), shall at any time have acquired direct or indirect beneficial ownership (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act as in effect on the Closing Date) of voting power of the outstanding Voting Stock of the Borrower having more than the greater of (1) 45% of the ordinary voting power for the election of the Board of Directors of the Borrower and (2) the percentage of the total ordinary voting power for the election of the Board of Directors of the Borrower collectively held, directly or indirectly, by the Permitted Holders, unless in the case of either clause (i) or (ii) of this clause (a), the Permitted Holders have, at such time, the right or the ability by voting power, contract or otherwise to elect at least a majority of the members of the Board of Directors of the Borrower or any Parent Entity; or
(b) Holdings shall fail to directly own 100% of the issued and outstanding Equity Interests of the Borrower (other than in connection with or after a Qualified IPO, IPO Reorganization Transactions or a Permitted Reorganization or temporarily during the consummation of the Transactions).
Notwithstanding the foregoing, for the purposes of this definition, a passive holding company, special purpose acquisition vehicle, Parent Entity (including any Parent Entity established in connection with a Qualified IPO) or a subsidiary or any of the foregoing shall not be considered a Person, entity or “group” and instead the equityholders of such passive holding company or special purpose acquisition vehicle (other than any other passive holding company or special purpose acquisition vehicle) shall be considered.
Notwithstanding the foregoing or any provision of Section 13(d)-3 of the Exchange Act as in effect on the Closing Date, (i) a Person, entity or “group” shall be deemed not to beneficially own Voting Stock subject to a stock or asset purchase agreement, merger agreement, option agreement, warrant agreement or similar agreement (or voting or option or similar agreement related thereto) until the consummation of the acquisition of the Voting Stock in connection with the transactions contemplated by such agreement and (ii) a Person, entity or “group” other than the Permitted Holders will not be deemed to beneficially own the Voting Stock of another Person or entity as a result of its ownership of the Voting Stock or other securities of such other Person or entity’s parent entity (or related contractual rights) unless (A) it owns 50% or more of the total voting power of the Voting Stock entitled to vote for the election of the Board of Directors of such parent entity and (B) the members of the Board of Directors of such parent entity elected by the Person, entity or “group” have a majority of the aggregate votes on the Board of Directors of such parent entity.
“Change in Law” shall mean (a) the adoption of any law, rule or regulation after the Closing Date, (b) any change in law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender (or, for purposes of Section 2.15(b), by any Lending Office of such Lender or by such Lender’s holding company, if any) with any written request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date; provided, however, that notwithstanding anything herein to the contrary, (x) all requests, rules, guidelines or directives under or issued in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act, all interpretations and applications thereof and any compliance by a Lender with any request or directive relating thereto
and (y) all requests, rules, guidelines or directives promulgated under or in connection with, all interpretations and applications of, or any compliance by a Lender with any request or directive relating to International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States of America or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case under clauses (x) and (y) be deemed to be a “Change in Law,” but only to the extent a Lender is imposing applicable increased costs or costs in connection with capital adequacy requirements similar to those described in clauses (a) and (b) of Section 2.15 generally on other borrowers of loans under United States of America credit facilities, which, as a credit matter, are similarly situated to the Borrower or Thai Borrower, as applicable.
“Charges” shall have the meaning assigned to such term in Section 9.09.
“Class” shall mean, (a) when used in respect of any Loan or Borrowing, whether such Loan or the Loans comprising such Borrowing are Initial Term B Loans (including the 2025 Refinancing Term B Loans and the 2025-2 Refinancing Term B Loans), any Other Term Loans, Initial USD Revolving Facility Loans, Initial Thai Baht Revolving Facility Loans, Incremental Revolving Loans, Extended Revolving Loans or Replacement Revolving Loans and (b) when used in respect of any Commitment, whether such Commitment is in respect of a commitment to make Initial Term B Loans (including 2025 Refinancing Term B Loans and the 2025-2 Refinancing Term B Loans), any Other Term Loans, Initial USD Revolving Facility Loans, Initial Thai Baht Revolving Facility Loans, Incremental Revolving Loans, Extended Revolving Loans or Replacement Revolving Loans. Other Term Loans, Incremental Revolving Loans, Extended Revolving Loans and Replacement Revolving Loans that have different terms and conditions (together with the Commitments in respect thereof) from the Initial Term B Loans (including the 2025 Refinancing Term B Loans and the 2025-2 Refinancing Term B Loans), the Initial USD Revolving Facility Loans or the Initial Thai Baht Revolving Facility Loans, respectively, and from each other Class of Loans or Commitments, as applicable, shall each be construed to be in separate and distinct Classes. Pursuant to the 2025 Refinancing Amendment and the 2025-2 Refinancing Amendment, respectively, for all purposes of this Agreement, the 2025 Refinancing Term B Loans, the 2025-2 Refinancing Term B Loans and the Initial Term B Loans shall be deemed to be of the same “Class”.
“Closing Date” shall mean August 19, 2024.
“Closing Date Dividend” means the making of dividends or distributions by the Borrower to Holdings (which may make dividends and distribution to ALH or any other Parent Entity) with proceeds of Loans advanced on the Closing Date or cash on the balance sheet of the Borrower and its Subsidiaries for the repurchase or redemption of Equity Interests of ALH or any Parent Entity in an amount not to exceed $900,000,000.
“CNI Growth Amount” shall mean, at any date of determination, an amount (which amount shall not be less than zero) equal to 50% of Consolidated Net Income for the cumulative period from the first day of the fiscal quarter of the Borrower during which the Closing Date occurs to and including the last day of the most recently ended fiscal quarter of the Borrower prior to such date for which consolidated financial statements required pursuant to Section 5.04 have been delivered or, at the Borrower’s election, are internally available (treated as one accounting period).
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Collateral” shall mean all the “Collateral” as defined in the Security Agreement and shall also include any Mortgaged Properties and all other property that is subject to any Lien in favor of the Secured Parties and/or the Administrative Agent, the Collateral Agent or any Subagent for the benefit of
the Secured Parties to secure the Secured Obligations pursuant to any Security Document. For the avoidance of doubt, in no event shall “Collateral” include any Excluded Property.
“Collateral Agent” shall mean the Administrative Agent acting as collateral agent for the Secured Parties, together with its successors and permitted assigns in such capacity.
“Collateral and Guarantee Requirement” shall mean the requirement that (in each case in accordance with and subject to Section 5.10 and Schedule 5.12):
(a) on the Closing Date, the Collateral Agent shall have received (i) a completed Perfection Certificate, dated the Closing Date and signed by a Responsible Officer of the Borrower, together with all attachments contemplated thereby, (ii) from Holdings, the Borrower and each Subsidiary Loan Party, a counterpart of the Guarantee Agreement and of each Security Document, in each case to which it is to be a party as of the Closing Date, in each case duly executed and delivered on behalf of such Person (it being understood that any Guarantee by Holdings shall be “non-recourse” with recourse limited to Equity Interests of the Borrower), (iii) the results of customary lien searches made with respect to the Loan Parties in the jurisdictions contemplated by the Perfection Certificate and (iv) evidence reasonably satisfactory to the Administrative Agent that the Liens indicated by such searches are Permitted Liens or have been, or will be simultaneously or substantially concurrently with the closing under this Agreement, released (or arrangements reasonably satisfactory to the Administrative Agent for such release shall have been made);
(b) on the Closing Date, (i)(x) all outstanding Equity Interests directly owned by the Loan Parties, other than Excluded Securities, and (y) all intercompany Indebtedness owing to any Loan Party, other than Excluded Securities, shall have been pledged to the Collateral Agent to the extent required to be pledged pursuant to the Security Agreement and (ii) the Collateral Agent shall have received certificates or other instruments (if any) representing such Equity Interests (other than certificates or instruments issued by Subsidiaries of the Borrower that are not received from the Borrower on or prior to the Closing Date after using commercially reasonable efforts) and any notes or other instruments, in each case to the extent required to be delivered pursuant to the Security Agreement, together with stock powers, note powers or other instruments of transfer (if applicable) with respect thereto endorsed in blank;
(c) in the case of any Person (other than a Designated Guarantor) that becomes and remains a Subsidiary Loan Party after the Closing Date, the Collateral Agent shall have received, within the time period set forth in Section 5.10(b) (i) a supplement to the Security Agreement (or, at the option of the Subsidiary Loan Party, a new security agreement in substantially similar form or such other form reasonably satisfactory to the Collateral Agent), (ii) a supplement to the Guarantee Agreement (or, at the option of the Subsidiary Loan Party, a new guarantee agreement in substantially similar form or such other form reasonably satisfactory to the Collateral Agent) and (iii) supplements to the other Security Documents (or, at the option of the Subsidiary Loan Party, new Security Documents in substantially similar form or such other form reasonably satisfactory to the Collateral Agent), if applicable;
(d) in the case of any Person that is a Designated Guarantor and that becomes and remains a Subsidiary Loan Party after the Closing Date, the Collateral Agent shall have received, by such time as the Administrative Agent shall agree in its reasonable discretion (i) such Security Documents as are customary for the jurisdiction of organization of such Designated Guarantor and reasonably requested by the Collateral Agent, pursuant to which such Designated Guarantor shall grant security over substantially all of its assets, other than Excluded Property, in favor of the Collateral Agent (for the benefit of the Secured Parties) and (ii) a supplement to the Guarantee Agreement (or, at the option of the
Subsidiary Loan Party, a new guarantee agreement in substantially similar form or such other form reasonably satisfactory to the Collateral Agent);
(e) after the Closing Date, (x) all outstanding Equity Interests of any Person that becomes a Subsidiary Loan Party after the Closing Date that are directly owned by any Loan Party and (y) subject to Section 5.10(d), all Equity Interests directly acquired by a Loan Party after the Closing Date, other than Excluded Securities, in each case shall have been pledged pursuant to the Security Agreement, together with stock powers or other instruments of transfer (if applicable) with respect thereto endorsed in blank;
(f) except as otherwise contemplated by this Agreement or any Security Document,
all Uniform Commercial Code financing statements and filings with the United States Copyright Office and the United States Patent and Trademark Office covering United States issued patents and registered trademarks and copyrights (and pending applications for the foregoing) expressly required by the terms of the Security Documents shall have been delivered, filed, registered or recorded or delivered to the Collateral Agent for filing, registration or the recording concurrently with, or promptly following, the execution and delivery of each such Security Document;
(g) within (x) 180 days after the Closing Date with respect to each Mortgaged Property set forth on Schedule 1.01(E) (or by such later date as the Collateral Agent may agree in its reasonable discretion) and (y) the time periods set forth in Section 5.10 with respect to each Mortgaged Property to be encumbered pursuant to Section 5.10, the Collateral Agent shall have received:
(i) counterparts of a Mortgage to be entered into with respect to such Mortgaged Property duly executed and delivered by the record owner of such Mortgaged Property and suitable for recording or filing in all filing or recording offices in the jurisdiction where the applicable Mortgaged Property is located in order to create a valid and enforceable Lien on such Mortgaged Property subject to no other Liens except Permitted Liens, at the time of recordation thereof; and
(ii) with respect to the Mortgage encumbering each such Mortgaged Property and prior to its recordation, (A) all Flood Documentation as required to ensure compliance with the Flood Insurance Laws, (B) an ALTA mortgagee title insurance policy or policies or marked up title insurance commitments with respect to Mortgaged Properties, or a date-down and/or modification endorsement, if applicable and available in the jurisdiction, paid for by the applicable Loan Party (but in no event in an amount of insurance exceeding the fair market value of such property as reasonably determined by the Borrower), issued by a nationally or regionally recognized title insurance company insuring the Lien of each Mortgage as a valid Lien on the Mortgaged Property described therein, free of any other Liens except Permitted Liens, together with such customary endorsements, coinsurance or reinsurance as the Collateral Agent may reasonably request and, with respect to customary endorsements, which are available at commercially reasonable rates in the jurisdiction where the applicable Mortgaged Property is located, (C) upon reasonable request of the Collateral Agent, a survey of such Mortgaged Property or such other evidence sufficient for such title insurance company to remove all standard survey exceptions from the title insurance policy (or commitment) relating to such Mortgaged Property (or to modify such survey exceptions in the manner required by applicable insurance regulations in the applicable jurisdictions) and issue the customary survey-related endorsements to the extent available in the applicable jurisdiction and (D) an opinion of counsel regarding the enforceability, due authorization, execution and delivery of the applicable Mortgage and such other matters customarily covered in mortgage enforceability opinions in
transactions of this kind as the Collateral Agent may reasonably request, in form and substance reasonably acceptable to the Collateral Agent; and
(h) on the Closing Date, the Collateral Agent shall have received evidence of the insurance required on the Closing Date by the terms of Section 5.02 hereof.
Notwithstanding the foregoing, the Collateral Agent shall not accept delivery of any Mortgage in respect of any Material Real Property acquired by any Loan Party after the Closing Date until the date that is 30 days after the Administrative Agent has delivered to the Lenders (which may be delivered electronically) the following documents in respect of such real property: (i) a completed flood hazard determination from a third party vendor; (ii) if such real property is located in a “special flood hazard area”, (A) a notification to the Borrower (or the applicable Loan Party) of that fact and (if applicable) notification to the Borrower (or the applicable Loan Party) that flood insurance coverage is not available and (B) evidence of the receipt by the Borrower (or the applicable Loan Party) of such notice; and (iii) if such notice is required to be provided to the Borrower (or the applicable Loan Party) and flood insurance is available in the community in which such real property is located, evidence of required flood insurance.
“Commitment Fee” shall have the meaning assigned to such term in Section 2.12(a)(ii).
“Commitments” shall mean, (a) with respect to any Lender, such Lender’s Revolving Facility Commitment or Term Facility Commitment and (b) with respect to any Swingline Lender, its Swingline Commitment (it being understood that a Swingline Commitment does not increase the applicable Swingline Lender’s Revolving Facility Commitment).
“Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.
“Compliance Certificate” shall mean a Compliance Certificate signed by a Financial Officer of the Borrower substantially in the form of Exhibit I or another form approved by the Administrative Agent.1
“consolidation” shall mean the consolidation of the accounts of each of the Subsidiaries with those of the Borrower in accordance with GAAP; provided that, except as otherwise expressly provided herein, “consolidation” will not include consolidation of the accounts of any Securitization Entity. The term “consolidated” has a correlative meaning.
“Consolidated Debt” with respect to any Person at any date shall mean the sum of (without duplication) all Indebtedness of such Person that matures more than one year from the date of its creation or matures within one year from such date but is renewable or extendible, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, in each case consisting of Indebtedness for borrowed money (including Finance Lease Obligations, purchase money Indebtedness (excluding, for the avoidance of doubt, earnouts and seller notes) and unreimbursed obligations under Letters of Credit) of such Person and its subsidiaries determined on a consolidated basis on such date in accordance with GAAP; provided that, at the option of the Borrower,
1 Exhibit to be amended with Term Loan amendment to include ratings for purposes of determining applicable level of Pricing Grid.
Consolidated Debt shall be decreased or increased, as applicable, by the mark to market value of all currency Hedging Agreements to the extent relating to such Consolidated Debt in a manner determined by the Borrower in good faith. Notwithstanding the foregoing, Consolidated Debt of the Borrower and its Subsidiaries shall not include (a) Indebtedness in respect of letters of credit or bank guarantees, to the extent undrawn, (b) any undrawn loan commitment or cash collateral deposit or other funding commitment or obligation that is Limited Recourse, (c) Permitted Securitization Financing Indebtedness and (d) any contingent obligations, not in excess of the Limited Recourse, in respect of any loss reserve, risk retention, residual value guarantee or other credit support or product support provided in connection with any Foreign Customer Finance Program.
“Consolidated Net Income” shall mean, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis; provided, however, that, without duplication,
(i) (A) any extraordinary, exceptional, special, non-recurring or unusual gains, losses, fees, costs or income or expense or charge (including relating to any strategic initiatives and accruals and amounts reserved in connection with such gains, losses, charges or expenses), (B) restructuring charges, expenses, losses or reserves, including any charges, expenses, losses or reserves attributable to the undertaking and/or implementation of new initiatives, business optimization activities and other restructuring activities including any tax restructuring, special marketing initiatives, brand investment initiatives, cost rationalization programs, operating expense reductions, synergies and/or similar initiatives or programs (including, without limitation, in connection with any inventory optimization program or curtailment, integration, restructuring or transition, any reconstruction, decommissioning, recommissioning or reconfiguration of fixed assets for alternative uses, any employee ramp-up charges or any changes related to underutilized personnel (including duplicative personnel) or any implementation of operational and reporting systems and technology initiatives (including any such item relating to the implementation of enhanced accounting or IT functions or new system designs)), any costs and expenses related to any New Project or any reconstruction, decommissioning, recommissioning or reconfiguration of fixed assets for alternative uses (including but not limited to rent termination costs, moving costs and legal costs), changes attributable to any carveout, asset retirement costs in connection with sales, dispositions or abandonments of assets or discontinued operations, fees, expenses or charges relating to closing costs, rebranding costs, curtailments or modifications to pension and post-retirement employee benefit plans, excess pension charges, acquisition or other integration costs, opening costs, recruiting costs, signing, retention, recruitment or completion bonuses and expenses, stock option and other equity-based compensation expenses and the amount of payments made to option holders in connection with, or as a result of, any distribution being made to shareholders, severance and relocation costs, systems design, implementation and upgrade charges, losses or expenses and establishment costs, costs relating to entry into a new market or to exiting a market, costs associated with office and facility openings, pre-openings, closings, expansions and consolidations (including but not limited to termination costs, moving costs and legal costs), new operation costs, unused warehouse and other facility costs, new contract costs, project start-up costs, costs relating to early termination of rights fee arrangements, consulting fees, one-time compensation costs, consulting or corporate development costs and software and other Intellectual Property development charges, costs and expenses incurred in connection with strategic initiatives, transition costs, costs and expenses incurred in connection with non-ordinary course product and Intellectual Property development, costs incurred in connection with acquisitions (or purchases of assets) or refranchising transactions prior to or after the Closing Date, business optimization expenses, costs or expenses related to employment of terminated
employees, litigation costs and expenses (including costs related to settlements, fines judgments or orders), (C) Pre-Opening Expenses and (D) expenses or charges related to any offering of Equity Interests (including any Qualified IPO) or debt securities of such Person or its subsidiaries or any Parent Entity, any Investment, acquisition, refranchising transaction, Disposition, recapitalization or, incurrence, issuance, repayment, repurchase, refinancing, amendment or modification of Indebtedness (in each case, whether or not successful), any fees, expenses, charges or change in control payments related to the Transactions (including any costs relating to auditing prior periods, any transition-related expenses, Transaction Expenses incurred before, on or after the Closing Date), and any consideration paid or payable in relation to a Permitted Business Acquisition or other permitted Investment to the extent reflected in Net Income, in each case, shall be excluded,
(ii) any income or loss from Disposed of, abandoned, closed, divested or discontinued operations, properties or assets and any net after-Tax gain or loss on the Dispositions of Disposed of, abandoned, closed or discontinued operations, properties or assets shall be excluded,
(iii) any gain or loss (less all fees and expenses or charges relating thereto) attributable to business Dispositions or asset Dispositions (including asset retirement costs or sales or issuances of Equity Interests) other than in the ordinary course of business (as determined in good faith by the Borrower) shall be excluded,
(iv) any income or loss (less all fees and expenses or charges relating thereto) attributable to the early extinguishment or buy-back or cancellation of indebtedness, Hedging Agreements or other derivative instruments shall be excluded,
(v) the Net Income for such period of any Person that is not a Subsidiary of such Person, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends or distributions or other payments paid in cash or cash equivalents (or to the extent converted into cash or cash equivalents) to the referent Person or a Subsidiary thereof (other than an Unrestricted Subsidiary of such referent Person) in respect of such period,
(vi) the cumulative effect of a change in accounting principles and changes as a result of the adoption or modification of accounting policies during such period whether effected through a cumulative effect adjustment or a retroactive application, in each case in accordance with GAAP during such period shall be excluded,
(vii) effects of purchase accounting adjustments (including the effects of such adjustments pushed down to such Person and its Subsidiaries and including the effects of adjustments to (A) deferred rent, (B) Finance Lease Obligations or other obligations or deferrals attributable to capital spending funds with suppliers or (C) any deferrals of revenue) in component amounts required or permitted by GAAP, resulting from the application of recapitalization accounting or purchase accounting, as the case may be, in relation to the Transactions or any acquisition, refranchising transaction or Investment consummated after the Closing Date or the amortization or write-off of any amounts thereof, net of Taxes, shall be excluded,
(viii) any impairment charges, including any bad debt expense, or asset write-offs or write-downs, in each case pursuant to GAAP, and the amortization of intangibles and other fair value adjustments arising pursuant to GAAP, shall be excluded,
(ix) any (a) non-cash compensation charge or (b) costs or expenses realized in connection with or resulting from management equity, profits interests or stock option plans or any other management agreement or plan, employee benefit plans, post-employment benefit plans, or any stock subscription or shareholder agreement, any distributor equity plan or any similar equity plan or agreement (including any deferred compensation arrangement or trust), grants or sales of stock, stock appreciation or similar rights, equity incentive programs or similar rights, long term incentive plans or similar rights, stock options, restricted stock, preferred stock or other rights, and any cash charges associated with the rollover, acceleration or payout of equity interests by management of such Person or its subsidiaries or any Parent Entity shall be excluded,
(x) accruals and reserves that are established or adjusted, as applicable, within (a) twelve months after the Closing Date that are required to be established, adjusted or incurred, as applicable, as a result of the Transactions in accordance with GAAP, (b) within twelve months after the closing of any other acquisition, Investment or refranchising transaction that are required to be established, adjusted or incurred, as applicable, as a result of such acquisition, Investment or refranchising transaction in accordance with GAAP or (c) that are so required to be established or adjusted as a result of the adoption or modification of accounting principles or policies shall be excluded,
(xi) non-cash gains, losses, income and expenses resulting from fair value accounting required by the applicable standard under GAAP and related interpretation shall be excluded,
(xii) any gain, loss, income, expense or charge resulting from the application of any LIFO method shall be excluded,
(xiii) any charges for deferred Tax expenses associated with any tax deduction or net operating loss arising as a result of the Transactions, or the release of any valuation allowance related to any such item shall be excluded,
(xiv) (a) any unrealized or realized currency translation or transaction gains and losses (including currency re-measurements of Indebtedness, any currency translation gains and losses related to the translation to the presentation currency and translation of a foreign operation and any net loss or gain resulting from Hedging Agreements), (b) any realized or unrealized gain or loss in respect of (x) any obligation under any Hedging Agreement as determined in accordance with GAAP and/or (y) any other derivative instrument, pursuant to, in the case of this clause (y), Financial Accounting Standards Board’s Accounting Standards Codification No. 815-Derivatives and Hedging and (c) unrealized gains or losses in respect of any Hedging Agreement and any ineffectiveness recognized in earnings related to qualifying hedge transactions or the fair value of changes therein recognized in earnings for derivatives that do not qualify as hedge transactions, in respect of Hedging Agreements, shall be excluded,
(xv) any deductions attributable to minority interests or the amount of any non-controlling interest attributable to non-controlling interests of third parties in any
non-Wholly Owned Subsidiary, excluding cash distributions in respect thereof, shall be excluded,
(xvi) earn-out and contingent consideration obligations (including to the extent accounted for as bonuses or otherwise) shall be excluded,
(xvii) so long as such Person in good faith expects to receive such amount, to the extent that (x) a claim for reimbursement or indemnification is submitted or expected to be submitted within 180 days and (y) such Person expects in good faith to receive such amount within 365 days following the date of such submission (with a deduction for any amount so added back to the extent not so submitted within 180 days or reimbursed within such 365 days), the amount of proceeds estimated in good faith to be received or receivable with respect to liability or casualty events or business interruption or that are, directly or indirectly, reimbursed or reimbursable by a third party, and amounts that are covered by indemnification or other reimbursement provisions in connection with any acquisition, refranchising transaction, Investment or any sale, conveyance, transfer or other disposition of assets permitted hereunder shall be included (with a deduction for amounts actually received up to such estimated amount to the extent included in Net Income in a future period) and expenses incurred in connection with obtaining such reimbursement or indemnification shall be excluded,
(xviii) with respect to events that result in one or more retail locations being closed, so long as such Person in good faith expects to receive such amount, to the extent that (x) a claim for reimbursement or indemnification is submitted or expected to be submitted within 180 days and (y) such Person expects in good faith to receive such amount within 365 days following the date of such submission (with a deduction for any amount so added back to the extent not so submitted within 180 days or reimbursed within such 365 days), the amount of proceeds estimated in good faith to be received or receivable with respect to business interruption that are, directly or indirectly, reimbursed or reimbursable by a third party, shall be included (with a deduction for amounts actually received up to such estimated amount to the extent included in Net Income in a future period) and expenses incurred in connection with obtaining such reimbursement or indemnification shall be excluded,
(xix) solely for the purpose of calculating Excess Cash Flow, the income or loss of any Person accrued prior to the date on which such Person becomes a Subsidiary of such Person or is merged into or consolidated with such Person or any Subsidiary of such Person or the date that such other Person’s assets are acquired by such Person or any Subsidiary of such Person,
(xx) an amount equal to the amount of distributions actually made to any parent or equity holder of such Person in respect of such period in accordance with Section 6.06(b)(v) shall be included as though such amounts had been paid as income Taxes directly by such Person for such period,
(xxi) Capitalized Software Expenditures and software development costs shall be excluded,
(xxii) closing fees, amendment fees and other costs, expenses and charges incurred in connection with Permitted Securitization Financings, including the Existing Securitization Facilities, or any Foreign Customer Finance Program, shall be excluded,
(xxiii) any non-cash expenses, accruals or reserves related to adjustments to historical tax exposures shall be excluded.
Unless otherwise specified, Consolidated Net Income shall refer to Consolidated Net Income of the Borrower and its Subsidiaries.
“Consolidated Ratio Interest Expense” shall mean, with respect to any Person, cash interest expense (including that attributable to Finance Lease Obligations but excluding that attributable to the annual dividend or return on ALH Preferred Equity), net of cash interest income of such Person and its subsidiaries, with respect to all outstanding Indebtedness of such Person and its subsidiaries and net cash costs (less net cash payments) under Hedging Agreements, but excluding, for the avoidance of doubt, (a) any non-cash interest expense and any capitalized interest, whether paid or accrued, (b) the amortization of original issue discount resulting from the issuance of Indebtedness at less than par, (c) amortization of deferred financing costs, Indebtedness issuance costs, commissions, fees and expenses, (d) any expenses resulting from discounting of Indebtedness in connection with the application of recapitalization accounting or purchase accounting, (e) penalties or interest related to Taxes and any other amounts of non-cash interest resulting from the effects of the acquisition method accounting or pushdown accounting, (f) the accretion or accrual of, or accrued interest on, discounted liabilities (other than Indebtedness) during such period, (g) non-cash interest expense attributable to the mark-to-market valuation of obligations under Hedging Agreements or other derivative instruments pursuant to FASB Accounting Standards Codification No. 815-Derivatives and Hedging, (h) any one-time cash costs associated with breakage in respect of Hedging Agreements for interest rates, (i) any payments with respect to make whole premiums or other breakage costs of any debt, all as calculated on a consolidated basis in accordance with GAAP, (j) all non-recurring interest expense consisting of liquidated damages for failure to timely comply with registration rights obligations, all as calculated on a consolidated basis in accordance with GAAP, (k) expensing of bridge, arrangement, structuring, commitment or other financing fees, (l) any dividends on account of Disqualified Stock and (m) interest expense associated with any Indebtedness (including letters of credit) incurred in connection with any Permitted Securitization Financing or Foreign Customer Finance Program.
Notwithstanding anything to the contrary herein, Consolidated Ratio Interest Expense of the Borrower and its Subsidiaries shall (A) exclude Permitted Securitization Financing Indebtedness and other obligations associated with any Indebtedness (including letters of credit) incurred in connection with any Permitted Securitization Financing or Foreign Customer Finance Program and (B) for any Test Period ending prior to the date that is four full fiscal quarters after the Closing Date, be calculated on an annualized basis, based on Consolidated Ratio Interest Expense of the Borrower and its Subsidiaries for the period commencing on the Closing Date and ending on the last day of such Test Period, based on a year of 365 days and actual days elapsed.
“Consolidated Total Assets” shall mean, as of any date, all amounts which would, in conformity with GAAP, be set forth opposite the caption “total assets” (or any like caption) on a consolidated balance sheet of the Borrower and its consolidated Subsidiaries (including for purposes of this definition, the Securitization Entities to the extent consolidated in accordance with GAAP).
“Continuing Thai Baht Letter of Credit” shall have the meaning assigned to such term in Section 2.05(k)(ii).
“Continuing USD Letter of Credit” shall have the meaning assigned to such term in Section 2.05(k)(i).
“Contribution Debt” has the meaning assigned to such term in Section 6.01(l).
“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and “Controlling” and “Controlled” shall have meanings correlative thereto.
“Controlled Investment Affiliate” 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. For the avoidance of doubt, (a) any affiliates, collectively with the funds, partnerships or other co-investment vehicles, in each case managed, advised or controlled by the BDT Investor and (b) BDT Badger, in each case, other than portfolio companies thereof, will constitute a Controlled Investment Affiliate of the BDT Investor.
“Convertible Indebtedness” shall mean Indebtedness of Holdings or any Parent Entity (which may be guaranteed by the Borrower and its subsidiaries) that is either (a) convertible into Qualified Equity Interests of the Borrower or any Parent Entity (and cash in lieu of fractional shares) or cash (in an amount determined by reference to the price of such Qualified Equity Interests) or (b) sold as units with call options, warrants or rights to purchase (or substantially equivalent derivative transactions) that are exercisable for Qualified Equity Interests of the Borrower or any Parent Entity or cash (in an amount determined by reference to the price of such Qualified Equity Interests).
“Covered Affiliate” has the meaning assigned to such term in Section 9.08(k)(i).
“Credit Event” shall have the meaning assigned to such term in Article IV.
“Credit Rating” means the public rating that has been most recently announced by Moody’s and S&P with respect to the corporate rating of the Borrower or Parent Entity.
“Cumulative Credit” shall mean, at any date, an amount, not less than zero in the aggregate, determined on a cumulative basis equal to, without duplication:
(a) the greater of (x) $300,000,000 and (y) 0.75 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period, plus
(b) the greatest of (i) the Cumulative Retained Excess Cash Flow Amount, (ii) the CNI Growth Amount and (iii) the EBITDA Growth Amount (such greatest amount, the “Cumulative Credit Growth Amount”), plus
(c) the aggregate amount of any Retained Asset Sale Proceeds and Excluded Proceeds, plus
(d) the aggregate amount of any Retained Declined Proceeds, plus
(e) (i) the cumulative amount of proceeds (including cash and the fair market value (as determined in good faith by the Borrower) of property other than cash) from the sale of Equity Interests (other than Disqualified Stock) of the Borrower or (solely to the extent contributed to the Borrower in cash, Permitted Equity or property other than cash) any Parent Entity after the Closing Date and on or prior to such time (including upon exercise of warrants or options), which proceeds have been contributed as Permitted Equity to the capital of the Borrower and (ii) Qualified Equity Interests of the Borrower or any Equity Interests of any Parent Entity issued upon conversion of Indebtedness (other than Indebtedness that is contractually subordinated to the Loan Obligations in right of payment) of the
Borrower or any Subsidiary owed to a person other than the Borrower or a Subsidiary to the extent not increasing any other basket under Article VI; provided that this clause (e) shall exclude Permitted Cure Securities, sales of Equity Interests financed as contemplated by Section 6.04(e) or used as described in clause (x) of the definition of “EBITDA”, any amount used to incur Indebtedness under Section 6.01(l), and any amounts used to finance Restricted Debt Payments pursuant to Section 6.09(b), plus
(f) 100% of the aggregate amount of contributions as Permitted Equity to the capital of the Borrower received in cash (and the fair market value (as determined in good faith by the Borrower) of property other than cash received) after the Closing Date (subject to the same exclusions as are applicable to clause (e) above), plus
(g) 100% of the aggregate principal amount of any Indebtedness (including the liquidation preference or maximum fixed repurchase price, as the case may be, of any Disqualified Stock) of the Borrower or any Subsidiary issued after the Closing Date (other than Indebtedness issued to a Subsidiary), which has been converted into or exchanged for Equity Interests (other than Disqualified Stock) in the Borrower or Equity Interests of any Parent Entity (and the fair market value (as determined in good faith by the Borrower) of any property other than cash received by the Borrower or any Subsidiary upon such conversion or exchange), plus
(h) 100% of the aggregate amount received by the Borrower or any Subsidiary in cash (and the fair market value (as determined in good faith by the Borrower) of property other than cash received by Holdings or any Subsidiary) after the Closing Date from:
(A) the issuance or sale (other than to the Borrower or any Subsidiary) of the Equity Interests of an Unrestricted Subsidiary to the extent not increasing any other basket under Section 6.04, or
(B) any dividend or other distribution by an Unrestricted Subsidiary to the extent not increasing any other basket under Section 6.04, plus
(i) in the event any Unrestricted Subsidiary, joint venture or minority investment has been redesignated as a Subsidiary or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, the Borrower or any Subsidiary, the fair market value (as determined in good faith by the Borrower) of the Investments of the Borrower or any Subsidiary in such Unrestricted Subsidiary, joint venture or minority investment at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable) to the extent not increasing any other basket under Section 6.04, plus
(j) an amount equal to any returns (including dividends, interest, distributions, returns of principal, profits on sale, repayments, income and similar amounts) actually received by the Borrower or any Subsidiary in respect of any Investments made pursuant to Section 6.04(hh) using the Cumulative Credit, plus
(k) the net proceeds received by the Borrower or any Subsidiary during the period from and including the day immediately following the Closing Date through and including such time in connection with the Disposition to any person (other than the Borrower or any Subsidiary) of any Investment made pursuant to Section 6.04(hh), plus
(l) an amount equal to the aggregate fair market value (as determined in good faith by the Borrower) of any Initial Term B Loans, Other Term Loans, Incremental Term Loans, Incremental Equivalent Debt, Refinancing Term Loans or Refinancing Notes contributed to the Borrower or any of its Subsidiaries and cancelled after the Closing Date, plus
(m) the net proceeds received by the Borrower and its Subsidiaries from any Sale and Lease-Back Transaction not prohibited by this Agreement, minus
(n) any amount thereof used to make Investments pursuant to Section 6.04(hh) after the Closing Date prior to such time, minus
(o) any amount thereof used to make Restricted Payments pursuant to Section 6.06(e) prior to such time, minus
(p) any amount thereof used to make Restricted Debt Payments pursuant to Section 6.09(b)(i)(E) (other than payments made with proceeds from the issuance of Equity Interests that were excluded from the calculation of the Cumulative Credit pursuant to clause (e) above).
“Cumulative Credit Growth Amount” shall have the meaning assigned to such term in the definition of “Cumulative Credit”.
“Cumulative Retained Excess Cash Flow Amount” shall mean, at any date, an amount (which shall not be less than zero in the aggregate) determined on a cumulative basis equal to the aggregate cumulative sum of the Excess Cash Flow that is not required to be applied as a mandatory prepayment under Section 2.11(c) for all Excess Cash Flow Periods ending after the Closing Date and prior to such date.
“Cure Amount” shall have the meaning assigned to such term in Section 7.03.
“Cure Expiration Date” shall have the meaning assigned to such term in Section 7.03.
“Cure Right” shall have the meaning assigned to such term in Section 7.03.
“Current Assets” shall mean, with respect to the Borrower and its Subsidiaries on a consolidated basis at any date of determination, all assets (other than cash and Permitted Investments or other cash equivalents) that would, in accordance with GAAP, be classified on a consolidated balance sheet of the Borrower and its Subsidiaries as current assets at such date of determination, other than (a) amounts related to current or deferred Taxes based on income or profits, (b) receivables (i) in respect of interest, insurance proceeds or the proceeds of dispositions or (ii) the proceeds of which are required to be reinvested or applied towards any mandatory prepayment of obligations, (c) assets relating to Hedging Agreements, (d) deferred financing fees and (e) assets arising from prepayments in respect of Capital Expenditures.
“Current Liabilities” shall mean, with respect to the Borrower and its Subsidiaries on a consolidated basis at any date of determination, all liabilities that would, in accordance with GAAP, be classified on a consolidated balance sheet of the Borrower and its Subsidiaries as current liabilities at such date of determination, other than (a) the current portion of any Indebtedness or any capitalized lease liability that does not constitute a Finance Lease Obligation, (b) accruals of Interest Expense (excluding Interest Expense that is due and unpaid), (c) accruals for current or deferred Taxes based on income or profits, (d) accruals, if any, of Transaction Expenses resulting from the Transactions, (e) accruals for
Capital Expenditures, (f) accruals or payables in respect of Permitted Business Acquisitions or other permitted Investments, (g) accruals of any costs or expenses related to (i) severance or termination of employees prior to the Closing Date or (ii) bonuses, pension and other post-retirement benefit obligations, (h) accruals for amounts described in clause (a)(v) of the definition of EBITDA or clause (i) of the definition of Consolidated Net Income, (i) dividends payable and (j) liabilities relating to Hedging Agreements.
“Customary Bridge Loans” shall mean, with respect to any requirements as to earliest maturity or shortest Weighted Average Life to Maturity, bridge loans with a maturity date not longer than one year; provided that any loans, notes, securities or other Indebtedness which are exchanged (automatically or otherwise) for or otherwise intended to replace such bridge loans shall be subject to such requirements.
“Daily Simple RFR” shall mean, for any day (an “RFR Interest Day”), an interest rate per annum equal to the greater of (a) THOR for the day that is 5 Business Days prior to (A) if such RFR Interest Day is a Business Day, such RFR Interest Day or (B) if such RFR Interest Day is not a Business Day, the Business Day immediately preceding such RFR Interest Day and (b) any applicable Floor. Any change in Daily Simple RFR due to a change in THOR shall be effective from and including the effective date of such change in THOR without notice to the Borrower.
“Daily Simple SOFR” shall mean, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Administrative Agent, in consultation with the Borrower, in accordance with the conventions for this rate recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided that if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion in consultation with the Borrower.
“Debt Fund Affiliate” shall mean an Affiliate of the BDT Investor (other than Holdings, any of its Subsidiaries or a natural Person) that is a bona fide debt fund or investment vehicle primarily engaged in the making, purchasing, holding or otherwise investing in commercial loans, bonds or similar extensions of credit in the ordinary course of its business and with respect to which none of the Borrower, the BDT Investor or any of their Affiliates that is not a bona fide debt fund, investment vehicle or regulated bank entity primarily engaged in the making, purchasing, holding or otherwise investing in commercial loans, bonds or similar extensions of credit in the ordinary course of its business makes investment decisions or has the power, directly or indirectly, to cause the direction of such Affiliate’s investment decisions. For the avoidance of doubt, any Person that is a limited partner or member of an investment vehicle managed by the BDT Investor shall not be deemed to be a Debt Fund Affiliate.
“Debt Service” shall mean, with respect to the Borrower and its Subsidiaries on a consolidated basis for any period, Interest Expense for such period, plus scheduled principal amortization of Consolidated Debt for such period.
“Debtor Relief Laws” shall mean the US Bankruptcy Code, the Insolvency Act 1986 and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, judicial management, scheme of arrangement, reorganization, stay or similar debtor relief laws of the United States of America or other applicable jurisdictions from time to time in effect.
“Declined Proceeds” shall have the meaning assigned to such term in Section 2.11(h)(i).
“Declining Lender” shall have the meaning assigned to such term in Section 2.11(h)(i).
“Default” shall mean any event or condition that upon notice, lapse of time or both would constitute an Event of Default.
“Defaulting Lender” shall mean, subject to Section 2.25, any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied or (ii) pay to the Administrative Agent, any Issuing Bank, the Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two Business Days of the date when due, (x) has notified the Borrower, the Swingline Lender, the Administrative Agent or any Issuing Bank in writing that it does not intend or expect to comply with its funding obligations (i) hereunder (unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied) or (ii) generally under other agreements in which it commits to extend credit, or has made a public statement to that effect, (y) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower) or (z) has, or has a direct or indirect parent company that has, other than via an Undisclosed Administration, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States of America or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.25) upon delivery of written notice of such determination to the Borrower, each Issuing Bank, the Swingline Lender and each Lender. Any obligation to fund pursuant to Section 8.07(b) shall be deemed to be a funding obligation for purposes of this definition.
“Designated Foreign Borrower” shall have the meaning assigned to such term in Section 1.12(a).
“Designated Guarantor” shall have the meaning assigned to such term in the definition of “Subsidiary Loan Party.”
“Designated Non-Cash Consideration” shall mean the fair market value (as determined in good faith by the Borrower) of non-cash consideration received by the Borrower or any Subsidiary in connection with an Asset Sale that is so designated as Designated Non-Cash Consideration by the
Borrower, less the amount of cash or cash equivalents received in connection with a subsequent disposition of, or as proceeds of, such Designated Non-Cash Consideration.
“Dispose” or “Disposed of” shall mean to convey, sell, lease, sell and leaseback, assign, farm-out, transfer or otherwise dispose of any property, business or asset. The term “Disposition” shall have a correlative meaning to the foregoing. For the avoidance of doubt, grants of limited licenses of Intellectual Property for fixed terms in the ordinary course of business in connection with the grant of franchise rights to any Person shall not constitute a Disposition of those Intellectual Property rights.
“Disqualified Stock” shall mean, with respect to any Person, any Equity Interests of such Person that, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior or concurrent repayment in full of the Loans and all other Loan Obligations that are accrued and payable and the termination of the Commitments), (b) is redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part or (c) is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Stock, in each case, prior to the date that is 91 days after the Latest Maturity Date in effect at the time of issuance thereof (provided that only the portion of the Equity Interests that so mature or are mandatorily redeemable, are so convertible or exchangeable or are so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock). Notwithstanding the foregoing: (i) any Equity Interests issued to any employee or to any plan for the benefit of employees of the Borrower or the Subsidiaries or by any such plan to such employees shall not constitute Disqualified Stock solely because they may be required to be repurchased by Holdings in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability; and (ii) any class of Equity Interests of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Equity Interests that are not Disqualified Stock shall not be deemed to be Disqualified Stock.
“Dollar Equivalent” shall mean, at any time, (a) with respect to any amount denominated in Dollars, such amount and (b) with respect to any amount denominated in any Alternative Currency, the equivalent amount thereof in Dollars as determined by the Administrative Agent, the Swingline Lender or the Issuing Bank, as appropriate, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of Dollars with such Alternative Currency.
“Dollars” or “$” shall mean lawful money of the United States of America.
“EBITDA” shall mean, with respect to the Borrower and its Subsidiaries on a consolidated basis for any period, the Consolidated Net Income of the Borrower and its Subsidiaries for such period, plus (x) the difference between (A) the interest and fees earned on equipment promissory notes sold to special-purpose bankruptcy remote entities less interest expense payable to noteholders of such entities less collection and administrative expenses associated with said promissory notes and (B) the gain on sale accounting resulting from the sale of promissory notes to such entities in accordance with GAAP, plus (y) at the option of the Borrower with regard to any addback, the sum of (in each case without duplication and to the extent the respective amounts described in subclauses (i) through (xxii) of this clause (a) reduced such Consolidated Net Income (other than clauses (ix), (xi), (xiii), (xvii) and (xviii)
below) and were not excluded therefrom for the respective period for which EBITDA is being determined):
(i) (A) provision for Taxes or deferred Taxes of the Borrower and its Subsidiaries for such period, including, without limitation, income, profits, revenue, capital, federal, state, local, franchise and similar Taxes, property Taxes, foreign withholding Taxes and foreign unreimbursed value added Taxes (including penalties and interest related to Taxes or arising from Tax examinations) and the amount of distributions pursuant to Sections 6.06(a), 6.06(b)(iii) and 6.06(b)(v) in respect of such period and (B) any payments to any Parent Entity in respect of Taxes permitted to be made hereunder,
(ii) Interest Expense (and to the extent not included in Interest Expense, (a) fees and expenses paid to the Administrative Agent in connection with its services hereunder, (b) other bank, administrative agency (or trustee) and financing fees (including commissions, discounts and other fees and charges associated with the Loans, the Letters of Credit and any Indebtedness issued in connection with any Permitted Securitization Financing or Foreign Customer Finance Program) and rating agency fees, (c) all cash dividend payments made by the Borrower or its Subsidiaries (excluding items eliminated in consolidation) on any series of preferred stock (including the preferred return on Borrower’s preferred units) or Disqualified Stock, (d) costs of surety bonds in connection with financing activities (whether amortized or immediately expensed), (e) interest charge on defined benefit liabilities, (f) unwinding of discount on restoration and onerous lease provisions) of the Borrower and its Subsidiaries for such period and (g) any losses on Hedging Agreements or other derivative instruments entered into for the purpose of hedging interest or currency exchange rate risk, net of interest income and gains on such Hedging Agreements or such derivative instruments,
(iii) (A) depreciation and amortization expenses of the Borrower and its Subsidiaries for such period including amortization of acquisition-related fair value adjustments to inventory and including the amortization of goodwill (including goodwill or other expense recognition of any costs associated with asset write-ups in accordance with Financial Accounting Standards No. 141(R) and non-cash gains or losses associated with ASC 460) and other intangible assets, deferred financing fees, debt issuance costs, original issue discount and Capitalized Software Expenditures, amortization of unrecognized prior service costs and actuarial gains and losses related to pensions and other post-employment benefits (including, for purpose of this clause (A), but without duplication of clause (a)(ii) above, amortization or write-off of deferred financing fees, debt discounts and debt issuance costs and commissions, discounts and other fees and charges associated with the Loans, the Letters of Credit and any Indebtedness issued in connection with any Permitted Securitization Financing) and (B) any impairment charge,
(iv) [reserved],
(v) any other non-cash charges, expenses or losses, including, without limitation, any non-cash impairment charge and any write-offs or write-downs, any amortization of intangibles, any non-cash compensation expense, any non-cash translation loss and any non-cash expense relating to the vesting of warrants in each case reducing Consolidated Net Income for such period; provided that for purposes of this sub-clause (v) of this clause (a), (i) if any such non-cash charges represent an accrual or reserve for potential cash items in any future period, the Borrower may determine not to add back such non-cash charge in the current period and (ii) to the extent the Borrower does decide to add back any such non-cash charges, any
non-cash charges or losses shall be treated as cash charges or losses in any subsequent period during which cash disbursements attributable thereto are made (but excluding, for the avoidance of doubt, amortization of a prepaid cash item that was paid in a prior period),
(vi) (A) the amount of board of director fees and related indemnities and expenses and management, consulting, monitoring, transaction, advisory, transaction, termination and similar fees and related indemnities and expenses (including reimbursements) paid to the BDT Investor and/or their respective Affiliates or management companies (or any accruals related to such fees and related expenses) and payments to outside directors of the Borrower or any Parent Entity actually paid by or on behalf of, or accrued by, such Person or any of its subsidiaries during such period and (B) the amount of payments made to optionholders of such Person in connection with, or as a result of, any distribution being made to equityholders of such Person, which payments are being made to compensate such optionholders as though they were equityholders at the time of, and entitled to share in, such distribution, in each case to the extent permitted under this Agreement,
(vii) Transaction Expenses and other transaction fees, costs, accruals, expenses or charges (including rationalization, legal, tax, structuring and other costs and expenses, other than depreciation or amortization expense as described in the preceding sub-clause (iii)) related to (A) any issuance or exchange of Equity Interests (including by Holdings), Investment, acquisition, refranchising transaction, New Project, Disposition, merger, consolidation or amalgamation, recapitalization, dividend, restricted payment, option buyouts, refinancing transactions, hedging agreements or other derivative instruments, or the incurrence, modification, amendment or repayment of Indebtedness (including any amortization or write-off of debt issuance or deferred financing costs, premiums and prepayment penalties) permitted to be incurred by this Agreement (including repayment, redemption or refinancing thereof) (in each case, whether or not successful), including (x) such fees, expenses or charges related to this Agreement (including rating agency legal and bank fees), (y) any amendment or other modification of the Secured Obligations or other Indebtedness and (z) commissions, discounts, yield and other fees, expenses and charges (including any interest expense) related to any Permitted Securitization Financing or any Foreign Customer Finance Program and/or (B) in connection with any Qualified IPO or becoming a standalone company or a public company (in each case, whether or not consummated),
(viii) the amount of any loss, discount or other charge in connection with a sale of Securitization Assets and any assets related to any Securitization Entity or in connection with any Permitted Securitization Financing or any Foreign Customer Finance Program, including amortization of loan origination costs and amortization of portfolio discounts,
(ix) pro forma adjustments, including (1) expected “run rate” cost savings, operating expense reductions, operational improvements and other synergies (in each case, net of amounts actually realized), (A) identified to the Arrangers (including in the Projections, any management presentation, any confidential information memorandum, the Model or any quality of earnings or similar report or analysis) prior to the Closing Date (including in respect of any action taken on or prior to the Closing Date) or (B) related to the Transactions or any acquisition (including the commencement of activities constituting a business), disposition (including the termination or discontinuance of activities constituting a business) or other specified investment or transaction or event, or related to any operating change initiative, business optimization initiative, restructuring initiative, cost savings initiative or other initiative (including the effect of increased pricing with respect to products or in customer contracts, the renegotiation of contracts
or other arrangements of efficiencies from the shifting of production of one or more products from one or more products from one manufacturing facility to another), that are reasonably identifiable and projected by the Borrower in good faith to result from actions that have been taken or with respect to, which steps have been taken or are expected to be taken within 24 months after the last day of the applicable period (in each case, in the good faith determination of the Borrower) and (2) the aggregate amount of net income projected by the Borrower in good faith to result from binding contracts entered into during such period,
(x) (A) any costs or expense incurred pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, any pension plan (including any post-employment benefit program which has been agreed to with the relevant pension trustee), any employee benefit trust, any employment benefits program, any long-term incentive plan or any similar equity plan or arrangement (including any deferred compensation arrangement), including, without limitation, pensions or other post-employment benefit costs representing amortization of unrecognized prior service costs, actuarial costs, including amortization of such amounts arising in prior periods, and (B) any charge in connection with the rollover, acceleration or payout of equity interests held by management, in each case under this clause (x), to the extent that such costs or expenses are non-cash or are funded with cash proceeds contributed to the capital of the Borrower or a Subsidiary (other than contributions received from the Borrower or another Subsidiary) or net cash proceeds of an issuance of Equity Interests of the Borrower (other than Disqualified Stock),
(xi) add-backs and adjustments (x) that are consistent with Regulation S-X or (y) that are of the type identified or set forth in the Projections, the Model or in any quality of earnings analysis or report prepared by financial advisors of recognized standing or any other firm reasonably acceptable to the Administrative Agent (it being understood that the “Big Four” accounting firms are acceptable) and delivered to the Administrative Agent in connection with any acquisition or Investment not prohibited by this Agreement,
(xii) the amount of any loss or pre-opening expenses attributable to a New Project, until the date that is 12 months after the date of completing the construction, acquisition, assembling or creation of such New Project, as the case may be; provided that (A) such losses or pre-opening expenses are reasonably identifiable and factually supportable and (B) losses or pre-opening expenses attributable to such New Project after 12 months from the date of completing such construction, acquisition, assembling or creation, as the case may be, shall not be included in this sub-clause (xii),
(xiii) with respect to any joint venture that is not a Subsidiary and solely to the extent relating to any net income referred to in clause (v) of the definition of “Consolidated Net Income,” an amount equal to the proportion of those items described in subclauses (i), (ii) and (iii) above relating to such joint venture corresponding to the Borrower’s and its Subsidiaries’ proportionate share of such joint venture’s Consolidated Net Income (determined as if such joint venture were a Subsidiary),
(xiv) one-time costs associated with commencing Public Company Compliance,
(xv) the aggregate Residual Amount for such period,
(xvi) the amount of earn-out and other contingent consideration obligations (including to the extent accounted for as bonuses, compensation or otherwise) incurred in connection with (A) the Transactions, (B) acquisitions, refranchising transactions and Investments completed prior to the Closing Date and (C) any acquisition, refranchising transaction or other Investment permitted by this Agreement, in each case, which is paid or accrued in such period and, in each case, adjustments thereof; provided that any accrual amount added back pursuant to this clause (xvi) shall not be added back in any subsequent period when paid,
(xvii) the amount of any cash actually received by such Person (or the amount of the benefit of any netting arrangement resulting in reduced cash expenditures) during such period and not included in Consolidated Net Income in any period, to the extent that any non-cash gain relating to such cash receipt or netting arrangement was deducted in the calculation of EBITDA pursuant to clause (b) below for any previous period and not added back,
(xviii) any non-cash charge related to rent expense, including the excess of rent expense over actual cash rent paid during the relevant period due to the use of straight line rent for GAAP purposes,
(xix) extraordinary, special, unusual, or non-recurring charges, expenses or losses (as determined by the Borrower in good faith),
(xx) any other charges in connection with a single or one-time event;
(xxi) any increase in costs or expenses resulting from the revaluation of inventory (including any impact of changes of inventory valuation policy method, including changes in capitalization of variances) or other inventory adjustment; and
(xxii) charges, costs and expenses relating to marketing, product development, first-year compensation for incremental head count and other activities, in each case under this clause (xxii) directly related to a strategic increase in new product releases;
minus (b) the sum of (without duplication and to the extent the amounts described in this clause (b) increased such Consolidated Net Income for the respective period for which EBITDA is being determined) non-cash items increasing Consolidated Net Income of the Borrower and its Subsidiaries for such period (but excluding any such items (A) in respect of which cash was received in a prior period or will be received in a future period or (B) which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges that reduced EBITDA in any prior period) and extraordinary gains.
Notwithstanding anything contained in this definition to the contrary, EBITDA of the Borrower and its Subsidiaries shall be deemed to be: (a) $108,221,000 for the fiscal quarter ended June 30, 2024, (b) $91,363,000 for the fiscal quarter ended March 31, 2024, (c) $105,435,000 for the fiscal quarter ended December 31, 2023 and (d) $88,844,000 for the fiscal quarter ended September 30, 2023 (in each case, as adjusted (i) on a Pro Forma Basis, as applicable and (ii) pursuant to clause (a)(ix), as applicable, for each Test Period).
“EBITDA Growth Amount” shall mean EBITDA of the Borrower and its Subsidiaries (but not less than zero) for the period (taken as one accounting period) beginning on the first day of the fiscal quarter of the Borrower during which the Closing Date occurs to the end of the most recently ended Test
Period less 150% of the Consolidated Ratio Interest Expense of the Borrower and its Subsidiaries for the same period (which amount shall not be less than zero in any fiscal quarter period).
“ECF Date” shall have the meaning assigned to such term in Section 2.11(c).
“ECF Payment Amount” shall have the meaning assigned to such term in Section 2.11(c).
“ECF Threshold Amount” shall have the meaning assigned to such term in Section 2.11(c)(i).
“EEA Financial Institution” shall mean (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (a) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” shall mean any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Eligible Assignee” means a Person (including Holdings, the Borrower, any Restricted Subsidiary, any Unrestricted Subsidiary, any Affiliate Lender or any Debt Fund Affiliate) other than (a) any Ineligible Institution, (b) any Defaulting Lender or any of its subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing persons described in this clause (b) or (c) any natural person (or a holding company, investment vehicle or trust for, or owned and operated by or for the primary benefit of a natural person).
“Employee Benefit Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) that is or was, within the preceding six years, established, sponsored, maintained, or contributed to by Holdings, the Borrower or any Subsidiary, or with respect to any such plan that is subject to Section 302 of ERISA or Title IV of ERISA or Section 412 of the Code, any ERISA Affiliate.
“Environment” shall mean ambient and indoor air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, natural resources such as flora and fauna.
“Environmental Laws” shall mean all applicable laws (including common law), rules, regulations, codes, ordinances, orders, binding agreements, decrees or judgments, promulgated or entered into by or with any Governmental Authority, relating in any way to the Environment, preservation or reclamation of natural resources, the generation, use, transport, management, Release or threatened Release of, or exposure to, any hazardous material or to public or employee health and safety matters (to the extent relating to the Environment or hazardous materials).
“Environmental Permits” shall have the meaning assigned to such term in Section 3.16.
“Equity Interests” of any Person shall mean any and all shares, interests, rights to purchase or otherwise acquire, warrants, options, participations or other equivalents of or interests in (however
designated) equity or ownership of such Person, including any preferred stock, any limited or general partnership interest and any limited liability company membership interest, and any securities or other rights or interests convertible into or exchangeable for any of the foregoing.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time and any final regulations promulgated and the rulings issued thereunder.
“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that, together with Holdings, the Borrower or a Subsidiary, is treated as a 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 or the requirements of Section 4043(b) of ERISA apply with respect to a Plan; (b) with respect to any Plan, the failure to satisfy the minimum funding standard under Section 412 of the Code or Section 302 of ERISA, whether or not waived; (c) a determination that any Plan is, or is expected to be, in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code); (d) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Plan or the failure to make any required contribution to a Multiemployer Plan; (e) the incurrence by Holdings, the Borrower, a Subsidiary or any ERISA Affiliate of any liability (contingent or otherwise) under Title IV of ERISA with respect to the termination of any Plan or Multiemployer Plan; (f) the receipt by Holdings, the Borrower, a Subsidiary or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or to appoint a trustee to administer any Plan under Section 4042 of ERISA, or the occurrence of an event or condition which would reasonably be expected to constitute grounds for the institution of such proceedings; (g) the incurrence by Holdings, the Borrower, a Subsidiary or any ERISA Affiliate of any liability (contingent or otherwise) with respect to the withdrawal or partial withdrawal from any Multiemployer Plan; (h) the receipt by Holdings, the Borrower, a Subsidiary or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from Holdings, the Borrower, a Subsidiary or any ERISA Affiliate of any notice that a Multiemployer Plan is, or is expected to be, insolvent, within the meaning of Title IV of ERISA, or in “endangered” or “critical” status, within the meaning of Section 432 of the Code or Section 305 of ERISA; (i) the conditions for imposition of a lien under Section 303(k) of ERISA shall have been met with respect to any Plan; (j) the withdrawal or partial withdrawal of any of Holdings, the Borrower, a Subsidiary or any ERISA Affiliate from a Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; or (k) the filing of a notice of intent to terminate any Plan.
“Erroneous Payment” shall have the meaning assigned to it in Section 8.14(a).
“Erroneous Payment Assigned Amount” shall have the meaning assigned to such term in Section 8.14(f).
“Erroneous Payment Assigning Lender” shall have the meaning assigned to such term in Section 8.14(d).
“Erroneous Payment Deficiency Assignment” shall have the meaning assigned to it in Section 8.14(d).
“Erroneous Payment Impacted Class” shall have the meaning assigned to it in Section 8.14(d).
“Erroneous Payment Return Deficiency” shall have the meaning assigned to it in Section 8.14(d).
“Erroneous Payment Subrogation Rights” shall have the meaning assigned to it in Section 8.14(d).
“EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.
“EURIBOR” shall mean for any Interest Period as to any Eurocurrency Borrowing denominated in Euro (i) the rate per annum determined by the Administrative Agent to be the offered rate which appears on the page of the Reuters Screen which displays the European interbank offered rate administered by the Banking Federation of the European Union (such page currently being the EURIBOR01) (the “EURIBOR Screen Rate”) for deposits (for delivery on the first day of the applicable Interest Period) with a term equivalent to such Interest Period in Euros, determined as of approximately 11:00 a.m. (Brussels, Belgium time), two Business Days prior to the commencement of such Interest Period, or (ii) in the event the rate referenced in the preceding clause (i) does not appear on such page or service or if such page or service shall cease to be available, the rate determined by the Administrative Agent to be the offered rate on such other page or other service which displays EURIBOR Screen Rate for deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period in Euros, determined as of approximately 11:00 a.m. (London, England time) two Business Days prior to the commencement of such Interest Period; provided that if EURIBOR Screen Rates are quoted under either of the preceding clauses (i) or (ii), but there is no such quotation for the Interest Period elected, the EURIBOR Screen Rate shall be equal to the Interpolated Rate.
“Euro” and “€” shall mean the single currency of the Participating Member States.
“Eurocurrency Borrowing” shall mean a Borrowing comprised of Eurocurrency Loans.
“Eurocurrency Loan” shall mean (a) with respect to any Revolving Facility Loan denominated in Euros, a Revolving Facility Loan bearing interest at a rate determined by reference to the Adjusted EURIBOR in accordance with the provisions of Article II and (ii) with respect to any Revolving Facility Loan denominated in an Alternative Currency in accordance with clause (c) of the definition of “Alternative Currency”, a Revolving Facility Loan bearing interest at a rate reasonably determined by the Administrative Agent to be the offered rate that appears on the appropriate page of the Reuters screen (or, in the event such rate does not appear on such Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion) that displays the IBA (or the successor interest rate benchmark provider if IBA is no longer making the applicable interest settlement rate available) rate for deposits in the applicable Alternative Currency (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) on the applicable Revaluation Date (but if more than one applicable rate for such Interest Period is specified on such page, the rate will be an arithmetic average of all such rates for such Interest Period).
“Event of Default” shall have the meaning assigned to such term in Section 7.01.
“Excess Cash Flow” shall mean, with respect to the Borrower and its Subsidiaries on a consolidated basis for any Excess Cash Flow Period (or the related Applicable Period), EBITDA of the
Borrower and its Subsidiaries on a consolidated basis for such Excess Cash Flow Period without giving effect to clauses (ix), (xi), (xiii), (xvii), (xviii), (xxi) and (xxii) thereof, minus, without duplication:
(a) Debt Service for the Applicable Period to the extent paid (including (i) fees and expenses paid to the Administrative Agent in connection with its services hereunder, (ii) other bank, administrative or rating agency (or trustee) and financing fees, (iii) costs of surety bonds in connection with financing activities (whether amortized or immediately expensed) and (iv) commissions, discounts, closing fees and other fees and charges owed with respect to revolving commitments, letters of credit, bank guarantees, bankers’ acceptances or any similar facilities or financing and Hedging Agreements),
(b) the aggregate principal amount of any voluntary payment permitted hereunder of term Indebtedness and the amount of any voluntary payments of revolving Indebtedness to the extent accompanied by permanent reductions of any revolving facility commitments during such Applicable Period (other than any voluntary prepayment of the Term Loans and Other First Lien Debt, which shall be the subject of Section 2.11(c)(ii)(A) and any voluntary prepayments of the Revolving Facility Commitment, which shall be the subject of Section 2.11(c)(ii)(B)),
(c) Taxes (including Taxes paid pursuant to any Tax sharing arrangement) paid in cash or Tax reserves set aside in good faith for amounts payable in respect of such Fiscal Year by the Borrower and its Subsidiaries during such Excess Cash Flow Period or that will be paid within six months after the end of such Excess Cash Flow Period and the amount of any distributions made pursuant to Sections 6.06(a), 6.06(b)(iii) and 6.06(b)(v) during such Excess Cash Flow Period or that will be made within six months after the close of such Excess Cash Flow Period; provided (x) that with respect to any such amounts to be paid or distributed after the close of such Excess Cash Flow Period, (i) any amount so deducted shall not be deducted again in a subsequent Excess Cash Flow Period, except to the extent such amount has been added back pursuant to clause (q) below and is subsequently paid or distributed and (ii) appropriate reserves shall have been established in accordance with GAAP and (y) without duplication of clause (q) below, any reserves set aside not actually paid during the Excess Cash Flow Period or such six month period after the Excess Cash Flow Period shall increase Excess Cash Flow in the next subsequent Excess Cash Flow Period,
(d) an amount equal to any increase in Working Capital (other than any increase arising from the recognition or de-recognition of any Current Assets or Current Liabilities upon an acquisition or disposition of a business) of the Borrower and its Subsidiaries for such Excess Cash Flow Period,
(e) cash expenditures made in respect of Hedging Agreements during such Excess Cash Flow Period, to the extent not reflected in the computation of EBITDA or Interest Expense,
(f) amounts paid in cash pursuant to a long term cash incentive plan,
(g) amounts paid in cash during such Excess Cash Flow Period on account of (A) items that were accounted for as non-cash reductions of Net Income in determining Consolidated Net Income or as non-cash reductions of Consolidated Net Income in determining EBITDA of the Borrower and its Subsidiaries in a prior Excess Cash Flow Period and (B) reserves or accruals established in purchase accounting,
(h) the aggregate principal amount of all mandatory prepayments and scheduled repayments of Indebtedness (other than those required due to the incurrence of Indebtedness (other than revolving Indebtedness)), together with the aggregate amount of any interest, premiums, make whole or
penalty payments required to be paid (and actually paid) in connection therewith (other than any mandatory prepayment of the Term Loans and Other First Lien Debt, which shall be the subject of Section 2.11(c)(ii)(C)), in the Applicable Period,
(i) the amount related to items that were added to or excluded from or not deducted from Net Income in calculating Consolidated Net Income or were added to or excluded from or not deducted from Consolidated Net Income in calculating EBITDA to the extent such items resulted in an increase to EBITDA (including by increasing Consolidated Net Income) and either (i) represented a cash payment which had not reduced Excess Cash Flow upon the accrual thereof in a prior Excess Cash Flow Period or (ii) have a corresponding asset or liability movement captured which has not been excluded in the calculation of Working Capital,
(j) (A) any deductions attributable to minority interests that were added to or not deducted from Net Income in calculating Consolidated Net Income, (B) the EBITDA of joint ventures and minority investments added to Consolidated Net Income in calculating EBITDA and (C) the EBITDA of any Person referable to any period prior to such Person becoming a Subsidiary of the Borrower,
(k) cash payments by the Borrower and its Subsidiaries made (or committed) in respect of long term liabilities (including for the purpose of clarity, the current portion of such long term liabilities) of the Borrower and its Subsidiaries other than Indebtedness, except to the extent such cash payments were deducted in the calculation of Consolidated Net Income or EBITDA, and
(l) to the extent included in the calculation of EBITDA for such Excess Cash Flow Period, the amount of any insurance proceeds received by the Borrower or any Subsidiary during such period under any representation and warranty insurance policy obtained in connection with any acquisition or Investment permitted by this Agreement.
plus, without duplication:
(m) an amount equal to any decrease in Working Capital (other than any decrease arising from the recognition or de-recognition of any Current Assets or Current Liabilities upon an acquisition or disposition of a business) of the Borrower and its Subsidiaries for such Excess Cash Flow Period,
(n) cash payments received in respect of Hedging Agreements during such Excess Cash Flow Period to the extent (i) not included in the computation of EBITDA or (ii) such payments do not reduce Interest Expense,
(o) any extraordinary or non-recurring gain realized in cash during such Excess Cash Flow Period (except to the extent such gain consists of Net Proceeds subject to Section 2.11(b)),
(p) the amount related to items that were deducted from or excluded from or not added to Net Income in connection with calculating Consolidated Net Income or were deducted from or excluded from or not added to Consolidated Net Income in calculating EBITDA to the extent such items resulted in a decrease to EBITDA (including by decreasing Consolidated Net Income) and either (i) represented cash received by the Borrower or any Subsidiary or (ii) have a corresponding asset or liability movement captured which has not been excluded in the calculation of Working Capital, and
(q) to the extent any payments for Taxes referred to in clause (c) above are not made in the following Excess Cash Flow Period, the amount of Taxes that were not so paid in such following Excess Cash Flow Period.
“Excess Cash Flow Period” shall mean each Fiscal Year of the Borrower, commencing with the Fiscal Year of the Borrower ending on December 31, 2025.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Excluded Indebtedness” shall mean all Indebtedness not incurred in violation of Section 6.01.
“Excluded Lender” has the meaning assigned to such term in Section 9.08(k)(ii).
“Excluded Proceeds” shall have the meaning assigned to such term in the definition of “Net Proceeds.”
“Excluded Property” shall have the meaning assigned to such term in Section 5.10(d).
“Excluded Securities” shall mean any of the following:
(a) any Equity Interests or Indebtedness with respect to which the Collateral Agent and the Borrower reasonably agree that the cost or other consequences of pledging such Equity Interests or Indebtedness in favor of the Secured Parties under the Security Documents are likely to be excessive in relation to the value (as determined by the Borrower in good faith) to be afforded thereby;
(b) (i) any Equity Interests of (A) any Foreign Subsidiary of the Borrower or (B) any FSHCO, in each case, in excess of 65% of the issued and outstanding Equity Interests of such entity (provided that, if such entity is a direct or indirect subsidiary of a Foreign Subsidiary of the Borrower, all such Equity Interests shall constitute Excluded Securities) and (ii) any Equity Interest of any Foreign Subsidiary that is not a Loan Party or of any Excluded Subsidiary (other than those Excluded Subsidiaries addressed in clause (b)(i));
(c) any Indebtedness having an individual principal amount less than $20,000,000;
(d) any Equity Interests or Indebtedness to the extent the pledge thereof would be prohibited by any Requirement of Law;
(e) any Equity Interests of any Person that is not a Wholly Owned Subsidiary;
(f) any Equity Interests of any Immaterial Subsidiary, any Unrestricted Subsidiary or any Securitization Entity;
(g) any Equity Interests that Rule 3-10, Rule 3-16 or Article 13 of Regulation S-X under the Securities Act of 1933, as amended, as amended, modified or interpreted by the SEC, would require (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted, which would require) the filing with the SEC (or any other Governmental Authority) of separate financial statements of Holdings or any Subsidiary of Holdings due to the fact that such Equity Interests secure the Secured Obligations;
(h) any Equity Interests of any Subsidiary to the extent that the pledge of such Equity Interests could reasonably be expected to result in material adverse Tax consequences to any
Parent Entity (or equityholder thereof), the Borrower or any Subsidiary as determined in good faith by the Borrower;
(i) any Equity Interests or Indebtedness that are set forth on Schedule 1.01(A) to this Agreement or that have been identified on or prior to the Closing Date in writing to the Agent by a Responsible Officer of the Borrower and agreed to by the Collateral Agent;
(j) any Indebtedness owned by or owing to Holdings, other than intercompany receivables; and
(k) any Margin Stock;
provided that in no event shall this definition of “Excluded Securities” include the Equity Interests in the Borrower.
“Excluded Subsidiary” shall mean any of the following (except as otherwise provided in the definition of Subsidiary Loan Party and except for the Borrower):
(a) each Immaterial Subsidiary,
(b) each Subsidiary that is not a Wholly Owned Subsidiary (for so long as such Subsidiary remains a non-Wholly Owned Subsidiary),
(c) each Subsidiary that is prohibited from Guaranteeing or granting Liens to secure the Secured Obligations by any Requirement of Law or that would require consent, approval, license or authorization of a Governmental Authority to Guarantee or grant Liens to secure the Secured Obligations (unless such consent, approval, license or authorization has been received),
(d) each Subsidiary for which the Guaranteeing or granting Liens to secure the Secured Obligations on the Closing Date or at the time such Subsidiary becomes a Subsidiary not in violation of Section 6.09(c) is prohibited by, or would violate, invalidate, terminate (or cause a right of termination in favor of a third party) or cause a breach under any applicable contractual requirement with an unaffiliated third party (and for so long as such restriction or any replacement or renewal thereof is in effect and so long as such restriction was not created in anticipation of such Person becoming a subsidiary),
(e) any Securitization Entity,
(f) any Foreign Subsidiary (including the Thai Borrower),
(g) any FSHCO,
(h) any Subsidiary that is a Subsidiary of (i) any Foreign Subsidiary or (ii) any FSHCO,
(i) any Captive Insurance Subsidiary,
(j) any Unrestricted Subsidiary,
(k) any not-for-profit Subsidiary,
(l) any other Subsidiary with respect to which, (x) the Borrower determines in good faith that the cost or other consequences of providing a Guarantee of or granting Liens to secure the Secured Obligations are likely to be excessive in relation to the value (as determined by the Borrower in good faith) to be afforded thereby or (y) providing such a Guarantee or granting such Liens could reasonably be expected to result in material adverse Tax consequences to any Parent Entity (including any equityholder thereof), the Borrower or any Subsidiary, in each case as determined in good faith by the Borrower, and
(m) with respect to any Swap Obligation, any Subsidiary that is not an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder.
“Excluded Swap Obligation” shall mean, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation, unless otherwise agreed between the Administrative Agent and the Borrower. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.
“Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document,
(i) Taxes imposed on or measured by its overall net income or branch profits (however denominated), and franchise (and similar) Taxes imposed on it, in each case by a jurisdiction (including any political subdivision thereof) as a result of such recipient being organized in, having its principal office in, or in the case of any Lender, having its applicable Lending Office in, such jurisdiction, or as a result of any other present or former connection with such jurisdiction (other than any such connection arising from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document),
(ii) in the case of a Lender, any U.S. federal withholding Tax imposed on any payment by or on account of any obligation of any Loan Party hereunder or under any other Loan Document that is required to be imposed on amounts payable to a Lender (other than to the extent such Lender is an assignee pursuant to a request by Holdings under Section 2.19(b) or 2.19(c)) pursuant to laws in force at the time such Lender becomes a party hereto (or designates a new Lending Office), except to the extent that such Lender (or its assignor, if any) was entitled, immediately prior to the designation of a new Lending Office (or assignment), to receive additional amounts or indemnification payments from any Loan Party with respect to such withholding Tax pursuant to Section 2.17,
(iii) any withholding Tax imposed on any payment by or on account of any obligation of any Loan Party hereunder or under any other Loan Document that is attributable to
the Administrative Agent’s, any Lender’s or any other recipient’s failure to comply with Sections 2.17(e) or (f), and
(iv) any Tax imposed under FATCA.
“Existing Credit Facilities” shall mean (A) that certain Credit Agreement dated as of October 9, 2020 among Holdings, the Borrower, the lenders and issuing banks from time to time party thereto and UBS AG, Stamford Branch, as administrative agent and as collateral agent, and (B) that certain revolving credit facility established pursuant to that certain advising letter dated as of December 10, 2018 by and among ALH Thailand and Bank of America, N.A., Bangkok Branch, in each case as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof.
“Existing Roll-Over Letters of Credit” shall mean those letters of credit or bank guarantees issued and outstanding as of the Closing Date and set forth on Schedule 1.01(C), which shall each be deemed to constitute a Letter of Credit issued hereunder on behalf of the Borrower on the Closing Date.
“Existing Securitization Facilities” shall mean (i) the $460,000,000 non-recourse receivables purchase and equipment financing facility established by the Borrower (through ALERT 2015A) on June 8, 2018 and (ii) $120,000,000 the non-recourse receivables purchase and trade financing facility established by the Borrower (through ALTR LLC) on June 8, 2018, in each case, as amended and in effect on the date hereof, as the same may be further amended, modified, changed, replaced or substituted from time to time.
“Extended Revolving Facility Commitment” shall have the meaning assigned to such term in Section 2.22(a).
“Extended Revolving Loan” shall have the meaning assigned to such term in Section 2.22(a).
“Extended Term Loan” shall have the meaning assigned to such term in Section 2.22(a).
“Extending Lender” shall have the meaning assigned to such term in Section 2.22(a).
“Extension” shall have the meaning assigned to such term in Section 2.22(a).
“Extension Amendment” shall mean an amendment to this Agreement among the Borrower, the Administrative Agent and each Lender that has accepted the applicable offer for Extension pursuant hereto and in accordance with Section 2.22(a).
“Facility” shall mean the respective facility and commitments utilized in making Loans and credit extensions hereunder, it being understood that (w) as of the Closing Date there are three Facilities (i.e., the Initial Term B Facility, the Initial USD Revolving Facility Commitments and the Initial Thai Baht Revolving Facility Commitments established on the Closing Date), (x) as of the 2025 Refinancing Amendment Effective Date, there are three Facilities (i.e., the Initial Term B Facility (including the 2025 Refinancing Term B Facility), the Initial USD Revolving Facility Commitments and the Initial Thai Baht Revolving Facility Commitments established on the Closing Date), (y) as of the 2025-2 Refinancing Amendment Effective Date, there are three Facilities (i.e., the Initial Term B Facility (including the 2025 Refinancing Term B Facility and the 2025-2 Refinancing Term B Facility), the Initial USD Revolving Facility Commitments and the Initial Thai Baht Revolving Facility Commitments established on the
Closing Date) and (z) after the 2025-2 Refinancing Amendment Effective Date, the term “Facility” may include any other Class of Loans or Commitments and the extensions of credit thereunder.
“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.
“Federal Funds Effective Rate” shall mean, for any day, the rate calculated by the Federal Reserve Bank of New York based on such day’s federal funds transactions by depository institutions (as determined in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York as the federal funds effective rate; provided that if the Federal Funds Effective Rate for any day is less than zero, the Federal Funds Effective Rate for such day will be deemed to be zero.
“Federal Reserve Board” shall mean the Board of Governors of the Federal Reserve System of the United States of America.
“Fee Letters” shall mean the Arranger Fee Letter and the Administrative Agent Fee Letter.
“Fees” shall mean the Commitment Fees, the L/C Participation Fees, the Issuing Bank Fees and the Administrative Agent Fees.
“Finance Lease Obligations” shall mean, at the time any determination thereof is to be made, subject to Section 1.08, the amount of the liability in respect of a finance lease that would at such time be required to be reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP; provided that obligations of the Borrower or its Subsidiaries, or of a special purpose or other entity not consolidated with the Borrower and its Subsidiaries, either existing on the Closing Date or created thereafter that (a) initially were not included on the consolidated balance sheet of the Borrower as finance lease obligations and were subsequently re-characterized as finance lease obligations or, in the case of such a special purpose or other entity becoming consolidated with the Borrower and its Subsidiaries, were required to be characterized as finance lease obligations upon such consolidation, in either case, due to a change in accounting treatment or otherwise, (b) would have been characterized as an operating lease under GAAP in effect on December 31, 2017 (regardless of when such lease was entered into) or (c) constitute capitalized operating lease liabilities resulting from the adoption of ASC 842 shall, in each case, unless the Borrower otherwise elects, not constitute Indebtedness or a Finance Lease Obligation of the Borrower or any Subsidiary under this Agreement or any other Loan Document.
“Financial Covenant” shall mean the covenant set forth in Section 6.11.
“Financial Officer” of any Person shall mean the Chief Financial Officer or an equivalent financial officer, principal accounting officer, Treasurer, Assistant Treasurer, Controller or a director of such Person, or a duly authorized signatory of such Person who is a Financial Officer of a subsidiary of such Person.
“fiscal quarter” shall mean a fiscal quarter of any Fiscal Year.
“Fiscal Year” shall mean the fiscal year of the Borrower ending on December 31 of each calendar year.
“Fitch” shall mean Fitch Ratings Inc. and its successors and assigns.
“Fixed Amounts” shall have the meaning assigned to such term in Section 1.04(b).
“Flood Documentation” shall mean, with respect to each Mortgaged Property, (i) a completed “life-of-loan” Federal Emergency Management Agency standard flood hazard determination, together with a notice about Special Flood Hazard Area status and flood disaster assistance duly executed by the applicable Loan Party relating thereto (to the extent a Mortgaged Property is located in a Special Flood Hazard Area) and (ii) evidence of flood insurance as required by Section 5.02(c) hereof and the applicable provisions of the Security Documents, each of which shall (A) include a lender’s loss payable or mortgagee endorsement (as applicable), (B) name the Collateral Agent, on behalf of the Secured Parties, as additional insured and loss payee/mortgagee, (C) identify the address of each improved property located in a Special Flood Hazard Area and the applicable flood zone designation, (D) identify the flood insurance coverage and deductible relating thereto and (E) be otherwise in form and substance reasonably satisfactory to the Administrative Agent.
“Flood Insurance Laws” shall mean, collectively, (i) the National Flood Insurance Reform Act of 1994 (which comprehensively revised the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973) as now or hereafter in effect or any successor statute thereto, (ii) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (iii) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.
“Floor” means (a) solely with respect to the Initial USD Revolving Facility, the Initial Thai Baht Revolving Facility and the Initial Term B Facility (including the 2025 Refinancing Term B Loans and the 2025-2 Refinancing Term B Loans), 0.00% per annum and (b) otherwise, there shall be no floor.
“foreign” shall mean any jurisdiction other than the United States of America, any state thereof or the District of Columbia.
“Foreign Customer Finance Program” shall mean any program established by the Borrower or any Subsidiary designed to provide financing, credit support for or subsidization of (a) the purchase or use, outside of the United States, of the Borrower’s or any Subsidiary’s products, or (b) the financing, by lenders, lessors or other capital providers, of any such purchase or use, including (in the case of clause (a) or (b)) by means of (i) any loss reserve, risk retention, residual value guaranty or other credit support or product support obligations, (ii) Investments in Receivables Assets payable by purchasers or users located outside of the United States by the Borrower or any Subsidiary, (iii) Dispositions of, or incurrence of, Liens on, any such Investments, with or without recourse, pursuant to sale, securitization, loan or other transactions and (iv) such other methods as the Borrower or any of its Subsidiaries shall determine in good faith.
“Foreign Lender” shall mean any Lender (a) that is not disregarded as separate from its owner for U.S. federal income Tax purposes and that is not a “United States person” as defined by Section 7701(a)(30) of the Code or (b) that is disregarded as separate from its owner for U.S. federal income Tax purposes and whose regarded owner is not a “United States person” as defined in Section 7701(a)(30) of the Code.
“Foreign Subsidiary” shall mean any Subsidiary of the Borrower that is organized under the laws of any jurisdiction other than the United States of America, any state thereof or the District of Columbia.
“Fronting Exposure” shall mean, at any time there is a Defaulting Lender, (a) with respect to any Issuing Bank, such Defaulting Lender’s Revolving Facility Percentage of Revolving L/C Exposure with respect to Letters of Credit issued by such Issuing Bank other than such Revolving L/C Exposure as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof and (b) with respect to the Swingline Lender, such Defaulting Lender’s Swingline Exposure other than Swingline Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders.
“FSHCO” shall mean any direct or indirect Subsidiary of the Borrower organized under the laws of the United States or a state thereof or the District of Columbia that has no material assets other than the capital stock or capital stock and Indebtedness of one or more Foreign Subsidiaries of the Borrower or one or more FSHCOs, cash and cash equivalents and other incidental assets related thereto.
“GAAP” shall mean, subject to Section 1.08, generally accepted accounting principles in the United States of America, as in effect from time to time.
“Governmental Authority” shall mean any federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory or legislative body (including any supra-national bodies such as the European Union or the European Central Bank).
“Guarantee” of or by any Person (the “guarantor”) shall mean (a) any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other monetary obligation (the “primary obligations”) payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (iv) entered into for the purpose of assuring in any other manner the holders of such Indebtedness or other obligation of the payment thereof or to protect such holders against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of the guarantor securing any Indebtedness or other obligation (or any existing right, contingent or otherwise, of the holder of Indebtedness or other obligation to be secured by such a Lien) of any other Person, whether or not such Indebtedness or other obligation is assumed by the guarantor; provided, however, that the term “Guarantee” shall not include endorsements of instruments for deposit or collection in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Closing Date or entered into in connection with any acquisition or Disposition of assets permitted by this Agreement (other than such obligations with respect to Indebtedness). The amount of any Guarantee of any guarantor shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made and (b) the maximum amount for which such guarantor may be liable pursuant to the terms of the instrument embodying such Guarantee, unless such primary obligation and the maximum amount for which such guarantor may be liable are not stated or determinable, in which case the amount of such Guarantee shall be such guarantor’s maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.
“Guarantee Agreement” shall mean the Guarantee Agreement dated as of the Closing Date as may be amended, restated, supplemented or otherwise modified from time to time, among Holdings, the Borrower, each Subsidiary Loan Party party thereto and the Collateral Agent.
“guarantor” shall have the meaning assigned to such term in the definition of the term “Guarantee.”
“Guarantors” shall mean (i) Holdings, (ii) other than with respect to its own Loan Obligations, the Borrower and (iii) each Subsidiary Loan Party. For the avoidance of doubt, the Borrower shall be a Guarantor of the Thai Baht Revolving Facility.
“Hazardous Materials” shall mean all pollutants, contaminants, wastes, chemicals, materials, substances and constituents, including, without limitation, explosive or radioactive substances or petroleum by products or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas or pesticides, fungicides, fertilizers or other agricultural chemicals, of any nature subject to regulation or which can give rise to liability under any Environmental Law due to their hazardous or toxic characteristics.
“Hedge Bank” shall mean any Person that, at the time it enters into a Hedging Agreement (or on the Closing Date), is (or is an Affiliate of a Person that is) (a) an Agent, an Arranger or a Lender, regardless of whether any such Person shall thereafter cease to be an Agent, an Arranger or a Lender or an Affiliate of any of the foregoing, (b) from time to time identified to the Administrative Agent by the Borrower in writing as a Hedge Bank hereunder or (c) listed in Schedule 1.01(F).
“Hedging Agreement” shall mean any agreement with respect to any swap, forward, future or derivative transaction, or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value, or credit spread transaction, repurchase transaction, reserve repurchase transaction, securities lending transaction, weather index transaction, spot contracts, fixed price physical delivery contracts, or any similar transaction or any combination of these transactions, in each case of the foregoing, whether or not exchange traded; provided that (i) no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of Holdings or any of its Subsidiaries shall be a Hedging Agreement and (ii) no Packaged Right, Permitted Bond Hedge Transaction or Permitted Warrant Transaction shall, in each case, constitute Hedging Agreement.
“Holdings” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
“IBA” means the ICE Benchmark Administration (together with any successor to the ICE Benchmark Administrator).
“IFRS” means international accounting standards within the meaning of the IAS Regulation 1606/2002, as in effect from time to time, to the extent applicable to the relevant financial statements.
“Immaterial Subsidiary” shall mean any Subsidiary that did not, as of the last day of the most recent Test Period, have assets with a value in excess of 2.5% of the Consolidated Total Assets or revenues representing in excess of 5% of total revenues of the Borrower and its Subsidiaries on a consolidated basis as of such date; provided that the Borrower may elect in its sole discretion to exclude
as an Immaterial Subsidiary any Subsidiary that would otherwise meet the definition thereof. Each Immaterial Subsidiary as of the Closing Date shall be set forth in Schedule 1.01(B).
“Immediate Family Member” shall mean, with respect to any individual, such individual’s child, stepchild, grandchild or more remote descendant, parent, stepparent, grandparent, spouse, former spouse, domestic partner, former domestic partner, sibling or step-sibling (and any linear descendant thereof), mother-in-law, father-in-law, son-in-law and daughter-in-law (including adoptive relationships), any trust, partnership or other bona fide estate-planning vehicle the only beneficiaries of which are any of the foregoing individuals, any of the foregoing individual’s (including the initial individual’s) estate (or an executor or administrator acting on its behalf), heirs or legatees or any private foundation or fund that is controlled by any of the foregoing individuals or any donor-advised fund of which any such individual is the donor.
“Increased Amount” of any Indebtedness shall mean any increase in the amount of such Indebtedness in connection with any accrual of interest, the accretion of accreted value, the amortization of original issue discount or deferred financing fees, the payment of interest or dividends in the form of additional Indebtedness or in the form of Equity Interests, as applicable, the accretion of original issue discount, deferred financing fees or liquidation preference and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies.
“Increased Class” shall have the meaning assigned to such term in Section 2.24(a).
“Incremental Amount” shall mean, at the time of the establishment of the commitments in respect of the Indebtedness to be incurred utilizing this definition (or, at the option of the Borrower, at the time of incurrence of such Indebtedness), the sum of (without duplication):
(i) (a) (1) the greater of (i) $400,000,000 and (ii) 1.0 times EBITDA, calculated on a Pro Forma Basis, for the most recently ended Test Period, plus (2) amounts available to be incurred in reliance on the reallocation allowed under Section 6.01(k) (this clause (a), the “Incremental Starter Amount”), minus (b) the sum of (1) the aggregate outstanding principal amount of all Incremental Term Loans and Incremental Revolving Facility Commitments, in each case incurred or established after the Closing Date and outstanding at such time pursuant to Section 2.21 utilizing this clause (i) and (2) the aggregate outstanding principal amount of any Indebtedness pursuant to Section 6.01(q), (r), (s) and (z) in reliance on the “Incremental Starter Amount”; plus
(ii) any amounts so long as immediately after giving effect to the establishment of the commitments in respect thereof utilizing this clause (ii) and the use of proceeds thereunder, the Net First Lien Leverage Ratio on a Pro Forma Basis is not greater than the greater of (I) 5.00 to 1.00 and (II) if such Indebtedness is incurred in connection with the acquisition of assets or Equity Interests (including a Permitted Business Acquisition and including through a merger or consolidation) or an Investment (including the acquisition by a Securitization Entity that is or will in twelve months be subject to a Permitted Securitization Financing), where such acquisition, merger, consolidation or Investment is not prohibited by this Agreement, the Net First Lien Leverage Ratio for the most recently ended Test Period prior thereto (this clause (ii), the “Incremental Ratio Amount”); plus
(iii) (a) the sum of the aggregate principal amounts of (A) all voluntary prepayments of Term Loans and all permanent reductions of Revolving Facility Commitments, (B) all voluntary prepayments or permanent commitment reductions of any Incremental
Equivalent Debt or other third-party Indebtedness for borrowed money of the Loan Parties, in each case, that is secured by the Collateral on a pari passu basis with the Term Loans or incurred pursuant to clause (i) above and (C) all Indebtedness of the Loan Parties set forth in this clause (iii) that is secured on a pari passu basis with Term Loans or incurred in reliance on clause (i) above and purchased by the Borrower or any of its Subsidiaries, in each case of this clause (iii), prior to such time and so long as such prepayment or purchase was not funded with the proceeds of long-term Indebtedness (other than revolving Indebtedness) minus (b) the sum of (1) the aggregate outstanding principal amount of all Incremental Term Loans and Incremental Revolving Facility Commitments, in each case incurred or established after the Closing Date and outstanding at such time pursuant to Section 2.21 utilizing this clause (iii) and (2) the aggregate outstanding principal amount of any Indebtedness pursuant to Sections 6.01(q), (r), (s) and (z) in reliance on the “Incremental Prepayment Amount”; plus
(iv) in the case of any Incremental Facility or Incremental Equivalent Debt that effectively extends the (a) maturity date with respect to any loans and/or commitments hereunder or thereunder (including in connection with the Borrower’s exercise of its rights pursuant to the “yank-a-bank” provisions hereunder or thereunder), an amount equal to the portion of the relevant loans or commitments that will be replaced by such Incremental Facility or Incremental Equivalent Debt minus (b) the sum of (1) the aggregate outstanding principal amount of all Incremental Term Loans and Incremental Revolving Facility Commitments, in each case incurred or established after the Closing Date and outstanding at such time pursuant to Section 2.21 utilizing this clause (iv) and (2) the aggregate outstanding principal amount of any Indebtedness incurred or established pursuant to Sections 6.01(q), (r), (s) and (z) in reliance on the “Incremental Prepayment Amount”; plus
(v) in the case of any Incremental Facility or Incremental Equivalent Debt that effectively replaces any Commitment terminated in accordance with Section 2.19 hereof, an amount equal to the relevant Commitment;
provided that, for the avoidance of doubt, (A) amounts may be established or incurred utilizing clause (ii) above prior to utilizing clause (i), (iii), (iv) or (v) above, (B) any calculation of the Net First Lien Leverage Ratio on a Pro Forma Basis pursuant to clause (ii) above may be determined, at the option of the Borrower, without giving effect to any simultaneous establishment or incurrence of any amounts utilizing clause (i), (iii), (iv) or (v) above and (C) any amounts previously incurred utilizing clause (i), (iii), (iv) or (v) above may, at the election of the Borrower, later be reclassified as having been established under clause (ii) above, so long as the Borrower meets the requirements of clause (ii) above on a Pro Forma Basis after giving effect to such reclassification (in which case the amount available under clause (i), (iii), (iv) or (v) shall be automatically increased by the amount so reclassified).
“Incremental Assumption Agreement” shall mean an agreement among the Borrower, the Administrative Agent and, if applicable, one or more Incremental Term Lenders and/or Incremental Revolving Facility Lenders entered into pursuant to Section 2.21.
“Incremental Commitment” shall mean an Incremental Term Loan Commitment or an Incremental Revolving Facility Commitment.
“Incremental Equivalent Debt” shall mean Indebtedness incurred under Sections 6.01(q)(i), 6.01(r)(i), 6.01(s)(i) and/or 6.01(z)(i).
“Incremental Facility” shall mean any Incremental Term Facility, any Incremental Revolving Facility and/or any or all of the Incremental Term Facilities and the Incremental Revolving Facilities.
“Incremental Loan” shall mean an Incremental Term Loan or an Incremental Revolving Loan.
“Incremental Prepayment Amount” shall mean, at any time, an amount equal to the sum of clauses (iii) and (iv) of the definition of “Incremental Amount” at such time.
“Incremental Ratio Amount” shall have the meaning assigned to such term in the definition of “Incremental Amount”.
“Incremental Revolving Borrowing” shall mean a Borrowing comprised of Incremental Revolving Loans.
“Incremental Revolving Facility” shall mean any Class of Incremental Revolving Facility Commitments and the Incremental Revolving Loans made thereunder.
“Incremental Revolving Facility Commitment” shall mean the commitment of any applicable Lender, established pursuant to Section 2.21, to make Incremental Revolving Loans to the Borrower.
“Incremental Revolving Facility Lender” shall mean a Lender with an Incremental Revolving Facility Commitment or an outstanding Incremental Revolving Loan.
“Incremental Revolving Loan” shall mean Revolving Facility Loans made by one or more Revolving Facility Lenders to the Borrower pursuant to an Incremental Revolving Facility Commitment to make additional Revolving Facility Loans.
“Incremental Starter Amount” shall have the meaning assigned to such term in the definition of Incremental Amount.
“Incremental Term Borrowing” shall mean a Borrowing comprised of Incremental Term Loans.
“Incremental Term Facility” shall mean any Class of Incremental Term Loan Commitments and the Incremental Term Loans made thereunder.
“Incremental Term Lender” shall mean a Lender with an Incremental Term Loan Commitment or an outstanding Incremental Term Loan.
“Incremental Term Loan Commitment” shall mean the commitment of any applicable Lender, established pursuant to Section 2.21, to make Incremental Term Loans to the Borrower.
“Incremental Term Loans” shall mean Term Loans made by one or more Lenders to the Borrower pursuant to an Incremental Term Loan Commitment.
“Incurrence-Based Amounts” shall have the meaning assigned to such term in Section 1.04(b).
“Indebtedness” of any Person shall mean, if and to the extent (other than with respect to clause (i)) the same would constitute indebtedness or a liability on a balance sheet prepared in accordance with GAAP, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased
by such Person, (d) all obligations of such Person issued or assumed as the deferred purchase price of property or services (other than such obligations accrued in the ordinary course), to the extent that the same would be required to be shown as a long-term liability on a balance sheet prepared in accordance with GAAP, (e) all Finance Lease Obligations of such Person, (f) all net payments that such Person would have to make in the event of an early termination, on the date Indebtedness of such Person is being determined, in respect of outstanding Hedging Agreements, (g) the principal component of all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit, (h) the principal component of all obligations of such Person in respect of bankers’ acceptances, (i) all Guarantees by such Person of Indebtedness described in clauses (a) to (h) above (other than Indebtedness of another Loan Party) and (j) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock (excluding (i) accrued dividends that have not increased the liquidation preference of such Disqualified Stock and (ii) accrued preferred return on any Parent Entity’s preferred units); provided that Indebtedness shall not include (A) trade and other ordinary-course payables, accrued expenses, and intercompany liabilities arising in the ordinary course of business, (B) prepaid or deferred revenue, (C) purchase price holdbacks arising in the ordinary course of business in respect of a portion of the purchase prices of an asset to satisfy unperformed obligations of the seller of such asset, (D) Permitted Securitization Financing Indebtedness, (E) earn-out obligations until such obligations become a liability on the balance sheet of such Person in accordance with GAAP and have not been satisfied within 60 days after falling due, (F) obligations in respect of Third Party Funds, (G) in the case of the Borrower and its Subsidiaries, (I) all intercompany Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms) and made in the ordinary course of business and (II) intercompany liabilities in connection with the cash management, Tax and accounting operations of the Borrower and its Subsidiaries, (H) defined benefit liabilities or (I) lease obligations that do not constitute Finance Lease Obligations. The Indebtedness of any Person shall include the Indebtedness of any partnership in which such Person is a general partner, other than to the extent that the instrument or agreement evidencing such Indebtedness limits the liability of such Person in respect thereof.
“Indemnified Taxes” shall mean (a) all Taxes, other than Excluded Taxes, imposed on or with respect to or measured by any payment by or on account of any obligation of any Loan Party hereunder or under any other Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.
“Indemnitee” shall have the meaning assigned to such term in Section 9.05(b).
“Ineligible Institution” shall mean (i) any person identified as a “Disqualified Lender” in writing to the Arrangers by the Borrower or an Affiliate of the Borrower on or prior to the Closing Date, (ii) any bona fide business competitor of Holdings, the Borrower, or any of their respective subsidiaries, in each case identified in writing as such to the Arrangers by the Borrower prior to the Closing Date or to the Administrative Agent on or after the Closing Date, (iii) any Affiliate of such competitor that is (A) identified in writing to the Administrative Agent by the Borrower as such from time to time or (B) clearly identifiable based on the name of such Affiliate (other than a Bona Fide Debt Fund)) and (iv) any person identified in writing to the Administrative Agent by the Borrower from time to time after the Closing Date as a “Disqualified Lender” or as an Affiliate of any Ineligible Institution under clause (i) and approved by the Administrative Agent; provided that no such updates pursuant to clauses (ii) or (iii) shall be deemed to retroactively disqualify any parties that have previously acquired an assignment or participation interest in respect of the Loans from continuing to hold or vote such previously acquired assignments and participations on the terms set forth herein for Lenders that are not Ineligible Institutions.
“Information” shall have the meaning assigned to such term in Section 3.14(a).
“Initial Revolving Facility” shall mean the Initial USD Revolving Facility and the Initial Thai Baht Revolving Facility.
“Initial Revolving Facility Commitment” shall mean the Initial USD Revolving Facility Commitment and the Initial Thai Baht Revolving Facility Commitment.
“Initial Revolving Facility Lender” shall mean an Initial USD Revolving Facility Lender and/or an Initial Thai Baht Revolving Facility Lender.
“Initial Revolving Facility Loan” shall mean an Initial USD Revolving Facility Loan and/or an Initial Thai Baht Revolving Facility Loan.
“Initial Revolving Facility Maturity Date” shall mean the Initial Thai Baht Revolving Facility Maturity Date and/or the Initial USD Revolving Facility Maturity Date; provided that if the Initial Revolving Facility Maturity Date is not a Business Day, the Initial Revolving Facility Maturity Date shall be the immediately succeeding Business Day.
“Initial Thai Baht Revolving Facility” shall mean the Initial Thai Baht Revolving Facility Commitments and the extensions of credit made in respect thereof by the Initial Thai Baht Revolving Facility Lenders of such Class.
“Initial Thai Baht Revolving Facility Commitment” shall mean, with respect to each Initial Thai Baht Revolving Facility Lender, the commitment of such Initial Thai Baht Revolving Facility Lender to make Initial Thai Baht Revolving Facility Loans pursuant to Section 2.01(c), expressed as an amount representing the maximum aggregate permitted amount of such Initial Thai Baht Revolving Facility Lender’s Thai Baht Revolving Facility Credit Exposure in respect of the Initial Thai Baht Revolving Facility hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08, (b) reduced or increased from time to time pursuant to assignments by or to such Lender under Section 9.04, and (c) increased (or replaced) as provided under Section 2.21, 2.22 or 2.23. The initial amount of each Initial Thai Baht Revolving Facility Lender’s Initial Thai Baht Revolving Facility Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance or Incremental Assumption Agreement pursuant to which such Lender shall have assumed its Initial Thai Baht Revolving Facility Commitment. The aggregate amount of the Initial Thai Baht Revolving Facility Lenders’ Initial Thai Baht Revolving Facility Commitments on the Closing Date is $25,000,000.
“Initial Thai Baht Revolving Facility Lender” shall mean a Lender with an Initial Thai Baht Revolving Facility Commitment or with outstanding Initial Thai Baht Revolving Facility Loans.
“Initial Thai Baht Revolving Facility Loan” shall mean a Loan made pursuant to the Initial Revolving Facility Commitments.
“Initial Thai Baht Revolving Facility Maturity Date” shall mean August 19, 2029.
“Initial USD Revolving Facility” shall mean the Initial USD Revolving Facility Commitments and the extensions of credit made in respect thereof by the Initial USD Revolving Facility Lenders of such Class.
“Initial USD Revolving Facility Commitment” shall mean, with respect to each Initial USD Revolving Facility Lender, the commitment of such Initial USD Revolving Facility Lender to make Initial USD Revolving Facility Loans pursuant to Section 2.01(b), expressed as an amount representing the maximum aggregate permitted amount of such Initial USD Revolving Facility Lender’s USD Revolving Facility Credit Exposure in respect of the Initial USD Revolving Facility hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08, (b) reduced or increased from time to time pursuant to assignments by or to such Lender under Section 9.04, and (c) increased (or replaced) as provided under Section 2.21, 2.22 or 2.23. The initial amount of each Initial USD Revolving Facility Lender’s Initial USD Revolving Facility Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance or Incremental Assumption Agreement pursuant to which such Lender shall have assumed its Initial USD Revolving Facility Commitment. The aggregate amount of the Initial USD Revolving Facility Lenders’ Initial USD Revolving Facility Commitments on the Closing Date is $225,000,000.
“Initial USD Revolving Facility Lender” shall mean a Lender with an Initial USD Revolving Facility Commitment or with outstanding Initial USD Revolving Facility Loans.
“Initial USD Revolving Facility Loan” shall mean a Loan made pursuant to the Initial USD Revolving Facility Commitments.
“Initial USD Revolving Facility Maturity Date” shall mean August 19, 2029.
“Initial Term B Facility” shall mean the Initial Term B Loan Commitments and the Initial Term B Loans made hereunder.
“Initial Term B Facility Maturity Date” shall mean August 19, 2031.
“Initial Term B Loan Amortization Percentage” shall mean 0.25%.
“Initial Term B Loan Commitment” shall mean, with respect to each applicable Lender, the commitment of such Lender to make Initial Term B Loans hereunder on the Closing Date. The amount of each Lender’s Initial Term B Loan Commitment as of the Closing Date is set forth on Schedule 2.01. The aggregate amount of the Initial Term B Loan Commitments as of the Closing Date is $2,075,000,000.
“Initial Term B Loans” shall mean (i) prior to the 2025 Refinancing Amendment Effective Date, the term loans made by the applicable Lenders to the Borrower pursuant to Section 2.01(a) pursuant to their Initial Term B Loan Commitments, (ii) from and after the 2025 Refinancing Amendment Effective Date and prior to the 2025-2 Refinancing Amendment Effective Date, the 2025 Refinancing Term B Loans made (or exchanged) pursuant to the 2025 Refinancing Amendment and (iii) from and after the 2025-2 Refinancing Amendment Effective Date, the 2025-2 Refinancing Term B Loans made (or exchanged) pursuant to the 2025 Refinancing Amendment. For the avoidance of doubt, (i) all Initial Term B Loans outstanding immediately prior to the 2025 Refinancing Amendment Effective Date were refinanced in full by the 2025 Refinancing Term B Loans on the 2025 Refinancing Amendment Effective Date and (ii) all 2025 Refinancing Term B Loans outstanding immediately prior to the 2025-2 Refinancing Amendment Effective Date were refinanced in full by the 2025-2 Refinancing Term B Loans on the 2025-2 Refinancing Amendment Effective Date.
“Inside Maturity Basket” shall mean, with respect to any Indebtedness expressed to be subject to the Inside Maturity Basket, an aggregate principal amount of such Indebtedness at any time outstanding
not exceeding the greater of (x) $200,000,000 and (y) 0.50 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period.
“Intellectual Property” shall mean all U.S. and non-U.S. (a) patents and patent applications, (b) trademarks, service marks, trade names, trade dress, and other source identifiers, designs and domain names, (c) copyrights, (d) design rights, inventions, original works of authorship, trade secrets, confidential information, know-how and all other intellectual property rights and interests, whether registered or unregistered and (e) all registrations and applications for registration therefor.
“Intercreditor Agreement” shall have the meaning assigned to such term in Section 8.11.
“Interest Election Request” shall mean a request by the Borrower or the Thai Borrower, as applicable, to convert or continue a Borrowing in accordance with Section 2.07 and substantially in the form of Exhibit D or another form approved by the Administrative Agent.
“Interest Expense” shall mean, with respect to any Person for any period, the sum of (a) gross interest expense of such Person for such period on a consolidated basis, including the portion of any payments or accruals with respect to Finance Lease Obligations allocable to interest expense and including amortization of deferred financing fees and original issue discount, debt issuance costs, commissions, fees and expenses, expensing of any bridge, commitment or other financing fees and non-cash interest expense attributable to movement in mark to market of obligations in respect of Hedging Agreements or other derivatives (in each case permitted hereunder) under GAAP, but excluding any interest expense with respect to any Permitted Securitization Financing Indebtedness and (b) capitalized interest of such Person, minus interest income for such period. For purposes of the foregoing, gross interest expense shall be determined after giving effect to any net payments made or received and costs incurred by such Person with respect to Hedging Agreements, and interest on a Finance Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by the Borrower to be the rate of interest implicit in such Finance Lease Obligation in accordance with GAAP.
“Interest Payment Date” shall mean, in addition to any applicable Revolving Facility Maturity Date or Term Facility Maturity Date, (a) with respect to any Term SOFR Loan or Eurocurrency Loan, (i) the last day of the Interest Period applicable to the Borrowing of which such Loan is a part, (ii) in the case of a Term SOFR Borrowing or Eurocurrency Borrowing with an Interest Period of more than three months’ duration, each day that would have been an Interest Payment Date had successive Interest Periods of three months’ duration been applicable to such Borrowing and (iii) in addition, the date of any refinancing or conversion of such Borrowing with or to a Borrowing of a different Type, (b) with respect to any ABR Loan or RFR Loan, the last Business Day of each calendar quarter and (c) with respect to any Swingline Loan, the day that such Swingline Loan is required to be repaid pursuant to Section 2.09 (a).
“Interest Period” shall mean, as to any Term SOFR Borrowing or Eurocurrency Borrowing, subject to Section 2.25(a), the period commencing on the date of such Borrowing or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as applicable, and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is one, three or six months thereafter (or 12 months, if agreed by all relevant Lenders with respect to such Borrowing or, if agreed to by the Administrative Agent, any shorter period), as the Borrower may elect; provided, however, that if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period
shall end on the next preceding Business Day. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period.
“Interpolated Rate” shall mean, in relation to the EURIBOR Screen Rate, as applicable, the rate which results from interpolating on a linear basis between:
(a) the applicable EURIBOR Screen Rate for the longest period (for which that EURIBOR Screen Rate, as applicable, is available) which is less than the Interest Period of that Loan; and
(b) the applicable EURIBOR Screen Rate for the shortest period (for which that EURIBOR Screen Rate is available) which exceeds the Interest Period of that Loan,
each as of approximately 11:00 a.m. (London, England time) two Business Days prior to the commencement of such Interest Period of that Loan.
“Investment” shall mean (i) any purchase or acquisition (including pursuant to any merger with a person that is not a Wholly Owned Subsidiary immediately prior to such merger) of any Equity Interests, evidences of Indebtedness or other securities of any other person, (ii) any making of loans or advances to or Guarantees of the Indebtedness of any other person (other than in respect of (A) intercompany liabilities incurred in connection with the cash management, Tax and accounting operations of the Borrower and its Subsidiaries and (B) intercompany loans, advances or Indebtedness having a term not exceeding 364 days (inclusive of any roll-overs or extensions of terms) and made in the ordinary course of business or consistent with industry practices, including the payment of fees to, or obligation to reimburse, any Securitization Entity in respect of letters of credit issued to the account of such Securitization Entity for the benefit of the Borrower and its Subsidiaries) or (iii) any purchase or other acquisition, in one transaction or a series of related transactions, (x) all or substantially all of the property and assets or business of another person or (y) assets constituting a business unit, line of business or division of such person. The amount of any Investment shall be the original cost of such Investment, plus the cost of any addition thereto that otherwise constitutes an Investment, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect thereto, but giving effect to any repayments of principal in the case of any Investment in the form of a loan and any return or reduction of capital or return on Investment in the case of any equity Investment (whether as a distribution, dividend, share buyback, redemption or sale).
“Investors” shall mean (a) the BDT Investor, (b) the Management Investors and (c) other investors identified to the Administrative Agent in writing that, directly or indirectly, beneficially own Equity Interests in the Borrower on the Closing Date.
“IPO Entity” shall have the meaning assigned to such term in the definition of “Qualified IPO.”
“IPO Equity” shall have the meaning assigned to such term in the definition of “Qualified IPO.”
“IPO Reorganization Transaction” shall mean transactions taken in connection with and reasonably related to consummating an initial public offering.
“IRS” shall mean the U.S. Internal Revenue Service.
“ISDA CDS Definitions” shall mean the meaning assigned to such term in Section 9.08(k)(iv).
“Issuing Bank” shall mean (i) with respect to USD Letters of Credit, Citibank, N.A., Bank of Montreal, Bank of America, N.A., JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and UBS AG, Stamford Branch, (ii) with respect to Thai Baht Letters of Credit, Citibank, N.A. Bangkok Branch, (iii) for purposes of the Existing Roll-Over Letters of Credit, the Issuing Bank set forth on Schedule 1.01(C) and (iv) each other Issuing Bank designated pursuant to Section 2.05(l), in each case in its capacity as an issuer of Letters of Credit hereunder, and its successors in such capacity. An Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by any branch or Affiliate of such Issuing Bank, in which case the term “Issuing Bank” shall include any such branch or Affiliate with respect to Letters of Credit issued by such branch or Affiliate.
“Issuing Bank Fees” shall have the meaning assigned to such term in Section 2.12(b).
“Joint Bookrunners” shall mean, with respect to the Initial Term Loans issued on the Closing Date and with respect to the 2025-2 Refinancing Term B Loans issued on the 2025-2 Refinancing Amendment Effective Date, collectively, Citibank, N.A., BMO Capital Markets Corp., BofA Securities, Inc., JPMorgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, in their capacities as joint bookrunners.
“Judgement Currency” has the meaning assigned to such term in Section 9.27.
“Junior Financing” shall mean any Indebtedness (other than Indebtedness among any the Borrower and/or its Subsidiaries) of a Loan Party or the Thai Borrower that is expressly subordinated in right of payment to the Loan Obligations, but only to the extent that such Indebtedness both is required by the terms of this Agreement to mature after the Initial Term B Facility Maturity Date and constitutes Material Indebtedness.
“Junior Liens” shall mean Liens on the Collateral that are junior to the Liens thereon securing the Term Loans (and other Loan Obligations that are pari passu with the Term Loans) pursuant to a Permitted Junior Intercreditor Agreement (it being understood that Junior Liens are not required to be pari passu with other Junior Liens, and that Indebtedness secured by Junior Liens may have Liens that are senior in priority to, or pari passu with, or junior in priority to, other Liens constituting Junior Liens).
“L/C Disbursement” shall mean a USD L/C Disbursement and/or a Thai Baht L/C Disbursement.
“L/C Participation Fee” shall have the meaning assigned to such term in Section 2.12(b).
“Latest Maturity Date” shall mean, at any date of determination, the latest of the latest Revolving Facility Maturity Date and the latest Term Facility Maturity Date, in each case then in effect on such date of determination.
“LCT Election” shall have the meaning assigned to such term in Section 1.04(a).
“LCT Test Date” shall have the meaning assigned to such term in Section 1.04(a).
“Lease” shall mean any rental or lease of any equipment or other property or products of the Borrower or any Subsidiary to any third-party customer, user or distributor of the Borrower or any Subsidiary (including in connection with any Foreign Customer Finance Program). For the avoidance of doubt, “Lease” shall include, without limitation, both finance and operating leases.
“Leased Property” shall mean any equipment or other property or products that have been financed, rented or leased by the Borrower or any Subsidiary (in any case, as lender, renter or lessor or in any similar capacity) pursuant to a Lease. For the avoidance of doubt, any equipment or other property or products in which a rentee or lessee under a Lease acquires a rental, ownership, leasehold or security interest or other Lien pursuant to such Lease shall constitute Leased Property.
“Lease Receivable” shall mean as to the Borrower or any of its Subsidiaries, any right to payment (including, without limitation, lease, rental, principal, interest, stipulated loss, terminal adjustment of rents or other payments and any payments by a rentee or lessee in respect of the purchase price for related Leased Property) under, or in respect of, any Lease or related Leased Property (including the right to liquidation or residual proceeds of such Leased Property).
“Legal Reservations” shall mean (a) the principle that equitable remedies are remedies which may be granted or refused at the discretion of the court, the principle of reasonableness and fairness, the limitation of enforcement by laws relating to bankruptcy, insolvency, liquidation, reorganization, court schemes, moratoria, administration and other laws generally affecting the rights of creditors and secured creditors, (b) the time barring of claims under applicable statutes of limitation, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of stamp duty may be void and defenses of set-off or counterclaim, (c) similar principles, right and defenses under the laws of any relevant jurisdiction, (d) any other matters which are set out as qualifications or reservations as to matters of law of general application in any legal opinion delivered in connection with the Loan Documents, (e) the principle that in certain circumstances security granted by way of fixed charge may be characterized as a floating charge or that security purported to be constituted by way of an assignment may be recharacterized as a charge, (f) the principle that the creation or purported creation of security over any contract or agreement which is subject to a prohibition against transfer, assignment or charging may be void, ineffective or invalid and may give rise to a breach entitling the contracting party to terminate or take any other action in relation to such contract or agreement and (g) similar principles, right and defenses under the laws of any relevant jurisdiction.
“Lender” shall mean each financial institution listed on Schedule 2.01 (other than any such person that has ceased to be a party hereto pursuant to an Assignment and Acceptance in accordance with Section 9.04), as well as any person that becomes a “Lender” hereunder pursuant to Section 9.04 or Sections 2.21, 2.22 or 2.23. Unless the context clearly indicates otherwise, the term “Lenders” shall include any Swingline Lender.
“Lending Office” shall mean, as to any Lender, any applicable foreign or domestic branch, office or Affiliate of such Lender designated by such Lender to make Loans.
“letter of credit” shall mean any letter of credit or bank guarantee.
“Letter of Credit” shall mean any USD Letter of Credit and/or any Thai Baht Letter of Credit.
“Lien” shall mean, with respect to any asset, (a) any mortgage, assignment or transfer for security purposes, deed of trust, lien, hypothecation, pledge, charge, security interest or similar monetary encumbrance in or on such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, Finance Lease Obligation or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset; provided that in no event shall any lease (other than a lease giving rise to Finance Lease Obligations) or an agreement to sell be deemed to constitute a Lien.
“Limited Condition Transaction” shall mean (i) any acquisition or similar Investment or related transaction or event (including with respect to any Indebtedness contemplated or incurred in connection therewith), (ii) any Restricted Payment (including with respect to any Indebtedness contemplated or incurred in connection therewith) and (iii) any redemption, defeasance, satisfaction and discharge or repayment of Indebtedness or Disqualified Stock, in each case, permitted under this Agreement.
“Limited Recourse” shall mean a letter of credit, revolving loan commitment, cash collateral account, Guarantee, bank guaranty or other credit enhancement (or the obligations of any Person in respect thereof) issued (a) in connection with the incurrence of Indebtedness by a Securitization Entity under a Permitted Securitization Financing or (b) in connection with any Foreign Customer Finance Program; provided that, the aggregate amount of such letter of credit reimbursement obligations and the aggregate available amount of such revolving loan commitments, cash collateral accounts, Guarantee or other such credit enhancements of the Borrower and the Subsidiary Loan Parties shall not exceed (x) in the case of clause (a) above, 20% of the aggregate principal amount of such Indebtedness at any time and (y) in the case of clause (b) above, 75% of the suggested manufacturer’s retail price (or foreign currency equivalent) of the products subject to all such Foreign Customer Finance Programs (as determined by the Borrower in good faith).
“Loan Documents” shall mean (i) this Agreement, (ii) the Guarantee Agreement, (iii) the Security Documents, (iv) each Incremental Assumption Agreement, (v) any Intercreditor Agreement, (vi) any Note issued under Section 2.09(e), (vii) the Letters of Credit, (viii) the 2025 Refinancing Amendment, (ix) the 2025 Revolving Facility Repricing Amendment, (x) the 2025-2 Refinancing Amendment and, (xi) the 2025-2 Revolving Facility Repricing Amendment and (xii) solely for the purposes of Sections 4.02(c) and 7.01 hereof, the Administrative Agent Fee Letter.
“Loan Guarantee” shall mean the guarantees of the Loan Parties pursuant to the Guarantee Agreement.
“Loan Obligations” shall mean (a) the due and punctual payment by the Borrower or the Thai Borrower, as applicable, of (i) the unpaid principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans made to the Borrower or the Thai Borrower, as applicable, under this Agreement, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by the Borrower or the Thai Borrower under this Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) and obligations to provide Cash Collateral and (iii) all other monetary obligations of the Borrower or the Thai Borrower owed under or pursuant to this Agreement and each other Loan Document, including obligations to pay fees, expense reimbursement obligations and indemnification obligations, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) and (b) the due and punctual payment of all obligations of each other Loan Party under or pursuant to each of the Loan Documents.
“Loan Parties” shall mean Holdings, the Borrower and each Subsidiary Loan Party.
“Loan Receivable” shall mean as to the Borrower or any of its Subsidiaries, any right to payment in respect of loans made by the Borrower or any Subsidiary to third-party purchases, customers or users
of the Borrower’s or any Subsidiary’s product or customers of distributors of such products in the ordinary course of business (including in connection with any Foreign Customer Finance Program).
“Loans” shall mean the Term Loans, the Revolving Facility Loans and the Swingline Loans.
“Majority Lenders” of any Facility shall mean, at any time, Lenders under such Facility having Loans and unused Commitments representing more than 50% of the sum of all Loans outstanding under such Facility and unused Commitments under such Facility at such time (subject to the last paragraph of Section 9.08(b)).
“Management Investors” shall mean the officers, directors, managers, employees and members of management of any Parent Entity and/or any subsidiary of the Borrower and their Immediate Family Members.
“Management Notes” shall have the meaning assigned to such term in Section 6.06(r).
“Margin Stock” shall have the meaning assigned to such term in Regulation U.
“Market Capitalization” shall mean an amount equal to (i) the total number of issued and outstanding shares of common (or common equivalent) Equity Interests of the IPO Entity on the date of the declaration of the relevant Restricted Payment multiplied by (ii) the arithmetic mean of the closing prices per share of the common (or common equivalent) Equity Interests for the 30 consecutive trading days immediately preceding the date of declaration of such Restricted Payment.
“Material Acquisition” shall mean any Permitted Business Acquisition or other similar Investment (including any Investment in a Similar Business) the aggregate consideration for which exceeds $100,000,000.
“Material Adverse Effect” shall mean (a) a material adverse effect on the business, financial condition or results of operations of the Borrower and its Subsidiaries (taken as a whole) or (b) a material and adverse effect on the material rights and remedies (taken as a whole) of the Administrative Agent under this Agreement and the other Loan Documents.
“Material Disposition” shall mean any Disposition not prohibited hereunder the aggregate consideration for which exceeds $100,000,000.
“Material Indebtedness” shall mean Indebtedness (other than Loans and Letters of Credit) of any one or more of the Borrower or any Subsidiary in an aggregate principal amount exceeding the greater of (x) $150,000,000 and (y) 0.375 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period.
“Material Intellectual Property” shall mean any Intellectual Property (other than customer lists) owned by the Borrower and its Subsidiaries that is material to the business of Borrower and the Subsidiaries, taken as a whole (whether owned as of the Closing Date or thereafter acquired).
“Material Real Property” shall mean any parcel or parcels of Real Property located in the United States and now or hereafter owned in fee simple (or local equivalent) by any Loan Party and having a fair market value (on a per-property basis) of at least the greater of (1) $25,000,000 and (2) 0.0625 times EBITDA as of (x) the Closing Date, for Real Property owned by a Loan Party as of the Closing Date or (y) the later of the date of acquisition of such Real Property and the date of acquisition of the Loan Party
that owns such Real Property, for other Real Property, in each case as determined by the Borrower in good faith; provided that “Material Real Property” shall not include (i) any Real Property in respect of which a Loan Party does not own the land in fee simple, or (ii) any Real Property which a Loan Party leases to a third party.
“Material Subsidiary” shall mean any Subsidiary other than an Immaterial Subsidiary.
“Maximum Rate” shall have the meaning assigned to such term in Section 9.09.
“Minimum L/C Collateral Amount” shall mean, at any time, in connection with any Letter of Credit, an amount equal to 102% of the Revolving L/C Exposure with respect to such Letter of Credit at such time.
“Model” shall mean the financial model provided by or on behalf of the BDT Investor to the Arrangers on July 20, 2024.
“Moody’s” shall mean Moody’s Investors Service, Inc. and its successors and assigns.
“Mortgaged Properties” shall mean any Material Real Property from time to time required to be encumbered by a Mortgage pursuant to Section 5.10 and identified on Schedule 1.01(E).
“Mortgages” shall mean, collectively, the mortgages, trust deeds, deeds of trust, deeds to secure debt, assignments of leases and rents, and other security documents (including amendments to any of the foregoing) delivered with respect to Mortgaged Properties, each in such form as is reasonably satisfactory to the Collateral Agent and the Borrower, in each case, as amended, supplemented or otherwise modified from time to time.
“Multiemployer Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which Holdings, the Borrower or any Subsidiary or any ERISA Affiliate (other than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414) is making or accruing an obligation to make contributions, has within any of the preceding six plan years made or accrued an obligation to make contributions, or has any liability (contingent or otherwise).
“Net First Lien Leverage Ratio” shall mean, on any date, the ratio of (A) (i) the sum of, without duplication, (x) the aggregate principal amount of any Consolidated Debt of the Borrower and its Subsidiaries consisting of Loan Obligations outstanding as of the last day of the Test Period most recently ended as of such date (other than Loan Obligations secured only by Junior Liens) and (y) the aggregate principal amount of any other Consolidated Debt of the Borrower and its Subsidiaries outstanding as of the last day of such Test Period that is then secured by Liens on the Collateral that are Other First Liens less (ii) without duplication, the Unrestricted Cash and unrestricted Permitted Investments of the Borrower and its Subsidiaries as of the last day of such Test Period to (B) EBITDA of the Borrower and its Subsidiaries for such Test Period, all determined on a consolidated basis in accordance with GAAP; provided that the Net First Lien Leverage Ratio shall be determined for the relevant Test Period on a Pro Forma Basis.
“Net Income” shall mean, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends.
“Net Proceeds” shall mean:
(a) 100% of the cash proceeds actually received by a Loan Party (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise and including casualty insurance settlements and condemnation awards, but only as and when received and excluding, for the avoidance of doubt, any other consideration received in the form of assumption by the acquiring person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Disposition or recovery event or received in any other non-cash form) from any (x) any casualty or condemnation event with respect to Collateral or (y) any Asset Sale or other Dispositions by a Loan Party of Collateral under Section 6.05(g), net of (i) attorneys’ fees, accountants’ fees, investment banking fees, survey costs, title insurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, required debt payments and required payments of other obligations relating to the applicable asset to the extent such debt or obligations are secured by a Lien permitted hereunder (other than (x) pursuant to the Loan Documents or (y) if such debt or obligations are secured by a Lien on the Collateral that ranks on an equal priority or junior basis to the Liens on the Collateral securing the obligations under the Loan Documents) on such asset, other customary expenses and brokerage, consultant and other customary fees actually incurred in connection therewith, (ii) Taxes paid or payable (in the good faith determination of the Borrower) as a result thereof (including the amount of any distributions in respect thereof pursuant to Section 6.06(b)(iii) or Section 6.06(b)(v) and including any repatriation costs associated with repatriation of such proceeds from the applicable recipient to the Borrower), (iii) the amount of any reasonable reserve established in accordance with GAAP against any adjustment to the sale price or any liabilities (other than any Taxes deducted pursuant to clause (i) or (ii) above) (x) related to any of the applicable assets and (y) retained by the Borrower or any of the Subsidiaries including, without limitation, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction (however, the amount of any subsequent reduction of such reserve (other than in connection with a payment in respect of any such liability) shall be deemed to be cash proceeds of such Asset Sale occurring on the date of such reduction) and (iv) the portion attributable to holders of non-controlling interests in non-Wholly Owned Subsidiaries; provided that the Borrower may elect to use any portion of such proceeds within 24 months of such receipt to (x) permanently repay intercompany Indebtedness among any Parent Entity, the Borrower and its Subsidiaries or among Subsidiaries or (y) acquire, maintain, develop, construct, improve, upgrade or repair assets or other property of the Borrower and its Subsidiaries or to make Capital Expenditures, Permitted Business Acquisitions and other Investments permitted hereunder (excluding Permitted Investments or intercompany Investments in Subsidiaries), to acquire Intellectual Property or to reimburse the cost of any of the foregoing incurred on or after the date on which the Asset Sale giving rise to such proceeds was contractually committed, such portion of such proceeds shall not constitute Net Proceeds except to the extent not, within 24 months of such receipt, so used or contractually committed to be so used (it being understood that if any portion of such proceeds are not so used within such 24 month period but within such 24 month period are contractually committed to be used, then such remaining portion if not so used within six months following the end of such 24 month period shall constitute Net Proceeds as of such date without giving effect to this proviso); provided, further, that (x) no net cash proceeds calculated in accordance with the foregoing realized in (1) a single transaction or series of related transactions shall constitute Net Proceeds unless such net cash proceeds shall exceed the greater of (x) $20,000,000 and (y) 0.05 times EBITDA calculated on a Pro Forma basis for the most recently ended Test Period (and thereafter only net cash proceeds in excess of such amount shall constitute Net Proceeds) and (2) any Fiscal Year shall constitute Net Proceeds unless such net cash proceeds that are not excluded pursuant to the preceding clause (1) exceed the greater of (x) $40,000,000 and (y) 0.10 times EBITDA calculated on a Pro Forma basis for the most recently ended Test Period (and thereafter only net cash proceeds in excess of such amount shall constitute Net Proceeds) (any amounts
not constituting Net Proceeds as a result of this clause (x), “Excluded Proceeds”), (y) the Borrower may elect to “reinvest” Net Proceeds prior to actual receipt of such Net Proceeds (provided that such reinvestment shall be no earlier that the earliest of notice, execution of a definitive agreement for such asset sale and consummation of such assets sale), in which case upon receipt of such Net Proceeds, such Net Proceeds shall be deemed to have been reinvested and (z) during the reinvestment period contemplated by this definition, notwithstanding any further prepayment obligations arising under the Loan Documents, the Borrower and its Subsidiaries may, in the Borrower’s sole discretion, utilize such Net Proceeds for general corporate purposes not otherwise prohibited by the Loan Documents, provided such use shall not be considered a permitted reinvestment hereunder; and
(b) 100% of the cash proceeds from the incurrence, issuance or sale by the Borrower or any Subsidiary of any Indebtedness (other than Excluded Indebtedness), net of all Taxes and fees (including investment banking fees), commissions, costs and other expenses, in each case incurred in connection with such incurrence, issuance or sale.
“Net Secured Leverage Ratio” shall mean, on any date, the ratio of (A) (i) the sum of, without duplication, (x) the aggregate principal amount of any Consolidated Debt of the Borrower and its Subsidiaries consisting of Loan Obligations outstanding as of the last day of the Test Period most recently ended as of such date and (y) the aggregate principal amount of any other Consolidated Debt of the Borrower and its Subsidiaries outstanding as of the last day of such Test Period that is then secured by Liens on the Collateral less (ii) without duplication, the Unrestricted Cash and unrestricted Permitted Investments of the Borrower and its Subsidiaries as of the last day of such Test Period to (B) EBITDA for such Test Period, all determined on a consolidated basis in accordance with GAAP; provided that the Net Secured Leverage Ratio shall be determined for the relevant Test Period on a Pro Forma Basis.
“Net Total Leverage Ratio” shall mean, on any date, the ratio of (A) (i) the aggregate principal amount of any Consolidated Debt of the Borrower and its Subsidiaries outstanding as of the last day of the Test Period most recently ended as of such date less (ii) without duplication, the Unrestricted Cash and unrestricted Permitted Investments of the Borrower and its Subsidiaries as of the last day of such Test Period, to (B) EBITDA for such Test Period, all determined on a consolidated basis in accordance with GAAP; provided, that the Net Total Leverage Ratio shall be determined for the relevant Test Period on a Pro Forma Basis.
“New Commitments” shall have the meaning assigned to such term in Section 2.25(a).
“New Project” shall mean (x) each retail location, plant, facility (including manufacturing facility), branch, office or business unit which is either a new retail location, plant, facility (including manufacturing facility), branch, office or business unit or an expansion, relocation, remodeling, refurbishment or substantial modernization of an existing retail location, plant, facility (including manufacturing facility), branch, office or business unit owned by the Borrower or the Subsidiaries which in fact commences operations and (y) each creation (in one or a series of related transactions) of a business unit, product line or information technology offering to the extent such business unit commences operations or such product line or information technology is offered or each expansion (in one or a series of related transactions) of business into a new market or through a new distribution method or channel.
“Non-Bank Tax Certificate” shall have the meaning assigned to such term in Section 2.17(f)(i).
“Non-Consenting Lender” shall have the meaning assigned to such term in Section 2.19(c).
“Non-Defaulting Lender” shall mean, at any time, each Lender that is not a Defaulting Lender at such time.
“Note” shall have the meaning assigned to such term in Section 2.09(e).
“OFAC” shall have the meaning provided in Section 3.21(b)(i).
“Other First Lien Debt” shall mean Indebtedness secured by Other First Liens.
“Other First Liens” shall mean Liens on the Collateral that are pari passu with the Liens thereon securing the Term Loans (and other Loan Obligations that are pari passu with the Term Loans) pursuant to a Permitted Pari Passu Intercreditor Agreement.
“Other Taxes” shall mean any and all present or future stamp or documentary Taxes or any other excise, transfer, sales, property, intangible, mortgage recording or similar Taxes arising from any payment made hereunder or under any other Loan Document or from the execution, registration, delivery or enforcement of, consummation or administration of, from the receipt or perfection of security interest under, or otherwise with respect to, the Loan Documents (but excluding any Excluded Taxes), except any such Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.19).
“Other Term Loans” shall mean, collectively, any Extended Term Loans, Incremental Term Loans or Refinancing Term Loans, as applicable.
“Packaged Right” shall mean warrants, options or other rights to acquire shares of any class of the Equity Interests of any Parent Entity, the Borrower or a Subsidiary (whether settled in Equity Interests, cash or any combination thereof), regardless of the issuer of such warrants, options or other rights, that are initially issued as a unit with Indebtedness of any Parent Entity, the Borrower or any Subsidiary (which may be guaranteed by the Borrower or any Subsidiary) permitted to be incurred hereunder, even if such Indebtedness is separable from such warrants, options or other rights by a holder thereof.
“Parent Entity” shall mean any direct or indirect parent of the Borrower (including Holdings and ALH and any other entity with whom Holdings or any Parent is consolidated following a Qualified IPO).
“Participant” shall have the meaning assigned to such term in Section 9.04(c)(i).
“Participant Register” shall have the meaning assigned to such term in Section 9.04(c)(ii).
“Payment Recipient” shall have the meaning assigned to it in Section 8.14(a).
“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.
“Perfection Certificate” shall mean the Perfection Certificate with respect to the Loan Parties dated as of the Closing Date and delivered in connection with this Agreement.
“Periodic Term SOFR Determination Day” has the meaning assigned to such term in the definition of “Term SOFR”.
“Permitted Asset Swap” shall mean the purchase and sale or exchange of Related Business Assets or any combination of Related Business Assets between the Borrower and/or any Subsidiary and any other Person.
“Permitted Bond Hedge Transaction” shall mean any call or capped call option (or substantively equivalent derivative transaction) on any Parent Entity’s common equity purchased by the Borrower or any of its Subsidiaries in connection with the issuance of any Convertible Indebtedness by any Parent Entity thereof; provided that the purchase price for such Permitted Bond Hedge Transaction, less the proceeds received by the Borrower or its Subsidiaries from the sale of any related Permitted Warrant Transaction, does not exceed the net proceeds received by the Borrower or its Subsidiaries from (or on account of) the sale of such Convertible Indebtedness issued in connection with the Permitted Bond Hedge Transaction.
“Permitted Business Acquisition” shall mean any acquisition of all or substantially all the assets of, or the acquisition of Equity Interests (other than directors’ qualifying shares) not previously held by the Borrower and its Subsidiaries in (such that, in the case of the acquisition of Equity Interests, immediately after such acquisition, the Borrower and its Subsidiaries shall own a majority of the Equity Interests in), or merger, consolidation or amalgamation with, a person or business unit, division or line of business of a person (or any subsequent Investment made in a person or business unit, division or line of business previously acquired in a Permitted Business Acquisition), if immediately after giving effect thereto, or at the time determined in accordance with Section 1.04(a): (i) no Specified Event of Default shall have occurred and be continuing or would immediately result therefrom; (ii) any person acquired in such acquisition shall be engaged in a line of business that is not prohibited by Section 5.14 and shall become a Subsidiary and (iii) solely to the extent required by Section 5.10, any person acquired in such acquisition, if acquired by the Borrower or a Subsidiary Loan Party, shall be merged into the Borrower or a Subsidiary Loan Party or shall become a Subsidiary Loan Party within the period required by Section 5.10.
“Permitted Cure Securities” shall mean any Equity Interests of (x) the Borrower issued pursuant to the Cure Right other than Disqualified Stock and (y) any Parent Entity issued pursuant to the Cure Right, the proceeds of which are contributed in cash to the Borrower as cash or common equity.
“Permitted Equity” shall mean, with respect to any Person, such Person’s (i) common equity or (ii) Qualified Equity Interests, in each case, other than Permitted Cure Securities and Disqualified Stock.
“Permitted Holders” shall mean (a) the Investors and (b) any Person with which one or more Investors form a “group” (within the meaning of Section 14(d) of the Exchange Act as in effect on the date hereof) so long as, in the case of this clause (b), the relevant Investors directly or indirectly collectively beneficially own more than 50% of the relevant voting stock beneficially owned by the group.
“Permitted Investments” shall mean:
(a) direct obligations of the United States of America or any member of the European Union or any agency thereof or obligations guaranteed by the United States of America or any member of the European Union or any agency thereof, in each case with maturities not exceeding two years from the date of acquisition thereof;
(a) time deposit accounts, certificates of deposit, money market deposits, banker’s acceptances and other bank deposits maturing within 180 days of the date of acquisition thereof issued by
a bank or trust company that is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America having capital, surplus and undivided profits in excess of $250,000,000 and whose long-term debt, or whose parent holding company’s long-term debt, is rated A (or such similar equivalent rating or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act));
(b) repurchase obligations with a term of not more than 180 days for underlying securities of the types described in clause (a) above entered into with a bank meeting the qualifications described in clause (b) above;
(c) commercial paper, maturing not more than one year after the date of acquisition, issued by a corporation (other than an Affiliate of the Borrower) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of P 1 (or higher) according to Moody’s, F 1 (or higher) according to Fitch, or A 1 (or higher) according to S&P (or such similar equivalent rating or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act));
(d) securities with maturities of two years or less from the date of acquisition, issued or fully guaranteed by any State, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least A by S&P, A by Moody’s or A by Fitch (or such similar equivalent rating or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act));
(e) shares of mutual funds whose investment guidelines restrict 95% of such funds’ investments to those satisfying the provisions of clauses (a) through (e) above;
(f) money market funds that (i) comply with the criteria set forth in Rule 2a 7 under the Investment Company Act of 1940, (ii) are rated by any two of (1) AAA by S&P, (2) Aaa by Moody’s or (3) AAA by Fitch and (iii) have portfolio assets of at least $5,000,000,000;
(g) time deposit accounts, certificates of deposit, money market deposits, banker’s acceptances and other bank deposits in an aggregate face amount not in excess of 0.5% of the total assets of the Borrower and its Subsidiaries, on a consolidated basis, as of the end of Holdings’ most recently completed Fiscal Year; and
(h) instruments equivalent to those referred to in clauses (a) through (h) above denominated in any foreign currency comparable in credit quality and tenor to those referred to above and commonly used by corporations for cash management purposes in any jurisdiction outside the United States of America.
“Permitted Junior Intercreditor Agreement” shall mean, with respect to any Liens on Collateral that are intended to be junior to any Liens securing the Term Loans (and other Secured Obligations that are pari passu with the Facilities) (a) an intercreditor agreement the terms of which are generally consistent with leveraged loan market terms governing arrangements for the sharing of liens on a junior basis and the regulation of such Indebtedness at the time such intercreditor agreement is proposed to be established in light of the type of Indebtedness to be secured by such liens or (b) in the event a “Permitted Junior
Intercreditor Agreement” has been entered into after the Closing Date meeting the requirement of preceding clause (a), an intercreditor agreement the terms of which are, taken as a whole, not materially less favorable to the Lenders than the terms of such previously-executed Permitted Junior Intercreditor Agreement to the extent such agreement governs similar priorities, in each case of (a) and (b), as determined by the Administrative Agent and the Borrower in the exercise of reasonable judgment. Any agreement substantially in the form of the junior intercreditor agreement attached hereto as Exhibit K-1 shall constitute a Permitted Junior Intercreditor Agreement.
“Permitted Liens” shall have the meaning assigned to such term in Section 6.02.
“Permitted Loan Purchase” shall have the meaning assigned to such term in Section 9.04(g).
“Permitted Loan Purchase Assignment and Acceptance” shall mean an assignment and acceptance entered into by a Lender as an assignor and the Borrower or any of its Subsidiaries as an Assignee, as accepted by the Administrative Agent (if required by Section 9.04) in the form of Exhibit E or such other form as shall be approved by the Administrative Agent and the Borrower (such approval not to be unreasonably withheld, conditioned or delayed).
“Permitted Pari Passu Intercreditor Agreement” shall mean, with respect to any Liens on Collateral that are intended to be pari passu with the Liens securing the Term Loans (and other Secured Obligations that are pari passu with the Facilities), (a) an intercreditor agreement the terms of which are generally consistent with leveraged loan market terms governing arrangements for the sharing of liens on a pari passu basis and the regulation of such Indebtedness at the time such intercreditor agreement is proposed to be established in light of the type of Indebtedness to be secured by such liens or (b) in the event a “Permitted Pari Passu Intercreditor Agreement” has been entered into after the Closing Date meeting the requirement of preceding clause (a), an intercreditor agreement the terms of which are, taken as a whole, not materially less favorable to the Lenders than the terms of such previously-executed Permitted Pari Passu Intercreditor Agreement to the extent such agreement governs similar priorities, in each case of (a) and (b), as determined by the Administrative Agent and the Borrower in the exercise of reasonable judgment. Any agreement substantially in the form of the pari passu intercreditor agreement attached hereto as Exhibit K-2 shall constitute a Permitted Paris Passu Intercreditor Agreement.
“Permitted Refinancing Indebtedness” shall mean any Indebtedness issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund (collectively, to “Refinance”), the Indebtedness being Refinanced (or previous refinancings thereof constituting Permitted Refinancing Indebtedness); provided that (a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so Refinanced, except by (i) an amount equal to unpaid accrued interest, penalties and premiums (including tender premiums) thereon plus underwriting discounts and other customary fees, commissions and expenses (including upfront fees, original issue discount or initial yield payments) incurred in connection therewith, (ii) an amount equal to any existing commitments unutilized thereunder and (iii) additional amounts permitted to be incurred pursuant to Section 6.01 (with additional amounts incurred in reliance on this clause (iii) constituting a utilization of the relevant basket or exception pursuant to which such additional amount is permitted), (b) other than (1) Customary Bridge Loans and (2) pursuant to the Inside Maturity Basket, (i) the final maturity date of such Permitted Refinancing Indebtedness is on or after the earlier of (x) the final maturity date of the Indebtedness being Refinanced and (y) the Latest Maturity Date in effect at the time of incurrence thereof and (ii) the Weighted Average Life to Maturity of such Permitted Refinancing Indebtedness is greater than or equal to the lesser of (i) the Weighted Average Life to Maturity of the Indebtedness being Refinanced and (ii) the Weighted Average Life to Maturity of the Class of Term Loans then outstanding with the greatest remaining Weighted Average Life to Maturity, (c) if the Indebtedness being Refinanced is subordinated in right of payment to the Loan Obligations under this Agreement, such Permitted Refinancing Indebtedness shall be subordinated in right of payment to such Loan Obligations on terms in
the aggregate not materially less favorable to the Lenders as those contained in the documentation governing the Indebtedness being Refinanced, (d) no Permitted Refinancing Indebtedness shall have obligors that are not (or would not have been) obligated with respect to the Indebtedness being so Refinanced (except that a Subsidiary Loan Party may be added as an additional obligor), (e) if the Indebtedness being Refinanced is secured by Liens on any Collateral (whether senior to, equally and ratably with, or junior to the Liens on such Collateral securing the Loan Obligations or otherwise), such Permitted Refinancing Indebtedness may be secured by such Collateral (including any Collateral pursuant to after-acquired property clauses to the extent any such Collateral secured (or would have secured) the Indebtedness being Refinanced) on an equivalent or more junior basis and otherwise on terms in the aggregate that are substantially similar to, or not materially less favorable (as determined by the Borrower in good faith) to the Secured Parties than, the Indebtedness being refinanced or on terms otherwise permitted by Section 6.02 and (f) if the Indebtedness being refinanced is not secured by Liens on any Collateral, such Permitted Refinancing Indebtedness shall not be secured by Liens on any Collateral unless otherwise permitted by Section 6.02.
“Permitted Reorganization” shall mean an internal re-organization or restructuring (including in connection with tax planning and corporate re-organizations) that does not result in the material impairment of the guarantees under the Loan Documents and the security interest of the Collateral Agent for the benefit of the Lenders in the Collateral or the Guarantees in favor of the Lenders, in each case, taken as a whole.
“Permitted Securitization Documents” shall mean all documents and agreements evidencing, relating to, contemplated by or otherwise governing a Permitted Securitization Financing, including each Hedging Agreement, management agreement, servicing agreement or arrangement or back-up management agreement entered into in connection therewith.
“Permitted Securitization Financing” shall mean (a) each Existing Securitization Facility and any Permitted Refinancing Indebtedness in respect thereof, (b) any receivables purchase/sale, factoring agreements or other similar transactions or arrangements with respect to Securitization Assets and/or (c) any other transaction pursuant to which Securitization Assets or interests therein are or have been sold, contributed or are otherwise directly or indirectly transferred (including by way of the transfer of the Equity Interests of the entity holding such Securitization Assets) to a Securitization Entity or to any Person that is not the Borrower or a Subsidiary thereof (including by way of two or more successive such transactions), which transaction or transactions (x) may include Standard Securitization Undertakings of the Borrower and/or any Subsidiary and (y) shall otherwise have Limited Recourse to the Borrower and/or any Subsidiary based on the collectability of any Receivables Assets or the condition, value or marketability of any other Securitization Assets.
“Permitted Securitization Financing Indebtedness” shall mean Indebtedness of the Borrower, any Subsidiary or any Securitization Entity in connection with any Permitted Securitization Financing which (a) is non-recourse to the Borrower and its Subsidiaries (other than Standard Securitization Undertakings and Limited Recourse) and (b) with respect to which none of the Borrower or any of the Subsidiaries provides any Guarantee (other than Limited Recourse)..
“Permitted Warrant Transaction” shall mean any call option on, or warrant or right to purchase (or substantively equivalent derivative transaction), a Parent Entity’s common equity sold by a Parent Entity substantially concurrently with any purchase by the Borrower of a related Permitted Bond Hedge Transaction.
“Person” shall mean any natural person, corporation, business trust, joint venture, association, company, partnership, limited liability company or government, individual or family trusts, or any agency or political subdivision thereof.
“Plan” shall mean any employee pension benefit plan (as defined in Section 3(2) of ERISA), other than a Multiemployer Plan) that is (i) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, (ii) sponsored or maintained (at the time of determination or at any time within the five years prior thereto) by Holdings, any of its Subsidiaries or any ERISA Affiliate and (iii) in respect of which Holdings, any of its Subsidiaries or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA, or has any liability (contingent or otherwise).
“Platform” shall have the meaning assigned to such term in Section 9.17(a).
“Pledged Collateral” shall mean “Pledged Collateral” as defined in the Security Agreement.
“Preferred Equity Interests” shall mean Equity Interests of a Parent Entity of the Borrower which is preferred as to the payment of dividends or as to the distribution of assets or, upon liquidation or winding up, as to any other class of Equity Interests of such Parent Entity.
“Pre-Opening Expenses” shall mean, with respect to any fiscal period, the amount of expenses (other than interest expense) incurred that are classified as “pre-opening rent”, “pre-opening expenses”, “re-opening expenses”, “opening costs” or “re-opening costs” (or any similar or equivalent caption) until such facility or new store location has been open (or re-opened, as applicable) and operating for a period of 12 consecutive months, and shall include, without limitation, the amount of expenses of the Borrower and the Subsidiaries in connection with the re-modeling and re-opening of any retail location.
“Prepayment Notice” shall mean a notice by the Borrower in accordance with the terms of Section 2.08(c) and Section 2.11(i) and substantially in the form of Exhibit H or another form approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent).
“Pricing Grid” shall mean:
(a) prior to the 2025 Revolving Facility Repricing Amendment Effective Date, with respect to the Initial Revolving Facility Loans and Initial Revolving Facility Commitments, the per annum rates set forth in the tables below:
| | | | | | | | |
| | |
| Pricing Grid for Initial Revolving Facility Loans |
| | |
| Net First Lien Leverage Ratio | Applicable Margin for ABR Loans | Applicable Margin for Eurocurrency Loans, Term SOFR Loans and RFR Loans |
| | |
| > 4.50:1.00 | 2.25% | 3.25% |
| | |
| ≤ 4.50 but > 4.00:1.00 | 2.00% | 3.00% |
| | |
| ≤ 4.00:1.00 | 1.75% | 2.75% |
| | |
| Pricing Grid for Initial Revolving Facility Commitments |
| | | | | |
| Net First Lien Leverage Ratio | Applicable USD Revolver Commitment Fee Rate and Applicable Thai Baht Revolving Commitment Fee Rate |
| Greater than 4.50 to 1.00 | 0.375% |
| Less than or equal 4.50 to 1.00 | 0.250% |
(b) from and after the 2025 Revolving Facility Repricing Amendment Effective Date and prior to (but excluding) the 2025-2 Revolving Facility Repricing Amendment Effective Date, with respect to the Initial Revolving Facility Loans and Initial Revolving Facility Commitments, the per annum rates set forth in the table below:
| | | | | | | | |
| | |
| Pricing Grid for Initial Revolving Facility Loans |
| | |
| Net First Lien Leverage Ratio | Applicable Margin for ABR Loans | Applicable Margin for Eurocurrency Loans, Term SOFR Loans and RFR Loans |
| | |
| > 4.50:1.00 | 1.50% | 2.50% |
| | |
| ≤ 4.50:1.00 | 1.25% | 2.25% |
| | | | | | | | |
| | |
| Pricing Grid for Initial Revolving Facility Commitments |
| | |
| Net First Lien Leverage Ratio | Applicable USD Revolver Commitment Fee Rate and Applicable Thai Baht Revolving Commitment Fee Rate |
| | |
| Greater than 4.50 to 1.00 | 0.375% |
| | |
| Less than or equal 4.50 to 1.00 | 0.250% |
(c) from and after the 2025-2 Revolving Facility Repricing Amendment Effective Date, with respect to the Initial Revolving Facility Loans and Initial Revolving Facility Commitments, the per annum rates set forth in the table below:
| | | | | | | | | | | | | | |
Pricing Grid for Initial Revolving Facility Loans |
| | | | |
Level | Credit Ratings Moody’s / S&P for the Initial Revolving Facility Loans | Net First Lien Leverage Ratio | Applicable Margin for ABR Loans | Applicable Margin for Eurocurrency Loans, Term SOFR Loans and RFR Loans |
I | Lower than B1
(stable) and B+
(stable) | > 3.50:1.00 | 1.25% | 2.25% |
II | B1 (stable) and B+
(stable) or higher
than B1 (stable) and | ≤ 3.50:1.00 | 1.00% | 2.00% |
| | | | | |
Pricing Grid for Initial Revolving Facility Commitments |
| |
Net First Lien Leverage Ratio | Applicable USD Revolver Commitment Fee Rate and Applicable Thai Baht Revolving Commitment Fee Rate |
| |
Greater than 4.50 to 1.00 | 0.375% |
| |
Less than or equal 4.50 to 1.00 | 0.250% |
(cd) prior to (but excluding) the 2025 Refinancing Amendment Effective Date, with respect to the Initial Term B Loans, the per annum rates set forth in the table below:
| | | | | | | | |
| Pricing Grid for Initial Term B Loans |
| | |
| Net First Lien Leverage Ratio | Applicable Margin for ABR Loans | Applicable Margin for
Term SOFR Loans |
| | |
| > 4.50:1.00 | 2.50% | 3.50% |
| | |
| ≤ 4.50:1.00 | 2.25% | 3.25% |
(de) from and after the 2025 Refinancing Amendment Effective Date and prior to (but excluding) the 2025-2 Refinancing Amendment Effective Date, with respect to the Initial Term B Loans, the per annum rates set forth in the table below:
| | | | | | | | |
| | |
| Pricing Grid for Initial Term B Loans |
| | |
| Net First Lien Leverage Ratio | Applicable Margin for ABR Loans | Applicable Margin for
Term SOFR Loans |
| | |
| > 4.50:1.00 | 1.75% | 2.75% |
| | |
| ≤ 4.50:1.00 | 1.50% | 2.50% |
(ef) from and after the 2025-2 Refinancing Amendment Effective Date, with respect to the Initial Term B Loans, the per annum rates set forth in the table below:
| | | | | | | | | | | | | | |
Pricing Grid for Initial Term B Loans |
| | | | |
| Level | Credit Ratings Moody’s / S&P for the Initial Term B Loans | Net First Lien Leverage Ratio | Applicable Margin for ABR Loans | Applicable Margin for Term SOFR Loans |
| I | Lower than B1 (stable) and B+
(stable) | > 3.50:1.00 | 1.25% | 2.25% |
| II | B1 (stable) and B+ (stable) or higher than B1 (stable) and B+ (stable) | ≤ 3.50:1.00 | 1.00% | 2.00% |
The level applicable for determining pricing after the 2025-2 Revolving Facility Repricing Amendment Effective Date with respect to the Initial Revolving Facility Loans and the 2025-2 Refinancing Amendment Effective Date with respect to the Initial Term B Loans, shall be based on achievement of both the Credit Ratings from Moody’s and S&P and the Net First Lien Leverage Ratio as set forth in Level I or Level II determined as of each Adjustment Date (as defined below); provided, that if the rating system of Moody’s or S&P shall change, or if both such rating agencies shall cease to be in the business of providing credit ratings, the Borrower and the Lenders shall negotiate in good faith to amend such Pricing Grid to reflect such changed rating system or the unavailability of ratings from such ratings agencies, and pending the effectiveness of such amendment, the Applicable Margin shall be determined by reference to the ratings most recently in effect prior to such change or cessation. For the avoidance of doubt, if either Moody’s or S&P does not provide a Credit Rating for the Borrower or Parent Entity (other than pursuant to the immediately preceding proviso) then the level shall be deemed to be Level I.
For the purposes of the Pricing Grid, changes in the Applicable Margin, the Applicable USD Revolver Commitment Fee Rate and the Applicable Thai Baht Revolver Commitment Fee Rate resulting from changes in the Net First Lien Leverage Ratio or Credit Ratings, as applicable, shall become effective on the date (the “Adjustment Date”) that is three Business Days after the date on which the relevant financial statements and required Compliance Certificate are delivered to the Administrative Agent pursuant to Section 5.04 for each fiscal quarter beginning with the first full fiscal quarter of Holdings ended after the Closing Date and shall remain in effect until the next change to be effected pursuant to this paragraph. If any financial statements and required Compliance Certificate referred to in the preceding sentence are not delivered within the time periods specified in Section 5.04, then, at the option of the Administrative Agent or the Required USD Revolving Facility Lenders (in the case of the Initial USD Revolving Facility) or the Required Thai Baht Revolving Facility Lenders (in the case of the Initial Thai Baht Revolving Facility) or the Majority Lenders for the Initial Term B Facility (in the case of the Initial Term B Loans), until the date that is three Business Days after the date on which such financial statements and required Compliance Certificate are delivered, the highest pricing level shall apply as of the first Business Day after the date on which such financial statements were to have been delivered but were not delivered. Each determination of the Net First Lien Leverage Ratio pursuant to the Pricing Grid shall be made in a manner consistent with the determination thereof pursuant to Section 6.11.
“primary obligor” shall have the meaning assigned to such term in the definition of the term “Guarantee.”
“Prime Rate” shall mean the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as reasonably determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as reasonably determined by the Administrative Agent).
“Pro Forma Basis” shall mean, as to any Person, for any events as described below that occur subsequent to the commencement of a period for which the financial effect of such events is being calculated, and giving effect to the events for which such calculation is being made, such calculation as will give pro forma effect to such events as if such events occurred on the first day of the four consecutive fiscal quarter period ended on or before the occurrence of such event (the “Reference
Period”): (i) pro forma effect shall be given to any Disposition, any acquisition, Investment, capital expenditure, construction, repair, replacement, improvement, development, disposition, merger, amalgamation, consolidation (or any similar transaction or transactions not otherwise permitted under Section 6.04 or 6.05 that require a waiver or consent of the Required Lenders and such waiver or consent has been obtained), any dividend, distribution or other similar payment, any designation of any Subsidiary as an Unrestricted Subsidiary and any Subsidiary Redesignation, New Project, and any restructurings of the business of the Borrower or any of the Subsidiaries that the Borrower or any of the Subsidiaries has determined to make and/or made and in the good faith determination of a Responsible Officer of the Borrower are expected to have a continuing impact and are factually supportable, which would include cost savings resulting from head count reduction, closure of facilities and similar operational and other cost savings, which adjustments the Borrower determines are reasonable (the foregoing, together with any transactions related thereto or in connection therewith, the “relevant transactions”), in each case that occurred during the Reference Period (or, in the case of determinations made pursuant to Section 2.21 or Article VI (other than Section 6.11), occurring during the Reference Period or thereafter and through and including the date upon which the relevant transaction is consummated), (ii) in making any determination on a Pro Forma Basis, (x) all Indebtedness (including Indebtedness issued, incurred or assumed as a result of, or to finance, any relevant transactions and for which the financial effect is being calculated, whether incurred under this Agreement or otherwise, but excluding normal fluctuations in revolving Indebtedness incurred for working capital purposes, in each case not to finance any acquisition) issued, incurred, assumed or permanently repaid during the Reference Period (or, in the case of determinations made pursuant to Section 2.21 or Article VI (other than Section 6.11), occurring during the Reference Period or thereafter and through and including the date upon which the relevant transaction is consummated) shall be deemed to have been issued, incurred, assumed or permanently repaid at the beginning of such period, (y) Interest Expense of such Person attributable to interest on any Indebtedness, for which pro forma effect is being given as provided in the preceding clause (x), bearing floating interest rates shall be computed on a pro forma basis as if the rates that would have been in effect during the period for which pro forma effect is being given had been actually in effect during such periods, and (z) in giving effect to clause (i) above with respect to each New Project which commences operations and records not less than one full fiscal quarter’s operations during the Reference Period, the operating results of such New Project shall be annualized on a straight line basis during such period, taking into account any seasonality adjustments determined by the Borrower in good faith and (iii) (A) for any Subsidiary Redesignation then being designated, effect shall be given to such Subsidiary Redesignation and all other Subsidiary Redesignations after the first day of the relevant Reference Period and on or prior to the date of the respective Subsidiary Redesignation then being designated, collectively, and (B) for any designation of a Subsidiary as an Unrestricted Subsidiary, effect shall be given to such designation and all other designations of Subsidiaries as Unrestricted Subsidiaries after the first day of the relevant Reference Period and on or prior to the date of the then applicable designation of a Subsidiary as an Unrestricted Subsidiary, collectively.
In the event that EBITDA or any financial ratio is being calculated for purposes of determining whether Indebtedness or any Lien relating thereto may be incurred or whether any Investment, Restricted Payment or Restricted Debt Payment may be made, the Borrower may elect to treat all or any portion of the commitment relating thereto as being incurred at the time of such commitment, in which case any subsequent incurrence of Indebtedness under such commitment shall not be deemed, for purposes of this calculation, to be an incurrence at such subsequent time.
Pro forma calculations made pursuant to the definition of the term “Pro Forma Basis” shall be determined in good faith by a Responsible Officer of the Borrower and may include adjustments to reflect “run-rate” cost savings, operating expense reductions, and other operating improvements, synergies or cost savings projected by the Borrower in good faith to result from any relevant pro forma
event (including, to the extent applicable, an acquisition or other Permitted Investment) and not duplicative of any amounts added back in computing EBITDA.
For purposes of this definition, except as otherwise provided in this Agreement, any amount in a currency other than Dollars will be converted to Dollars based on the average exchange rate for such currency for the most recent twelve month period immediately prior to the date of determination in a manner consistent with that used in calculating EBITDA for the applicable period.
“Pro Forma Compliance” shall mean, at any date of determination, the Borrower and its Subsidiaries shall be in compliance, on a Pro Forma Basis after giving effect on a Pro Forma Basis to the relevant transactions (including the assumption, the issuance, incurrence and permanent repayment of Indebtedness), with the Financial Covenant recomputed as at the last day of the most recently ended fiscal quarter of the Borrower and its Subsidiaries for which the financial statements and any Compliance Certificate required pursuant to Section 5.04 have been delivered. For the avoidance of doubt, Pro Forma Compliance shall be tested without regard to whether or not the Financial Covenant was or was required to be tested on the applicable quarter end date.
“Pro Rata Extension Offers” shall have the meaning assigned to such term in Section 2.22(a).
“Pro Rata Share” shall have the meaning assigned to such term in Section 2.24(a).
“Projections” shall mean the projections delivered to the Arrangers on July 20, 2024.
“PTE” shall mean a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Public Company Compliance” shall mean compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, the provisions of the Securities Act and the Exchange Act, and the rules of national securities exchange listed companies (in each case, as applicable to companies with equity or debt securities held by the public), including procuring directors’ and officers’ insurance, legal and other professional fees, and listing fees.
“Public Lender” shall have the meaning assigned to such term in Section 9.17(b).
“Qualified Equity Interests” shall mean any Equity Interest other than Disqualified Stock.
“Qualified IPO” shall mean (i) an underwritten public offering of the Equity Interests (the “IPO Equity”) of Holdings, the Borrower or any Parent Entity (the “IPO Entity”) or (ii) a public listing of IPO Equity of the IPO Entity on any securities exchange or market.
“Rate” shall have the meaning assigned to such term in the definition of the term “Type.”
“Real Property” shall mean, collectively, all right, title and interest (including any leasehold estate) in and to any and all parcels of or interests in real property owned in fee or leased by any Loan Party, whether by lease, license, or other means, together with, in each case, all easements, hereditaments and appurtenances relating thereto, and all improvements and appurtenant fixtures and equipment located thereon and incidental to the ownership, lease or operation thereof.
“Receivables Assets” shall mean, as to the Borrower or any of its Subsidiaries or Securitization Entities, collectively, accounts receivable (including any bills of exchange), Lease Receivables, Loan Receivables and other receivables and, in each case, related assets and property from time to time originated, acquired or otherwise owned by the Borrower or such Subsidiary or Securitization Entity (including, without limitation, interest payments).
“Reclassifiable Item” shall have the meaning assigned to such term in Section 1.02(b).
“Reference Period” shall have the meaning assigned to such term in the definition of the term “Pro Forma Basis.”
“Refinance” shall have the meaning assigned to such term in the definition of the term “Permitted Refinancing Indebtedness,” and “Refinanced” and “Refinancings” shall have a meaning correlative thereto.
“Refinancing” shall mean (a) the repayment in full of all principal, accrued and unpaid interest, fees, premium, if any, and other amounts (other than (x) obligations not then due and payable or that by their terms survive the termination thereof and (y) certain existing letters of credit, bank guarantees, bankers’ acceptances and similar documents and instruments that on the Closing Date will be grandfathered into, or backstopped by, the Initial Revolving Facility or cash collateralized in a manner satisfactory to the issuing banks thereof) under the Existing Credit Facilities, (ii) the termination of all commitments to extend credit under the Existing Credit Facilities and (iii) the termination and release of any security interests and guarantees provided in connection with the Existing Credit Facilities.
“Refinancing Amendment” shall mean an amendment to this Agreement among the Borrower, the Administrative Agent and each Lender that agrees to provide all or any portion of the Refinancing Term Loans or the Replacement Revolving Facility Commitments, as applicable, being incurred pursuant thereto and in accordance with Section 2.23 (including, for the avoidance of doubt, the 2025 Refinancing Amendment and the 2025-2 Refinancing Amendment).
“Refinancing Effective Date” shall have the meaning assigned to such term in Section 2.23(a).
“Refinancing Notes” shall mean any secured or unsecured notes or loans issued by any Loan Party (whether under an indenture, a credit agreement or otherwise) and the Indebtedness represented thereby; provided that (a) 100% of the net proceeds of such Refinancing Notes are used to permanently reduce Loans and/or replace Commitments substantially simultaneously with the issuance thereof; (b) the principal amount (or accreted value, if applicable) of such Refinancing Notes does not exceed the principal amount (or accreted value, if applicable) of the aggregate portion of the Loans so reduced and/or Commitments so replaced, except by (i) an amount equal to unpaid accrued interest, penalties and premiums (including tender premiums) thereon plus underwriting discounts and other customary fees, commissions and expenses (including upfront fees, original issue discount or initial yield payments) incurred in connection therewith, (ii) an amount equal to any existing commitments unutilized thereunder and (iii) additional amounts permitted to be incurred pursuant to Section 6.01 (with additional amounts incurred in reliance on this clause (iii) constituting a utilization of the relevant basket or exception pursuant to which such additional amount is permitted); (c) other than pursuant to the Inside Maturity Basket, the final maturity date of such Refinancing Notes is on or after the Term Facility Maturity Date or the Revolving Facility Maturity Date, as applicable, of the Term Loans so reduced or the Revolving Facility Commitments so replaced; (d) other than pursuant to the Inside Maturity Basket, the Weighted Average Life to Maturity of such Refinancing Notes is greater than or equal to the Weighted Average Life to Maturity of the Term Loans so reduced or the Revolving Facility Commitments so replaced, as
applicable; (e) in the case of Refinancing Notes in the form of notes issued under an indenture, the terms thereof do not provide for any scheduled repayment, mandatory redemption or sinking fund obligations prior to the Term Facility Maturity Date of the Term Loans so reduced or the Revolving Facility Maturity Date of the Revolving Facility Commitments so replaced, as applicable (other than customary offers to repurchase or mandatory prepayment provisions upon a change of control, asset sale or event of loss and customary acceleration rights after an event of default); (f) the mandatory redemption terms applicable to such Refinancing Notes shall not be materially less favorable (as determined by the Borrower in good faith) to the Borrower than those applicable to the Term Loans so reduced (if any); (g) the other terms of such Refinancing Notes (other than interest rates, fees, floors, funding discounts and redemption or prepayment premiums and other pricing terms), taken as a whole, are substantially similar to, or not materially less favorable (as determined by the Borrower in good faith) to the Borrower and the Subsidiaries than the terms, taken as a whole, applicable to the Term Loans so reduced (if any) (in each case, except for covenants or other provisions (I) applicable only to periods after the Latest Maturity Date in effect at the time such Refinancing Notes are issued, (II) that reflect market terms and conditions (as determined by the Borrower in good faith) at the time such Refinancing Notes are issued or (III) that are otherwise reasonably acceptable to the Administrative Agent), as determined by the Borrower in good faith (or, if more restrictive, the Loan Documents are amended to contain such more restrictive terms to the extent required to satisfy the foregoing standard); (h) there shall be no obligor in respect of such Refinancing Notes that is not a Loan Party; (i) to the extent any Refinancing Notes are secured, such Refinancing Notes shall only be secured by Collateral; and (j) Refinancing Notes that are secured by Collateral shall be subject to the provisions of a Permitted Pari Passu Intercreditor Agreement or a Permitted Junior Intercreditor Agreement, as applicable.
“Refinancing Term Loans” shall have the meaning assigned to such term in Section 2.23(a).
“Register” shall have the meaning assigned to such term in Section 9.04(b)(iv).
“Regulated Bank” shall have the meaning assigned to such term in Section 9.08(k).
“Regulation T” shall mean Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
“Regulation U” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
“Regulation X” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
“Related Business Assets” shall mean assets (other than cash or cash equivalents) used or useful in a Similar Business; provided that any asset received by the Borrower or any Subsidiary in exchange for any asset transferred by the Borrower or any Subsidiary shall not be deemed to constitute a Related Business Asset if such asset consists of securities of a Person, unless upon receipt of the securities of such Person, such Person is or would become a Subsidiary.
“Related Fund” shall mean, with respect to any Lender that is a fund that invests in bank or commercial loans and similar extensions of credit, any other fund that invests in bank or commercial loans and similar extensions of credit and is advised or managed by (a) such Lender, (b) an Affiliate of such Lender or (c) an entity (or an Affiliate of such entity) that administers, advises or manages such Lender.
“Related Parties” shall mean, with respect to any specified Person, such Person’s Controlled or Controlling Affiliates and the respective directors, trustees, officers, employees, agents and advisors of such Person and such Person’s Controlled or Controlling Affiliates.
“Release” shall mean any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, emanating or migrating in, into, onto or through the Environment.
“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.
“Replacement Revolving Facilities” shall have the meaning assigned to such term in Section 2.23(d).
“Replacement Revolving Facility Commitments” shall have the meaning assigned to such term in Section 2.23(d).
“Replacement Revolving Facility Effective Date” shall have the meaning assigned to such term in Section 2.23(d).
“Replacement Revolving Loans” shall have the meaning assigned to such term in Section 2.23(d).
“Reportable Event” shall mean any reportable event as defined in Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a Plan, other than events for which the 30-day notice period has been waived.
“Required Amount of Loans” shall have the meaning assigned to such term in the definition of the term “Required Lenders.”
“Required ECF Percentage” shall mean, with respect to any Excess Cash Flow Period, 50%; provided that (a) if the Net First Lien Leverage Ratio on a Pro Forma Basis as at the date of required prepayment is less than or equal to 4.75 to 1.00, such percentage shall be 25% and (b) if the Net First Lien Leverage Ratio on a Pro Forma Basis as at the date of required prepayment is less than or equal to 4.50 to 1.00, such percentage shall be 0%, in each case with the Net First Lien Leverage Ratio calculated to give pro forma effect to such prepayment and any other repayment or prepayment prior to the date of required prepayment.
“Required Lenders” shall mean, at any time, Lenders having (a) Loans (other than Swingline Loans) outstanding, (b) Revolving L/C Exposures, (c) Swingline Exposures and (d) Available Unused Commitments that, taken together, represent more than 50% of the sum of (v) all Loans (other than Swingline Loans) outstanding, (x) all Revolving L/C Exposures, (y) all Swingline Exposure and (z) the total Available Unused Commitments at such time; provided that the Loans, Revolving L/C Exposures, Swingline Exposures and Available Unused Commitment of any Defaulting Lender shall be disregarded in determining Required Lenders at any time; provided, further, that, with respect to any determination of Required Lenders, Debt Fund Affiliates shall not, in the aggregate, account for more than 49.9% of the amounts included in such determination. For purposes of the foregoing, “Required Amount of Loans”
shall mean, at any time, the amount of Loans required to be held by Lenders in order for such Lenders to constitute “Required Lenders.”
“Required Net Proceeds Percentage” shall mean, at any time, 100%; provided that (a) if the Net First Lien Leverage Ratio on a Pro Forma Basis as at the date of required prepayment is less than or equal to 4.75 to 1.00 but greater than 4.50 to 1.00, such percentage shall be 50% and (b) if the Net First Lien Leverage Ratio on a Pro Forma Basis as at the date of required prepayment is less than or equal to 4.50 to 1.00, such percentage shall be 0%, in each case with the Net First Lien Leverage Ratio calculated to give pro forma effect to such prepayment and any other repayment or prepayment prior to the date of required prepayment.
“Required Prepayment Lenders” shall mean, at any time, the holders of more than 50% of the aggregate unpaid principal amount of the Term Loans that benefit from the applicable mandatory prepayment at such time (subject to the last paragraph of Section 9.08(b)).
“Required Revolving Facility Lenders” shall mean, at any time, Revolving Facility Lenders having (a) Revolving Facility Loans outstanding, (b) Revolving L/C Exposures, (c) Swingline Exposures and (d) Available Unused Commitments that, taken together, represent more than 50% of the sum of (w) all Revolving Facility Loans outstanding, (x) all Revolving L/C Exposures, (y) all Swingline Exposures and (z) the total Available Unused Commitments at such time; provided that the Revolving Facility Loans, Revolving L/C Exposures, Swingline Exposures and Available Unused Commitment of any Defaulting Lender shall be disregarded in determining Required Revolving Facility Lenders at any time.
“Required Thai Baht Revolving Facility Lenders” shall mean, at any time, Thai Baht Revolving Facility Lenders having (a) Thai Baht Revolving Facility Loans outstanding, (b) Thai Baht Revolving L/C Exposures and (c) Available Unused Commitments (with respect to the Thai Baht Revolving Facility) that, taken together, represent more than 50% of the sum of (w) all Thai Baht Revolving Facility Loans outstanding, (x) all Thai Baht Revolving L/C Exposures and (y) the total Available Unused Commitments (with respect to the Thai Revolving Facility) at such time; provided that the Thai Baht Revolving Facility Loans, Thai Baht Revolving L/C Exposures and Available Unused Commitment (with respect to the Thai Baht Revolving Facility) of any Defaulting Lender shall be disregarded in determining Thai Baht Required Revolving Facility Lenders at any time.
“Required USD Revolving Facility Lenders” shall mean, at any time, USD Revolving Facility Lenders having (a) USD Revolving Facility Loans outstanding, (b) USD Revolving L/C Exposures, (c) Swingline Exposures and (d) Available Unused Commitments (with respect to the USD Revolving Facility) that, taken together, represent more than 50% of the sum of (w) all USD Revolving Facility Loans outstanding, (x) all USD Revolving L/C Exposures, (y) all Swingline Exposures and (z) the total Available Unused Commitments (with respect to the USD Revolving Facility) at such time; provided that the USD Revolving Facility Loans, USD Revolving L/C Exposures, Swingline Exposures and Available Unused Commitment (with respect to the USD Revolving Facility) of any Defaulting Lender shall be disregarded in determining USD Required Revolving Facility Lenders at any time.
“Requirement of Law” shall mean, as to any Person, any law, treaty, rule, regulation, statute, order, ordinance, decree, judgment, consent decree, writ, injunction, settlement agreement or governmental requirement enacted, promulgated or imposed or entered into or agreed by any Governmental Authority, in each case applicable to or binding upon such Person or any of its property or assets or to which such Person or any of its property or assets is subject.
“Residual Amount” shall mean the “Residual Amount” or any substantially equivalent term or amount in respect of any Permitted Securitization Financing.
“Resolution Authority” shall mean an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” shall mean the chief executive officer, president, chief financial officer, treasurer, director, secretary or assistant secretary, or other similar officer, manager or a director of any Loan Party, and, solely for purposes of notices given pursuant to Article II, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in, or pursuant to an agreement between the applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
“Restricted Debt Payment” shall have the meaning assigned to such term in Section 6.09(b).
“Restricted Payments” shall have the meaning assigned to such term in Section 6.06. The amount of any Restricted Payment made other than in the form of cash or cash equivalents shall be the fair market value thereof (as determined by the Borrower in good faith).
“Restricted Subsidiary” shall mean any Subsidiary other than an Unrestricted Subsidiary.
“Retained Asset Sale Proceeds” shall mean all Net Proceeds that, by reason of the Required Net Proceeds Percentage, are not or were not required to be applied to prepay Subject Loans pursuant to Section 2.11(b).
“Retained Declined Proceeds” shall have the meaning assigned to such term in Section 2.11(h)(i).
“Revaluation Date” shall mean (a) with respect to any Loan, each of the following: (i) each date of an extension of a Term SOFR Loan or a Eurocurrency Loan or RFR Loan denominated in an Alternative Currency, (ii) each date of a continuation of a Term SOFR Loan or a Eurocurrency Loan denominated in an Alternative Currency pursuant to Section 2.13 and (iii) such additional dates as the Administrative Agent shall reasonably determine or the Required Revolving Facility Lenders shall reasonably require, (b) with respect to any Letter of Credit, each of the following: (i) each date of issuance of a Letter of Credit denominated in an Alternative Currency, (ii) each date of an amendment of any Letter of Credit denominated in an Alternative Currency having the effect of increasing the amount thereof, (iii) each date of any payment by the Issuing Bank under any Letter of Credit denominated in an Alternative Currency and (iv) such additional dates as the Issuing Bank shall reasonably determine, (c) with respect to any Swingline Loan, each date of an extension of a Swingline Loan denominated in an Alternative Currency and (d) with respect to the Available Unused Commitment of a Lender for purposes of calculating the Revolver Commitment Fee, each day of the applicable period during which such Available Unused Commitment is in effect.
“Revolver Commitment Fee” shall mean the USD Revolver Commitment Fee and/or the Thai Baht Revolver Commitment Fee.
“Revolving Facility” shall mean the USD Revolving Facility and/or the Thai Baht Revolving Facility.
“Revolving Facility Borrowing” shall mean a Borrowing comprised of Revolving Facility Loans of the same Class.
“Revolving Facility Commitment” shall mean, with respect to each Revolving Facility Lender, such Lender’s USD Revolving Facility Commitment and/or Thai Baht Revolving Facility Commitment.
“Revolving Facility Credit Exposure” shall mean, with respect to any Lender at any time, such Lender’s USD Revolving Facility Credit Exposure and/or Thai Baht Revolving Facility Credit Exposure.
“Revolving Facility Lender” shall mean a USD Revolving Facility Lender and/or a Thai Baht Revolving Facility Lender.
“Revolving Facility Loan” shall mean a USD Revolving Facility Loan and/or a Thai Baht Revolving Facility Loan.
“Revolving Facility Maturity Date” shall mean the USD Revolving Facility Maturity Date and/or the Thai Baht Revolving Facility Maturity Date.
“Revolving Facility Percentage” shall mean, with respect to any Revolving Facility Lender, such Lender’s USD Revolving Facility Percentage and/or Thai Baht Revolving Facility Percentage.
“Revolving L/C Exposure” shall mean, with respect to any Revolving Facility Lender, such Lender’s USD Revolving L/C Exposure and/or Thai Baht Revolving L/C Exposure, as the context may require.
“RFR Borrowing” shall mean a Borrowing comprised of RFR Loans.
“RFR Interest Day” shall have the meaning assigned to such term in the definition of “Daily Simple RFF”.
“RFR Loan” means a Loan that bears interest at a rate based on Daily Simple RFR.
“S&P” shall mean Standard & Poor’s Ratings Group, Inc. and its successors and assigns.
“Sale and Lease-Back Transaction” shall mean any arrangement, directly or indirectly, whereby the Borrower or any Subsidiary shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter, as part of such transaction, rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred from another Person.
“Sanctioned Country” shall have the meaning assigned to such term in Section 3.21(b).
“Sanctions” shall have the meaning assigned to such term in Section 3.21(b).
“Sanctions Laws” shall have the meaning assigned to such term in Section 3.21(b).
“SEC” shall mean the Securities and Exchange Commission or any successor thereto.
“Secured Cash Management Agreement” shall mean (x) any Cash Management Agreement that is entered into by and between any Loan Party or any Subsidiary and any Cash Management Bank, to the extent that such Cash Management Agreement (i) exists on the Closing Date between a Loan Party or any Subsidiary and an Agent, an Arranger, a Lender or an Affiliate of any such Person or (ii) is designated in writing by the Borrower and such Cash Management Bank to the Administrative Agent to be included as a Secured Cash Management Agreement and (y) bank guarantees that exist on the Closing Date, which are set forth on Schedule 1.01(F).
“Secured Hedge Agreement” shall mean any Hedging Agreement that is entered into by and between any Loan Party or any Subsidiary and any Hedge Bank, to the extent that such Hedging Agreement (i) exists on the Closing Date between a Loan Party or any Subsidiary and an Agent, an Arranger, a Lender or an Affiliate of any such Person or (ii) is designated in writing by the Borrower and such Hedge Bank to the Administrative Agent to be included as a Secured Hedge Agreement. Notwithstanding the foregoing, for all purposes of the Loan Documents, any Guarantee of, or grant of any Lien to secure, any obligations in respect of a Secured Hedge Agreement by a Guarantor shall not include any Excluded Swap Obligations.
“Secured Obligations” shall mean, collectively, (a) the Loan Obligations, (b) obligations in respect of any Secured Cash Management Agreement, (c) obligations of Holdings or any Subsidiaries in respect of any Secured Hedge Agreement and (d) the Erroneous Payment Subrogation Rights.
“Secured Parties” shall mean, collectively, the Administrative Agent, the Collateral Agent, each Lender, each Issuing Bank, each Hedge Bank that is party to any Secured Hedge Agreement, each Cash Management Bank that is party to any Secured Cash Management Agreement and each sub-agent appointed pursuant to Section 8.02 by the Administrative Agent with respect to matters relating to the Loan Documents or by the Collateral Agent with respect to matters relating to any Security Document.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Securitization Assets” shall mean, as to the Borrower or any of its Subsidiaries or Securitization Entities, any of the following assets (or interests therein) from time to time originated, acquired or otherwise owned or in which such Person has any rights or interests, in each case, without regard to where such assets or interests are located: (a) Receivables Assets, (b) Leases and Leased Property, (c) franchise fees, royalties and other similar payments made related to the use of trade names and other Intellectual Property, business support, training and other services, (d) revenues related to distribution and merchandising of the products of the Securitization Entities, (e) rents, real estate Taxes and other non-royalty amounts due from franchisees, (f) Intellectual Property rights relating to the generation of any of the types of assets listed in this definition, (g) parcels of or interests in real property, together with all easements, hereditaments and appurtenances thereto, all improvements and appurtenant fixtures and equipment, incidental to the ownership, lease or operation thereof, (h) any Equity Interests of any (i) Securitization Entity, (ii) Subsidiary of a Securitization Entity or (iii) Subsidiary that holds solely Securitization Assets (other than Equity Interests described under this clause (h)) designated as such by the Borrower for the purpose of effecting the transfer of such Securitization Assets by way of transferring such Equity Interests in connection with a Permitted Securitization Financing, and, in each case, any rights under any limited liability company agreement, trust agreement, shareholders agreement, organization or formation documents or other agreement entered into in furtherance of the organization of such entity, (i) any equipment, contractual rights with unaffiliated third parties, website domains and associated property and rights necessary for a Securitization Entity to operate in accordance with its stated purposes and (j) any rights and obligations associated with gift card or similar programs.
“Securitization Entity” shall mean (a) as of the Closing Date, Alliance Laundry Equipment Receivables 2015 LLC, Alliance Laundry Equipment Receivables Trust 2015-A (“ALERT 2015A”), Alliance Laundry Trade Receivables LLC (“ALTR LLC”), (b) any corporation, partnership, trust, limited liability company or other entity that is formed or designated from time to time by the Borrower or any Subsidiary in connection with a Permitted Securitization Financing for the purpose of (i) holding, transferring, borrowing against, servicing, providing financing for or providing a security interest in respect of Securitization Assets or interests therein or otherwise affecting such Permitted Securitization Financing, (ii) holding Equity Interests in any Securitization Entity and/or (iii) guaranteeing the obligations of a Securitization Entity and (c) any subsidiary of a Securitization Entity, in each case, so long as (A) such entity engages in no business and incurs no Indebtedness or other liabilities or obligations other than those related to or incidental to the relevant Permitted Securitization Financing, (B) neither the Borrower nor any Subsidiary (other than a Securitization Entity) issues or incurs any Indebtedness or Guarantee (other than Standard Securitization Undertakings and Limited Recourse) in respect of, or grants any Lien (other than Liens permitted under Section 6.02(nn)) on any of its assets or properties to secure, any Indebtedness, liabilities or other obligations of such entity or otherwise relating to such Permitted Securitization Financing, (C) none of Holdings, the Borrower nor any of their respective Subsidiaries has any material contract, agreement, arrangement or understanding with such entity other than on terms not materially less favorable to Holdings, the Borrower or such Subsidiary than those that might be obtained at that time from Persons that are not Affiliates of the Borrower (as determined by the Borrower in good faith), other than fees payable in the ordinary course of business in connection with servicing Securitization Assets of such entity or otherwise customary for similar securitizations or receivables financings and (D) none of Holdings, the Borrower, nor any of their respective Subsidiaries has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results (other than (i) those related to or incidental to the relevant Permitted Securitization Financing, (ii) Standard Securitization Undertakings and (iii) Limited Recourse).
“Securitization Repurchase Obligation” means any obligation of a seller (or any guaranty of such obligation) of assets to repurchase such assets arising as a result of a breach of a representation, warranty or covenant or otherwise, including, without limitation, as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, offset or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to such seller.
“Security Agreement” shall mean the Security Agreement, dated as of the Closing Date, among the Loan Parties and the Collateral Agent, as amended, restated, supplemented or otherwise modified from time to time.
“Security Documents” shall mean the Mortgages (if any), the Security Agreement and each of the intellectual property security agreements, pledge agreements and other instruments and documents executed and delivered pursuant to any of the foregoing or pursuant to Section 5.10, in each case as may be amended, restated, supplemented or otherwise modified from time to time and each other agreement or document whereby a Loan Party grants security over its assets in favor of the Collateral Agent (for the benefit of the Secured Parties).
“Similar Business” shall mean any business, the majority of whose revenues are derived from (i) business or activities conducted (or proposed to be conducted) by the Borrower and its Subsidiaries on the Closing Date, (ii) any business that is a natural outgrowth or reasonable extension, development or expansion of any such business or any business similar, reasonably related, incidental, complementary, ancillary, corollary or synergistic to any of the foregoing or (iii) any business that in the Borrower’s good
faith business judgment constitutes a reasonable diversification of businesses conducted by the Borrower and its Subsidiaries.
“SOFR” shall mean, with respect to any day, a rate per annum equal to the secured overnight financing rate for such day published by the SOFR Administrator.
“SOFR Administrator” shall mean the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“Special Flood Hazard Area” shall mean an area identified by the Federal Emergency Management Agency (or any successor agency) as a special flood hazard area with respect to which flood insurance has been made available under the Flood Insurance Laws.
“Specified Commitment” shall have the meaning assigned to such term in Section 1.04(c).
“Specified Event of Default” shall mean an Event of Default under Section 7.01(b) or 7.01(c) or, solely with respect to the Borrower, 7.01(h) or 7.01(i).
“Specified Letter of Credit Sublimit” shall mean, with respect to each Issuing Bank, the amount set forth opposite the name of such Issuing Bank on Schedule 2.01 or in the counterpart to this Agreement pursuant to which such Issuing Bank became an Issuing Bank hereunder, as reduced from time to time pursuant to Section 2.05(l).
“Spot Rate” shall mean for a currency, the rate determined by the Administrative Agent or the Issuing Bank, as the case may be, to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date as of which the foreign exchange computation is made; provided that the Administrative Agent may obtain such spot rate from another financial institution designated by the Administrative Agent (in consultation with the Borrower) if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency; and provided further that the Issuing Bank may use such spot rate quoted on the date as of which the foreign exchange computation is made in the case of any Letter of Credit denominated in Euros, Thai Baht or another Alternative Currency.
“Standard Securitization Undertakings” shall mean representations, warranties, covenants and indemnities made by the Borrower or any of its Subsidiaries that are customary for equipment lease, lease receivables, account receivables, loan receivables or similar factoring or securitization financings with respect to any Securitization Assets, including with respect to the residual value of the Securitization Assets that become subject to a Permitted Securitization Financing; provided that Standard Securitization Undertakings shall include Securitization Repurchase Obligations but not include any Guarantee or promise, other than by a Securitization Entity, of collectability of any Securitization Assets (in each case, other than Limited Recourse).
“Standby Letters of Credit” shall have the meaning assigned to such term in Section 2.05(a).
“Statutory Reserves” shall mean the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board and any other banking authority, domestic or foreign, to which the Administrative Agent or any Lender (including any branch, Affiliate or other fronting office making or holding a Loan) is subject for Eurocurrency Liabilities (as defined in Regulation D of the Board). Eurocurrency Loans shall be deemed
to constitute Eurocurrency Liabilities (as defined in Regulation D of the Board) and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D. Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
“Subagent” shall have the meaning assigned to such term in Section 8.02.
“Subject Loans” shall mean each Class of Term Loans, other than any Class of Term Loans in respect of which the applicable Incremental Assumption Agreement, Extension Amendment or Refinancing Amendment provides for non-ratable treatment with respect to the mandatory prepayment provisions set forth in Section 2.11(b) and (c) of this Agreement.
“subsidiary” shall mean, with respect to any Person (herein referred to as the “parent”), any corporation, partnership, association or other business entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, directly or indirectly, owned, Controlled or held, or (b) that is, at the time any determination is made, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.
“Subsidiary” shall mean, unless the context otherwise requires, a subsidiary of the Borrower. Notwithstanding the foregoing, (a) except for purposes of the definition of “Unrestricted Subsidiary” contained herein, an Unrestricted Subsidiary shall be deemed not to be a Subsidiary of the Borrower, or any of its Subsidiaries for purposes of this Agreement and (b) except as otherwise expressly provided herein, no Securitization Entity shall be a Subsidiary of the Borrower (or of any Subsidiary of the Borrower) for purposes of this Agreement. For the avoidance of doubt, the Thai Borrower is a Subsidiary as of the Closing Date and shall cease to constitute a borrower hereunder on and after any date on which (x) it ceases to be a Subsidiary and (y) the Thai Baht Revolving Facility is terminated and all Loan Obligations thereunder have been paid in full or otherwise satisfied in full.
“Subsidiary Loan Party” shall mean (a) each Wholly Owned Subsidiary of the Borrower that is not an Excluded Subsidiary and (b) any other Subsidiary of the Borrower that may be designated by the Borrower (by way of delivering to the Collateral Agent the documents required to be delivered pursuant to the Collateral and Guarantee Requirement) in its sole discretion from time to time to be a guarantor or borrower in respect of the Loan Obligations and the obligations in respect of the Loan Documents (a “Designated Guarantor”), whereupon such Designated Guarantor shall be obligated to comply with the applicable requirements of Section 5.10(b) as if it were newly acquired; provided that, if such Designated Guarantor is a Foreign Subsidiary, (i) the jurisdiction of incorporation of such Designated Guarantor shall be reasonably acceptable to the Administrative Agent and (ii) collateral and security provisions with respect to such Foreign Subsidiary reasonably acceptable to the Collateral Agent shall be negotiated in good faith.
“Subsidiary Redesignation” shall have the meaning provided in the definition of “Unrestricted Subsidiary” contained in this Section 1.01.
“Successor Borrower” shall have the meaning assigned to such term in Section 6.05(o).
“Surviving Person” shall have the meaning assigned to such term in Section 6.05(o).
“Swap Obligation” shall mean, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.
“Swingline Borrowing” shall mean a Borrowing comprised of Swingline Loans.
“Swingline Borrowing Request” shall mean a request by the Borrower substantially in the form of Exhibit C-2 or such other form as shall be approved by the Swingline Lender.
“Swingline Commitment” shall mean, with respect to each Swingline Lender, the commitment of such Swingline Lender to make Swingline Loans pursuant to Section 2.04(a). The aggregate amount of the Swingline Commitments on the Closing Date is $25,000,000. The Swingline Commitment may be modified by written agreement among the Borrower and the Swingline Lender from time to time, but shall not exceed the USD Revolving Facility Commitments. The Swingline Commitment is part of, and not in addition to, the USD Revolving Facility Commitments.
“Swingline Exposure” shall mean at any time the Dollar Equivalent of the aggregate principal amount of all outstanding Swingline Borrowings at such time. The Swingline Exposure of any USD Revolving Facility Lender at any time shall mean its applicable USD Revolving Facility Percentage of the aggregate Swingline Exposure at such time.
“Swingline Lender” shall mean (a) the Administrative Agent, in its capacity as a lender of Swingline Loans, and (b) each USD Revolving Facility Lender that shall have become a Swingline Lender hereunder as provided in Section 2.04(c), each in its capacity as a lender of Swingline Loans hereunder.
“Swingline Loans” shall mean the swingline loans made to the Borrower pursuant to Section 2.04(a).
“TARGET2” shall mean the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which utilizes a single shared platform and which was launched on November 19, 2007.
“TARGET Day” shall mean any day on which TARGET2 (or, if such payment system ceases to be operative, such other payment system, if any, determined by the Administrative Agent to be a suitable replacement) is open for the settlement of payments in Euros.
“Taxes” shall mean any and all present or future taxes, duties, levies, imposts, assessments, deductions, withholdings or other similar charges imposed by any Governmental Authority, whether computed on a separate, consolidated, unitary, combined or other basis and any interest, fines, penalties or additions to tax with respect to the foregoing.
“Term Borrowing” shall mean any Borrowing comprised of Term Loans.
“Term Facility” shall mean the Initial Term B Facility (including the 2025 Refinancing Term B Facility and the 2025-2 Refinancing Term B Facility) and/or any or all of the Incremental Term Facilities.
“Term Facility Commitment” shall mean the commitment of any applicable Lender to make Term Loans, including Initial Term B Loans (including the 2025 Refinancing Term B Loans and the 2025-2 Refinancing Term B Loans) and/or any Other Term Loans.
“Term Facility Lender” shall mean a Lender with a Term Facility Commitment or with outstanding Term Loans.
“Term Facility Maturity Date” shall mean, as the context may require, (a) with respect to the Initial Term B Facility (including the 2025 Refinancing Term B Facility and the 2025-2 Refinancing Term B Facility) in effect on the 2025-2 Refinancing Amendment Effective Date, the Initial Term B Facility Maturity Date and (b) with respect to any other Class of Term Loans, the maturity dates specified therefor in the applicable Incremental Assumption Agreement, Extension Amendment or Refinancing Amendment.
“Term Loans” shall mean the Initial Term B Loans (including the 2025 Refinancing Term B Loans and the 2025-2 Refinancing Term B Loans) and/or any Other Term Loans.
“Term Margin Differential” shall have the meaning assigned to such term in Section 2.21(b)(v).
“Term SOFR” shall mean,
(a) for any calculation with respect to a Term SOFR Loan, the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day, and
(b) for any calculation with respect to an ABR Loan on any day, the Term SOFR Reference Rate for a tenor of one month on the day (such day, the “ABR Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to such day, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any ABR Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such ABR Term SOFR Determination Day.
“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).
“Term SOFR Borrowing” shall mean a Borrowing comprised of Term SOFR Loans.
“Term SOFR Loan” shall mean any Term SOFR Term Loan or Term SOFR Revolving Loan.
“Term SOFR Revolving Facility Borrowing” shall mean a Borrowing comprised of Term SOFR Revolving Loans.
“Term SOFR Revolving Loan” shall mean any Revolving Facility Loan bearing interest at a rate determined by reference to the Adjusted Term SOFR in accordance with the provisions of Article II other than pursuant to clause (c) of the definition of “ABR”.
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
“Term SOFR Term Loan” shall mean any Term Loan bearing interest at a rate determined by reference to the Adjusted Term SOFR in accordance with the provisions of Article II other than pursuant to clause (c) of the definition of “ABR”.
“Termination Date” shall mean the date on which (a) all Commitments shall have been terminated, (b) the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document and all other Loan Obligations shall have been paid in full (other than in respect of contingent indemnification and expense reimbursement claims not then due) and (c) all Letters of Credit (other than those that have been Cash Collateralized) have been cancelled or have expired with no pending drawings and all amounts drawn or paid thereunder have been reimbursed in full.
“Test Period” shall mean, on any date of determination, (a) the period of four consecutive fiscal quarters of Holdings then most recently ended (taken as one accounting period) for which financial statements have been (or were required to be) delivered pursuant to Section 5.04(a) or 5.04(b) or at the election of Holdings (other than for purposes of determining actual compliance with Section 6.11), if earlier, are internally available.
“Testing Condition” shall be satisfied at any time if as of such time (i) the sum of without duplication (x) the aggregate principal amount of outstanding Revolving Facility Loans and Swingline Loans at such time and (y) the aggregate amount of Letters of Credit issued hereunder (other than up to $25,000,000 of Initial Revolving Facility Loans borrowed after the Closing Date to fund any Permitted Business Acquisitions, joint venture, capital expenditure or other Investment and up to $65,000,000 of undrawn Letters of Credit and any Letters of Credit that have been Cash Collateralized in accordance with Section 2.05(j)) exceeds (ii) an amount equal to 40% of the aggregate amount of the Revolving Facility Commitments at such time.
“Thai Baht” and “THB” shall mean the lawful currency of Thailand.
“Thai Baht L/C Disbursement” shall mean a payment or disbursement made by an Issuing Bank pursuant to a Thai Baht Letter of Credit.
“Thai Baht Letter of Credit” shall mean any letter of credit or bank guarantee issued pursuant to Section 2.05(a) under the Thai Baht Revolving Facility.
“Thai Baht Revolver Commitment Fee” shall have the meaning assigned to such term in Section 2.12(a)(ii).
“Thai Baht Revolving Facility” shall mean (i) the Initial Thai Baht Revolving Facility, (ii) the Thai Baht Revolving Facility Commitments of any other Class and the extensions of credit made in respect thereof by the Thai Baht Revolving Facility Lenders of such Class and (iii) for purposes of Section 9.08(b), all such Thai Baht Revolving Facility Commitments as a single Class.
“Thai Baht Revolving Facility Borrowing” shall mean a Borrowing comprised of Thai Baht Revolving Facility Loans of the same Class.
“Thai Baht Revolving Facility Commitment” shall mean, with respect to each Revolving Facility Lender, the commitment of such Revolving Facility Lender to make Thai Baht Revolving Facility Loans (including the Initial Thai Baht Revolving Facility Commitment) expressed as an amount representing the maximum aggregate permitted amount of such Revolving Facility Lender’s Thai Baht Revolving Facility Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08, (b) reduced or increased from time to time pursuant to assignments by or to such Lender under Section 9.04, and (c) increased (or replaced) as provided under Sections 2.21, 2.22 or 2.23. The initial amount of each Lender’s Thai Baht Revolving Facility Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance or Incremental Assumption Agreement, Extension Amendment or Refinancing Amendment pursuant to which such Lender shall have assumed its Thai Baht Revolving Facility Commitment. After the Closing Date, additional Classes of Thai Baht Revolving Facility Commitments may be added or created pursuant to Incremental Assumption Agreements, Extension Amendments or Refinancing Amendments. The Thai Borrower Revolving Facility Commitment will be reduced to $0 in the event that Holdings and/or the Borrower shall fail to directly or indirectly own 100% of the issued and outstanding Equity Interests of the Thai Borrower.
“Thai Baht Revolving Facility Credit Exposure” shall mean, at any time with respect to any Class of Thai Baht Revolving Facility Commitments, the sum of the Dollar Equivalents of (a) the aggregate principal amount of the Thai Baht Revolving Facility Loans of such Class outstanding at such time and (b) the Thai Baht Revolving L/C Exposure applicable to such Class at such time minus, for the purpose of Sections 6.11 and 7.03, the amount of Thai Baht Letters of Credit that have been Cash Collateralized in an amount equal to the Minimum L/C Collateral Amount at such time. The Thai Baht Revolving Facility Credit Exposure of any Thai Baht Revolving Facility Lender at any time shall be the product of (x) such Thai Baht Revolving Facility Lender’s Thai Baht Revolving Facility Percentage of the applicable Class and (y) the aggregate Thai Baht Revolving Facility Credit Exposure of such Class of all Thai Baht Revolving Facility Lenders, collectively, at such time.
“Thai Baht Revolving Facility Lender” shall mean a Lender (including an Incremental Revolving Facility Lender) with a Thai Baht Revolving Facility Commitment or with outstanding Thai Baht Revolving Facility Loans.
“Thai Baht Revolving Facility Loan” shall mean a Loan made by a Thai Baht Revolving Facility Lender pursuant to Section 2.01(c) including, to the extent permitted by Section 2.21, 2.22 or 2.23 and provided for in the relevant Incremental Assumption Agreement, Extension Amendment or Refinancing
Amendment, any Incremental Revolving Loan, any Extended Revolving Loans or any Replacement Revolving Loans, as applicable.
“Thai Baht Revolving Facility Maturity Date” shall mean, as the context may require, (a) with respect to the Initial Thai Baht Revolving Facility, the Initial Thai Baht Revolving Facility Maturity Date and (b) with respect to the Thai Baht Revolving Facility of any other Class, the maturity date specified therefor in the applicable Incremental Assumption Agreement, Extension Amendment or Refinancing Amendment, as applicable.
“Thai Baht Revolving Facility Percentage” shall mean, with respect to any Thai Baht Revolving Facility Lender of any Class, the percentage of the total Thai Baht Revolving Facility Commitments of such Class represented by such Lender’s Thai Baht Revolving Facility Commitment of such Class. If the Thai Baht Revolving Facility Commitments of such Class have terminated or expired, the Thai Baht Revolving Facility Percentages of such Class shall be determined based upon the Thai Baht Revolving Facility Commitments of such Class most recently in effect, giving effect to any assignments pursuant to Section 9.04.
“Thai Baht Revolving Facility Termination Event” shall have the meaning assigned to such term in Section 2.05(k)(ii).
“Thai Baht Revolving L/C Exposure” of any Class shall mean at any time the sum of the Dollar Equivalents of (a) the aggregate undrawn amount of all Thai Baht Letters of Credit applicable to such Class outstanding at such time and (b) the aggregate principal amount of all Thai Baht L/C Disbursements applicable to such Class that have not yet been reimbursed at such time. The Thai Baht Revolving L/C Exposure of any Class of any Thai Baht Revolving Facility Lender at any time shall mean its applicable Thai Baht Revolving Facility Percentage of the aggregate Thai Baht Revolving L/C Exposure applicable to such Class at such time. For all purposes of this Agreement, if on any date of determination a Thai Baht Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.13 or Rule 3.14 of the International Standby Practices, International Chamber of Commerce No. 590, article 29 of the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce No. 600, or similar terms expressed in the Thai Baht Letter of Credit, such Thai Baht Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn. Unless otherwise specified herein, the amount of a Thai Baht Letter of Credit at any time shall be deemed to be the amount available under such Thai Baht Letter of Credit in effect at such time; provided that with respect to any Thai Baht Letter of Credit that, by its terms or the terms of any document related thereto, provides for one or more automatic increases in the amount thereof, the amount of such Thai Baht Letter of Credit shall be deemed to be the maximum amount of such Thai Baht Letter of Credit after giving effect to all such increases, whether or not such maximum amount is in effect at such time.
“Thai Borrower” shall have the meaning assigned to such term in the recitals hereto.
“Thai Borrowing Receipt” shall mean the receipt in respect of a Borrowing under the Thai Baht Revolving Facility substantially in the form of Exhibit L or another form approved by the Administrative Agent.
“Thai Letter of Credit Sublimit” shall mean an amount equal to the total Initial Thai Baht Revolving Facility Commitments. The Thai Letter of Credit Sublimit is part of, and not in addition to, the Thai Baht Revolving Facility Commitments.
“Thai Unreimbursed Amount” shall have the meaning assigned to such term in Section 2.05(e)(ii).
“Third Party Funds” shall mean any segregated accounts or funds, or any portion thereof, received by the Borrower or any of its Subsidiaries as agent on behalf of third parties in accordance with a written agreement that imposes a duty upon the Borrower or one or more of its Subsidiaries to collect and remit those funds to such third parties.
“THOR” shall mean the Thai Overnight Repurchase Rate as administered by the THOR Administrator.
“THOR Administrator” shall mean the Bank of Thailand (or any successor administrator of the Thai Overnight Repurchase Rate).
“Trade Letters of Credit” shall have the meaning assigned to such term in Section 2.05(a).
“Transaction Expenses” shall mean any fees, premiums, expenses or other transaction costs incurred or paid by Holdings, the Borrower, any Parent Entity or any of its or their respective Subsidiaries or any of its or their respective Affiliates in connection with the Transactions, this Agreement, the other Loan Documents and the Refinancing and the Closing Date Dividend, and the transactions contemplated hereby and thereby.
“Transactions” shall mean, collectively, (a) the execution, delivery and performance of the Loan Documents, the creation of the Liens pursuant to the Security Documents, and the initial borrowings hereunder, (b) the Closing Date Dividend, (c) the Refinancing and (d) the payment of the Transaction Expenses.
“Transformative Transaction” shall mean any transaction by the Borrower or any Subsidiary that is either (a) not permitted by the terms of this Agreement immediately prior to the consummation of such transaction or (b) if permitted by the terms of this Agreement immediately prior to the consummation of such transaction, would not provide the Borrower and its Subsidiaries with a durable capital structure following such consummation, as determined by the Borrower acting in good faith.
“Type” shall mean, when used in respect of any Loan or Borrowing, the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, the term “Rate” shall include the Adjusted Term SOFR, Adjusted EURIBOR, Daily Simple RFR and ABR.
“UK Financial Institution” shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” shall mean the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” shall means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.
“Undisclosed Administration” shall mean, in relation to a Lender or its direct or indirect parent company, the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian, or other similar official by a supervisory authority or regulatory under or based on the law in the country where such Lender or such parent company is subject to home jurisdiction, if applicable law requires that such appointment not be disclosed.
“Uniform Commercial Code” shall mean the Uniform Commercial Code as the same may from time to time be in effect in the State of New York or the Uniform Commercial Code (or similar code or statute) of another jurisdiction in the United States of America, to the extent it may be required to apply to any item or items of Collateral.
“Unrestricted Cash” shall mean cash or cash equivalents of the Borrower or any of its Subsidiaries that would not appear as “restricted” on a consolidated balance sheet of the Borrower or any of its Subsidiaries or that are “restricted” in favor of the Administrative Agent or Collateral Agent on behalf of the Secured Parties (whether or not held in a pledged account); provided that for purposes of the calculation of the Net First Lien Leverage Ratio, the Net Secured Leverage Ratio and the Net Total Leverage Ratio, the amount of Unrestricted Cash and Permitted Investments not denominated in Dollars shall be calculated based on the currency exchange rates that would be used either, at the option of the Borrower, (i) for purposes of preparing a balance sheet or (ii) for purposes of calculating EBITDA, in each case, as of the last day of the Test Period most recently ended as of the date of determination as determined by the Borrower in good faith.
“Unrestricted Subsidiary” shall mean (a) any Subsidiary of the Borrower identified on Schedule 1.01(D), (b) any other Subsidiary of the Borrower, whether now owned or acquired or created after the Closing Date, that is designated by the Borrower as an Unrestricted Subsidiary hereunder; provided that the Borrower shall only be permitted to form or designate a new Unrestricted Subsidiary after the Closing Date so long as (i) no Specified Event of Default has occurred and is continuing or would result therefrom and (ii) at the time of designation, the Borrower or its applicable Subsidiary shall be deemed to have made an Investment pursuant to Section 6.04 in an amount equal to the fair market value of the net assets of such Unrestricted Subsidiary to the extent referable to the Borrower or its Subsidiaries’ Equity Interests therein, and (c) any subsidiary of an Unrestricted Subsidiary. Holdings may designate any Unrestricted Subsidiary to be a Restricted Subsidiary for purposes of this Agreement (each, a “Subsidiary Redesignation”); provided that any Subsidiary Redesignation shall be deemed to (x) constitute the incurrence of the Indebtedness and Liens of the Subsidiary subject to such Subsidiary Redesignation at such time and (y) reduce the deemed Investment referred to in the preceding sentence to the extent such Subsidiary was designated as an Unrestricted Subsidiary as of the Closing Date. Notwithstanding the foregoing, in no event shall the Thai Borrower constitute an Unrestricted Subsidiary.
“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).
“US Bankruptcy Code” shall mean Title 11 of the United States Code, as amended, or any similar federal or state law for the relief of debtors.
“USD L/C Disbursement” shall mean a payment or disbursement made by an Issuing Bank pursuant to a USD Letter of Credit.
“USD Letter of Credit” shall mean any letter of credit or bank guarantee issued pursuant to Section 2.05(a) under the USD Revolving Facility. Each Existing Roll-Over Letter of Credit shall be deemed to constitute a Letter of Credit issued hereunder on the Closing Date for all purposes of the Loan Documents.
“USD Letter of Credit Sublimit” shall mean $102,200,000 or such larger amount not to exceed the USD Revolving Facility Commitments as the Administrative Agent and any applicable Issuing Bank may agree.
“USD Revolver Commitment Fee” shall have the meaning assigned to such term in Section 2.12(a)(i).
“USD Revolving Facility” shall mean (i) the Initial USD Revolving Facility, (ii) the USD Revolving Facility Commitments of any other Class and the extensions of credit made in respect thereof by the USD Revolving Facility Lenders of such Class and (iii) for purposes of Section 9.08(b), all such USD Revolving Facility Commitments as a single Class.
“USD Revolving Facility Borrowing” shall mean a Borrowing comprised of USD Revolving Facility Loans of the same Class.
“USD Revolving Facility Commitment” shall mean, with respect to each Revolving Facility Lender, the commitment of such Revolving Facility Lender to make USD Revolving Facility Loans (including the Initial USD Revolving Facility Commitment) expressed as an amount representing the maximum aggregate permitted amount of such Revolving Facility Lender’s USD Revolving Facility Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08, (b) reduced or increased from time to time pursuant to assignments by or to such Lender under Section 9.04, and (c) increased (or replaced) as provided under Sections 2.21, 2.22 or 2.23. The initial amount of each Lender’s USD Revolving Facility Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance or Incremental Assumption Agreement, Extension Amendment or Refinancing Amendment pursuant to which such Lender shall have assumed its USD Revolving Facility Commitment. After the Closing Date, additional Classes of USD Revolving Facility Commitments may be added or created pursuant to Incremental Assumption Agreements, Extension Amendments or Refinancing Amendments.
“USD Revolving Facility Credit Exposure” shall mean, at any time with respect to any Class of USD Revolving Facility Commitments, the sum of the Dollar Equivalents of (a) the aggregate principal amount of the USD Revolving Facility Loans of such Class outstanding at such time, (b) the Swingline Exposure applicable to such Class at such time and (c) the USD Revolving L/C Exposure applicable to such Class at such time minus, for the purpose of Sections 6.11 and 7.03, the amount of USD Letters of Credit that have been Cash Collateralized in an amount equal to the Minimum L/C Collateral Amount at such time. The USD Revolving Facility Credit Exposure of any USD Revolving Facility Lender at any time shall be the product of (x) such USD Revolving Facility Lender’s USD Revolving Facility Percentage of the applicable Class and (y) the aggregate USD Revolving Facility Credit Exposure of such Class of all USD Revolving Facility Lenders, collectively, at such time.
“USD Revolving Facility Lender” shall mean a Lender (including an Incremental Revolving Facility Lender) with a USD Revolving Facility Commitment or with outstanding USD Revolving Facility Loans.
“USD Revolving Facility Loan” shall mean a Loan made by a USD Revolving Facility Lender pursuant to Section 2.01(b) including, to the extent permitted by Section 2.21, 2.22 or 2.23 and provided for in the relevant Incremental Assumption Agreement, Extension Amendment or Refinancing Amendment, any Incremental Revolving Loan, any Extended Revolving Loans or any Replacement Revolving Loans, as applicable.
“USD Revolving Facility Maturity Date” shall mean, as the context may require, (a) with respect to the Initial USD Revolving Facility, the Initial USD Revolving Facility Maturity Date and (b) with respect to the USD Revolving Facility of any other Class, the maturity date specified therefor in the applicable Incremental Assumption Agreement, Extension Amendment or Refinancing Amendment, as applicable.
“USD Revolving Facility Percentage” shall mean, with respect to any USD Revolving Facility Lender of any Class, the percentage of the total USD Revolving Facility Commitments of such Class represented by such Lender’s USD Revolving Facility Commitment of such Class. If the USD Revolving Facility Commitments of such Class have terminated or expired, the USD Revolving Facility Percentages of such Class shall be determined based upon the USD Revolving Facility Commitments of such Class most recently in effect, giving effect to any assignments pursuant to Section 9.04.
“USD Revolving Facility Termination Event” shall have the meaning assigned to such term in Section 2.05(k)(i).
“USD Revolving L/C Exposure” of any Class shall mean at any time the sum of the Dollar Equivalents of (a) the aggregate undrawn amount of all USD Letters of Credit applicable to such Class outstanding at such time and (b) the aggregate principal amount of all USD L/C Disbursements applicable to such Class that have not yet been reimbursed at such time. The USD Revolving L/C Exposure of any Class of any USD Revolving Facility Lender at any time shall mean its applicable USD Revolving Facility Percentage of the aggregate USD Revolving L/C Exposure applicable to such Class at such time. For all purposes of this Agreement, if on any date of determination a USD Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.13 or Rule 3.14 of the International Standby Practices, International Chamber of Commerce No. 590, article 29 of the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce No. 600, or similar terms expressed in the USD Letter of Credit, such USD Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn. Unless otherwise specified herein, the amount of a USD Letter of Credit at any time shall be deemed to be the amount available under such USD Letter of Credit in effect at such time; provided that with respect to any USD Letter of Credit that, by its terms or the terms of any document related thereto, provides for one or more automatic increases in the amount thereof, the amount of such USD Letter of Credit shall be deemed to be the maximum amount of such USD Letter of Credit after giving effect to all such increases, whether or not such maximum amount is in effect at such time.
“USD Unreimbursed Amount” shall have the meaning assigned to such term in Section 2.05(e)(i).
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that
the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“Voting Stock” shall mean, with respect to any Person, such Person’s Equity Interests having the right to vote for the election of directors of such Person under ordinary circumstances.
“Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required scheduled payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness; provided that the effect of (x) any prepayment made in respect of such Indebtedness shall be disregarded in making such calculation and (y) any “AHYDO catch-up” payment that may be required to be made in respect of such Indebtedness shall be disregarded in making such calculation.
“Wholly Owned Subsidiary” of any Person shall mean a subsidiary of such Person, all of the Equity Interests of which (other than (x) directors’ qualifying shares or nominee or other similar shares required pursuant to applicable law and (y) de minimis shares owned by other Persons) are owned by such Person or another Wholly Owned Subsidiary of such Person. Unless the context otherwise requires, “Wholly Owned Subsidiary” shall mean a Subsidiary of the Borrower that is a Wholly Owned Subsidiary of the Borrower.
“Working Capital” shall mean, with respect to the Borrower and its Subsidiaries on a consolidated basis at any date of determination, Current Assets at such date of determination minus Current Liabilities at such date of determination; provided that, for purposes of calculating Excess Cash Flow, increases or decreases in Working Capital shall be calculated without regard to any changes in Current Assets or Current Liabilities as a result of (a) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrent, (b) the effects of purchase or recapitalization accounting (including any such effects that are pushed down) or (c) foreign exchange effects.
“Write-Down and Conversion Powers” shall mean (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of such Person or any other Person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
Section 1.02 Terms Generally. (a) The definitions set forth or referred to in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” The words “ordinary course of business” or “ordinary course” shall, with respect to any Person, be deemed to refer to items or actions that are consistent with practice in or norms of the industry in which such Person
operates or such Person’s past practice (it being understood that the sale of accounts receivable (and related assets) pursuant to supply-chain, factoring or reverse factoring arrangements entered into by the Borrower and its Restricted Subsidiaries shall be deemed to be in the ordinary course of business so long as such accounts receivable (and related assets) are sold for cash in an amount not less than 80% of the face amount thereof (but, for the avoidance of doubt, this shall not preclude any sale for less than a price to be determined to be in the ordinary course so long as it is in the ordinary course of business)) (in each case, as determined by the Borrower in good faith). Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or other document herein or in any Loan Document (including any Loan Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, amended and restated, supplemented or otherwise modified or extended, replaced or refinanced (subject to any restrictions or qualifications on such amendments, restatements, amendment and restatements, supplements or modifications or extensions, replacements or refinancings set forth herein), (ii) any reference to any Requirement of Law in any Loan Document shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing, superseding or interpreting such Requirement of Law, (iii) any reference herein or in any Loan Document to any Person shall be construed to include such Person’s successors and permitted assigns, (iv) the words “herein,” “hereof” and “hereunder,” and words of similar import, when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision hereof, (v) all references herein or in any Loan Document to Articles, Sections, Clauses, Paragraphs, Exhibits and Schedules shall be construed to refer to Articles, Sections, Clauses and Paragraphs of, and Exhibits and Schedules to, this Agreement or such Loan Document unless the context shall otherwise require, (vi) in the computation of periods of time in any Loan Document from a specified date to a later specified date, the word “from” means “from and including”, the words “to” and “until” mean “to but excluding” and the word “through” means “to and including”, (vii) the words “asset” and “property”, when used in any Loan Document, shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights, (viii) the fair market value of any asset or property shall be determined by the Borrower in good faith and (ix) references to any matter being “permitted” under the Loan Documents shall include references to such matters not being prohibited or otherwise approved under the Loan Documents.
(b) For purposes of determining compliance at any time with Sections 6.01, 6.02, 6.04, 6.05, 6.06 and 6.09(b), in the event that any Indebtedness, Lien, Restricted Payment, Restricted Debt Payment, Investment or Disposition or portion thereof, as applicable, at any time meets the criteria of more than one of the categories of transactions or items permitted pursuant to any clause of such Section (other than Section 6.01(a) (in the case of Indebtedness incurred on the Closing Date, the 2025 Refinancing Amendment Effective Date and the 2025-2 Refinancing Amendment Effective Date), Sections 6.02(a) and 6.02(b)) (each of the foregoing, a “Reclassifiable Item”), the Borrower, in its sole discretion, may, from time to time, divide, classify or reclassify such Reclassifiable Item (or portion thereof) under one or more clauses of each such Section and will only be required to include such Reclassifiable Item (or portion thereof) in any one category; provided that upon delivery of any financial statements pursuant to Section 5.04(a) or (b) following the initial incurrence or making of any such Reclassifiable Item, if such Reclassifiable Item could, based on such financial statements, have been incurred or made in reliance on any “ratio-based” basket, such Reclassifiable Item shall automatically be reclassified as having been incurred or made under the applicable provisions of such “ratio-based” basket, as applicable (in each case, subject to any other applicable provision such “ratio-based” basket, as applicable). It is understood and agreed that any Indebtedness, Lien, Restricted Payment, Restricted Debt Payment, Investment and/or Disposition need not be permitted solely by reference to one category of permitted Indebtedness, Lien, Restricted Payment, Restricted Debt Payment, Investment and/or
Disposition under Sections 6.01, 6.02, 6.04, 6.05, 6.06 and 6.09(b), respectively, but may instead be permitted in part under any combination thereof or under any other available exception.
(c) With respect to any Default or Event of Default, the words “exists,” “is continuing” or similar expressions with respect thereto shall mean that such Default or Event of Default has occurred and has not yet been cured or waived. If any Default or Event of Default has occurred hereunder (any such Default or Event of Default, an “Initial Default”) and is subsequently cured (a “Cured Default”), any other Default or Event of Default that resulted from (i) the making or deemed making of any representation or warranty by any Loan Party or the Thai Borrower or (ii) the taking of any action or failure to satisfy any condition precedent to the taking of any action by any Loan Party or any Subsidiary of any Loan Party, in each case which subsequent Default, Event of Default or failure would not have arisen had the Cured Default not been continuing at the time of such representation, warranty, action or failure to satisfy such condition precedent to the taking of any action, shall be deemed to automatically be cured or satisfied, as applicable, upon, and simultaneously with, the cure of the Cured Default, so long as at the time of such representation, warranty, action or failure to satisfy any condition precedent to the taking of any action, no Responsible Officer of the Borrower had knowledge of any such Initial Default. Any time period in this Agreement to cure any actual or alleged Default or Event of Default may be extended or stayed by a court of competent jurisdiction to the extent such actual or alleged Default or Event of Default is the subject of litigation.
(d) Notwithstanding anything to the contrary in this Agreement, (i) a restatement of historical financial statements delivered pursuant to Section 4.01 or Section 5.04 shall not result in a Default or an Event of Default to the extent that (x) such restatement does not reveal a Material Adverse Effect in the previously reported information from actual results reflected in such restatement for any relevant prior period and (y) no Event of Default would have occurred if such restated financial statements had been in effect at the time such financial statements were originally delivered and (ii) the Borrower and its Subsidiaries may be required to restate historical financial statements as the result of the implementation of changes in GAAP or IFRS, or the respective interpretation thereof, and such restatements shall not result in a Default or an Event of Default.
Section 1.03 Effectuation of Transaction. Each of the representations and warranties of the Borrower contained in this Agreement (and all corresponding definitions) are made after giving effect to the Transactions as shall have taken place on or prior to the date of determination, unless the context otherwise requires.
Section 1.04 Limited Condition Transactions; Pro Forma Calculations; Certain Other Matters. (a) Notwithstanding anything in this Agreement or any Loan Document to the contrary, when (i) calculating any applicable ratio, Consolidated Net Income or EBITDA in connection with the incurrence of Indebtedness, the issuance of Disqualified Stock, the creation of Liens, the making of any Disposition, the making of an Investment, the making of a Restricted Payment, the designation of a Subsidiary as a Restricted Subsidiary, any Subsidiary Redesignation or any Restricted Debt Payment, (ii) determining compliance with any provision of this Agreement which requires that no Default, Event of Default or Specified Event of Default has occurred, is continuing or would result therefrom, (iii) determining compliance with any provision of this Agreement which requires compliance with any representations and warranties set forth herein or (iv) determining the availability for the utilization of any basket, the incurrence of Indebtedness, the issuance of Disqualified Stock, the creation of Liens, the making of any Disposition, the making of an Investment, the making of a Restricted Payment, the designation of a Subsidiary as a Restricted Subsidiary, any Subsidiary Redesignation or any Restricted Debt Payment, in each case in connection with a Limited Condition Transaction, the date of determination of such ratio or other provisions, determination of whether any Default, Event of Default
or Specified Event of Default has occurred, is continuing or would result therefrom, determination of compliance with any representations or warranties or the satisfaction of any other conditions shall, at the option of the Borrower (the Borrower’s election to exercise such option in connection with any Limited Condition Transaction, an “LCT Election”, which LCT Election may be in respect of one or more of clauses (i) through (iv) above), be deemed to be (a) in the case of any acquisition or similar Investment or related transaction or event (including with respect to any Indebtedness contemplated or incurred in connection therewith), either (2) at the time of the execution of a letter of intent or the definitive agreement with respect to the relevant Investment (and, if determined at such time, may be recalculated, at the election of the Borrower, at the delivery of financial statements prior to the consummation of the relevant acquisition or similar Investment or at the time of the consummation of the relevant acquisition or similar Investment) or (ii) at the time of the consummation of the relevant acquisition or similar Investment, (b) in the case of any Restricted Payment (including with respect to any Indebtedness contemplated or incurred in connection therewith), either (i) at the time of the declaration of such Restricted Payment (and, if determined at such time, may be recalculated, at the election of the Borrower, at the delivery of financial statements prior to the making of such Restricted Payment or at the time of the making of such Restricted Payment) or (ii) at the time of the making of such Restricted Payment and/or (c) in the case of any Restricted Debt Payment or any redemption of and Equity Interests of Holdings (including with respect to any Indebtedness contemplated or incurred in connection therewith), either (i) at the time of delivery of notice with respect to such payment or redemption (and, if determined at such time, may be recalculated, at the election of the Borrower, at the delivery of financial statements prior to the making of such Restricted Debt Payment or redemption or at the time of the making of such Restricted Payment or redemption) or (ii) at the time of the making of such Restricted Debt Payment or redemption, in each case (1) after giving effect to the relevant transaction, the incurrence of any related Indebtedness (including the intended use of proceeds thereof) and all other permitted pro forma adjustments on a Pro Forma Basis, (2) based on the most recently ended four (4) consecutive fiscal quarter period for which internal financial statements are initially available, (3) excluding and disregarding for any Pro Forma Basis calculations any borrowings under any revolving credit facility (which shall include, for the avoidance of doubt, any Revolving Facility and any refinancing thereof) made for ordinary course working capital purposes of the Borrower and its Subsidiaries (as determined by the Borrower in good faith) and (4) at the election of the Borrower, giving effect to other prospective “limited conditionality” acquisitions or similar investments on a Pro Forma Basis for which a letter of intent or definitive agreements have been executed for such Limited Condition Transaction are entered into (the applicable date determined pursuant to the foregoing, the “LCT Test Date”). If on a Pro Forma Basis after giving effect to such Limited Condition Transaction and the other transactions to be entered into in connection therewith (including any incurrence or issuance of Indebtedness or Disqualified Stock and the use of proceeds thereof), with such ratios and other provisions calculated as if such Limited Condition Transaction or other transactions had occurred at the beginning of the most recent Test Period ending prior to the LCT Test Date for which internal financial statements are available, the Borrower could have taken such action on the relevant LCT Test Date in compliance with the applicable ratios or other provisions, such provisions shall be deemed to have been complied with. For the avoidance of doubt, (i) if, following the LCT Test Date, any of such ratios or other provisions are exceeded or breached as a result of fluctuations in such ratio (including due to fluctuations in EBITDA or other components of such ratio) or other provisions at or prior to the consummation of the relevant Limited Condition Transactions, such ratios and other provisions will not be deemed to have been exceeded or failed to have been satisfied as a result of such fluctuations solely for purposes of determining whether the Limited Condition Transaction is permitted hereunder and (ii) such ratios and compliance with such conditions shall not be tested at the time of consummation of such Limited Condition Transaction or related transactions, unless the Borrower elects, in its sole discretion, to test such ratios and compliance with the conditions on the date such Limited Condition Transaction or related transaction is consummated. If the Borrower has made an LCT Election for any Limited Condition Transaction, then
in connection with any subsequent calculation of any ratio, basket availability or compliance with any other provision hereunder (other than actual compliance with the Financial Covenant and the Pricing Grid) on or following the relevant LCT Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated and the date that the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio, basket or compliance with any other provision hereunder shall be calculated on a Pro Forma Basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence or issuance of Indebtedness or Disqualified Stock and the use of proceeds thereof) had been consummated on the LCT Test Date. For the avoidance of doubt, this Section 1.04(a) shall apply in the case of the conditions precedent to borrowing of any Incremental Facility.
(b) Notwithstanding anything in this Agreement or any Loan Document to the contrary herein, with respect to any amounts incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement that does not require compliance with a financial ratio or test (including, without limitation, any borrowing of revolving loans or delayed draw term loans) (any such amounts, the “Fixed Amounts”) substantially concurrently with any amounts incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement that requires compliance with any such financial ratio or test (any such amounts, the “Incurrence-Based Amounts”), it is understood and agreed that any Fixed Amount (and any cash proceeds thereof) shall be disregarded in the calculation of the financial ratio or test applicable to the relevant Incurrence-Based Amount in connection with such substantially concurrent incurrence.
(c) In connection with the implementation or assumption of any revolving commitment and/or any delayed draw commitment in reliance on the Incremental Ratio Amount or any other ratio-based amount, the Borrower may, in its sole discretion, either (a) elect to treat all or any portion of such revolving commitment and/or delayed draw commitment as having been fully drawn on the date of implementation or assumption (such commitment (or portion thereof), a “Specified Commitment”), in which case (i) the Borrower shall not be required to comply with any financial ratio or test in connection with any drawing thereunder after the date of incurrence or assumption and (ii) for purposes of testing the Incremental Ratio Amount for purposes of establishing such Commitment, the amount of such Specified Commitment shall be deemed to have been fully drawn or (b) elect to test the permissibility of all or any portion of any drawing under such revolving commitment and/or delayed draw commitment on the date of such drawing (if any), in which case, such revolving commitment and/or delayed draw commitment (or portion thereof) shall only be treated as drawn for purposes of the Incremental Ratio Amount or any other ratio-based amount to the extent of any actual drawing thereunder. It is understood and agreed that the Borrower may, at any time in its sole discretion, elect to treat such revolving commitment and/or delayed draw commitment incurred in accordance with clause (b) of the immediately preceding sentence to be incurred in reliance on clause (a) of the immediately preceding sentence so long as on a Pro Forma Basis such Specified Commitments could be incurred in reliance on clause (a) at such time (as if the applicable time were the date of implementation or assumption). Notwithstanding anything to the contrary, lenders with unfunded commitments in respect of delayed draw term loans shall not be entitled to voting rights with respect to such unfunded commitments unless such delayed draw term loan commitment was provided in good faith and for bona fide business purpose (as determined by the Borrower in good faith).
(d) For any calculation of EBITDA hereunder or under any other Loan Document (for purposes of calculating any baskets, growers and/or thresholds based off of such calculation), the Borrower may deem EBITDA to be the highest amount of EBITDA achieved for any Test Period after the Closing Date (for the avoidance of doubt, even if such Test Period occurred prior to, and is not the
same four fiscal quarter period as, the applicable Test Period for which EBITDA is being calculated, and regardless of any subsequent decrease in EBITDA after the date of such highest amount of EBITDA).
(e) [Reserved].
(f) For the purposes of calculating any Incurrence Based Amounts, the proceeds of any Indebtedness being incurred in reliance on such Incurrence Based Amount shall not be netted (but the Borrower may have pro forma effect to the repayment of any Indebtedness to be repaid with such proceeds) from calculating such Incurrence Based Amount.
Section 1.05 Timing of Payment or Performance. Except as otherwise expressly provided herein, when the payment of any obligation or the performance of any covenant, duty or obligation is
stated to be due or performance required on a day which is not a Business Day, the date of such payment or performance shall extend to the immediately succeeding Business Day.
Section 1.06 Times of Day. Unless otherwise specified herein, all references herein to times of day shall be references to New York City time (daylight or standard, as applicable).
Section 1.07 Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time.
Section 1.08 Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that if (a) the Borrower notifies the Administrative Agent that the Borrower requests an amendment to this Agreement to eliminate the effect of any change occurring after the Closing Date in GAAP or in the application thereof (including the impact of Accounting Standards Update 2016-12, Revenue from Contracts with Customers (Topic 606) or similar revenue recognition policies or any change in the methodology of calculating reserves for returns, rebates and other chargebacks) on the operation of any provisions hereof, (b) the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to this Agreement for the foregoing purpose or (c) the Borrower or any Parent Entity elects or is required to report under IFRS and notifies the Administrative Agent that the Borrower requests an amendment to this Agreement to eliminate the effect of such election, regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provisions shall be interpreted on the basis of GAAP as in effect and applied immediately before such change or election shall have become effective until either such notice shall have been withdrawn or this Agreement shall have been amended, it being understood and agreed that (x) the Borrower and the Administrative Agent shall negotiate in good faith to amend any affected provisions hereof (and no amendment or similar fee shall be payable to the Administrative Agent or any Lender in connection therewith) to preserve the original intent thereof in light of the applicable change or election, as the case may be, (y) such amendment shall occur pursuant to an Agreement entered into solely by the Borrower and the Administrative Agent (without the need for consent or action by any other Person) and (z) in the case of an election by the Borrower described in the preceding clause (c), the Borrower shall deliver, concurrently with or promptly following the delivery of financial information of the Borrower and its Subsidiaries (or any Parent Entity) next required under either Section 5.04(a) or Section 5.04(b), an unaudited reconciliation in reasonable detail between such financial information pursuant to IFRS and such financial information pursuant to GAAP. Any consent required from the
Administrative Agent with respect to the foregoing shall not be unreasonably withheld, conditioned or delayed. If the Borrower or any Parent Entity elects to report under IFRS as contemplated hereby, “GAAP” shall mean international financial reporting standards pursuant to IFRS; provided that any calculation or determination in this Agreement that requires the application of GAAP for periods that include fiscal quarters ended prior to the application of IFRS may, at the election of the Borrower, remain as previously calculated or determined in accordance with GAAP prior to such election.
Section 1.09 Exchange Rates; Currency Equivalent.
(a) The Administrative Agent, the Swingline Lender or the Issuing Bank, as applicable, shall determine the Spot Rates as of each Revaluation Date to be used for calculating Dollar Equivalent amounts of Loans and Letters of Credit and outstanding amounts denominated in Alternative Currencies. Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot
Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur. Except for purposes of financial statements delivered by the Borrower hereunder or calculating financial covenants hereunder or except as otherwise provided herein, the applicable amount of any currency (other than Dollars) for purposes of the Loan Documents shall be such Dollar Equivalent amount as so determined by the Administrative Agent or the Issuing Bank, as applicable.
(b) Wherever in this Agreement in connection with a borrowing, conversion, continuation or prepayment of a Term SOFR Loan, Eurocurrency Loan or RFR Loan or the issuance, amendment or extension of a Letter of Credit, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such borrowing, Term SOFR Loan, Eurocurrency Loan, RFR Loan or Letter of Credit is denominated in an Alternative Currency, such amount shall be the relevant Alternative Currency Equivalent of such Dollar amount (rounded to the nearest unit of such Alternative Currency, as applicable, with 0.5 of a unit being rounded upward), as determined by the Administrative Agent, or the Issuing Bank, as the case may be.
(c) For purposes of any determination under Article V, Article VI (other than Section 6.11 and the calculation of compliance with any financial ratio for purposes of taking any action hereunder) or Article VII with respect to the amount of any Indebtedness, Lien, Restricted Payment, Restricted Debt Payment, Investment, Disposition, Sale and Lease-Back Transaction, affiliate transaction or other transaction, event or circumstance, or any determination under any other provision of this Agreement (any of the foregoing, for purposes of this clause, an “identified transaction”), in a currency other than Dollars, (i) the Dollar equivalent amount of an identified transaction in a currency other than Dollars shall be calculated based on the rate of exchange quoted by the Bloomberg Foreign Exchange Rates & World Currencies Page (or any successor page thereto, or in the event such rate does not appear on any Bloomberg Page, by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and Holdings) for such foreign currency, as in effect at 11:00 a.m. (New York time) on the date of such identified transaction (which, in the case of any Restricted Payment, Restricted Debt Payment, Investment, Disposition or incurrence of Indebtedness, shall be determined as set forth in Section 1.04(a)) or, in the case of any commitment in respect of Indebtedness, at the election of the Borrower, at the time such commitment is obtained; provided that if any Indebtedness is incurred (and, if applicable, associated Lien granted) to refinance or replace other Indebtedness denominated in a currency other than Dollars, and the relevant refinancing or replacement would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing or replacement, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing or replacement Indebtedness (and, if applicable, associated Lien granted) does not exceed an amount sufficient to repay the principal amount of such Indebtedness being refinanced or replaced, except by an amount equal to (x) unpaid accrued interest, penalties and premiums (including tender premiums) thereon plus underwriting discounts and other customary fees, commissions and expenses (including upfront fees,
original issue discount or initial yield payment) incurred in connection with such refinancing or replacement, (y) any existing commitments unutilized thereunder and (z) additional amounts permitted to be incurred hereunder and (ii) for the avoidance of doubt, no Default or Event of Default shall be deemed to have occurred solely as a result of a change in the rate of currency exchange occurring after the time of any identified transaction so long as such identified transaction was permitted at the time incurred, made, acquired, committed, entered or declared as set forth in clause (i). For purposes of Section 6.11 and the calculation of compliance with any financial ratio for purposes of taking any action hereunder (including for purposes of calculating availability under the “Incremental Amount”) on any relevant date of determination, except as otherwise set forth herein, amounts denominated in currencies other than Dollars shall be translated into Dollars at the applicable currency exchange rate used, at the option of the Borrower, either (x) in preparing the financial statements delivered pursuant to Section 5.04 (or, prior to the first such delivery, the financial statements previously delivered to the Arrangers) or (y) for purposes of calculating EBITDA, as applicable, for the relevant Test Period. Notwithstanding the foregoing or anything to the contrary herein, to the extent that the Borrower would not be in compliance with Section 6.11 if any Indebtedness denominated in a currency other than Dollars were to be translated into Dollars on the basis of the applicable currency exchange rate used in preparing the financial statements delivered pursuant to Section 5.04 for the relevant Test Period, but would be in compliance with Section 6.11 if such Indebtedness that is denominated in a currency other than in Dollars were instead translated into Dollars on the basis of the average relevant currency exchange rates over such Test Period (taking into account the currency translation effects, determined in accordance with GAAP, of any Hedging Agreement permitted hereunder in respect of currency exchange risks with respect to the applicable currency in effect on the date of determination for the Dollar equivalent amount of such Indebtedness) then, solely for purposes of compliance with Section 6.11, the Net First Lien Leverage Ratio as of the last day of such Test Period shall be calculated on the basis of such average relevant currency exchange rates.
(d) The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to the administration, submission or any other matter related to the rates in the definition of “Term SOFR”, “EURIBOR” or with respect to any comparable or successor rate thereto.
Section 1.10 Additional Alternative Currencies.
(a) The Borrower may from time to time request that Revolving Facility Loans be made and Letters of Credit be issued in a currency other than Dollars, Thai Baht (in the case of the Thai Baht Revolving Facility) or an existing Alternative Currency, provided that such requested currency is a lawful currency that is readily available and freely transferable and convertible into Dollars. In the case of any such request with respect to the making of Revolving Facility Loans, such request shall be subject to the approval of the Administrative Agent and the applicable Revolving Facility Lenders; and in the case of any such request with respect to the issuance of Letters of Credit, such request shall be subject to the approval of the Administrative Agent and each Issuing Bank.
(b) Any such request shall be made to the Administrative Agent not later than 11:00 a.m., ten Business Days prior to the date of the desired initial credit extension in such requested currency (or such later time or date as may be agreed by the Administrative Agent and, in the case of any such request pertaining to Letters of Credit, each Issuing Bank, in its or their sole discretion). In the case of any such request pertaining to Revolving Facility Loans, the Administrative Agent shall promptly notify each Lender thereof; and in the case of any such request pertaining to Letters of Credit, the Administrative Agent shall promptly notify the Issuing Bank thereof. Each Lender (in the case of any such request pertaining to Revolving Facility Loans) or each Issuing Bank (in the case of a request pertaining to Letters of Credit) shall notify the Administrative Agent, not later than 11:00 a.m., five Business Days after receipt of such request whether it consents, in its sole discretion, to the making of
Revolving Facility Loans or the issuance of Letters of Credit, as the case may be, in such requested currency.
(c) Any failure by a Lender or an Issuing Bank, as the case may be, to respond to such request within the time period specified in the preceding sentence shall be deemed to be a refusal by such Lender or such Issuing Bank, as the case may be, to permit Revolving Facility Loans to be made or Letters of Credit to be issued in such requested currency. If the Administrative Agent and all the applicable Revolving Facility Lenders consent to making Revolving Facility Loans in such requested currency, the Administrative Agent shall so notify the Borrower and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Revolving Facility Loans; and if the Administrative Agent and each Issuing Bank consent to the issuance of Letters of Credit in such requested currency, the Administrative Agent shall so notify the Borrower and such currency shall thereupon, upon the effectiveness of the amendment referenced below, be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Letter of Credit issuances. If the Administrative Agent shall fail to obtain consent to any request for an additional currency under this Section 1.10, the Administrative Agent shall promptly so notify the Borrower. If the Administrative Agent and the applicable Revolving Facility Lenders consent to such request for an Alternative Currency, the Borrower and the Administrative Agent shall negotiate in good faith to enter into an amendment to this Agreement (it being understood that no amendment or similar fee shall be payable to the Administrative Agent or any Lender in connection therewith) to effect such changes hereto as may be necessary or appropriate, in the opinion of the Borrower and the Administrative Agent, to effect the provisions of this Section 1.10. Notwithstanding the foregoing, to the extent consent has been given by all applicable Revolving Facility Lenders (and each Issuing Bank, as applicable) in the time period provided above in respect of the initial credit extension in the aforesaid requested currency, such credit extension shall be effected on the date requested by the Borrower without the need for any such amendment being entering into, unless the Administrative Agent (or such Issuing Bank, in the case of any such request pertaining to Letters of Credit), determines otherwise and in such case the Administrative Agent shall notify the Borrower accordingly.
(d) Notwithstanding anything to the contrary herein, no currency other than Dollars or Thai Baht will be available under the Thai Baht Revolving Facility without the prior written consent of the Administrative Agent, the Thai Borrower and the Thai Baht Revolving Lenders.
Section 1.11 Change of Currency. (a) Each obligation of the Borrower or the Thai Borrower to make a payment denominated in the national currency unit of any member state of the European Union that adopts the Euro as its lawful currency after the date hereof shall be redenominated into Euro at the time of such adoption. If, in relation to the currency of any such member state, the basis of accrual of interest expressed in this Agreement in respect of that currency shall be inconsistent with any convention or practice in the London interbank market for the basis of accrual of interest in respect of the Euro, such expressed basis shall be replaced by such convention or practice with effect from the date on which such member state adopts the Euro as its lawful currency; provided that if any Loan in the currency of such member state is outstanding immediately prior to such date, such replacement shall take effect, with respect to such Loan, at the end of the then current Interest Period.
(b) Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent (in consultation with the Borrower) may from time to time specify to be appropriate to reflect the adoption of the Euro by any member state of the European Union and any relevant market conventions or practices relating to the Euro.
(c) Each provision of this Agreement also shall be subject to such reasonable changes of construction as the Administrative Agent (in consultation with the Borrower) may from time
to time specify to be appropriate to reflect a change in currency of any other country and any relevant market conventions or practices relating to the change in currency.
Section 1.12 Additional Borrowers; the Borrower as Representative.
(a) From time to time on or after the Closing Date, and with at least five Business Days’ notice to the Administrative Agent (or such shorter period as the Administrative Agent may agree), subject to completion of customary “know your customer” procedures and delivery of related information reasonably requested by the Administrative Agent and the Revolving Lenders, including information required pursuant to Section 9.20, the Borrower may designate any other Subsidiary of the Borrower as an additional Borrower (each such person, an “Additional Borrower”) hereunder; provided that (i) the Additional Borrower shall be an entity organized or existing under the laws of the United States, any state thereof or the District of Columbia or another jurisdiction reasonably acceptable to the Administrative Agent and the Revolving Lenders (any Additional Borrower organized or existing under the laws of a jurisdiction that is not the United States, any state thereof or the District of Columbia, a “Designated Foreign Borrower”) and (ii) the Additional Borrower shall expressly assume the obligations of a Borrower under this Agreement in a manner reasonably satisfactory to the Administrative Agent (it being understood that a Subsidiary may be designated as an Additional Borrower pursuant to the terms of any Incremental Assumption Agreement, Refinancing Amendment or Extension Amendment). Upon satisfaction of such requirements, the Additional Borrower shall be a “Borrower” hereunder and will have the right to request Term Loans, Revolving Facility Loans or Letters of Credit, as the case may be, in accordance with Article II hereof until the earlier to occur of the applicable Revolving Facility Maturity Date or Term Facility Maturity Date or the date on which such Additional Borrower resigns as an Additional Borrower in accordance with clause (c) below. Notwithstanding anything to the contrary herein, there shall be no Additional Borrower under the Thai Baht Revolving Facility without the prior written consent of the Administrative Agent and the Thai Baht Revolving Lenders.
(b) The Borrower and the Thai Borrower shall be severally liable for their respective Loan Obligations in respect of each Class of Loans and Commitments established under this Agreement. Each Additional Borrower shall be jointly and severally liable for the Loan Obligations of the Borrower under this Agreement at the time of its appointment as an Additional Borrower unless otherwise specified in the agreement pursuant to which such Additional Borrower assumes the obligations of the Borrower. Subject to the foregoing, the covenants and other agreements in this Agreement of the Borrower and the Thai Borrower shall be construed to apply severally to each the Borrower and the Thai Borrower (as applicable) and no failure of the Borrower or the Thai Borrower to perform such covenants or other agreements shall relieve the other from its obligation to perform such covenants or other agreements as are expressed to be applicable to the Borrower or the Thai Borrower.
(c) An Additional Borrower may elect to resign as an Additional Borrower; provided that: (i) such resigning Additional Borrower has delivered to the Administrative Agent a written notice of resignation at least five Business Days in advance and (ii) either (A) such resigning Additional Borrowers’ obligations in its capacity as Guarantor continue to be legal, valid, binding and enforceable or (B) such resigning Additional Borrower is released from its obligations as a Guarantor pursuant to Section 9.18 substantially concurrently with such resignation pursuant to the Loan Documents. Upon satisfaction of such requirements, the applicable Additional Borrower shall cease to be an Additional Borrower and a Borrower (but in the case of a resignation pursuant to clause (A) above shall continue to be a Guarantor) and at the request of the Borrower any Note in respect of such Additional Borrower shall be returned by the holder thereof to such Additional Borrower for cancellation.
(d) In connection with any appointment or resignation of an Additional Borrower, the Borrower and the Administrative Agent shall be authorized, without the need for consent of any other Person, to effect appropriate amendments to this Agreement and the other Loan Documents.
(e) The Borrower hereby designates the Borrower as its agent and representative. The Borrower may act as the agent and/or representative of any other Borrower for the purposes of (i) delivering Borrowing Requests, continuation or conversion notices and other notices pursuant to Article II hereof (and for the purpose of giving instructions with respect to the disbursement of the proceeds of any Loans or the issuance of any Letters of Credit), (ii) delivering and receiving all other notices, consents, certificates and similar instruments contemplated hereunder or under any of the other Loan Documents and (iii) taking all other actions (including in respect of compliance with covenants and certifications) on behalf of the Borrower under any Loan Document. Holdings hereby accepts such appointment.
(f) For the avoidance of doubt, the Borrower shall Guarantee the Loan Obligations of the Thai Borrower to the same extent as the other Subsidiary Loan Parties.
ARTICLE II
The Credits
Section 2.01 Commitments. Subject to the terms and conditions set forth herein:
(a)
(i) Each applicable Lender severally agrees to make Initial Term B Loans in Dollars to the Borrower on the Closing Date in an aggregate principal amount not to exceed its Initial Term B Loan Commitment.
(ii) Subject to and upon the terms set forth in the 2025 Refinancing Amendment, (x) each 2025 Refinancing Term B Facility Lender agrees to make 2025 Refinancing Term B Loans in Dollars to the Borrower, on a several and not joint basis, in an aggregate amount not to exceed such 2025 Refinancing Term B Facility Lender’s 2025 Refinancing Term B Facility Commitment, and (y) each Cashless Settlement Term Lender (as defined in the 2025 Refinancing Amendment) has agreed to continue and/or convert its Existing Term B Loans (as defined in the 2025 Refinancing Amendment) in an aggregate principal amount equal to such Lender’s Cashless Settlement Allocated Amount (as defined in the 2025 Refinancing Amendment). Following the making or continuation and/or conversion thereof, as applicable, on the 2025 Refinancing Amendment Effective Date, the 2025 Refinancing Term B Loans shall constitute “Initial Term B Loans” and “Term Loans”, as applicable, in all respects for purposes of this Agreement and all other Loan Documents.
(iii) Subject to and upon the terms set forth in the 2025-2 Refinancing Amendment, (x) each 2025-2 Refinancing Term B Facility Lender agrees to make 2025-2 Refinancing Term B Loans in Dollars to the Borrower, on a several and not joint basis, in an aggregate amount not to exceed such 2025-2 Refinancing Term B Facility Lender’s 2025-2 Refinancing Term B Facility Commitment, and (y) each Cashless Settlement Term Lender (as defined in the 2025-2 Refinancing Amendment) has agreed to continue and/or convert its Existing Term B Loans (as defined in the 2025-2 Refinancing Amendment) in an aggregate principal amount equal to such Lender’s Cashless Settlement Allocated Amount (as defined in
the 2025-2 Refinancing Amendment). Following the making or continuation and/or conversion thereof, as applicable, on the 2025-2 Refinancing Amendment Effective Date, the 2025-2 Refinancing Term B Loans shall constitute “Initial Term B Loans” and “Term Loans”, as applicable, in all respects for purposes of this Agreement and all other Loan Documents.
(b) Each applicable Lender severally and not jointly agrees to make Initial USD Revolving Facility Loans in Dollars, Euros or any other Alternative Currency to the Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in (i) such Lender’s USD Revolving Facility Credit Exposure with respect to the Initial USD Revolving Facility Commitments exceeding such Lender’s Initial USD Revolving Facility Commitment or (ii) the aggregate USD Revolving Facility Credit Exposure with respect to the Initial USD Revolving Facility Commitments exceeding the aggregate Initial USD Revolving Facility Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Initial USD Revolving Facility Loans.
(c) Each applicable Lender severally agrees to make Initial Thai Baht Revolving Facility Loans in Dollars or Thai Baht to the Thai Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in (i) such Lender’s Thai Baht Revolving Facility Credit Exposure with respect to the Initial Thai Baht Revolving Facility Commitments exceeding such Lender’s Initial Thai Baht Revolving Facility Commitment or (ii) the aggregate Thai Baht Revolving Facility Credit Exposure with respect to the Initial Thai Baht Revolving Facility Commitments exceeding the aggregate Initial Thai Baht Revolving Facility Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Thai Borrower may borrow, prepay and reborrow Initial Thai Baht Revolving Facility Loans.
(d) Amounts of Term Loans borrowed under Section 2.01(a) that are repaid or prepaid may not be re-borrowed. Each Lender may, at its option, make any Loan available to the Borrower or the Thai Borrower by causing any Lending Office of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.
Section 2.02 Loans and Borrowings. (a) Each Loan shall be made as part of a Borrowing consisting of Loans under the same Facility and of the same Type made by the Lenders ratably in accordance with their respective Commitments under the applicable Facility; provided, however, that Revolving Facility Loans of any Class shall be made by the Revolving Facility Lenders of such Class ratably in accordance with their respective Revolving Facility Percentages on the date such Loans are made hereunder. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.
(b) Subject to Section 2.14, each Borrowing (other than a Swingline Borrowing) shall be comprised entirely of (i) in the case of Dollars, ABR Loans or Term SOFR Loans as the Borrower may request in accordance herewith, (ii) in the case of Euros, Eurocurrency Loans or (iii) in the case of Thai Baht, RFR Loans.
(c) At the commencement of each Interest Period for any Term SOFR Revolving Facility Borrowing or Eurocurrency Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum. At the time of borrowing of any RFR Borrowing, such RFR Borrowing shall be an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum. At the time that each
ABR Revolving Facility Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum; provided that an ABR Revolving Facility Borrowing may be in an aggregate amount that is equal to the entire unused available balance of the Revolving Facility Commitments or that is required to finance the reimbursement of an L/C Disbursement as contemplated by Section 2.05(e). Each Swingline Borrowing shall be in an amount that is not less than the Borrowing Minimum. Borrowings of more than one Type may be outstanding at the same time; provided, however, that the Borrower shall not be entitled to request any Borrowing that, if made, would result in more than 10 Term SOFR Borrowings or Eurocurrency Borrowings outstanding under all Facilities at any time. Borrowings having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings.
(d) Notwithstanding any other provision of this Agreement, neither the Borrower nor the Thai Borrower shall be entitled to request, or to elect to convert or continue, any Borrowing of any Class if the Interest Period requested with respect thereto would end after the Revolving Facility Maturity Date or the Term Facility Maturity Date for such Class, as applicable.
Section 2.03 Requests for Borrowings. To request a Revolving Facility Borrowing and/or a Term Borrowing, the Borrower or the Thai Borrower, as applicable, shall notify the Administrative Agent of such request electronically (a) in the case of a Term SOFR Borrowing, a Eurocurrency Borrowing or RFR Borrowing, not later than 2:00 pm, New York City time, three Business Days before the date of the proposed Borrowing (or, in each case, such later time as the Administrative Agent may agree) and (b) in the case of an ABR Borrowing, not later than 10:00 am, New York City time, on the Business Day of the proposed Borrowing (or such later time as the Administrative Agent may agree); provided that (i) to request a Term SOFR Borrowing, Eurocurrency Borrowing, RFR Borrowing or ABR Borrowing on the Closing Date, the Borrower shall notify the Administrative Agent of such request not later than 2:00 pm, New York City time, one Business Day prior to the Closing Date (or such later time as the Administrative Agent may agree), (ii) any such notice of an ABR Revolving Facility Borrowing to finance the reimbursement of an L/C Disbursement as contemplated by Section 2.05(e) may be given not later than 2:00 p.m., New York City time, on the Business Day of the proposed Borrowing (or such later time as the Administrative Agent may agree) and (iii) any such notice may be given in accordance with the terms of any applicable Incremental Assumption Agreement, Extension Amendment or Refinancing
Amendment. Each Borrowing Request shall be irrevocable (except that any Borrowing Request may be conditioned on the consummation of any Permitted Business Acquisition, any Investment or any other event or occurrence). Each Borrowing Request shall be in writing and signed by the Borrower or the Thai Borrower and shall specify the following information in compliance with Section 2.02:
(i) the Class of the Borrowing;
(ii) the aggregate amount of the requested Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing, a Term SOFR Borrowing, a Eurocurrency Borrowing or a RFR Borrowing;
(v) in the case of a Term SOFR Borrowing or Eurocurrency Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”;
(vi) the location and number of the account to which funds are to be disbursed; and
(vii) with respect to any Revolving Facility Loans, the applicable currency.
(viii) Whether the Borrowing shall be made by the Borrower or the Thai Borrower.
If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be, in the case of Dollars, a Term SOFR Borrowing, in the case of Euros, a Eurocurrency Borrowing, or, in the case of Thai Baht, a RFR Borrowing. If no Interest Period is specified with respect to any requested Term SOFR Borrowing or Eurocurrency Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent shall advise each applicable Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing. In the case of a Borrowing by the Thai Borrower, the Administrative Agent shall receive an original of a duly executed Thai Borrowing Receipt with respect to any amount of a requested Borrowing received by the Thai Borrower.
Section 2.04 Swingline Loans.
(a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans in Dollars, Euros or other Alternative Currency to the Borrower from time to time during the Availability Period, in an aggregate principal amount that will not result in (x) the Dollar Equivalent of the aggregate principal amount of outstanding Swingline Loans exceeding the Swingline Commitment or (y) the aggregate USD Revolving Facility Credit Exposure of the applicable Class exceeding the aggregate USD Revolving Facility Commitments of such Class and; provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans.
(b) To request a Swingline Borrowing, the Borrower shall notify the Administrative Agent and the Swingline Lender of such request with a Swingline Borrowing Request by electronic means, not later than 2:00 p.m., New York City time, on the day of a proposed Swingline Loan. Each such Swingline Borrowing Request shall be irrevocable and shall specify (i) the requested date of such Swingline Borrowing (which shall be a Business Day) and (ii) the amount of the requested Swingline Borrowing. The Swingline Lender shall make each Swingline Loan on the proposed date thereof by wire transfer of immediately available funds to the account specified by the Borrower in the Swingline Borrowing Request (or, in the case of a Swingline Borrowing made to finance the reimbursement of an L/C Disbursement as provided in Section 2.05(e), by remittance to the applicable Issuing Bank).
(c) The Swingline Lender may by written notice given to the Administrative Agent not later than 12:00 pm, New York City time, on any Business Day require the USD Revolving Facility Lenders of the applicable Class to acquire participations on such Business Day in all or a portion of the outstanding Swingline Loans made by it. Such notice shall specify the aggregate amount of such Swingline Loans in which the USD Revolving Facility Lenders will participate and whether such Swingline Loans are Swingline Loans. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each such Lender, specifying in such notice such USD Revolving Facility Lender’s applicable USD Revolving Facility Percentage of such Swingline Loans. Each USD Revolving Facility Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above,
to pay to the Administrative Agent for the account of the Swingline Lender, such USD Revolving Facility Lender’s applicable USD Revolving Facility Percentage of such Swingline Loans. Each USD Revolving Facility Lender acknowledges and agrees that its respective obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or Event of Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each USD Revolving Facility Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such USD Revolving Facility Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the USD Revolving Facility Lenders. The Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph (c), and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the USD Revolving Facility Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear; provided that any such payment so remitted shall be repaid to the Swingline Lender or to the Administrative Agent, as applicable, if and to the extent such payment is required to be refunded to the Borrower for any reason. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.
(d) The Borrower may, at any time and from time to time, designate as additional Swingline Lenders one or more USD Revolving Facility Lenders that agree to serve in such capacity as provided below. The acceptance by a USD Revolving Facility Lender of an appointment as a Swingline Lender hereunder shall be evidenced by an agreement, which shall be in form and substance reasonably satisfactory to the Administrative Agent and the Borrower, executed by the Borrower, the Administrative Agent and such designated Swingline Lender, and, from and after the effective date of such agreement, (i) such USD Revolving Facility Lender shall have all the rights and obligations of a Swingline Lender under this Agreement and (ii) references herein to the term “Swingline Lender” shall be deemed to include such USD Revolving Facility Lender in its capacity as a lender of Swingline Loans hereunder.
Section 2.05 Letters of Credit. (a) General. Subject to the terms and conditions set forth herein, (i) the Borrower may request the issuance of and the Issuing Banks shall issue one or more letters of credit denominated in Dollars, Euros or other Alternative Currency in the form of (x) trade letters of credit in support of trade obligations of the Borrower and the Subsidiaries incurred in the ordinary course of business (such letters of credit issued for such purposes, “Trade Letters of Credit”) and (y) standby letters of credit for any other lawful purposes of the Borrower and the Subsidiaries (such letters of credit for such purposes, “Standby Letters of Credit”; each such letter of credit issued hereunder, a “Letter of Credit” and collectively, the “Letters of Credit”) for its own account or for the account of the Borrower or any Subsidiary and (i) the Thai Borrower may request the issuance of and the Issuing Banks shall issue one or more Standby Letters of Credit denominated in Thai Baht or Dollars for its own account, in each case of clauses (i) and (ii), in a form reasonably acceptable to the applicable Issuing Bank, at any time and from time to time during the applicable Availability Period and prior to the date that is five Business Days prior to the applicable Revolving Facility Maturity Date; provided that (w)(i) no Issuing Bank shall be required to issue bank guarantees without its prior written consent, (ii) Citibank, N.A., Citibank, N.A. Bangkok Branch, Bank of Montreal, Bank of America, N.A., JPMorgan Chase Bank,
N.A., Morgan Stanley Senior Funding, Inc. and UBS AG, Stamford Branch shall not be required to issue Trade Letters of Credit without its prior written consent, (x) the Borrower shall remain primarily liable in the case of a Letter of Credit issued for the account of a Subsidiary, (y) the Thai Borrower shall remain primarily liable in the case of a Letter of Credit issued for its own account and (z) the applicable Issuing Bank shall not be obligated to issue Letters of Credit if any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank from issuing such Letter of Credit, the issuance of such Letter of Credit would violate any Requirements of Law binding upon such Issuing Bank or the issuance of the Letter of Credit would violate one or more policies or procedures of such Issuing Bank applicable to letters of credit generally that are customary for the industry. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower or the Thai Borrower to, or entered into by the Borrower or the Thai Borrower with, an Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.
(b) Request for Issuance, Amendment, Extension: Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, extension (other than an automatic extension in accordance with paragraph (c) of this Section 2.05) or extension of an outstanding Letter of Credit), the Borrower or the Thai Borrower, as applicable, shall electronically send to the applicable Issuing Bank and the Administrative Agent (at least three Business Days in advance of the requested date of issuance, amendment or extension or such shorter period as the Administrative Agent and the applicable Issuing Bank in their sole discretion may agree) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended or extended, and specifying the date of issuance, amendment or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section 2.05), the amount of such Letter of Credit, the currency of such Letter of Credit, the name and address of the beneficiary thereof, whether such Letter of Credit constitutes a Standby Letter of Credit or a Trade Letter of Credit and such other information as shall be necessary to issue, amend or extend such Letter of Credit. If requested by the applicable Issuing Bank, the Borrower or the Thai Borrower also shall submit a letter of credit application on such Issuing Bank’s standard form in connection with any request for a Letter of Credit. A USD Letter of Credit shall be issued, amended or extended only if (and upon issuance, amendment or extension of each USD Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment or extension, (x)(i) the aggregate USD Revolving Facility Credit Exposure shall not exceed the aggregate USD Revolving Facility Commitments, (ii) the aggregate USD Revolving L/C Exposure shall not exceed the USD Letter of Credit Sublimit and (y) the aggregate amount of all USD Letters of Credit, and unreimbursed USD L/C Disbursements with respect to USD Letters of Credit, issued by any Issuing Bank shall not exceed such Issuing Bank’s Specified Letter of Credit Sublimit without such Issuing Bank’s express written consent; provided that each Issuing Bank hereby agrees that any Existing Roll-Over Letters of Credit issued by such Issuing Bank may exceed such Issuing Bank’s Specified Letter of Credit Sublimit. A Thai Baht Letter of Credit shall be issued, amended or extended only if (and upon issuance, amendment or extension of each Thai Baht Letter of Credit the Thai Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment or extension, (x)(i) the aggregate Thai Baht Revolving Facility Credit Exposure shall not exceed the aggregate Thai Baht Revolving Facility Commitments, (ii) the aggregate Thai Baht Revolving L/C Exposure shall not exceed the Thai Letter of Credit Sublimit and (y) the aggregate amount of all Thai Baht Letters of Credit, and unreimbursed Thai Baht L/C Disbursements with respect to Thai Baht Letters of Credit, issued by any Issuing Bank shall not exceed such Issuing Bank’s Specified Letter of Credit Sublimit without such Issuing Bank’s express written consent.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year (unless otherwise agreed upon by the Borrower or the Thai
Borrower, as applicable, and the applicable Issuing Bank in their sole discretion) after the date of the issuance of such Letter of Credit (or, in the case of any extension thereof, one year (unless otherwise agreed upon by the Borrower or the Thai Borrower, as applicable, and the applicable Issuing Bank in their sole discretion) after such extension) and (ii) the Revolving Facility Maturity Date for the applicable Class; provided that any Letter of Credit with a one year tenor may provide for automatic extension thereof for additional one year periods (which, in no event, shall extend beyond the date referred to in clause (ii) of this paragraph (c)) so long as such Letter of Credit permits the applicable Issuing Bank to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof within a time period during such twelve-month period to be agreed upon at the time such Letter of Credit is issued; provided, further, that if such Issuing Bank consents in its sole discretion, the expiration date on any Letter of Credit may extend beyond the date referred to in clause (ii) above, provided that if any such Letter of Credit is outstanding or is issued under the Revolving Facility Commitments of any Class after the Revolving Facility Maturity Date for such Class, the Borrower or the Thai Borrower (as applicable) shall provide Cash Collateral pursuant to documentation reasonably satisfactory to the Administrative Agent and the relevant Issuing Bank in an amount equal to the available amount of each such Letter of Credit on or prior to the Revolving Facility Maturity Date for such Class.
(d) Participations.
(i) By the issuance of a USD Letter of Credit (or an amendment to a USD Letter of Credit increasing the amount thereof) under the USD Revolving Facility Commitments of any Class and without any further action on the part of the applicable Issuing Bank or the USD Revolving Facility Lenders, such Issuing Bank hereby grants to each USD Revolving Facility Lender under such Class, and each such USD Revolving Facility Lender hereby acquires from such Issuing Bank, a participation in such USD Letter of Credit equal to such USD Revolving Facility Lender’s applicable USD Revolving Facility Percentage of the aggregate amount available to be drawn under such USD Letter of Credit. In consideration and in furtherance of the foregoing, each USD Revolving Facility Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the applicable Issuing Bank, such USD Revolving Facility Lender’s applicable USD Revolving Facility Percentage of each USD L/C Disbursement made by such Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section 2.05, or of any reimbursement payment required to be refunded to the Borrower for any reason. Each USD Revolving Facility Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of USD Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment or extension of any USD Letter of Credit or the occurrence and continuance of a Default or Event of Default or reduction or termination of the Commitments or the fact that, as a result of changes in currency exchange rates, such USD Revolving Facility Lender’s USD Revolving Facility Credit Exposure at any time might exceed its USD Revolving Facility Commitment at such time, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.
(ii) By the issuance of a Thai Baht Letter of Credit (or an amendment to a Thai Baht Letter of Credit increasing the amount thereof) under the Thai Baht Revolving Facility Commitments of any Class and without any further action on the part of the applicable Issuing Bank or the Thai Baht Revolving Facility Lenders, such Issuing Bank hereby grants to each Thai Baht Revolving Facility Lender under such Class, and each such Thai Baht Revolving Facility Lender hereby acquires from such Issuing Bank, a participation in such Thai Baht Letter of Credit equal to such Thai Baht Revolving Facility Lender’s applicable Thai Baht Revolving Facility Percentage of the aggregate amount available to be drawn under such Thai Baht Letter of Credit. In consideration and in furtherance of the foregoing, each Thai Baht Revolving
Facility Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the applicable Issuing Bank, such Thai Baht Revolving Facility Lender’s applicable Thai Baht Revolving Facility Percentage of each Thai Baht L/C Disbursement made by such Issuing Bank and not reimbursed by the Thai Borrower on the date due as provided in paragraph (e) of this Section 2.05, or of any reimbursement payment required to be refunded to the Thai Borrower for any reason. Each Thai Baht Revolving Facility Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Thai Baht Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment or extension of any Thai Baht Letter of Credit or the occurrence and continuance of a Default or Event of Default or reduction or termination of the Commitments or the fact that, as a result of changes in currency exchange rates, such Thai Baht Revolving Facility Lender’s Thai Baht Revolving Facility Credit Exposure at any time might exceed its Thai Baht Revolving Facility Commitment at such time, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement.
(i) If the applicable Issuing Bank shall make any USD L/C Disbursement in respect of a USD Letter of Credit, the Borrower shall reimburse such USD L/C Disbursement by paying to the Administrative Agent an amount equal to such USD L/C Disbursement not later than 12:00 p.m., New York City time, on the second Business Day after the Borrower receives notice under paragraph (g) of this Section 2.05 of such USD L/C Disbursement; provided that the Borrower may, without regard to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or Section 2.04(a) that such payment be financed with a USD Revolving Facility Borrowing or a Swingline Borrowing of the applicable Class, as applicable, in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting USD Revolving Facility Borrowing or Swingline Borrowing. If the Borrower fails to reimburse any USD L/C Disbursement when due, then the Administrative Agent shall promptly notify the applicable Issuing Bank and each other applicable USD Revolving Facility Lender of the applicable USD L/C Disbursement, the payment then due from the Borrower in respect thereof (the “USD Unreimbursed Amount”) and, in the case of a USD Revolving Facility Lender, such USD Lender’s Revolving Facility Percentage thereof. Promptly following receipt of such notice, each USD Revolving Facility Lender with a USD Revolving Facility Commitment of the applicable Class shall pay to the Administrative Agent its USD Revolving Facility Percentage of the USD Unreimbursed Amount in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the USD Revolving Facility Lenders), and the Administrative Agent shall promptly pay to the applicable Issuing Bank the amounts so received by it from the USD Revolving Facility Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the applicable Issuing Bank or, to the extent that USD Revolving Facility Lenders have made payments pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their interests may appear. Any payment made by a USD Revolving Facility Lender pursuant to this paragraph to reimburse an Issuing Bank for any USD L/C Disbursement (other than the funding of a USD Revolving Facility Loan or a Swingline Borrowing as contemplated above) shall not
constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such USD L/C Disbursement.
(ii) If the applicable Issuing Bank shall make any Thai Baht L/C Disbursement in respect of a Thai Baht Letter of Credit, the Thai Borrower shall reimburse such Thai Baht L/C Disbursement by paying to the Administrative Agent an amount equal to such Thai Baht L/C Disbursement not later than 1:00 p.m., New York City time, on the second Business Day after the Thai Borrower receives notice under paragraph (g) of this Section 2.05 of such Thai Baht L/C Disbursement; provided that the Thai Borrower may, without regard to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or Section 2.04(a) that such payment be financed with a Thai Baht Revolving Facility Borrowing of the applicable Class in an equivalent amount and, to the extent so financed, the Thai Borrower’s obligation to make such payment shall be discharged and replaced by the resulting Thai Baht Revolving Facility Borrowing. If the Thai Borrower fails to reimburse any Thai Baht L/C Disbursement when due, then the Administrative Agent shall promptly notify the applicable Issuing Bank and each other applicable Thai Baht Revolving Facility Lender of the applicable Thai Baht L/C Disbursement, the payment then due from the Thai Borrower in respect thereof (the “Thai Unreimbursed Amount”) and, in the case of a Thai Baht Revolving Facility Lender, such Thai Baht Lender’s Revolving Facility Percentage thereof. Promptly following receipt of such notice, each Thai Baht Revolving Facility Lender with a Thai Baht Revolving Facility Commitment of the applicable Class shall pay to the Administrative Agent its Thai Baht Revolving Facility Percentage of the Thai Baht Unreimbursed Amount in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Thai Baht Revolving Facility Lenders), and the Administrative Agent shall promptly pay to the applicable Issuing Bank the amounts so received by it from the Thai Baht Revolving Facility Lenders. Promptly following receipt by the Administrative Agent of any payment from the Thai Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the applicable Issuing Bank or, to the extent that Thai Baht Revolving Facility Lenders have made payments pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their interests may appear. Any payment made by a Thai Baht Revolving Facility Lender pursuant to this paragraph to reimburse an Issuing Bank for any Thai Baht L/C Disbursement (other than the funding of a Thai Baht Revolving Facility Loan as contemplated above) shall not constitute a Loan and shall not relieve the Thai Borrower of its obligation to reimburse such Thai Baht L/C Disbursement.
(f) Obligations Absolute. The obligations of the Borrower or the Thai Borrower, as applicable, to reimburse L/C Disbursements as provided in paragraph (e) of this Section 2.05 shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the applicable Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit, (iv) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith or (v) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.05, constitute a legal or equitable discharge of, or provide a right of setoff
against, the Borrower’s or the Thai Borrower’s obligations hereunder. Neither the Administrative Agent, the Lenders nor any Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of such Issuing Bank, or any of the circumstances referred to in clauses (i), (ii) or (iii) of the first sentence; provided that the foregoing shall not be construed to excuse the applicable Issuing Bank from liability to the Borrower or the Thai Borrower (as applicable) to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower and the Thai Borrower to the extent permitted by applicable law) suffered by the Borrower or the Thai Borrower (as applicable) that are determined by final and binding decision of a court of competent jurisdiction to have been caused by such Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of (x) gross negligence or willful misconduct on the part of the applicable Issuing Bank as determined in a final, non-appealable judgment by a court of competent jurisdiction, in determining whether documents presented under any Letter of Credit comply with the terms of the Letter of Credit or (y) such Issuing Bank’s willful failure to make lawful payment under a Letter of Credit after the presentation to it of instruments strictly complying with the terms and conditions of the Letter of Credit, such Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented that appear on their face to be in substantial compliance with the terms of a Letter of Credit, the applicable Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit. The Borrower and the Thai Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit.
(g) Disbursement Procedures. The applicable Issuing Bank shall, within the time allowed by the specific terms of the Letter of Credit following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. After such examination, Issuing Bank shall promptly notify the Administrative Agent and the Borrower or the Thai Borrower, as applicable, by telephone (confirmed by electronic means) of any such demand for payment under a Letter of Credit and whether such Issuing Bank has made or will make an L/C Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower or the Thai Borrower, as applicable, of its obligation to reimburse such Issuing Bank and the Revolving Facility Lenders with respect to any such L/C Disbursement.
(h) Interim Interest. If an Issuing Bank shall make any L/C Disbursement, then, unless the Borrower or the Thai Borrower (as applicable) shall reimburse such L/C Disbursement in full on the date such L/C Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such L/C Disbursement is made to but excluding the date that the Borrower or the Thai Borrower (as applicable) reimburses such L/C Disbursement, at the rate per annum then applicable to (i) in the case of a L/C Disbursement in Dollars, the rate applicable to ABR Revolving Loans of the applicable Class, (ii) in the case of a Thai Baht L/C Disbursement, the rate applicable to RFR Loans of the applicable Class or (iii) in the case of a L/C Disbursement in an Alternative Currency, the rate applicable to Eurocurrency Loans of the applicable Class with the shortest available Interest
Period. Interest accrued pursuant to this paragraph shall be for the account of the applicable Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Facility Lender pursuant to paragraph (e) of this Section 2.05 to reimburse such Issuing Bank shall be for the account of such Revolving Facility Lender to the extent of such payment.
(i) Replacement of an Issuing Bank. An Issuing Bank may be replaced at any time by written agreement among the Borrower (with respect to the USD Letter of Credit Sublimit) or the Thai Borrower (with respect to the Thai Letter of Credit Sublimit), the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of an Issuing Bank. At the time any such replacement shall become effective, the Borrower or the Thai Borrower (as applicable) shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12. From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the replaced Issuing Bank under this Agreement with respect to USD Letters of Credit and/or Thai Baht Letters of Credit (as applicable) to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of such Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement but shall not be required to issue additional Letters of Credit.
(j) Cash Collateralization Following Certain Events. If and when the Borrower or the Thai Borrower (as applicable) is required to Cash Collateralize any Revolving L/C Exposure relating to any outstanding Letters of Credit pursuant to any of Sections 2.05(c), 2.11(g), 2.25(a)(v) or 7.01, the Borrower or the Thai Borrower (as applicable) shall deposit in an account with or at the direction of the Collateral Agent, in the name of the Collateral Agent and for the benefit of the applicable Revolving Facility Lenders, an amount in cash in Dollars or an Alternative Currency, as applicable, equal to the Minimum L/C Collateral Amount (or, in the case of Sections 2.05(c), 2.11(g) and 2.25(a)(v), the portion thereof required by such sections). Each deposit of Cash Collateral (x) made pursuant to this paragraph or (y) made by the Administrative Agent pursuant to Section 2.25(a)(ii), in each case, shall be held by the Collateral Agent as collateral for the payment and performance of the obligations of the Borrower or the Thai Borrower (as applicable) under this Agreement. The Collateral Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of (i) for so long as an Event of Default shall be continuing, the Collateral Agent and (ii) at any other time, the Borrower in each case, in Permitted Investments and at the risk and expense of the Borrower, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Collateral Agent to reimburse each Issuing Bank for L/C Disbursements for which such Issuing Bank has not been reimbursed and, to the extent not so applied, shall (i) in the case of the reimbursement obligations of the Borrower, be held for the satisfaction of such reimbursement obligations for the USD Revolving L/C Exposure at such time (and any amounts in excess of the USD Revolving L/C Exposure at such time shall promptly be returned to the Borrower) or, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders with USD Revolving L/C Exposure representing greater than 50% of the total USD Revolving L/C Exposure), be applied to satisfy other obligations of the Borrower under this Agreement and (ii) in the case of the reimbursement obligations of the Thai Borrower, be held for the satisfaction of such reimbursement obligations for the Thai Baht Revolving L/C Exposure at such time (and any amounts in excess of the Thai Baht Revolving L/C Exposure at such time shall promptly be returned to the Thai Borrower) or, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders with Thai Baht Revolving L/C Exposure representing greater than 50% of the total
Thai Baht Revolving L/C Exposure), be applied to satisfy other obligations of the Thai Borrower under this Agreement. If the Borrower is required to provide an amount of Cash Collateral hereunder as a result of the occurrence of an Event of Default or the existence of a Defaulting Lender or the occurrence of a limit under Section 2.11(g) being exceeded, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived or the termination of the Defaulting Lender status or the limits under Section 2.11(g) no longer being exceeded, as applicable.
(k) Cash Collateralization Following Termination of a Revolving Facility.
(i) Notwithstanding anything to the contrary herein, in the event of the prepayment in full of all outstanding USD Revolving Facility Loans and the termination of all USD Revolving Facility Commitments (a “USD Revolving Facility Termination Event”) in connection with which the Borrower notifies any one or more Issuing Banks that the Borrower or any of its Subsidiaries intends to maintain one or more USD Letters of Credit initially issued under this Agreement in effect after the date of such USD Revolving Facility Termination Event (each, a “Continuing USD Letter of Credit”), then the security interest of the Collateral Agent in the Collateral under the Security Documents may be terminated in accordance with Section 9.18 if each such Continuing USD Letter of Credit is Cash Collateralized in an amount equal to the Minimum L/C Collateral Amount, which shall be deposited with or at the direction of each such Issuing Bank.
(ii) Notwithstanding anything to the contrary herein, in the event of the prepayment in full of all outstanding Thai Baht Revolving Facility Loans and the termination of all Thai Baht Revolving Facility Commitments (a “Thai Baht Revolving Facility Termination Event”) in connection with which the Thai Borrower notifies any one or more Issuing Banks that the Thai Borrower intends to maintain one or more Thai Baht Letters of Credit initially issued under this Agreement in effect after the date of such Thai Baht Revolving Facility Termination Event (each, a “Continuing Thai Baht Letter of Credit”), then the security interest of the Collateral Agent in the Collateral under the Security Documents may be terminated in accordance with Section 9.18 if each such Continuing Thai Baht Letter of Credit is Cash Collateralized in an amount equal to the Minimum L/C Collateral Amount, which shall be deposited with or at the direction of each such Issuing Bank.
(l) Additional Issuing Banks. From time to time, the Borrower may by notice to the Administrative Agent designate any Lender (in addition to the initial Issuing Banks) that agrees (in its sole discretion) to act in such capacity and that is reasonably satisfactory to the Administrative Agent as an Issuing Bank. Each such additional Issuing Bank shall execute a counterpart of this Agreement (which counterpart shall set forth any fronting sublimit to the Letter of Credit Sublimit applicable to such Issuing Bank, which shall be agreed from time to time solely among the Borrower and such Issuing Bank) upon the approval of the Administrative Agent (which approval shall not be unreasonably withheld, delayed or conditioned) and shall thereafter be an Issuing Bank hereunder for all purposes. Upon the designation of an Issuing Bank hereunder, the Borrower and the applicable Issuing Bank may in consultation with the Administrative Agent, effect amendments to this Agreement to reflect such designation and any letter of credit sublimit agreed between the Borrower and such Issuing Bank, to be applicable to such Issuing Bank.
(m) Reporting. Unless otherwise requested by the Administrative Agent, each Issuing Bank shall (i) provide to the Administrative Agent copies of any notice received from the Borrower or the Thai Borrower, as applicable, pursuant to Section 2.05(b) no later than the next Business
Day after receipt thereof and (ii) report in writing to the Administrative Agent (A) on or prior to each Business Day on which such Issuing Bank expects to issue, amend or extend any Letter of Credit, the date of such issuance, amendment or extension, and the aggregate available amount of the Letters of Credit to be issued, amended or extended by it and outstanding after giving effect to such issuance, amendment or extension occurred (and whether the amount thereof changed), and such Issuing Bank shall be permitted to issue, amend or extend such Letter of Credit if the Administrative Agent shall not have advised such Issuing Bank that such issuance, amendment or extension would not be in conformity with the requirements of this Agreement, (B) on each Business Day on which such Issuing Bank makes any L/C Disbursement, the date of such L/C Disbursement and the amount of such L/C Disbursement and (C) on any other Business Day, such other information with respect to the outstanding Letters of Credit issued by such Issuing Bank as the Administrative Agent shall reasonably request.
Section 2.06 Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder by wire transfer of immediately available funds by 12:00 p.m., New York City time on the proposed date thereof (or, otherwise, in the case of Loans denominated in Euros, not later than 9:00 a.m., New York City time on the proposed date thereof), to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided that (i) Swingline Loans shall be made as provided in Section 2.04 and (ii) any Loan may be made as provided for in any applicable Incremental Assumption Agreement, Extension Amendment or Refinancing Amendment. The Administrative Agent will make such Loans available to the Borrower or the Thai Borrower by promptly crediting the amounts so received, in like funds, to an account or accounts designated by the Borrower or the Thai Borrower as specified in the applicable Borrowing Request; provided that Revolving Facility Loans made to finance the reimbursement of a L/C Disbursement and reimbursements as provided in Section 2.05(e) shall be remitted by the Administrative Agent to the applicable Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with clause (a) of this Section 2.06 and may, in reliance upon such assumption, make available to the Borrower or the Thai Borrower a corresponding amount. In such event, or if a funding request is made by the Thai Baht Revolving Lender pursuant to Section 8.07(b), if a Lender has not in fact made its share of the Borrowing (or requested reimbursement) available to the Administrative Agent, then the applicable Lender, the Borrower and the Thai Borrower severally agree to pay to the Administrative Agent forthwith on demand (without duplication) such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower or the Thai Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of (A) the Federal Funds Effective Rate and (B) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of a payment to be made by the Borrower or the Thai Borrower, the interest rate applicable to such Borrowing. If the Borrower, the Thai Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower or the Thai Borrower the amount of such interest paid by the Borrower or the Thai Borrower, as applicable, for such period. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower and the Thai Borrower shall be without prejudice to any claim the Borrower and the Thai Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.
(c) The foregoing notwithstanding, the Administrative Agent, in its sole discretion, may from its own funds make a Revolving Facility Loan on behalf of the Lenders. In such event, the
applicable Lenders on behalf of whom the Administrative Agent made the Revolving Facility Loan shall reimburse the Administrative Agent for all or any portion of such Revolving Facility Loan made on its behalf upon written notice given to each applicable Lender not later than 11:00 a.m., New York City time, on the Business Day such reimbursement is requested. The entire amount of interest attributable to such Revolving Facility Loan for the period from and including the date on which such Revolving Facility Loan was made on such Lender’s behalf to but excluding the date the Administrative Agent is reimbursed in respect of such Revolving Facility Loan by such Lender shall be paid to the Administrative Agent for its own account.
Section 2.07 Interest Elections. (a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Term SOFR Borrowing or a Eurocurrency Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Term SOFR Borrowing or a Eurocurrency Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.07. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section 2.07, the Borrower shall notify the Administrative Agent of such election by submitting an Interest Election Request by electronic means to the Administrative Agent, by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election.
(c) Each Interest Election Request shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing, a Term SOFR Borrowing, a Eurocurrency Borrowing or an RFR Borrowing; and
(iv) if the resulting Borrowing is a Term SOFR Borrowing or a Eurocurrency Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period.”
If any such Interest Election Request requests a Term SOFR Borrowing or a Eurocurrency Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. If less than all the outstanding principal amount of any Borrowing shall be converted or continued, then each resulting Borrowing shall be not less than the Borrowing Minimum and satisfy the limitations specified in Section 2.02(c) regarding the maximum number of Borrowings of the relevant Type.
(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender to which such Interest Election Request relates of the details thereof and of such Lender’s portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Term SOFR Borrowing or a Eurocurrency Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be continued as a Term SOFR Borrowing or a Eurocurrency Borrowing with a one month Interest Period. Notwithstanding any contrary provision hereof, if a Specified Event of Default has occurred and is continuing and the Administrative Agent, at the written request (including a request through electronic means) of the Required Lenders, so notifies the Borrower, then, so long as a Specified Event of Default is continuing (i) no outstanding Borrowing denominated in Dollars may be converted to or continued as a Term SOFR Borrowing or Eurocurrency Borrowing and (ii) unless repaid, each Term SOFR Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.
Section 2.08 Termination and Reduction of Commitments. (a) On the Closing Date (after the funding of the Initial Term B Loans to be made on such date), the Initial Term B Loan Commitments of each Lender as of the Closing Date will terminate. On the 2025 Refinancing Amendment Effective Date (after giving effect to the funding, continuation and/or conversion of the 2025 Refinancing Term B Loans to be made on such date), the 2025 Refinancing Term B Facility Commitments of each 2025 Refinancing Term B Facility Lender as of the 2025 Refinancing Amendment Effective Date will terminate. On the 2025-2 Refinancing Amendment Effective Date (after giving effect to the funding, continuation and/or conversion of the 2025-2 Refinancing Term B Loans to be made on such date), the 2025-2 Refinancing Term B Facility Commitments of each 2025-2 Refinancing Term B Facility Lender as of the 2025-2 Refinancing Amendment Effective Date will terminate.Unless previously terminated, the Revolving Facility Commitments of each Class shall terminate on the applicable Revolving Facility Maturity Date for such Class.
(b) The Borrower may at any time terminate, or from time to time reduce, the unused Commitments of any Class; provided that (i) each reduction shall be in an amount that is an integral multiple of $250,000 and not less than $1,000,000 (or, if less, the remaining amount of the unused Commitments of such Class) and (ii) the Borrower shall not terminate or reduce the Revolving Facility Commitments of any Class if, after giving effect to any concurrent prepayment of the Revolving Facility Loans in accordance with Section 2.11 and any Cash Collateralization of Letters of Credit in accordance with Section 2.05(j) or (k) the Revolving Facility Credit Exposure of such Class (excluding any Cash Collateralized Letter of Credit) would exceed the total Revolving Facility Commitments of such Class.
(c) The Borrower shall notify the Administrative Agent by delivery of a Prepayment Notice of any election to terminate or reduce the Commitments of any Class under clause (b) of this Section 2.08 at least one Business Day prior to the effective date of such termination or reduction (or such shorter period acceptable to the Administrative Agent), specifying such election and the effective date thereof. Promptly following receipt of any Prepayment Notice, the Administrative Agent shall advise the applicable Lenders of the contents thereof. Each Prepayment Notice delivered by the Borrower pursuant to this Section 2.08 shall be irrevocable (except that any Prepayment Notice may be conditioned on the consummation of any Permitted Business Acquisition, any Investment, any incurrence of Indebtedness or any other event or occurrence). Any termination or reduction of the Commitments
shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class.
Section 2.09 Maturity of Loans; Evidence of Debt.
(a) Each of the Borrower and the Thai Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Revolving Facility Lender the then unpaid principal amount of each Revolving Facility Loan to the Borrower or the Thai Borrower on the Revolving Facility Maturity Date applicable to such Revolving Facility Loans, (ii) to the Administrative Agent for the account of each applicable Lender, the then unpaid principal amount of each Term Loan of such Lender as provided in Section 2.10 and (iii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan applicable to any Class of Revolving Facility Commitments on the earlier of the Revolving Facility Maturity Date for such Class and the first date after such Swingline Loan is made that is the first date that is the last Business Day of March, June, September or December and is at least ten Business Days after such Swingline Loan is made; provided that on each date that a Revolving Facility Borrowing is made by the Borrower or the Thai Borrower, the Borrower shall repay all Swingline Loans made to the Borrower or the Thai Borrower that is then outstanding. Notwithstanding anything in this Agreement or any other Loan Document to the contrary, the Thai Borrower will not be liable for an amount in excess of the Loan Obligations directly incurred hereunder by the Thai Borrower.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain the Register pursuant to Section 9.04(b)(iv), and a subaccount therein for each Lender, in which it shall record (i) the amount of each Loan made hereunder, the Facility and Type thereof and the Interest Period (if any) applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) any amount received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.
(d) The entries made in the Register and the accounts maintained pursuant to clause (b) or (c) of this Section 2.09 shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain the Register or such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a promissory note (a “Note”). In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to such Lender and its registered assigns and in a form reasonably approved by the Administrative Agent and reasonably acceptable to the Borrower, which promissory note shall be substantially in the form of (x) Exhibit J-1 in the case of a Note evidencing Indebtedness of the Borrower under the Term Loan of such Lender and (y) Exhibit J-2 in the case of a Note evidencing Indebtedness of the Borrower under the Revolving Facility Commitment of such Lender. Thereafter, unless otherwise agreed to by the applicable Lender, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the payee named therein and its registered assigns.
Section 2.10 Scheduled Repayments of Term Loans. Subject to Section 2.11 and Section 9.08(d), and adjustment otherwise in accordance with this Agreement, the Borrower shall repay Initial Term B Loans on the last Business Day of each March, June, September and December of each year (commencing with the last Business Day of December 2025) and on the Initial Term B Facility Maturity Date in an aggregate principal amount equal to (A) in the case of quarterly payments due prior to the Initial Term B Facility Maturity Date, an amount equal to the Initial Term B Loan Amortization Percentage of the aggregate original principal amount of all such Initial Term B Loans outstanding immediately after the 2025-2 Refinancing Amendment Effective Date and (B) in the case of such payment due on the Initial Term B Facility Maturity Date, an amount equal to the aggregate principal amount of all such Initial Term B Loans then outstanding.
Section 2.11 Voluntary and Mandatory Prepayment of Loans. (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, without premium or penalty (but subject to Section 2.12(d) and Section 2.16), in an aggregate principal amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum or, if less, the amount outstanding, subject to prior notice in accordance with Section 2.11(h).
(b) The Borrower shall apply the Required Net Proceeds Percentage of Net Proceeds promptly upon receipt thereof, which shall not be required to be earlier than five Business Days after receipt thereof, to prepay Subject Loans.
(c) Not later than ten Business Days after the date on which the annual financial statements are, or are required to be, delivered under Section 5.04(a) (the “ECF Date”) with respect to each Excess Cash Flow Period, commencing with the Excess Cash Flow Period ending on December 31, 2025, the Borrower shall calculate Excess Cash Flow for such Excess Cash Flow Period and the Borrower shall apply, to prepayment of Subject Loans, an amount (the “ECF Payment Amount”) equal to:
(i) the amount by which the Required ECF Percentage of such Excess Cash Flow exceeds the greater of (x) $80,000,000 and (y) 0.20 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period (the “ECF Threshold Amount”), minus
(ii) to the extent not financed using the proceeds of the incurrence of funded term Indebtedness, the sum of (without duplication in any period or with respect to successive Excess Cash Flow Periods), at the option of the Borrower:
(A) the amount of any voluntary payments, purchases or other acquisitions for value during the Applicable Period of (x) Term Loans (it being understood that the amount of any such payment constituting a below-par Permitted Loan Purchase shall be calculated based on the amount of cash used and not the principal amount acquired), (y) Other First Lien Debt and (z) any other Indebtedness for borrowed money, regardless of whether secured or unsecured (provided that in the case of the prepayment of any revolving Indebtedness, there was a corresponding reduction in commitments),
(B) the amount of any permanent voluntary reductions during the Applicable Period of commitments under any revolving credit facility (including Revolving Facility Commitments) to the extent that an equal amount of Revolving Facility Loans were simultaneously repaid,
(C) the amount of any mandatory prepayments during the Applicable Period of (x) Term Loans and (y) Other First Lien Debt (other than any prepayment of any revolving Indebtedness),
(D) the amount of any voluntary payments, purchases or other acquisitions for value during the Applicable Period of Incremental Equivalent Debt (provided that in the case of the prepayment of any revolving Indebtedness, there was a corresponding reduction in commitments),
(E) (i) the amount of Capital Expenditures or acquisitions of Intellectual Property made during the Applicable Period that are paid in cash and (ii) the aggregate consideration paid in cash during the Applicable Period in respect of Permitted Business Acquisitions and other Investments permitted hereunder or in respect of earnout obligations in respect of the foregoing,
(F) the amount of permitted Restricted Payments and Restricted Debt Payments paid in cash by the Borrower during the Applicable Period and permitted Restricted Payments paid in cash by any Subsidiary to any Person other than any Parent Entity, the Borrower or any of its Subsidiaries during such Applicable Period, and
(G) any payment of the kind set forth in the preceding clauses (A) through (F) that the Borrower or any Subsidiary shall, during such Applicable Period, have become obligated to, or anticipated or committed to make, in each case in cash and no later than the date ending four consecutive fiscal quarters of the Borrower following the end of such Applicable Period; provided that any amount so deducted shall not be deducted again for a subsequent Excess Cash Flow Period,
provided, that (1) any amounts set forth in clauses (A) through (G) above may be applied to any subsequent Fiscal Year(s) to the extent the aggregate of such amounts exceeds the amount required to reduce to zero, with respect to any given fiscal year, the ECF Payment Amount (including after giving effect to the ECF Threshold Amount and carry-forwards of any such excess amounts from prior years) for such Fiscal Year and (2) the ECF Payment Amount shall be increased on a dollar-for-dollar basis by any amounts referred to in clause (G) above that are committed or anticipated to be made during an Applicable Period or the period of four consecutive fiscal quarters of Holdings following the end of such Applicable Period, to the extent not so made during such Applicable Period or four fiscal quarter period (in each case solely to the extent such amounts originally reduced the ECF Payment Amount pursuant to clause (G) above), with such dollar-for-dollar increase occurring for the Excess Cash Flow Period in which such four fiscal quarter period referenced above expired without such cash payment being made.
Such calculation will be set forth in a Compliance Certificate delivered to the Administrative Agent setting forth the amount, if any, of Excess Cash Flow for such Fiscal Year, the amount of any required prepayment in respect thereof and the calculation thereof in reasonable detail.
(d) [Reserved].
(e) Notwithstanding clauses (b) and (c) above, the Borrower may, at its election, use a portion of such Net Proceeds (other than any Net Proceeds of the type described in clause (b) of the definition thereof) or of such Excess Cash Flow to prepay or repurchase any Other First Lien Debt if such prepayment or repurchase is required under the terms of such Other First Lien Debt, in each case in an amount not to exceed the product of (x) the amount of such Net Proceeds or Excess Cash Flow, as the case may be and (y) a fraction, (A) the numerator of which is the outstanding principal amount of such Other First Lien Debt and (B) the denominator of which is the sum of the outstanding principal amount of such Other First Lien Debt and the outstanding principal amount of all Subject Loans.
(f) Notwithstanding any other provisions of this Section 2.11 to the contrary, (i) to the extent that any Net Proceeds of any Asset Sale by a Subsidiary or Excess Cash Flow attributable to a Subsidiary would otherwise be required to be applied pursuant to Section 2.11(b) or Section 2.11(c) but is prohibited, restricted or delayed by applicable local law from being repatriated to the Borrower, the portion of such Net Proceeds or Excess Cash Flow so affected will not be required to be applied to repay Subject Loans at the times provided in Section 2.11(b) or Section 2.11(c) but may be retained by the applicable Subsidiary for so long, but only so long, as the applicable local law will not permit repatriation to the Borrower (in each case, as determined by the Borrower in good faith), and once such repatriation of any of such affected Net Proceeds or Excess Cash Flow is permitted under the applicable local law, such repatriation will be effected and such repatriated Net Proceeds or Excess Cash Flow will be promptly applied (net of additional Taxes payable or reserved against as a result thereof including, without duplication, any repatriation costs associated with repatriation of such proceeds from the applicable recipient to the Borrower) to the repayment of Subject Loans and/or Other First Lien Debt pursuant to Section 2.11(b) or Section 2.11(c), to the extent provided therein; provided that if such prohibition or restriction continues for 365 days, there shall be no requirement to apply such portion of such Net Proceeds or Excess Cash Flow so affected to prepay Subject Loans, (ii) to the extent that the Borrower has determined in good faith that repatriation to the Borrower of any or all of such Net Proceeds or Excess Cash Flow that would otherwise be required to be applied pursuant to Section 2.11(b) or Section 2.11(c) would have a material adverse Tax consequences to the Borrower, any Subsidiary, or any Parent Entity or direct or indirect equityholder thereof, the Net Proceeds or Excess Cash Flow so affected may be retained by the applicable Subsidiary and there shall be no requirement to apply the affected Net Proceeds or Excess Cash Flow to prepay Subject Loans, (iii) to the extent that the Borrower has determined in good faith based on the advice of counsel that the repatriation of any or all of such Net Proceeds or Excess Cash Flow would give rise to a risk of liability for the directors of a Subsidiary, such Subsidiary may retain the Net Proceeds or Excess Cash Flow and there shall be no requirement to apply the affected Net Proceeds or Excess Cash Flow to prepay Subject Loans and (iv) prepayments of Net Proceeds or from Excess Cash Flow shall be made net of Taxes payable or reserved against as a result of the repatriation of funds from any Subsidiaries to the Borrower.
(g) In the event that, on any Revaluation Date, the aggregate amount of Revolving Facility Credit Exposure of any Class is more than 105% of the aggregate Revolving Facility Commitments of such Class, the Borrower shall, within five Business Days of receipt of written notice thereof from the Administrative Agent, prepay Revolving Facility Borrowings or Swingline Borrowings of such Class and/or provide Cash Collateral in respect of outstanding Letters of Credit pursuant to Section 2.05(j) in an amount sufficient to eliminate any such excess Revolving Facility Credit Exposure, it being understood that for purposes of this clause, the Revolving Facility Credit Exposure of any Class shall be deemed reduced by the Dollar Equivalent of the face amount of Letters of Credit that are so Cash Collateralized.
(h) Subject to clause (e) above:
(i) prepayments of Subject Loans from Net Proceeds pursuant to Section 2.11(b) and Excess Cash Flow pursuant to Section 2.11(c) shall be allocated (A) on a pro rata basis to each Class of Subject Loans, (B) among remaining scheduled payments of principal under each such Class of Subject Loans as directed by the Borrower (and in the absence of such direction, in direct order of maturity) and (C) among Borrowings under each such Class of Subject Loans as directed by the Borrower (and in the absence of such direction, in a manner that will minimize any payments required under Section 2.16); provided that, if the Borrower permits, any Lender may, at its option, elect to decline any such prepayment of any Subject Loan (other than any Net Proceeds of the type described in clause (b) of the definition thereof and any prepayment made by the Borrower to refinance the Subject Loans) held by it if it shall give written notice of such election to the Administrative Agent by 1:00 p.m. at least two Business Days prior to the date of such prepayment (any such Lender, a “Declining Lender”), in which case, on the date of such prepayment, any amounts that would otherwise have been applied to prepay Subject Loans owing to Declining Lenders (such amounts, the “Declined Proceeds”) shall instead be retained by the Borrower for application for any purpose not prohibited by this Agreement (such amounts, the “Retained Declined Proceeds”), and
(ii) any optional prepayments pursuant to Section 2.11(a) shall be allocated (A) among Classes of Loans as directed by the Borrower, (B) in the case of Term Loans, among remaining scheduled payments of principal under each such Class of Loans as directed by the Borrower (and in the absence of such direction, in direct order of maturity) and (C) among Borrowings under each such Class of Loans as directed by the Borrower (and in the absence of such direction, in a manner that will minimize any payments required under Section 2.16) .
(i) Prior to any prepayment of any Loan under any Facility hereunder, the Borrower shall notify the Administrative Agent in writing (submitted by electronic means by delivery of a Prepayment Notice to the Agent) not later than (i) in the case of a voluntary prepayment of an ABR Borrowing, 11:00 am, New York City time, on the scheduled date of such prepayment and (ii) in the case of any mandatory prepayment of Subject Loans pursuant to Section 2.11(b) or (c) or any voluntary prepayment of any Term SOFR Borrowing or Eurocurrency Borrowing or RFR Borrowing, 1:00 pm, New York City time, at least three Business Days before the scheduled date of such prepayment (or, in any case, such shorter period acceptable to the Administrative Agent); provided, that notice of prepayment of any Swingline Loan may be provided on the scheduled date of such prepayment in the same manner as for ABR Borrowings, provided, further that each Prepayment Notice delivered by the Borrower pursuant to this Section 2.11 shall be irrevocable (except that any Prepayment Notice may be conditioned on the consummation of any Permitted Business Acquisition, any Investment, any incurrence of Indebtedness or any other event or occurrence). Each repayment of any Class and any Borrowing shall be made ratably among the Lenders in accordance with their respective Loans of such Class or such Borrowing. All repayments of Loans shall be accompanied by accrued interest on the amount repaid to the extent required by Section 2.13(d).
(j) Notwithstanding any other provisions of this Section 2.11 to the contrary, in the event that Holdings and/or the Borrower shall fail to directly or indirectly own 100% of the issued and outstanding Equity Interests of the Thai Borrower, (i) the Borrower shall immediately repay all outstanding Thai Baht Revolving Facility Loans, (ii) the Thai Baht Revolving Facility Commitments of all the Lenders shall be terminated immediately, (iii) the Borrower shall immediately reimburse, or
provide Cash Collateral, in respect of all outstanding Thai Baht Letters of Credit and (iv) the Borrower shall immediately pay all interest, fees and other amounts due in respect of the Thai Baht Facility.
Section 2.12 Fees. (a) The Borrower agrees to pay:
(i) to each Initial USD Revolving Facility Lender (other than any Defaulting Lender), through the Administrative Agent, on the date that is the last Business Day of each March, June, September and December in each year (commencing after the completion of one full fiscal quarter after the Closing Date) and on the date on which the Initial USD Revolving Facility Commitments of all the Lenders shall be terminated as provided herein, a commitment fee in Dollars (the “USD Revolver Commitment Fee”) on the daily amount of the applicable Available Unused Commitment of such Lender in respect of the Initial USD Revolving Facility during the preceding fiscal quarter (or other period commencing with the Closing Date or ending with the date on which the last of the Initial USD Revolving Facility Commitments of such Lender shall be terminated) at a rate equal to the Applicable USD Revolver Commitment Fee Rate accrued up to the last Business Day of each March, June, September and December (commencing after the completion of one full fiscal quarter after the Closing Date). All USD Revolver Commitment Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days. For purposes of calculating any Initial USD Revolving Facility Lender’s USD Revolver Commitment Fee, the outstanding Swingline Loans during the period for which such Initial USD Revolving Facility Lender’s USD Commitment Fee is calculated shall be deemed to be zero. The USD Revolver Commitment Fee due to each Initial USD Revolving Facility Lender shall commence to accrue on the Closing Date and shall cease to accrue on the date on which the last of the Initial USD Revolving Facility Commitments of such Lender shall be terminated as provided herein.
(ii) to each Initial Thai Baht Revolving Facility Lender (other than any Defaulting Lender), through the Administrative Agent, on the date that is the last Business Day of each March, June, September and December in each year (commencing after the completion of one full fiscal quarter after the Closing Date) and on the date on which the Initial Thai Baht Revolving Facility Commitments of all the Lenders shall be terminated as provided herein, a commitment fee in Dollars (the “Thai Baht Revolver Commitment Fee”) on the daily amount of the applicable Available Unused Commitment of such Lender in respect of the Initial Thai Baht Revolving Facility during the preceding fiscal quarter (or other period commencing with the Closing Date or ending with the date on which the last of the Initial Thai Baht Revolving Facility Commitments of such Lender shall be terminated) at a rate equal to the Applicable Thai Baht Revolver Commitment Fee Rate accrued up to the last Business Day of each March, June, September and December (commencing after the completion of one full fiscal quarter after the Closing Date). All Thai Baht Revolver Commitment Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days. The Thai Baht Revolver Commitment Fee due to each Initial Thai Baht Revolving Facility Lender shall commence to accrue on the Closing Date and shall cease to accrue on the date on which the last of the Initial Thai Baht Revolving Facility Commitments of such Lender shall be terminated as provided herein.
(b) The Borrower from time to time agrees to pay (i) to each Revolving Facility Lender of each Class (other than any Defaulting Lender), through the Administrative Agent, on the date that is the last Business Day of each March, June, September and December of each year (commencing after the completion of one full fiscal quarter after the Closing Date) and on the date on which the Revolving Facility Commitments of all the Lenders shall be terminated as provided herein, a fee in Dollars (with respect to the USD Revolving Facility) and Thai Baht or Dollars, as applicable (with
respect to the Thai Bhat Revolving Facility) (an “L/C Participation Fee”) on such Lender’s Revolving Facility Percentage of the daily face amount of the aggregate undrawn amount of all Letters of Credit applicable to such Class outstanding during the preceding fiscal quarter (or shorter period commencing with the Closing Date or ending with the Revolving Facility Maturity Date or the date on which the Revolving Facility Commitments of such Class shall be terminated) at the rate per annum equal to the Applicable Margin for Term SOFR Revolving Facility Borrowings of such Class effective for each day in such period accrued up to the last Business Day of each March, June, September and December (commencing after the completion of one full fiscal quarter after the Closing Date) and (ii) to each Issuing Bank, for its own account (x) on the date that is the last Business Day of each March, June, September and December of each year (commencing after the completion of one full fiscal quarter after the Closing Date) and on the date on which the USD Revolving Facility Commitments or the Thai Baht Revolving Facility Commitments, as applicable, of all the Lenders shall be terminated, a fronting fee in respect of each Letter of Credit issued by such Issuing Bank and outstanding during the preceding fiscal quarter to and including the termination of such Letter of Credit, computed at a rate equal to 0.125% per annum of the daily face amount of such Letter of Credit plus (y) in connection with the issuance, amendment or transfer of any such Letter of Credit or any L/C Disbursement thereunder, such Issuing Bank’s customary documentary and processing fees and charges (collectively, “Issuing Bank Fees”). All L/C Participation Fees and Issuing Bank Fees that are payable on a per annum basis shall be computed on the basis of the actual number of days elapsed in a year of 360 days.
(c) The Borrower agrees to pay to the Administrative Agent, for the account of the Administrative Agent, the administration fee in respect of the Facilities as set forth in the Administrative Agent Fee Letter, as may be amended, restated, supplemented or otherwise modified from time to time, at the times specified therein (the “Administrative Agent Fees”).
(d) In the event that, on or prior to the date that is six months after the 2025-2 Refinancing Amendment Effective Date, the Borrower shall (x) make (A) a voluntary prepayment of the Initial Term B Loans (which shall include prepayments pursuant to the yank-a-bank provisions in connection with a Repricing Transaction as otherwise described herein) pursuant to Section 2.11(a) or (B) a mandatory prepayment of the Initial Term B Loans with Net Proceeds under clause (b) of the definition thereof pursuant to Section 2.11(b), in each case with the proceeds of any new or replacement tranche of long-term term “B” loans denominated in Dollars secured on a pari passu basis with the Initial Term B Loans and that are broadly syndicated to banks and other institutional investors in a financing similar to the Initial Term B Loans and have an Applicable Margin that is less than the Applicable Margin of the Initial Term B Loans or (y) effect any amendment to this Agreement which reduces the Applicable Margin of the Initial Term B Loans, in either case of clause (x) or (y), where the primary purpose (as determined in good faith by the Borrower) of such prepayment or amendment is to reduce the Applicable Margin of the Initial Term B Loans (any such transaction, a “Repricing Transaction”), the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable Initial Term B Loan Lender, a prepayment premium of 1% of the aggregate principal amount of the Initial Term B Loans so prepaid or amended; provided that in no event shall any such fee be payable in connection with any voluntary prepayment of the Loans made with a Change of Control, a Qualified IPO, a Material Acquisition, a Material Disposition, a material business combination (as determined by the Borrower in good faith), a Transformative Transaction, a dividend in excess of $250,000,000, a dividend recapitalization or any other transaction resulting in an upsizing of the aggregate outstanding amount of Term Loans hereunder. Such amounts shall be due and payable on the date of such prepayment or the effective date of such amendment, as the case may be.
(e) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that Issuing Bank
Fees shall be paid directly to the applicable Issuing Banks. Once paid, none of the Fees shall be refundable under any circumstances.
Section 2.13 Interest. (a) The Loans comprising each ABR Borrowing (including each Swingline Loan denominated in Dollars) shall bear interest at the ABR plus the Applicable Margin.
(b) The Loans comprising each (i) Term SOFR Borrowing shall bear interest at the Adjusted Term SOFR for the Interest Period in effect for such Borrowing plus the Applicable Margin, (ii) Eurocurrency Borrowing shall bear interest at the Adjusted EURIBOR for the Interest Period in effect for such Borrowing plus the Applicable Margin and (iii) RFR Borrowing shall bear interest at Daily Simple RFR plus the Applicable Margin.
(c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any Fees or other amount payable by the Borrower or the Thai Borrower, as applicable, hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, at the request of the Administrative Agent during the continuance of a Specified Event of Default, such overdue amount (but, in respect of the Thai Borrower, excluding interest) shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding clauses of this Section 2.13 or (ii) in the case of any other overdue amount, 2% plus the rate applicable to ABR Loans as provided in clause (a) of this Section; provided that this clause (c) shall not apply to any Event of Default that has been waived by the Lenders pursuant to Section 9.08; provided, further, that no amount shall be payable under to this Section 2.13(c) to any Defaulting Lender. In respect of the Thai Borrower, any interest on a Loan (including default interest) due but unpaid for one (1) year or more will, on the date falling one (1) year after the relevant due date of that Loan, be compounded with the outstanding amount of that Loan and itself shall bear interest accordingly.
(d) Accrued interest on each Loan in any Borrowing shall be payable in arrears (i) on each Interest Payment Date for such Borrowing, (ii) in the case of Revolving Facility Loans, upon termination of the applicable Revolving Facility Commitments and (iii) in the case of the Term Loans, on the applicable Term Facility Maturity Date; provided that (A) interest accrued pursuant to clause (c) of this Section 2.13 shall be payable on demand, (B) in the event of any repayment or prepayment of any Loan (other than a prepayment of a Revolving Facility Loan that is an ABR Loan that is not made in conjunction with a permanent commitment reduction), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (C) in the event of any conversion of any Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that (i) interest computed by reference to the ABR at times when the ABR is based on the Prime Rate and (ii) interest computed by reference to Daily Simple RFR shall, in each case be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable ABR, Adjusted Term SOFR, Term SOFR, Daily Simple SOFR, Adjusted EURIBOR, EURIBOR or Daily Simple RFR shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.
Section 2.14 Benchmark Replacements. (a) Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (a) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (b) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders. If the Benchmark Replacement is Daily Simple SOFR, all interest payments will be payable on a monthly basis.
(b) In connection with the use, administration, adoption or implementation of a Benchmark Replacement or the administration of Adjusted Term SOFR, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement.
(c) The Administrative Agent will promptly notify the Borrower and the Lenders of (A) the implementation of any Benchmark Replacement and (B) the effectiveness of any Benchmark Replacement Conforming Changes in connection with the use, administration, adoption or implementation of a Benchmark Replacement. The Administrative Agent will notify the Borrower of (x) the removal or reinstatement of any tenor of a Benchmark pursuant to Section 2.14(d) and (y) the commencement of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.14, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.14.
(d) Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR Reference Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is not or will
not be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(e) Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, (i) the Borrower may revoke any pending request for a Term SOFR Borrowing of, conversion to or continuation of Term SOFR Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to ABR Loans and (ii) any outstanding affected Term SOFR Loans will be deemed to have been converted to ABR Loans at the end of the applicable Interest Period. During a Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of ABR based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of ABR.
Section 2.15 Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted Term SOFR, Daily Simple SOFR or Adjusted EURIBOR, as applicable) or Issuing Bank; or
(ii) subject any Lender to any Tax with respect to any Loan Document (other than (i) Indemnified Taxes or (ii) Excluded Taxes); or
(iii) impose on any Lender or Issuing Bank any other condition affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Lender of making, maintaining, continuing or converting any Term SOFR Loan or Eurocurrency Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower or the Thai Borrower, as applicable, will pay to such Lender or Issuing Bank, as applicable, such additional amount or amounts as will compensate such Lender or Issuing Bank, as applicable, for such additional costs incurred or reduction suffered.
(b) If any Lender or Issuing Bank determines that any Change in Law regarding capital requirements or liquidity has or would have the effect of reducing the rate of return on such Lender’s or Issuing Bank’s capital or on the capital of such Lender’s or Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit or Swingline Loans held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower or the Thai Borrower, as applicable, shall pay to such Lender or such Issuing Bank, as applicable, such additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for any such reduction suffered.
(c) A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or Issuing Bank or its holding company, as applicable, as specified in clause (a) or (b) of this Section 2.15 shall be delivered to the Borrower and shall be conclusive absent manifest error; provided that any such certificate claiming amounts described in clause (x) or (y) of the definition of “Change in Law” shall, in addition, state the basis upon which such amount has been calculated and certify that such Lender’s or Issuing Bank’s demand for payment of such costs hereunder, and such method of allocation is not inconsistent with its treatment of other borrowers which, as a credit matter, are similarly situated to the Borrower or the Thai Borrower, as applicable, and which are subject to similar provisions. The Borrower or the Thai Borrower, as applicable, shall pay such Lender or Issuing Bank, as applicable, the amount shown as due on any such certificate within 10 days after receipt thereof.
(d) Promptly after any Lender or any Issuing Bank has determined that it will make a request for increased compensation pursuant to this Section 2.15, such Lender or Issuing Bank shall notify the Borrower thereof. Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to this Section 2.15 shall not constitute a waiver of such Lender’s or Issuing Bank’s right to demand such compensation; provided that the Borrower or the Thai Borrower, as applicable, shall not be required to compensate a Lender or an Issuing Bank pursuant to this Section 2.15 for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or Issuing Bank, as applicable, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefor; provided, further, that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180 day period referred to above shall be extended to include the period of retroactive effect thereof.
Section 2.16 Break Funding Payments. With respect to Revolving Facility Loans, in the event of (a) the payment of any principal of any Eurocurrency Loan or Term SOFR Loan, other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurocurrency Loan or Term SOFR Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow (other than due to the default of the relevant Lender or with respect to Borrowings that are expressly stated to be contingent on certain transactions), convert, continue or prepay any Eurocurrency Loan or Term SOFR Loan on the date specified in any notice delivered pursuant hereto or (d) the assignment of any Eurocurrency Loan or Term SOFR Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19, then, in any such event, upon the request of the affected Lender, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event; provided that no such payment shall be required in connection with any payment made in connection with any initial Borrowing pursuant to any Incremental Assumption Agreement, Extension Amendment or Refinancing Amendment. In the case of a Eurocurrency Loan or Term SOFR Loan, such loss, cost or expense to any Lender shall be deemed to be the amount determined by such Lender (it being understood that the deemed amount shall not exceed the actual amount) to be the excess, if any, of (i) the amount of interest that would have accrued on the principal amount of such Loan had such event not occurred, at the Term SOFR or the EURIBOR, as applicable, that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue a Eurocurrency Loan or Term SOFR Loan, for the period that would have been the Interest Period for such Loan) over (ii) the amount of interest that would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for deposits in the applicable currency of a comparable amount and period from other banks in the eurocurrency market or similar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.16 shall be
delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.
Section 2.17 Taxes.
(a) Withholding. Any and all payments made by or on behalf of a Loan Party under this Agreement or any other Loan Document shall be made free and clear of, and without deduction or withholding for or on account of, any Taxes; provided that if a Loan Party, the Administrative Agent or any other applicable withholding agent shall be required by any applicable Requirement of Law to deduct or withhold any Taxes from such payments, then (i) the applicable withholding agent shall make such deductions or withholdings as are reasonably determined by the applicable withholding agent to be required by any applicable Requirement of Law, (ii) the applicable withholding agent shall timely pay the full amount deducted or withheld to the relevant Governmental Authority and in accordance with applicable Requirement of Law and (iii) to the extent withholding or deduction is required to be made on account of Indemnified Taxes, the Loan Party shall pay an additional amount as is necessary so that after all required deductions and withholdings have been made (including deductions or withholdings applicable to additional amounts payable under this Section 2.17) the Administrative Agent or any Lender, as applicable, receives an amount equal to the sum it would have received had no such deductions or withholdings been made. Whenever any Indemnified Taxes are paid by a Loan Party, as soon as practicable thereafter, such Loan Party shall send to the Administrative Agent for its own account or for the account of a Lender, as the case may be, an original or certified copy of an official receipt (or other evidence acceptable to the Administrative Agent or such Lender, acting reasonably) received by the Loan Party showing payment thereof. Without duplication, after any payment of Taxes by the Administrative Agent to a Governmental Authority as provided in this Section 2.17, the Administrative Agent shall deliver to the Borrower a copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by applicable Requirements of Law to report such payment or other evidence of such payment reasonably satisfactory to the Borrower or the Administrative Agent, as the case may be.
(b) Other Taxes. The Borrower shall timely pay any Other Taxes, or at the option of, and upon request by, the Administrative Agent, timely reimburse it for the payment of any Other Taxes.
(c) Indemnification by the Borrower. The Borrower shall indemnify and hold harmless the Administrative Agent and each Lender within 30 days after written demand therefor, for the full amount of any Indemnified Taxes imposed on the Administrative Agent or such Lender, as applicable, (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.17), and any reasonable out-of-pocket expenses arising therefrom or with respect thereto (other than interest, penalties or other expenses attributable to the failure or delay by the Administrative Agent or such Lender, as the case may be, to make such written demand to the Borrower within 180 days of becoming aware that such Taxes subject to indemnification under this Section 2.17(c) have been levied, imposed or asserted against it), whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate setting forth in reasonable detail the basis and calculation of the amount of such payment or liability delivered to the Borrower by a Lender or by the Administrative Agent (as applicable) on its own behalf or on behalf of a Lender shall be conclusive absent manifest error.
(d) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Loan Parties have not already indemnified the Administrative
Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04 relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (d).
(e) Certificates. Each Lender shall deliver to the Borrower and the Administrative Agent, at such time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law and such other reasonably requested information as will permit the Borrower or the Administrative Agent, as the case may be, to determine (A) whether or not any payments made hereunder or under any other Loan Document are subject to withholding of Taxes, (B) if applicable, the required rate of withholding or deduction, and (C) such Lender’s entitlement to any available exemption from, or reduction of, any such withholding of Taxes in respect of any payments to be made to such Lender by any Loan Party pursuant to any Loan Document or otherwise to establish such Lender’s status for withholding Tax purposes in the applicable jurisdiction. In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements and to satisfy any such requirements. Notwithstanding anything to the contrary, the completion, execution and submission of such documentation (other than such documentation set forth in Sections 2.17 (f)(i)(A) through (f)(i)(C), Section 2.17(f)(ii) and Section 2.17(h) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(f) Foreign Lender Certificates. Without limiting the generality of Section 2.17(e), each Foreign Lender with respect to any Loan made to the Borrower shall, to the extent it is legally eligible to do so:
(i) deliver to the Borrower and the Administrative Agent, on or prior to the date on which such Foreign Lender become a Lender under this Agreement, two copies of (A) in the case of a Foreign 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,” IRS Form W-8BEN or W-8BEN-E, as applicable, (or any applicable successor form) together with a certificate (substantially in the form of Exhibit F-1, F-2, F-3 or F-4 hereto, each such certificate, a “Non-Bank Tax Certificate”) certifying that such Foreign Lender is not a bank for purposes of Section 881(c) of the Code, is not a “10-percent shareholder” (within the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a controlled foreign corporation related to the Borrower (within the meaning of Section 881(c)(3)(C) of the Code), in each case properly completed and duly executed by such Foreign Lender, (B) IRS Form W-8BEN or W-8BEN-E, as applicable, or Form W-8ECI (or any applicable successor form), in each case properly completed and duly executed by such Foreign Lender claiming complete exemption from, or reduced rate of, U.S. federal withholding Tax on payments by the Borrower under this Agreement, (C) IRS
Form W-8IMY (or any applicable successor form) and all necessary attachments (including the forms described in clauses (A) and (B) above, in each case properly completed and duly executed by such Foreign Lender; provided that if the Foreign Lender is a partnership, and one or more of the partners is claiming portfolio interest treatment, the Non-Bank Tax Certificate may be provided by such Foreign Lender on behalf of such partners) or (D) any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and
(ii) deliver to the Borrower and the Administrative Agent two further copies of any such form or certification (or any applicable successor form) on or before the date that any such form or certification expires or becomes obsolete or invalid, after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower and the Administrative Agent, and from time to time thereafter if reasonably requested by the Borrower or the Administrative Agent.
Any Foreign Lender that becomes legally ineligible to update any form or certification previously delivered shall promptly notify the Borrower and the Administrative Agent in writing of such Foreign Lender’s inability to do so.
Each Person that shall become a Participant pursuant to Section 9.04 or a Lender pursuant to Section 9.04 shall, upon the effectiveness of the related transfer, be required to provide all the forms and statements required pursuant to this Section 2.17(f); provided that a Participant shall furnish all such required forms and statements to the Person from which the related participation shall have been purchased.
(g) Agent Certificates. In addition, each Agent shall deliver to the Borrower (x) (I) prior to the date on which the first payment by the Borrower is due hereunder or (II) prior to the first date on or after the date on which such Agent becomes a successor Administrative Agent pursuant to Section 8.09 on which payment by the Borrower is due hereunder, as applicable, two copies of a properly completed and executed IRS Form W-9 certifying its exemption from U.S. federal backup withholding or such other properly completed and executed documentation prescribed by applicable law certifying its entitlement to an available exemption from applicable U.S. federal withholding Taxes in respect of any payments to be made to such Agent by any Loan Party pursuant to any Loan Document and (y) on or before the date on which any such previously delivered documentation expires or becomes obsolete or invalid, after the occurrence of any event requiring a change in the most recent documentation previously delivered by it to the Borrower, and from time to time if reasonably requested by the Borrower, two further copies of such documentation.
(h) U.S. Lender Certificates. Each Lender that is not a Foreign Lender shall deliver to the Borrower (x) prior to the date on which the first payment by the Borrower is due hereunder two copies of a properly completed and executed IRS Form W-9 certifying its exemption from U.S. federal backup withholding or such other properly completed and executed documentation prescribed by applicable law certifying its entitlement to an available exemption from applicable U.S. federal withholding Taxes in respect of any payments to be made to such Lender by any Loan Party pursuant to any Loan Document and (y) on or before the date on which any such previously delivered documentation expires or becomes obsolete or invalid, after the occurrence of any event requiring a change in the most
recent documentation previously delivered by it to the Borrower, and from time to time if reasonably requested by the Borrower, two further copies of such documentation.
(i) Tax Refunds. If any Lender or the Administrative Agent, as applicable, determines, in its sole discretion exercised in good faith, that it has received a refund of an Indemnified Tax for which a payment has been made by a Loan Party pursuant to this Agreement or any other Loan Document, then the Lender or the Administrative Agent, as the case may be, shall reimburse the Loan Party for such amount (net of all out-of-pocket expenses of such Lender or the Administrative Agent, as the case may be, and without interest other than any interest received thereon from the relevant Governmental Authority with respect to such refund) as the Lender or Administrative Agent, as the case may be, determines in its sole discretion exercised in good faith to be the proportion of the refund as will leave it, after such reimbursement, in no better or worse position (taking into account expenses or any Taxes imposed on the refund) than it would have been in if the Indemnified Tax giving rise to such refund had not been imposed in the first instance; provided that the Loan Party, upon the request of the Lender or the Administrative Agent agrees to repay the amount paid over to the Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority, other than such penalties to the Lender or the Administrative Agent) in the event the Lender or the Administrative Agent is required to repay such refund to such Governmental Authority. No Lender nor the Administrative Agent shall be obliged to make available its Tax returns (or any other information relating to its Taxes that it reasonably deems confidential) to any Loan Party in connection with this clause (h) or any other provision of this Section 2.17.
(j) FATCA. If a payment made to any Lender or any Agent under this Agreement or any other Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender or such Agent were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender or such Agent shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA, to determine whether such Lender has or has not complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this Section 2.17(j), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
(k) The agreements in this Section 2.17 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable under any Loan Document. For purposes of this Section 2.17, the term “Lender” includes any Issuing Bank and the Swingline Lender and the terms “applicable law” and “applicable Requirement of Law” include FATCA.
Section 2.18 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) Unless otherwise specified, each of the Borrower or the Thai Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of L/C Disbursements, or of amounts payable under Sections 2.15, 2.16 or 2.17, or otherwise) prior to 3:00 pm, New York City time, on the date when due, in immediately available funds. Each such payment shall be made without condition or deduction for any defense, recoupment, set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for
purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent to the applicable account designated to the Borrower by the Administrative Agent, except payments to be made directly to the applicable Issuing Bank or the Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.15, 2.16 or 2.17 and 9.05 shall be made directly to the persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other person to the appropriate recipient promptly following receipt thereof in like funds. Except as otherwise expressly provided herein, including in the definition of “Interest Payment Date”, if any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments made under the Loan Documents shall be made in Dollars, Euros, Thai Baht or other applicable Alternative Currency. If, for any reason, the Borrower or the Thai Borrower, as applicable, is prohibited by any law from making any required payment hereunder in an Alternative Currency, the Borrower or the Thai Borrower (as applicable) may make such payment in Dollars in the Dollar Equivalent of the Alternative Currency payment amount. Any payment required to be made by the Administrative Agent hereunder shall be deemed to have been made by the time required if the Administrative Agent shall, at or before such time, have taken the necessary steps to make such payment in accordance with the regulations or operating procedures of the clearing or settlement system used by the Administrative Agent to make such payment.
(b) Subject to Section 7.02, if at any time insufficient funds are received by and available to the Administrative Agent from the Borrower or the Thai Borrower to pay fully all amounts of principal, unreimbursed L/C Disbursements, interest and fees then due from the Borrower or the Thai Borrower hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due from the Borrower or the Thai Borrower hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, (ii) second, towards payment of principal of Swingline Loans and unreimbursed L/C Disbursements then due from the Borrower or the Thai Borrower hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed L/C Disbursements then due to such parties and (iii) third, towards payment of principal then due from the Borrower or the Thai Borrower hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of, or interest on, any of its Term Loans, Revolving Facility Loans or participations in L/C Disbursements or Swingline Loans of a given Class resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Term Loans, Revolving Facility Loans and participations in L/C Disbursements and Swingline Loans of such Class and accrued interest thereon than the proportion received by any other Lender entitled to receive the same proportion of such payment, then the Lender receiving such greater proportion shall purchase participations in the Term Loans, Revolving Facility Loans and participations in L/C Disbursements and Swingline Loans of such Class of such other Lenders to the extent necessary so that the benefit of all such payments shall be shared by all such Lenders entitled thereto ratably in accordance with the principal amount of each such Lender’s respective Term Loans, Revolving Facility Loans and participations in L/C Disbursements and Swingline Loans of such Class and accrued interest thereon; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this clause (c) shall not be construed to apply to any payment made by the Borrower or the Thai Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in L/C Disbursements and Swingline Loans to any assignee or participant. Each of he Borrower and the Thai Borrower consents to
the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower or the Thai Borrower (as applicable) rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower or the Thai Borrower (as applicable) in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the applicable Issuing Bank hereunder that the Borrower or the Thai Borrower (as applicable) will not make such payment, the Administrative Agent may assume that the Borrower or the Thai Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the applicable Issuing Bank, as applicable, the amount due. In such event, if the Borrower or Thai Borrower has not in fact made such payment, then each of the Lenders or the applicable Issuing Bank, as applicable, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(b), 2.05(d) or (e), 2.06 or 2.18(d), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.
Section 2.19 Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.15, or if the Borrower or Thai Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17 or any event that gives rise to the operation of Section 2.20, then such Lender shall, upon request, use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17 or mitigate the applicability of Section 2.20, as applicable, in the future and (i) would not subject such Lender to any material unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender in any material respect. The Borrower hereby agrees to pay (or cause the Thai Borrower to pay) all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b) If (i) any Lender requests compensation under Section 2.15 or gives notice under Section 2.20, (ii) the Borrower or Thai Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, or (iii) any Lender is a Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, (x) terminate the applicable Commitments of such Lender, and repay all Loan Obligations of the Borrower and Thai Borrower owing to such Lender relating to the applicable Loans and participations held by such Lender as of such termination date under one or more Facilities as the Borrower may elect or (y) require any such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights (other than its existing rights to payments owing as of such date pursuant to Sections 2.15 and 2.17) and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that in the case of an
assignment pursuant to the preceding clause (y), (i) [reserved], (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in L/C Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower or Thai Borrower (in the case of all other amounts), (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15, payments required to be made pursuant to Section 2.17 or a notice given under Section 2.20, such assignment will result in a reduction in such compensation or payments thereafter and (iv) in the case of any such assignment resulting from a notice given under Section 2.20, such assignment will result in the Borrower or Thai Borrower (as applicable) having access to Term SOFR Loans and Eurocurrency Loans. Nothing in this Section 2.19 shall be deemed to prejudice any rights that the Borrower may have against any Lender that is a Defaulting Lender. No action by or consent of the removed Lender shall be necessary in connection with such assignment, which shall be immediately and automatically effective upon payment of such purchase price. In connection with any such assignment, the Borrower, Administrative Agent, such removed Lender and the replacement Lender shall otherwise comply with Section 9.04, provided that if such removed Lender does not comply with Section 9.04 within one Business Day after the Borrower’s request, compliance with Section 9.04 shall not be required to effect such assignment.
(c) If any Lender (such Lender, a “Non-Consenting Lender”) has failed to consent to a proposed amendment, waiver, discharge or termination which pursuant to the terms of Section 9.08 requires the consent of all of the Lenders affected and with respect to which the Required Lenders shall have granted their consent, then the Borrower shall have the right (unless such Non-Consenting Lender grants such consent) at their sole expense (including with respect to the processing and recordation fee referred to in Section 9.04(b)(ii)(B)) to (x) terminate the applicable Commitments of such Lender, and repay all Loan Obligations of the Borrower and Thai Borrower owing to such Lender relating to the applicable Loans and participations held by such Lender as of such termination date under one or more Facilities as the Borrower may elect or (y) replace such Non-Consenting Lender by requiring such Non-Consenting Lender to (and any such Non-Consenting Lender agrees that it shall, upon the Borrower’s request) assign its Loans and its Commitments (or, at the Borrower’s option, the Loans and Commitments under the Facility that is the subject of the proposed amendment, waiver, discharge or termination) hereunder to one or more assignees reasonably acceptable to (xxv) the Administrative Agent (unless such assignee is a Lender, an Affiliate of a Lender or an Approved Fund) and (xxv) if in respect of any Revolving Facility Commitment or Revolving Facility Loan, the Swingline Lender and the Issuing Banks; provided that in the case of an assignment pursuant to the preceding clause (y): (a) all Loan Obligations of the Borrower or Thai Borrower owing to such Non-Consenting Lender being replaced shall be paid in full to such Non-Consenting Lender concurrently with such assignment, (b) the replacement Lender shall purchase the foregoing by paying to such Non-Consenting Lender a price equal to the principal amount thereof plus accrued and unpaid interest thereon and the replacement Lender or, at the option of the Borrower, the Borrower shall pay any amount required by Section 2.12(d)(y), if applicable, and (c) the replacement Lender shall grant its consent with respect to the applicable proposed amendment, waiver, discharge or termination. No action by or consent of the Non-Consenting Lender shall be necessary in connection with such assignment, which shall be immediately and automatically effective upon payment of such purchase price. In connection with any such assignment, the Borrower, Administrative Agent, such Non-Consenting Lender and the replacement Lender shall otherwise comply with Section 9.04; provided that if such Non-Consenting Lender does not comply with Section 9.04 within one Business Day after the Borrower’s request, compliance with Section 9.04 shall not be required to effect such assignment.
Section 2.20 Illegality. If any Lender reasonably determines that any Change in Law has made it unlawful, or that any Governmental Authority has asserted after the Closing Date that it is
unlawful, for any Lender or its applicable Lending Office to make or maintain any Term SOFR Loans or Eurocurrency Loans then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligations of such Lender to make or continue Term SOFR Loans or Eurocurrency Loans or to convert ABR Borrowings to Term SOFR Borrowings shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall upon demand from such Lender (with a copy to the Administrative Agent), convert all Term SOFR Borrowings or Eurocurrency Borrowings, as applicable, of such Lender to ABR Borrowings, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Term SOFR Borrowings or Eurocurrency Borrowings, as applicable, to such day, or immediately, if such Lender may not lawfully continue to maintain such Loans. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so converted.
Section 2.21 Incremental Commitments.
(a) The Borrower or any Subsidiary Loan Party (or Subsidiary that will substantially concurrently become a Subsidiary Loan Party) may obtain Incremental Term Loan Commitments and/or Incremental Revolving Facility Commitments, as applicable, in an amount not to exceed the Incremental Amount available at the time such Incremental Commitments are established (or at the time any commitment relating thereto is entered into or, at the option of the Borrower, at the time of incurrence of the Incremental Loans thereunder) from one or more Incremental Term Lenders and/or Incremental Revolving Facility Lenders (which may include any existing Lender) willing to provide such Incremental Term Loans and/or Incremental Revolving Facility Commitments, as the case may be, in their own discretion; provided that each Incremental Revolving Facility Lender providing an Incremental Revolving Facility Commitment shall be subject, to the extent the same would be required for an assignment under Section 9.04, to the approval of the Administrative Agent, the Issuing Banks and the Swingline Lender (which approvals shall not be unreasonably withheld, delayed or conditioned). The amount of the Incremental Term Loan Commitments and/or Incremental Revolving Facility Commitments shall be in minimum increments of $5,000,000 and a minimum amount of $10,000,000, or equal to the remaining Incremental Amount or, in each case, such lesser amount approved by the Administrative Agent). Such Incremental Commitments may, at the election of the Borrower, be (x) commitments to increase the principal amount of any existing Class of Term Loans or Term Facility Commitments by making term loans with terms identical to such outstanding Class of Term Loans or Term Facility Commitments or to increase the principal amount of any existing Class of Revolving Facility Commitments (provided that an increase to the Thai Baht Revolving Facility will require prior written consent from the Thai Baht Revolving Lenders) by providing revolving credit commitments with terms identical to such outstanding Class of Revolving Facility Commitments or (y) commitments to make a new tranche of Term Loans with pricing, maturity, amortization, participation in mandatory prepayments and/or other terms different from any outstanding Class of Term Loans or commitments to make a new tranche of revolving credit commitments with pricing, maturity and/or other terms different from any outstanding Class of Revolving Facility Commitments.
(b) The Borrower and each Incremental Term Lender and/or Incremental Revolving Facility Lender shall execute and deliver to the Administrative Agent an Incremental Assumption Agreement and such other documentation as the Administrative Agent shall reasonably specify to evidence the Incremental Term Loan Commitment of such Incremental Term Lender and/or Incremental Revolving Facility Commitment of such Incremental Revolving Facility Lender. Each Incremental Assumption Agreement shall specify the terms of the applicable Incremental Term Loans and/or Incremental Revolving Facility Commitments; provided that:
(i) any commitments to increase the principal amount of an existing Class of Term Loans and/or make additional Revolving Facility Loans of any Class shall have the same terms as such Term Loans or the Revolving Facility Loans, respectively, and shall be documented as an increase to such Class of existing Term Loans and/or Revolving Facility Commitments, as applicable, hereunder (it being understood that, if required to consummate an Incremental Revolving Facility, the Borrower may increase the pricing, interest rate margins, rate floors and undrawn fees on the applicable Revolving Facility being increased for all lenders under such Revolving Facility without the need for consent from any existing Lender, but additional upfront or other fees may be payable to the lenders participating in such Incremental Revolving Facility without any requirement to pay such amounts to any existing Revolving Facility Lenders),
(ii) any Incremental Loans shall rank pari passu in right of payment and security with the Initial Term B Loans and the Initial Revolving Facility Loans,
(iii) the final maturity date of any such Incremental Term Loans (except for (i) Customary Bridge Loans and (ii) the Inside Maturity Basket) shall be no earlier than the Initial Term B Facility Maturity Date,
(iv) the Weighted Average Life to Maturity of any such Incremental Term Loans (except for (i) Customary Bridge Loans and (ii) the Inside Maturity Basket) shall be no shorter than the remaining Weighted Average Life to Maturity of the Initial Term B Loans,
(v) any Incremental Term Loans may provide for the ability to participate (i) on a pro rata basis or non-pro rata basis in any voluntary prepayments of any then-existing Class of Term Loans and (ii) on a pro rata basis or less than pro rata basis (but not on a greater than pro rata basis with respect to the Initial Term B Loans, other than in the case of a refinancing thereof) in any mandatory prepayments of any then-existing Class of Term Loan,
(vi) (A) other than as set forth in clauses (ii), (iii), (iv), (vii) or (viii) of this clause (b), all other terms of any Incremental Term Loan, if not consistent with the terms of any then-existing Class of Term Loans, will be as agreed between the Borrower and the lenders providing such Incremental Term Loans and (B) the terms of any Incremental Revolving Facility established as a separate Class will provide for final maturity no earlier than, and require no scheduled mandatory commitment reduction prior to, the Initial Revolving Facility Maturity Date and all other material terms (other than pricing, maturity, upfront, arrangement, structuring, underwriting, ticking, consent, amendment and other fees, participation in mandatory prepayments or commitment reductions and immaterial terms, which shall be determined by the Borrower) shall (x) be substantially consistent with the Initial Revolving Facility Loans (as determined by the Borrower in good faith), (y) reflect market terms and conditions (as determined by the Borrower in good faith) at the time of incurrence of such Incremental Revolving Facility or the obtaining of any commitment with respect thereto or (z) be reasonably satisfactory to the Administrative Agent (it being understood that if any financial maintenance covenant or other more favorable provision is added for the benefit of any Incremental Revolving Facility, no consent shall be required from the Administrative Agent or any Lender to the extent that such financial maintenance covenant or other provision is (1) also added for the benefit of any then-existing Revolving Facility or (2) only applicable after the Initial Revolving Facility Maturity Date),
(vii) the currency, pricing, interest rate margins, discounts, premiums, rate floors and fees applicable to any Incremental Term Loans shall be determined by the Borrower and the lenders thereunder; provided that with respect to any U.S. Dollar denominated broadly-syndicated floating rate Incremental Term Loan incurred prior to the date which is twelve months following the Closing Date that is originally incurred in reliance on clause (ii) of the definition of “Incremental Amount” (but not on account of any reclassification provided for in the proviso contained in such definition) and ranks pari passu in right of security with the Initial Term B Loans, the Applicable Margin shall not exceed the Applicable Margin in respect of the Initial Term B Loans on the 2025-2 Refinancing Amendment Effective Date by more than 0.50% per annum (the “Term Margin Differential”), or if it does so exceed such Applicable Margin by more than the Term Margin Differential, then the Applicable Margin applicable to such Initial Term B Loans shall be increased by an amount equal to the positive difference (if any) between the Applicable Margin with respect to such Incremental Term Loan and the corresponding Applicable Margin applicable to the Initial Term B Loans minus the Term Margin Differential (this proviso, the “MFN Provision”); provided, further, that the MFN Provision shall not apply to (A) any Incremental Term Facility having an aggregate principal amount not exceeding the greater of (x) $200,000,000 and (y) 0.50 times EBITDA calculated on a Pro Forma Basis for the most recently ended Test Period, (B) any Incremental Term Facility scheduled to mature on or after the date that is one year after the Initial Term B Facility Maturity Date, (C) any Incremental Term Facility incurred in connection with a Permitted Business Acquisition or other permitted Investment hereunder, (D) customary term “A” loans and (E) customary bridge loans with a maturity date not longer than one year that are convertible or exchangeable into, or are intended to be refinanced with, any Indebtedness other than term loans that are pari passu with the Initial Term B Loans in right of payment and with respect to security and that would otherwise be subject to the MFN Provision; and
(viii) there shall be no obligor in respect of any Incremental Term Loan Commitments or Incremental Revolving Facility Commitments that is not a Loan Party or the Thai Borrower (with respect to the Thai Baht Revolving Facility Commitments).
(c) Notwithstanding the foregoing, no Incremental Term Loan Commitment or Incremental Revolving Facility Commitment shall become effective under this Section 2.21 unless (i) subject to Section 1.07 and only to the extent required by the Lenders providing such Incremental Facility, no Specified Event of Default shall have occurred and be continuing and (ii) the Administrative Agent shall have received customary legal opinions, board resolutions and other customary closing certificates and documentation as reasonably required by the relevant Incremental Assumption Agreement consistent with those delivered pursuant Section 4.02 and such additional customary documents and filings (to the extent required to be delivered on the Closing Date pursuant to Section 4.02 and Section 5.10) as the Administrative Agent may reasonably request, subject to Section 5.10(d), to assure that the Incremental Term Loans and/or Revolving Facility Loans in respect of Incremental Revolving Facility Commitments are secured by the Collateral ratably with one or more Classes of then-existing Term Loans and Revolving Facility Loans; provided that, solely to the extent required by the applicable lenders providing such Incremental Facility in the applicable Incremental Assumption Agreement, and subject to Section 1.04(a) (i) the representations and warranties contained in Article III hereof shall be true and correct in all material respects on and as of the date of the incurrence of any Incremental Term Loan Commitment or Incremental Revolving Facility Commitment (provided that any representations and warranties which expressly relate to a given date or period shall be required only to be true and correct in all material respects as of such respective date or for the respective period, as the case may be), subject to customary “SunGard” limitations to the extent the proceeds of any Incremental Facility are being used to finance a Permitted Business Acquisition or other acquisition or similar
Investment permitted by this Agreement and (ii) on the date of effectiveness of the Incremental Assumption Agreement, no Specified Event of Default shall have occurred and be continuing.
(d) Notwithstanding anything to the contrary herein, (i) the initial Interest Period with respect to any Term SOFR Borrowing or Eurocurrency Borrowing of Incremental Loans may, at Holdings’ option, be of a duration that commences on the date of borrowing thereof and ends on the last day of the Interest Period applicable to any other outstanding Term SOFR Borrowing or Eurocurrency Borrowing, in which case the Adjusted Term SOFR or Adjusted EURIBOR with respect to such initial Interest Period shall be the same as the Adjusted Term SOFR or Adjusted EURIBOR applicable to such other outstanding Term SOFR Borrowing or Eurocurrency Borrowing, as the Borrower may direct and (ii) for the purpose of determining the number of outstanding Term SOFR Borrowings or Eurocurrency Borrowings upon the incurrence of any Incremental Loans, any Term SOFR Borrowings or Eurocurrency Borrowings in respect of which the Borrower has made the election described in the preceding clause (i) shall be considered a single Term SOFR Borrowing or Eurocurrency Borrowing, as applicable.
(e) Notwithstanding anything herein to the contrary, no Lender shall have any obligation to agree to increase its Commitment, or to provide any Incremental Term Loans, Incremental Term Loan Commitments or Incremental Revolving Facility Commitments, pursuant to this Section 2.21 and any election to do so shall be in the sole discretion of such Lender.
Section 2.22 Extensions.
(a) Notwithstanding anything to the contrary in this Agreement, including Section 2.18, pursuant to one or more offers made from time to time by the Borrower to all Lenders of any Class of Term Loans and/or Revolving Facility Commitments, on a pro rata basis (based, in the case of an offer to the Lenders under any Class of Term Loans, on the aggregate outstanding Term Loans of such Class and, in the case of an offer to the Lenders under any Revolving Facility, on the aggregate outstanding Revolving Facility Commitments under such Revolving Facility, as applicable) and on the same terms (“Pro Rata Extension Offers”), the Borrower is hereby permitted to consummate transactions with individual Lenders from time to time to extend the maturity date of such Lender’s Loans and/or Commitments of such Class and to otherwise modify the terms of such Lender’s Loans and/or Commitments of such Class pursuant to the terms of the relevant Pro Rata Extension Offer (including, without limitation, increasing the interest rate or fees payable in respect of such Lender’s Loans and/or Commitments and/or modifying the amortization schedule in respect of such Lender’s Loans). For the avoidance of doubt, the reference to “on the same terms” in the preceding sentence shall mean, (i) in the case of an offer to the Lenders under any Class of Term Loans, that all of the Term Loans of such Class are offered to be extended for the same amount of time and that the interest rate changes and fees payable with respect to such extension are the same and (ii) in the case of an offer to the Lenders under any Revolving Facility, that all of the Revolving Facility Commitments of such Facility are offered to be extended for the same amount of time and that the interest rate changes and fees payable with respect to such extension are the same. The election of any Lender or Issuing Bank to agree to such extension shall not obligate any other Lender or Issuing Bank to so agree. Any such extension (an “Extension”) agreed to between the Borrower and any such Lender, acting in its sole and individual discretion (an “Extending Lender”), will be established under this Agreement by implementing an extended Term Loan for such Lender if such Lender is extending an existing Term Loan (such extended Term Loan, an “Extended Term Loan”) or an extended Revolving Facility Commitment for such Lender if such Lender is extending an existing Revolving Facility Commitment (such extended Revolving Facility Commitment, an “Extended Revolving Facility Commitment” and any Revolving Facility Loans made thereunder, “Extended Revolving Loans”). Each Pro Rata Extension Offer shall specify the date on which the Borrower proposes that the Extended Term Loan shall be made or Extended Revolving Facility
Commitment shall become effective, which shall be a date not earlier than five Business Days after the date on which notice is delivered to the Administrative Agent (or such shorter period agreed to by the Administrative Agent in its reasonable discretion). No consent of any Lender shall be required to effectuate any Extension, other than (A) the consent of each Lender agreeing to such Extension with respect to one or more of its Loans and/or Commitments under any Class (or a portion thereof), (B) with respect to any extension of the Revolving Facility Commitments, the consent of each Issuing Bank to the extent to the commitment to provide Letters of Credit is to be extended and (C) with respect to any Extension of the Revolving Facility Commitments, the consent of the Swingline Lender to the extent the swingline facility is to be extended (in each case which consent shall not be unreasonably withheld, delayed or conditioned).
(b) The Borrower and each Extending Lender shall execute and deliver to the Administrative Agent an Extension Amendment and such other documentation as the Administrative Agent shall reasonably specify to evidence the Extended Term Loans and/or Extended Revolving Facility Commitments of such Extending Lender. Each Extension Amendment shall specify the terms of the applicable Extended Term Loans and/or Extended Revolving Facility Commitments; provided that (i) except as to interest rates, fees and any other pricing terms (which interest rates, fees and other pricing terms shall not be subject to the provisions set forth in Section 2.21(b)(vii)), amortization, final maturity date and participation in prepayments and commitment reductions (which shall, subject to clauses (ii) and (iii) of this proviso, be determined by the Borrower and set forth in the Pro Rata Extension Offer), the Extended Term Loans shall have the same terms as an existing Class of Term Loans (in each case, except for terms (I) (A) applicable only to periods after the Latest Maturity Date in effect at the time such Extended Term Loans are incurred or (B) that are conformed (or added) to this Agreement for the benefit of the then-existing Term Facilities or (II) that are otherwise reasonably acceptable to the Administrative Agent), (ii) the final maturity date of any Extended Term Loans shall be no earlier than the Class of Term Loans being extended, (iii) the Weighted Average Life to Maturity of any Extended Term Loans shall be no shorter than the remaining Weighted Average Life to Maturity of the Class of Term Loans to which such offer relates, (iv) except as to interest rates, fees, any other pricing terms, participation in mandatory prepayments and commitment reductions and final maturity (which shall be determined by the Borrower and set forth in the Pro Rata Extension Offer), any Extended Revolving Facility Commitment shall have the same terms as an existing Class of Revolving Facility Commitments (in each case, except for terms (I) (A) applicable only to periods after the Latest Maturity Date in respect of the Revolving Facility in effect at the time such Extended Revolving Facility Commitments are created or (B) that are conformed (or added) to this Agreement for the benefit of the then-existing Revolving Facilities, or (II) that are otherwise reasonably acceptable to the Administrative Agent and, in respect of any other terms that would affect the rights or duties of any Issuing Bank or Swingline Lender, reasonably satisfactory to such Issuing Bank or Swingline Lender), (v) any Extended Revolving Facility Commitments may participate on a pro rata basis or a less than pro rata basis (but not a greater than pro rata basis except in the case of a refinancing thereof) with the Initial Revolving Facility Loans in any mandatory prepayment or commitment reduction hereunder, (vi) any Extended Term Loans may participate on a pro rata basis or a less than pro rata basis (but not a greater than pro rata basis except in the case of a refinancing thereof) with the Initial Term B Loans in any mandatory prepayment hereunder and (vii) there shall be no obligor in respect of any such Extended Term Loans or Extended Revolving Facility Commitments that is not a Loan Party
(c) Each Extension shall be consummated pursuant to procedures set forth in the associated Pro Rata Extension Offer; provided that the Borrower shall cooperate with the Administrative Agent prior to making any Pro Rata Extension Offer to establish reasonable procedures with respect to
mechanical provisions relating to such Extension, including, without limitation, timing, rounding and other adjustments.
(d) Upon the effectiveness of any such Extension, the applicable Extending Lender’s Term Loan will be automatically designated an Extended Term Loan and/or such Extending Lender’s Revolving Facility Commitment will be automatically designated an Extended Revolving Facility Commitment.
(e) In connection with any Extension, no Issuing Bank or Swingline Lender shall be obligated to provide Swingline Loans or issue Letters of Credit after the expiration of the scheduled maturity date originally applicable to the relevant Revolving Facility Commitments unless it shall have consented thereto.
Section 2.23 Refinancing Amendments.
(a) Notwithstanding anything to the contrary in this Agreement, including Section 2.18, the Borrower may, by written notice to the Administrative Agent, establish one or more additional tranches of term loans under this Agreement (such loans, “Refinancing Term Loans”), the net cash proceeds of which are used to Refinance in whole or in part any Class of Term Loans. Each such notice shall specify the date (each, a “Refinancing Effective Date”) on which the Borrower proposes that the Refinancing Term Loans shall be made, which shall be a date not earlier than five Business Days after the date on which such notice is delivered to the Administrative Agent (or such shorter period agreed to by the Administrative Agent in its reasonable discretion); provided that:
(i) the final maturity date of the Refinancing Term Loans shall be no earlier than the Term Facility Maturity Date of the refinanced Term Loans and the Weighted Average Life to Maturity of such Refinancing Term Loans shall be no shorter than the then-remaining Weighted Average Life to Maturity of the refinanced Term Loans; provided that the requirements of this clause (i) shall not apply to the Inside Maturity Basket;
(ii) the aggregate principal amount of any Refinancing Term Loan is not greater than the principal or committed amount of the Class of Term Loan being refinanced, plus additional amounts to the extent otherwise permitted to be incurred under the Loan Documents, plus any fees, premiums, original issue discount and accrued interest associated therewith, and costs and expenses related thereto;
(iii) all other material terms applicable to such Refinancing Term Loans (other than provisions relating to original issue discount, upfront fees, interest rates and any other pricing terms (which original issue discount, upfront fees, interest rates and other pricing terms shall not be subject to the provisions set forth in Section 2.21(b)(vii)) and optional prepayment or mandatory prepayment or redemption terms, which shall be as agreed between the Borrower and the Lenders providing such Refinancing Term Loans) taken as a whole shall be substantially similar to, or not materially more favorable to the lenders providing such Refinancing Term Loans (as determined by the Borrower in good faith) than, the terms, taken as a whole, applicable to the Term Loans being refinanced (except to the extent such covenants and other terms (I) (A) apply solely to any period after the Initial Term B Facility Maturity Date or (B) are conformed (or added) to this Agreement for the benefit of the then-existing Term Facilities, (II) reflect market terms and conditions (as determined by the Borrower in good faith) at the time of
incurrence or at the time of obtaining a commitment with respect thereto or (III) are otherwise reasonably acceptable to the Administrative Agent);
(iv) any Refinancing Term Loans may rank pari passu or junior in right of payment and/or security with the Initial Term B Loans and, if secured by Liens on the Collateral that rank pari passu or junior in right of security to the Initial Term B Loans, such Refinancing Term Loans may, at the option of Holdings, be documented separately to this Agreement and such Liens will be subject to a Permitted Pari Passu Intercreditor Agreement or Permitted Junior Intercreditor Agreement;
(v) such Refinancing Term Loans may be secured solely by assets that are Collateral; and
(vi) there shall be no obligor in respect of such Refinancing Term Loans that is not a Loan Party.
(b) In addition, notwithstanding the foregoing, the Borrower may establish Refinancing Term Loans to refinance and/or replace all or any portion of a Revolving Facility Commitment (regardless of whether Revolving Facility Loans are outstanding under such Revolving Facility Commitments at the time of incurrence of such Refinancing Term Loans) and/or the Revolving Facility Loans pursuant thereto, so long as (1) the aggregate amount of such Refinancing Term Loans does not exceed the aggregate amount of Revolving Facility Commitments terminated at the time of incurrence thereof plus additional amounts to the extent otherwise permitted to be incurred under the Loan Documents, plus any fees, premiums, original issue discount and accrued interest associated therewith, and costs and expenses related thereto, (2) if the applicable Revolving Facility Credit Exposure outstanding on the Refinancing Effective Date would exceed the aggregate amount of Revolving Facility Commitments outstanding in each case after giving effect to the termination of such Revolving Facility Commitments, the Borrower shall take one or more actions such that such Revolving Facility Credit Exposure does not exceed such aggregate amount of Revolving Facility Commitments in effect on the Refinancing Effective Date after giving effect to the termination of such Revolving Facility Commitments (it being understood that (x) such Refinancing Term Loans may be provided by the Lenders holding the Revolving Facility Commitments being terminated and/or by any other Person that would be an Eligible Assignee hereunder and (y) the proceeds of such Refinancing Term Loans shall not constitute Net Proceeds hereunder), (3) the Weighted Average Life to Maturity of the Refinancing Term Loans (disregarding any customary amortization for this purpose) shall be no shorter than the remaining life to termination of the terminated Revolving Facility Commitments, (4) the final maturity date of the Refinancing Term Loans shall be no earlier than the termination date of the terminated Revolving Facility Commitments and (5) all other terms applicable to such Refinancing Term Loans (other than provisions relating to original issue discount, upfront fees, interest rates and any other pricing terms (which original issue discount, upfront fees, interest rates and other pricing terms shall not be subject to the provisions set forth in Section 2.21(b)(vii)) and optional prepayment or mandatory prepayment or redemption terms, which shall be as agreed between the Borrower and the Lenders providing such Refinancing Term Loans) taken as a whole shall be substantially similar to, or not materially more favorable (as determined by the Borrower in good faith) to the lenders providing such Refinancing Term Loans than, the terms, taken as a whole, applicable to the Revolving Facility Loans being refinanced (except to the extent such covenants and other terms (I) (A) apply solely to any period after the Initial Term B Facility Maturity Date or (B) are conformed (or added) to this Agreement for the benefit of the then-existing Revolving Facility Loans, (II) reflect market terms and conditions (as determined by the Borrower in good faith) at the time of incurrence or of obtaining a commitment with respect thereto, or
(III) are otherwise reasonably acceptable to the Administrative Agent), as determined by the Borrower in good faith.
(c) The Borrower may approach any Lender or any other Person that would be a permitted Assignee pursuant to Section 9.04 to provide all or a portion of the Refinancing Term Loans; provided that any Lender offered or approached to provide all or a portion of the Refinancing Term Loans may elect or decline, in its sole discretion, to provide a Refinancing Term Loan. Any Refinancing Term Loans made on any Refinancing Effective Date shall be designated an additional Class of Term Loans or as an increase in any previously established Class of Term Loans.
(d) Notwithstanding anything to the contrary in this Agreement, including Section 2.18, the Borrower may by written notice to the Administrative Agent establish one or more additional Facilities providing for revolving commitments (“Replacement Revolving Facilities” and the commitments thereunder, “Replacement Revolving Facility Commitments” and the revolving loans thereunder, “Replacement Revolving Loans”), which replace in whole or in part any Class of Revolving Facility Commitments under this Agreement. Each such notice shall specify the date (each, a “Replacement Revolving Facility Effective Date”) on which the Borrower proposes that the Replacement Revolving Facility Commitments shall become effective, which shall be a date not less than five Business Days after the date on which such notice is delivered to the Administrative Agent (or such shorter period agreed to by the Administrative Agent in its reasonable discretion); provided that:
(i) after giving effect to the establishment of any Replacement Revolving Facility Commitments and any concurrent reduction in the aggregate amount of any other Revolving Facility Commitments, the aggregate principal amount of any Replacement Revolving Facility is not greater than the principal or committed amount of the Class of Revolving Facility Commitments being replaced, plus additional amounts to the extent otherwise permitted to be incurred under the Loan Documents, plus any fees, premiums, original issue discount and accrued interest associated therewith, and costs and expenses related thereto;
(ii) no Replacement Revolving Facility Commitments shall have a final maturity date (or require commitment reductions or amortizations) prior to the Revolving Facility Maturity Date in effect at the time of incurrence for the Revolving Facility Commitments being replaced, other than as a result of a mandatory prepayment;
(iii) all other material terms applicable to such Replacement Revolving Facility (other than provisions relating to (x) fees, interest rates and other pricing terms and prepayment and commitment reduction and optional and mandatory redemption terms which shall be as agreed between the Borrower and the Lenders providing such Replacement Revolving Facility Commitments and (y) the amount of any letter of credit sublimit and swingline commitment under such Replacement Revolving Facility, which shall be as agreed between the Borrower, the Lenders providing such Replacement Revolving Facility Commitments, the Administrative Agent and the replacement issuing bank and replacement swingline lender, if any, under such Replacement Revolving Facility Commitments) taken as a whole shall be substantially similar to, or not materially less favorable (as determined by the Borrower in good faith) to the Borrower and the Subsidiaries than, the terms, taken as a whole, applicable to the Initial Revolving Facility Loans (except to the extent such covenants and other terms (I) (A) apply solely to any period after the latest Revolving Facility Maturity Date in effect at the time of incurrence or (B) are conformed (or added) to this Agreement for the benefit of the then-existing Revolving Facilities, (II) reflect market terms and conditions (as determined by the Borrower in
good faith) at the time of incurrence or at the time of obtaining a commitment with respect thereto or (III) are otherwise reasonably acceptable to the Administrative Agent);
(iv) any Replacement Revolving Facility may rank pari passu or junior in right of payment and/or security with the Initial Revolving Facility and, if secured by Liens on the Collateral that rank pari passu or junior in right of security to the Initial Revolving Facility, such Replacement Revolving Facility may, at the option of the Borrower, be documented separately to this Agreement and such Liens will be subject to a Permitted Pari Passu Intercreditor Agreement or a Permitted Junior Intercreditor Agreement;
(v) such Replacement Revolving Facility may be secured solely by assets that are Collateral; and
(vi) there shall be no obligor in respect of such Replacement Revolving Facility that is not a Loan Party or the Thai Borrower (with respect to a replacement of the Thai Baht Revolving Facility).
(e) In addition, the Borrower may establish Replacement Revolving Facility Commitments to refinance and/or replace all or any portion of a Term Loan hereunder (regardless of whether such Term Loan is repaid with the proceeds of Replacement Revolving Loans or otherwise), so long as the aggregate amount of such Replacement Revolving Facility Commitments does not exceed the aggregate amount of Term Loans repaid at the time of establishment thereof plus additional amounts to the extent otherwise permitted to be incurred under the Loan Documents, plus any fees, premiums, original issue discount and accrued interest associated therewith, and costs and expenses related thereto (it being understood that such Replacement Revolving Facility Commitment may be provided by the Lenders holding the Term Loans being repaid and/or by any other Person that would be a permitted Assignee hereunder), so long as the final termination date of the Replacement Revolving Facility Commitments shall be no earlier than the Term Facility Maturity Date of the refinanced Term Loans.
(f) Solely to the extent that an Issuing Bank or Swingline Lender is not a replacement issuing bank or replacement swingline lender, as the case may be, under a Replacement Revolving Facility, it is understood and agreed that such Issuing Bank or Swingline Lender shall not be required to issue any Letters of Credit or make Swingline Loans under such Replacement Revolving Facility without its consent.
(g) The Borrower may approach any Lender or any other Person that would be a permitted Assignee of a Revolving Facility Commitment pursuant to Section 9.04 to provide all or a portion of the Replacement Revolving Facility Commitments; provided that any Lender offered or approached to provide all or a portion of the Replacement Revolving Facility Commitments may elect or decline, in its sole discretion, to provide a Replacement Revolving Facility Commitment. Any Replacement Revolving Facility Commitment made on any Replacement Revolving Facility Effective Date shall be designated an additional Class of Revolving Facility Commitments or be designated as an increase in any previously established Class of Revolving Facility Commitments.
Section 2.24 Certain Adjustments.
(a) Notwithstanding anything to the contrary herein, in connection with the establishment of any Incremental Revolving Facility Commitments, Extended Revolving Facility Commitments or Replacement Revolving Facility Commitments (any such Commitments, “New Commitments”) that constitute an increase in the amount of any existing Class (the “Increased Class”),
each of the parties hereto hereby agrees that the Administrative Agent may take any and all action as may be necessary to ensure that on the date of such establishment and/or the date of any applicable Credit Events (each, an “Applicable Date”), each Lender in respect of the Increased Class, including the Lenders in respect of the New Commitments, participates ratably in (i) the outstanding Loans of the Increased Class, (ii) Letters of Credit issued in respect of the Increased Class and (iii) Swingline Loans made in respect of the Increased Class, in each case in accordance with its Pro Rata Share. In addition, at the election of the Administrative Agent, each applicable Lender may be deemed to have effectuated such purchases and assignments of Loans or participations as shall be required to give effect to the foregoing. The “Pro Rata Share” of any Lender on any Applicable Date is the ratio of (x) the Commitments of the Increased Class (including any New Commitments) held by such Lender and (y) the aggregate Commitments of the Increased Class (including any New Commitments).
(b) Notwithstanding anything to the contrary herein, in connection with the establishment of any Incremental Revolving Facility Commitments, Extended Revolving Facility Commitments or Replacement Revolving Facility Commitments that constitute a new Class hereunder, each of the parties hereto hereby agrees that this Agreement may be amended pursuant to the applicable Incremental Assumption Agreement, Extension Amendment or Refinancing Amendment to provide that (i) the borrowing and repayment (except for (1) payments of interest and fees at different rates, (2) repayments required upon the applicable Maturity Date and (3) repayments made in connection with any permanent repayment or termination of Commitments) of the applicable Incremental Revolving Loans, Extended Revolving Loans or Replacement Revolving Loans shall be made on a pro rata basis with any then-existing Revolving Facility Loans and (ii) all Swingline Loans and/or Letters of Credit (or additional swingline loans and/or letters of credit made or issued, as applicable) shall be participated on a pro rata basis by all Revolving Facility Lenders.
Section 2.25 Defaulting Lender. (a) Defaulting Lender Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:
(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definitions of “Required Lenders” or “Required Revolving Facility Lenders.”
(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, following an Event of Default or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 9.06 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder, second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any Issuing Bank or the Swingline Lender hereunder, third, to Cash Collateralize the Issuing Banks’ Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.05(j), fourth, as the Borrower may request (so long as no Default or Event of Default has occurred and is continuing or would result therefrom), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent, fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to
Loans under this Agreement and (y) Cash Collateralize the Issuing Banks’ future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.05(j), sixth, to the payment of any amounts owing to the Lenders, the Issuing Banks or the Swingline Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, Issuing Bank or Swingline Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement, seventh, so long as no Default or Event of Default has occurred and is continuing or would result therefrom, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement, and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.25 shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(iii) Certain Fees. (A) No Defaulting Lender shall be entitled to receive any Commitment Fee for any period during which that Lender is a Defaulting Lender.
(B) Each Defaulting Lender shall be entitled to receive L/C Participation Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its pro rata share of the amount available under of Letters of Credit for which it has provided Cash Collateral.
(C) With respect to any Commitment Fee or L/C Participation Fee not required to be paid to any Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in Letters of Credit or Swingline Loans that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to each Issuing Bank and the Swingline Lender, as applicable, the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such Issuing Bank’s or Swingline Lender’s Fronting Exposure to such Defaulting Lender and (z) not be required to pay the remaining amount of any such fee.
(iv) Reallocation of Participations to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in Letters of Credit and Swingline Loans shall be reallocated among the Non-Defaulting Lenders in accordance with their respective pro rata Commitments (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that such reallocation does not cause the aggregate Revolving Facility Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Revolving Facility Commitment. Subject to Section 9.24, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.
(v) Cash Collateral, Repayment of Swingline Loans. If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, within three Business Days following the written request of (i) the Administrative Agent or (ii) the Swingline Lender or any Issuing Bank, as applicable (with a copy to the Administrative Agent), (x) first, prepay Swingline Loans in an amount equal to the Swingline Lender’s Fronting Exposure and (y)
second, Cash Collateralize the Issuing Banks’ Fronting Exposure in accordance with the procedures set forth in Section 2.05(j).
(b) Defaulting Lender Cure. If the Borrower, the Administrative Agent and the Swingline Lender and each Issuing Bank agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Revolving Facility Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit and Swingline Loans to be held pro rata by the Lenders in accordance with their Revolving Facility Commitments (without giving effect to Section 2.25(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender; provided that, no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
(c) New Swingline Loans/Letters of Credit. So long as any Lender is a Defaulting Lender, (i) the Swingline Lender shall not be required to fund any Swingline Loans unless it is satisfied that it will have no Fronting Exposure after giving effect to such Swingline Loan and (ii) the Issuing Banks shall not be required to issue, extend or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.
(d) Termination of Defaulting Lender. The Borrower may terminate the unused amount of any Revolving Facility Commitment of any Revolving Facility Lender that is a Defaulting Lender, upon not less than five Business Days’ prior notice to the Administrative Agent (and the Administrative Agent shall promptly notify the Lenders thereof), and in such event the provisions of Section 2.25(a)(ii) hereof will apply to all amounts thereafter paid by the Borrower for the account of such Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity or other amounts); provided that such termination shall not be deemed to be a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
ARTICLE III
Representations and Warranties
On the date of each Credit Event, each of the Borrower and the Thai Borrower (and Holdings with respect to Sections 3.01, 3.02, 3.03, 3.04, 3.09, 3.11, 3.14, 3.15, 3.17, 3.18, 3.21 and 3.22) represents and warrants to each of the Lenders that:
Section 3.01 Organization; Powers. The Borrower, the Thai Borrower and each Guarantor (a) (i) is a partnership, limited liability company, corporation, company or other entity duly organized or incorporated, validly existing under the laws of the jurisdiction of its organization or incorporation and (ii) is, to the extent such concept is applicable under the laws of the jurisdiction of its organization or incorporation, in good standing, (b) has all requisite entity level power and authority to own its material property and assets and to carry on its business in all material respects as now conducted, (c) is qualified to do business in each jurisdiction where such qualification is required and (d) has the entity level power and authority to execute, deliver and perform its obligations under each of the Loan Documents to which it is or will be a party and, in the case of the Borrower and the Thai Borrower, to borrow and otherwise
obtain credit hereunder, in each case of this Section 3.01 (other than clauses (a)(i), (b) and (d), in each case with respect to the Borrower) except as would not reasonably be expected to result in a Material Adverse Effect.
Section 3.02 Authorization. The execution, delivery and performance by the Borrower, the Thai Borrower and each Subsidiary Loan Party and, in the case of Sections 3.02(a) and 3.02(b)(i), Holdings, of each of the Loan Documents to which it is a party, the borrowings hereunder and the granting of guarantees and security interests in respect thereof (a) have been duly authorized by all corporate, partnership, limited liability company action or similar action required to be obtained by Holdings, the Borrower, the Thai Borrower and such Subsidiary Loan Party and (a) will not (i) violate (A) any material provision of law, statute, rule or regulation applicable to Holdings, the Borrower, the Thai Borrower or such Subsidiary Loan Party, (B) the certificate or articles of incorporation or formation or other constitutive documents (including any partnership, limited liability company or operating agreements or by-laws) of Holdings, the Borrower, the Thai Borrower or any such Subsidiary Loan Party, (C) any applicable order of any court or any rule, regulation or order of any Governmental Authority applicable to the Borrower, the Thai Borrower or any such Subsidiary Loan Party or (D) any provision of any indenture, material debt agreement or other material debt instrument to which Holdings, the Borrower, the Thai Borrower or such Subsidiary Loan Party is a party or by which any of them or any of their property is or may be bound, (ii) result in a breach of or constitute (alone or with due notice or lapse of time or both) a default under, give rise to a right of or result in any cancellation or acceleration of any right or obligation (including any payment) under such indenture, material debt agreement or other material debt instrument, where any such conflict, violation or breach or default referred to in clause (i) or (ii) of this Section 3.02(b) would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or (iii) result in the creation or imposition of any Lien upon or with respect to any property or assets now owned or hereafter acquired by the Borrower, the Thai Borrower or any such Subsidiary Loan Party, other than the Liens created by the Loan Documents and Permitted Liens.
Section 3.03 Enforceability. This Agreement has been duly executed and delivered by Holdings, the Borrower and the Thai Borrower and constitutes, and each other Loan Document when executed and delivered by Holdings, the Borrower, the Thai Borrower and each Subsidiary Loan Party that is party thereto will constitute, a legal, valid and binding obligation of such Loan Party or the Thai Borrower enforceable against such Loan Party or the Thai Borrower, as applicable, in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, moratorium, reorganization, stay, fraudulent conveyance or other similar laws affecting creditors’ rights generally, (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), (iii) implied covenants of good faith and fair dealing and (iv) the Legal Reservations.
Section 3.04 Governmental Approvals. No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required for the execution, delivery or performance of each Loan Document to which the Borrower, the Thai Borrower or any Subsidiary Loan Party is a party, except for (a) the filing of Uniform Commercial Code financing statements, (b) filings with the United States Patent and Trademark Office and the United States Copyright Office, (c) recordation of the Mortgages, if any, (d) such as have been made or obtained and are in full force and effect, (e) such actions, consents and approvals the failure of which to be obtained or made would not reasonably be expected to have a Material Adverse Effect, (f) filings or other actions listed on Schedule 3.04 and any other filings, stampings, registrations, notarizations or notifications required by the Security Documents, required to perfect security created by the Security Documents or required to achieve the relevant priority for all Liens created by such Security Documents and (g) payment of stamp duty with respect to this Agreement with the Revenue Department of Thailand, which shall be made within 15 days from the date of execution of this Agreement, or if this Agreement is
executed outside Thailand, within 30 days from the date on which the original of this Agreement is brought into Thailand.
Section 3.05 Financial Statements. Except as set forth on Schedule 3.05:
(a) After the Closing Date, the financial statements most recently provided pursuant to Section 5.04(a) or Section 5.04(b), as applicable, present fairly, in all material respects, the financial position, results of operations and cash flows of the Persons covered thereby on a consolidated basis as of such dates and for such periods in accordance with GAAP, (w) except as otherwise expressly noted therein, (x) subject, in the case of quarterly financial statements, to the absence of footnotes and normal year-end audit adjustments, and (y) except as may be necessary to reflect any differing entity and/or organizational structure prior to giving effect to the Transactions.
(b) As of the Closing Date:
(i) The audited consolidated balance sheets of the Borrower and its consolidated Subsidiaries (including the Securitization Entities) and related statements of comprehensive income (loss), and cash flows of the Borrower and its consolidated Subsidiaries (including the Securitization Entities) for the 2022 and 2023 Fiscal Years have been prepared in accordance with GAAP consistently applied throughout the periods covered thereby and fairly present in all material respects the financial condition of the Borrower and its consolidated Subsidiaries (including the Securitization Entities) as of the dates thereof and their results of operations for the applicable period covered thereby.
(ii) The unaudited consolidated balance sheets and related statements of income (loss) of the Borrower and its consolidated Subsidiaries (including the Securitization Entities) for the first two fiscal quarters of 2024 have been prepared in accordance with GAAP consistently applied throughout the period covered thereby (subject to changes resulting from normal year-end adjustments and the absence of footnotes) and fairly present in all material respects the financial condition of the Borrower and its consolidated Subsidiaries (including the Securitization Entities) as of the dates thereof and their results of operations for the period covered thereby.
Section 3.06 No Material Adverse Effect. Since the Closing Date, there has been no event or circumstance that, individually or in the aggregate with other events or circumstances, has had or would reasonably be expected to have a Material Adverse Effect.
Section 3.07 Title to Properties. The Borrower, the Thai Borrower and each Subsidiary Loan Party has valid title in fee simple, or valid leasehold interests in, or easements or other limited property interests in, all its respective Real Properties (including all Mortgaged Properties) and has valid title to, or valid leasehold interests in, its respective personal property and assets, in each case, free and clear of Liens except for Permitted Liens and except for defects in title that do not materially interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes and except where the failure to have such title would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 3.08 [Reserved].
Section 3.09 Litigation; Compliance with Laws. Except as set forth on Schedule 3.09:
(a) There are no actions, suits or proceedings at law or in equity or by or on behalf of any Governmental Authority or in arbitration now pending against the Borrower, the Thai Borrower or any of the Subsidiary Loan Parties or any of its or their respective business, property or rights (including those that involve any Loan Document) that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) None of the Borrower, the Thai Borrower, the Subsidiary Loan Parties and their respective properties or assets is in violation of (nor will the continued operation of their material properties and assets as currently conducted violate) any law, rule or regulation (including any zoning, building, ordinance, code or approval or any building permit, but excluding any Environmental Laws, which are the subject of Section 3.16) or any restriction of record or agreement affecting any Mortgaged Property, or is in default with respect to any judgment, writ, injunction or decree of any Governmental Authority, where such violation or default would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 3.10 Federal Reserve Regulations. Neither the making of any Loan (or the extension of any Letter of Credit) hereunder nor the use of the proceeds thereof will violate the provisions of Regulation T, Regulation U or Regulation X of the Board.
Section 3.11 Investment Company Act. None of Holdings, the Borrower, the Thai Borrower or the Subsidiary Loan Parties is required to be registered as an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
Section 3.12 Use of Proceeds. (a) The Borrower will use the proceeds of the Initial Term B Loans funded on the Closing Date (i) to effect the Refinancing, (ii) to effect all or a portion of the Closing Date Dividend, (iii) to finance all or a portion of the other Transactions (including the payment of Transaction Expenses) or (iv) for working capital and general corporate purposes.
(b) The Borrower will use the proceeds of the Initial USD Revolving Facility Loans and extensions of credit under the Initial USD Revolving Facility (i) on the Closing Date, (1) to replace, backstop or cash collateralize existing letters of credit, guarantees or performance or similar bonds, (2) to provide for ordinary course working capital needs or (3) to finance all or a portion of the Transactions (including the payment of Transaction Expenses), or for general corporate purposes and (ii) after the Closing Date, for working capital, capital expenditures and other general corporate purposes (including to pay Transaction Expenses and for Permitted Business Acquisitions and other permitted Investments (including “earn-outs” and purchase price and working capital adjustments in connection thereunder) and permitted Restricted Payments) of the Borrower and its Subsidiaries.
(c) The Thai Borrower will use the proceeds of the Initial Thai Baht Revolving Facility Loans and extensions of credit under the Initial Thai Baht Revolving Facility (i) on the Closing Date, (1) to replace, backstop or cash collateralize existing letters of credit, guarantees or performance or similar bonds or (2) to provide for ordinary course working capital needs and (ii) after the Closing Date, for working capital, capital expenditures and other general corporate purposes of the Thai Borrower.
(d) The Borrower will use the proceeds of the 2025 Refinancing Term B Loans (i) to prepay Existing Term B Loans (as defined in the 2025 Refinancing Amendment), together with any accrued and unpaid interest thereon, as set forth in the 2025 Refinancing Amendment, (ii) to pay the fees
and expenses in connection with the transactions contemplated therein and (iii) for working capital and general corporate purposes.
(e) The Borrower will use the proceeds of the 2025-2 Refinancing Term B Loans (i) to prepay Existing Term B Loans (as defined in the 2025-2 Refinancing Amendment), together with any accrued and unpaid interest thereon, as set forth in the 2025-2 Refinancing Amendment, (ii) to pay the fees and expenses in connection with the transactions contemplated therein and (iii) for working capital and general corporate purposes.
Section 3.13 Taxes. Except as set forth on Schedule 3.13:
(a) Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each of the Borrower, the Thai Borrower and the Subsidiary Loan Parties has filed or caused to be filed all federal, state, local and foreign income and other Tax returns required to have been filed by it (taking into account extensions) and each such Tax return is true and correct;
(b) Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each of the Borrower, the Thai Borrower and the Subsidiary Loan Parties has timely paid or caused to be timely paid all Taxes shown to be due and payable by it on the returns referred to in clause (a) and all other Taxes or assessments (or made adequate provision (in accordance with GAAP) for the payment of all Taxes due), except Taxes or assessments that are being contested in good faith by appropriate proceedings in accordance with Section 5.03 and for which the Borrower, the Thai Borrower or any of the Subsidiary Loan Parties (as the case may be) has set aside on its books adequate reserves in accordance with GAAP; and
(c) Other than as would not be, individually or in the aggregate, reasonably expected to have a Material Adverse Effect, as of the Closing Date, with respect to the Borrower and the Subsidiaries, there are no claims being asserted in writing with respect to any Taxes.
Section 3.14 No Material Misstatements. (a) All written information (other than the Projections, other forward looking information and information of a general economic nature or general industry nature) (such non-excluded items, the “Information”) concerning the Borrower, the Subsidiaries, the Transactions and any other transactions contemplated hereby prepared by or on behalf of the foregoing or their representatives and made available to any Lenders or the Administrative Agent in connection with the Transactions or the other transactions contemplated hereby, when taken as a whole, was, true and correct in all material respects as of the date such Information was furnished to the Lenders and as of the Closing Date and did not, taken as a whole, as of any such date, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, taken as a whole, not materially misleading in light of the circumstances under which such statements were made (giving effect to all supplements and updates provided thereto).
(b) The Projections and other forward looking information and information of a general economic nature prepared by or on behalf of the Borrower or any of its representatives and that have been made available to any Lenders or the Administrative Agent in connection with the Transactions or the other transactions contemplated hereby have been prepared in good faith based upon assumptions believed by the Borrower to be reasonable as of the date thereof (it being understood that such Projections are predictions as to future events and are not to be viewed as facts, such Projections are subject to significant uncertainties and contingencies, many of which are beyond the control of Holdings, the Borrower and its Subsidiaries, and that actual results during the period or periods covered by any
such Projections may differ significantly from the projected results, and that no assurance can be given that the projected results will be realized), as of the date such Projections and information were furnished to the Lenders or the Administrative Agent (as applicable).
Section 3.15 Employee Benefit Plans.
(a) Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, (i) each Employee Benefit Plan is in compliance in all respects with its terms and with the applicable provisions of ERISA, the Code, and other federal and state laws and (ii) no “prohibited transactions” (as defined in Section 406 of ERISA or Section 4975 of the Code) have occurred with respect to any Employee Benefit Plan.
(b) Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, each Employee Benefit Plan that is intended to qualify under Section 401(a) of the Code is, and at all times has been, so qualified, and each trust created thereunder is, and at all times has been, exempt from Tax under the provisions of Section 501(a) of the Code.
(c) Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, no ERISA Event has occurred and is continuing or is reasonably expected to occur.
Section 3.16 Environmental Matters. Except (a) as set forth on Schedule 3.16 or (b) in respect of any other acts, omissions, events or circumstances that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (i) no written notice, request for information, order, complaint or penalty has been received by the Borrower or any of the Subsidiaries and, to the Borrower’s knowledge, there are no judicial, administrative or other actions, suits or proceedings pending or threatened, which allege a violation of or liability under any Environmental Laws, in each case relating to the Borrower or any of the Subsidiaries, (ii) each of the Borrower and the Subsidiaries has all permits, licenses and any other approvals of any Governmental Authority necessary for its respective business, properties and operations to comply with all Environmental Laws (“Environmental Permits”) and is in compliance with the terms of such Environmental Permits and with all other Environmental Laws, (iii) no Hazardous Material is located at, on or under any property currently or, to the Borrower’s knowledge, formerly owned, operated or leased by the Borrower or any of the Subsidiaries that would reasonably be expected to give rise to any cost, liability or obligation of the Borrower or any of the Subsidiaries under any Environmental Laws or Environmental Permits, and no Hazardous Material has been generated, used, treated, stored, handled, disposed of, controlled, or transported or Released at any location in a manner that would reasonably be expected to give rise to any cost, liability or obligation of the Borrower or any of the Subsidiaries under any Environmental Laws or Environmental Permits, and (iv) there are no agreements in which the Borrower or any of the Subsidiaries has assumed or undertaken responsibility for any known or reasonably likely liability or obligation of any other person arising under or relating to Environmental Laws, which in any such case has not been made available to the Administrative Agent prior to the Closing Date.
Section 3.17 Security Documents.
(a) The Security Agreement will be effective to create (to the extent described therein and subject to the Legal Reservations and exceptions set forth in the Collateral and Guarantee Requirement and any perfection requirements set out in the Security Agreement) in favor of the Collateral Agent (for the benefit of the Secured Parties), in each case, a legal, valid and enforceable security interest to the extent that the Security Agreement purports to create such a security interest in the
Collateral described therein and proceeds thereof. As of the Closing Date, in the case of the Pledged Collateral described in the Security Agreement, when certificates or promissory notes, as applicable, representing such Pledged Collateral and required to be delivered under the terms set forth in the Security Agreement are delivered to the Collateral Agent, and in the case of the other Collateral described in the Security Agreement (other than the Intellectual Property) in which a security interest may be created pursuant to Article 9 of the Uniform Commercial Code, when financing statements and other filings are filed or registered, as applicable, in the applicable offices or system of registration, the Collateral Agent (for the benefit of the Secured Parties) shall have a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties party to the Security Agreement in such Collateral (to the extent intended to be created thereby and required to be perfected under the Loan Documents and, in each case, subject to the Legal Reservations, any exceptions set forth in the Collateral and Guarantee Requirement and any perfection requirements set out in the Security Agreement) and, subject to Section 9-315 of the New York Uniform Commercial Code, the proceeds thereof, as security for the Secured Obligations, to the extent perfection can be obtained by filing Uniform Commercial Code financing statements, in each case prior and superior in right to the Lien of any other person (except Permitted Liens).
(b) When the Security Agreement or an ancillary document thereunder is properly filed and recorded in the United States Patent and Trademark Office and the United States Copyright Office and, with respect to Collateral in which a security interest cannot be perfected by such filings, upon the proper filing of the financing statements referred to in clause (a) above, the Collateral Agent (for the benefit of the Secured Parties) shall have a fully perfected (subject to exceptions arising from defects in the chain of title, which defects in the aggregate do not constitute a Material Adverse Effect hereunder) Lien on, and security interest in, all right, title and interest of the Loan Parties thereunder in the material United States Intellectual Property included in the Collateral (but, in the case of the United States registered copyrights included in the Collateral, only to the extent such United States registered copyrights are listed in such ancillary document filed with the United States Copyright Office) listed in such ancillary document, in each case prior and superior in right to the Lien of any other person, except for Permitted Liens (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a Lien on material registered trademarks and patents, trademark and patent applications and registered copyrights acquired by the Loan Parties after the Closing Date).
(c) The Mortgages executed and delivered after the Closing Date (if any) pursuant to Section 5.10 shall be effective to create (to the extent described therein and subject to the Legal Reservations, exceptions set forth in the Collateral and Guarantee Requirement and any perfection requirements set out in the Mortgages) in favor of the Collateral Agent (for the benefit of the Secured Parties) legal, valid and enforceable (except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law)) Liens on all of the Loan Parties’ rights, titles and interests in and to the respective Mortgaged Property described therein and the proceeds thereof (to the extent feasible in the applicable jurisdiction), and when such Mortgages are filed or recorded in the proper real estate filing or recording offices, and all relevant mortgage taxes and recording charges are duly paid, the Collateral Agent (for the benefit of the Secured Parties) shall have valid Liens with record notice to third parties on, and security interests in, all rights, titles and interests of the Loan Parties in the respective Mortgaged Property described therein (to the extent intended to be created thereby and required to be perfected under the Loan Documents and, in each case, subject to the Legal Reservations, any exceptions set forth in the Collateral and Guarantee Requirement and any perfection requirements set out in the Mortgages) and, to the extent applicable, subject to Section 9-315 of the Uniform Commercial Code, the proceeds thereof (to
the extent feasible in the applicable jurisdiction), in each case prior and superior in right to the Lien of any other person, except for Permitted Liens; provided, that the representations contained in this Section 3.17(c) shall not apply with respect to the perfection of Mortgaged Property which does not constitute Real Property.
(d) Notwithstanding anything herein (including this Section 3.17) or in any other Loan Document to the contrary, no Loan Party makes any representation or warranty as to (A) the effects of perfection or non-perfection, the priority or the enforceability of any pledge of or security interest in any Equity Interests or assets of any Subsidiary, or as to the rights and remedies of the Agents or any Lender with respect thereto, in each case under laws other than the laws of the United States or (B) the pledge or creation of any security interest, or the effects of perfection or non-perfection, the priority or the enforceability of any pledge of or security interest to the extent such pledge, security interest, perfection or priority is not required pursuant to the Collateral and Guarantee Requirement.
Section 3.18 Solvency. As of the Closing Date, immediately after giving effect to the consummation of the Transactions on the Closing Date, Holdings and its Subsidiaries (on a consolidated basis) (i) have property with fair value greater than the total amount of their debts and liabilities, contingent (it being understood that the amount of contingent liabilities at any time shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability), subordinated or otherwise, (ii) have assets with present fair salable value not less than the amount that will be required to pay their liability on their debts as they become absolute and matured, (iii) will be able to pay their debts and liabilities, subordinated, contingent or otherwise, as they become absolute and matured and (iv) are not engaged in business or a transaction, and are not about to engage in business or a transaction, for which their property would constitute an un-reasonably small capital. The representation set forth in this Section 3.18 shall be satisfied by delivery of the certificate delivered on the Closing Date pursuant to Section 4.02(c)(i).
Section 3.19 Intellectual Property. Except in respect of any acts, omissions, events or circumstances that would not reasonably be expected to have a Material Adverse Effect, (a) the Loan Parties own, or possess the right to use, all Intellectual Property necessary for the Loan Parties to conduct their respective businesses as conducted as of the date hereof, free and clear of all Liens other than Permitted Liens, (b) to the knowledge of the Loan Parties, none of the Loan Parties are infringing upon, misappropriating or otherwise violating any Intellectual Property of any Person and (c) no claim or litigation regarding any of the Intellectual Property owned by the Loan Parties is pending and, to the knowledge of the Loan Parties, no claim or litigation regarding any other Material Intellectual Property used by a Loan Party to conduct its business as conducted as of the date hereof is pending.
Section 3.20 [Reserved].
Section 3.21 USA PATRIOT Act; Sanctions; OFAC.
(a) Holdings, The Borrower and each of its Subsidiaries is in compliance in all material respects with the material provisions of the USA PATRIOT Act (to the extent applicable).
(b) None of Holdings, the Borrower, the Thai Borrower or any of their respective Subsidiaries is (i) currently the target of any sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”) or the U.S. State Department, the European Union or relevant member states of the European Union, the United Nations Security Council or His Majesty’s Treasury (“Sanctions”) or (ii) located, organized or resident in a country or territory that is the target of
Sanctions broadly prohibiting dealings with such country or territory (“Sanctioned Country”). Neither the Borrower nor the Thai Borrower will directly or, knowingly, indirectly use the proceeds of the Loans or use the Letters of Credit or otherwise make available such proceeds or Letters of Credit to any person for the purpose of financing the activities of any person that is, at the time of such financing, the target of any Sanctions or for the purpose of funding, financing or facilitating any activities, business or transaction with or in any Sanctioned Country, to the extent such activities, businesses or transaction are prohibited by Sanctions laws and regulations administered by the United States, including OFAC and the U.S. State Department, the United Nations Security Council, His Majesty’s Treasury, the European Union or relevant member states of the European Union (collectively, the “Sanctions Laws”), or in any manner that would result in the violation of any Sanctions Laws applicable to any party hereto. Holdings, the Borrower, the Thai Borrower or each of their respective Subsidiaries are in compliance with all applicable Sanctions Laws in all material respects.
Section 3.22 Foreign Corrupt Practices Act. Holdings, the Borrower and each of their respective Subsidiaries are in compliance with the U.S. Foreign Corrupt Practices Act of 1977 and similar laws of all jurisdictions in which Holdings, the Borrower or any of their respective Subsidiaries conduct their business and to which they are lawfully subject (“Anti-Corruption Laws”), in each case, in all material respects. No part of the proceeds of the Loans made hereunder and no Letters of Credit will be used in violation of any Anti-Corruption Law, including to make any unlawful bribe, influence payment, kickback or other unlawful payment.
ARTICLE IV
Conditions of Lending
The obligations of (a) the Lenders (including the Swingline Lender) to make Loans and (b) any Issuing Bank to issue Letters of Credit (each, a “Credit Event”) are subject to the satisfaction (or waiver in accordance with Section 9.08) of the following conditions:
Section 4.01 All Credit Events. In the case of, and on the date of, each Credit Event (other than (i) a Credit Event on the Closing Date or (ii) a Credit Event with respect to Loans or Commitments provided pursuant to an Incremental Assumption Agreement, Extension Amendment or Refinancing Amendment, as to which the terms thereof shall govern):
(a) The Administrative Agent shall have received, in the case of a Borrowing, a Borrowing Request as required by Section 2.03 (or a Borrowing Request shall have been deemed given in accordance with the last paragraph of Section 2.03) or, in the case of the issuance of a Letter of Credit, the applicable Issuing Bank and the Administrative Agent shall have received a notice requesting the issuance of such Letter of Credit as required by Section 2.05(b).
(b) The representations and warranties set forth in the Loan Documents shall be true and correct in all material respects as of such date, in each case, with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date).
(c) At the time of and immediately after such Credit Event, as applicable, no Event of Default or Default shall have occurred and be continuing.
Each Credit Event that occurs after the Closing Date shall be deemed to constitute a representation and warranty by the Borrower (or the Thai Borrower and the Borrower in the case of a Credit Event in respect of the Thai Baht Revolving Facility) on the date of such Borrowing or issuance as to the matters specified in paragraph (b) of this Section 4.01.
Section 4.02 First Credit Event. On or prior to the Closing Date:
(a) The Administrative Agent (or its counsel) shall have received from each of Holdings, the Borrower, the Thai Borrower and each other Loan Party (i) a counterpart of this Agreement and each other Loan Document to which such Loan Party or the Thai Borrower is a party signed on behalf of such party or (ii) written evidence reasonably satisfactory to the Administrative Agent (which may include delivery of a signed signature page of this Agreement by facsimile or other means of electronic transmission (e.g., “pdf”)) that such party has signed a counterpart of this Agreement and each other Loan Document to which it is a party.
(b) The Administrative Agent shall have received, on behalf of itself, the Lenders and each Issuing Bank, written opinions of (i) Davis Polk & Wardwell LLP, as New York counsel for the Loan Parties, (ii) Morris, Nichols, Arsht & Tunnell LLP, as Delaware counsel for the Loan Parties, and (iii) Norton Rose Fulbright (Thailand) Limited, as Thai counsel to the Loan Parties, each (A) dated the Closing Date, (B) addressed to each Issuing Bank, the Administrative Agent and the Lenders on the Closing Date and (C) in form and substance reasonably satisfactory to the Administrative Agent covering such matters relating to the Loan Documents as the Administrative Agent shall reasonably request.
(c) The Administrative Agent shall have received (i) a solvency certificate substantially in the form of Exhibit G attached hereto, from the chief financial officer (or other officer with reasonably equivalent duties) of Holdings, certifying that Holdings and its subsidiaries, on a consolidated basis after giving effect to the Transactions and the other transactions contemplated hereby, are solvent and (ii) with respect to the Loan Parties and the Thai Borrower, (A) customary certificates of a Responsible Officer of the Borrower or Holdings dated the Closing Date and certifying true and complete copies of the organizational documents of each Loan Party and the Thai Borrower attached thereto and customary resolutions or other evidence of authorization and incumbency of authorized officers of each Loan Party and the Thai Borrower and (B) certificates of good standing from the secretary of state of the state of organization of each Loan Party.
(d) As of the Closing Date, the representations and warranties set forth in the Loan Documents shall be true and correct in all material respects as of such date, in each case, with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date).
(e) On the Closing Date and immediately after such Credit Event, as applicable, no Event of Default or Default shall have occurred and be continuing.
(f) At least three Business Days prior to the Closing Date, the Administrative Agent shall have received a Borrowing Request as required by Section 2.03 (or a Borrowing Request shall have been deemed given in accordance with the last paragraph of Section 2.03).
(g) The Administrative Agent shall have received the financial statements referred to in Section 3.05(b).
(h) On or substantially concurrently with the Closing Date, after giving effect to the Transactions and the other transactions contemplated hereby, the Refinancing shall have occurred.
(i) The Agents shall have received all fees payable thereto or to any Lender on or prior to the Closing Date pursuant to the Fee Letters and reimbursement or payment of all reasonable and documented out-of-pocket expenses (including reasonable and documented out-of-pocket fees, charges and disbursements of Paul Hastings LLP) required to be reimbursed or paid by the Loan Parties hereunder or under any Loan Document on or prior to the Closing Date (which amounts may be offset against the proceeds of the Loans), in each case, to the extent invoiced at least three Business Days prior to the Closing Date.
(j) Except as set forth in Schedule 5.12 (which, for the avoidance of doubt, shall override the applicable clauses of the definition of “Collateral and Guarantee Requirement”) and subject to the grace periods and post-closing periods set forth in such definition, the Collateral and Guarantee Requirement shall be satisfied (or waived) as of the Closing Date
(k) The Administrative Agent shall have received a certificate of a Responsible Officer of Holdings or the Borrower certifying that since December 31, 2023, there has been no event or circumstance that, individually or in the aggregate with other events and circumstances, has had or would reasonably be expected to have a Material Adverse Effect.
(l) The Administrative Agent shall have received, at least three Business Days prior to the Closing Date, all documentation and other information (including Beneficial Ownership Certifications) about any Loan Party and the Thai Borrower required by U.S. regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act and the Beneficial Ownership Regulation, as is reasonably requested in writing by such Administrative Agent or any Lender at least ten business days prior to the Closing Date.
For purposes of determining compliance with the conditions specified in this Section 4.02, each Lender and Issuing Bank shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders or the Issuing Banks unless an officer of the Administrative Agent responsible for the transactions contemplated by the Loan Documents shall have received notice from such Lender or Issuing Bank prior to the Closing Date specifying its objection thereto and, in the case of a Borrowing, such Lender shall not have made available to the Administrative Agent such Lender’s ratable portion of the initial Borrowing.
ARTICLE V
Affirmative Covenants
The Borrower and (solely with respect to Sections 5.01, 5.03, 5.05, 5.06, 5.07 and 5.10(a), (d) and (e)) Holdings covenants and agrees with each Lender that, until the Termination Date, unless the Required Lenders shall otherwise consent in writing, it will, and will cause the Borrower and each of the Subsidiaries to comply with each of the following covenants to the extent expressed to be applicable.
Section 5.01 Existence; Business and Properties. (a) Holdings shall, and shall cause its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence, except, in the case of a Subsidiary of the Borrower, where the failure to do so would not reasonably be expected to have a Material Adverse Effect, and except as otherwise permitted
under Section 6.05, including the liquidation or dissolution of Subsidiaries in a manner not otherwise prohibited by this Agreement.
(b) Except where the failure to do so would not reasonably be expected to have a Material Adverse Effect, do or cause to be done all things necessary to lawfully obtain, preserve, renew, extend and keep in full force and effect the permits, franchises, authorizations, Intellectual Property, licenses and rights with respect thereto necessary to the normal conduct of its business and to the extent required to ensure that the business carried on in connection therewith, if any, may be lawfully conducted at all times (in each case, except as permitted by this Agreement). Except where the failure to do so would not reasonably be expected to have a Material Adverse Effect, (i) at all times maintain, protect and preserve all property necessary to the normal conduct of its business and keep such property in good repair, working order and condition (ordinary wear and tear and casualty and condemnation excepted) and (ii) from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary.
Section 5.02 Insurance. (a) Maintain, with financially sound and reputable insurance companies, insurance (subject to customary deductibles and retentions) (but not, for the avoidance of doubt, flood insurance except to the extent required by applicable law or regulation) in such amounts and against such risks as management believes are reasonable in light of the risks faced by its business, in each case as determined by the Borrower in good faith, and to the extent available from the relevant insurance carrier, cause the Collateral Agent to be listed as a co-loss payee on property and casualty policies with respect to Mortgaged Property located in the United States of America and use commercially reasonable efforts to cause the Collateral Agent to be listed as an additional insured on liability policies. Notwithstanding the foregoing, the Borrower and the Subsidiaries may self-insure with respect to such risks with respect to which companies of established reputation engaged in the same general line of business in the same general area usually self-insure.
(b) Except as the Administrative Agent may agree in its reasonable discretion, cause all such property and casualty insurance policies with respect to the Mortgaged Property to be endorsed or otherwise amended to include a “standard” or “New York” lender’s loss payable endorsement, in form and substance reasonably satisfactory to the Administrative Agent, and deliver a certificate of an insurance broker to the Collateral Agent. The Borrower will use commercially reasonable efforts to cause each such policy covered by this clause (b) to provide that it shall not be cancelled or not renewed upon less than 30 days’ prior written notice thereof by the insurer to the Collateral Agent.
(c) If any portion of any improved Mortgaged Property is at any time located in an area identified by the Federal Emergency Management Agency (or any successor agency) as a special flood hazard area (each a “Special Flood Hazard Area”) with respect to which flood insurance has been made available under the Flood Insurance Laws, the Borrower shall and shall cause its Subsidiaries to (i) maintain, or cause to be maintained, with a financially sound and reputable insurer, flood insurance in an amount not less than the maximum limit of coverage made available with respect to the particular type of property under the National Flood Insurance Reform Act of 1994 and otherwise sufficient to comply with all applicable rules and regulations promulgated pursuant to the Flood Insurance Laws (provided that to the extent that any insurance company insuring the Mortgaged Property ceases to be financially sound and reputable after the Closing Date, in which case, such insurance company shall be promptly replaced with a financially sound and reputable insurance company) and (ii) deliver to the Collateral Agent evidence of such compliance in form and substance reasonably acceptable to the Administrative Agent, including a copy of the flood insurance policy and declaration page relating thereto.
(d) In connection with the covenants set forth in this Section 5.02, it is understood and agreed that:
(i) the Administrative Agent, the Collateral Agent, the Lenders, the Issuing Banks and their respective agents or employees shall not be liable for any loss or damage insured by the insurance policies required to be maintained under this Section 5.02, it being understood that (A) the Loan Parties shall look solely to their insurance companies or any other parties other than the aforesaid parties for the recovery of such loss or damage and (B) such insurance companies shall have no rights of subrogation against the Administrative Agent, the Collateral Agent, the Lenders, any Issuing Bank or their agents or employees. If, however, the insurance policies, as a matter of the internal policy of such insurer, do not provide waiver of subrogation rights against such parties, as required above, then the Borrower, on behalf of itself and on behalf of each of the Subsidiaries, hereby agrees, to the extent permitted by law, to waive, and further agrees to cause each of their Subsidiaries to waive, its right of recovery, if any, against the Administrative Agent, the Collateral Agent, the Lenders, any Issuing Bank and their agents and employees;
(ii) the designation of any form, type or amount of insurance coverage by the Collateral Agent (including acting in the capacity as the Collateral Agent) under this Section 5.02 shall in no event be deemed a representation, warranty or advice by the Collateral Agent or the Lenders that such insurance is adequate for the purposes of the business of the Borrower and the Subsidiaries or the protection of their properties; and
(iii) the amount and type of insurance that the Borrower and its Subsidiaries have in effect as of the Closing Date satisfies for all purposes the requirements of this Section 5.02.
Section 5.03 Taxes. Pay its obligations in respect of all Tax liabilities, assessments and governmental charges, before the same shall become delinquent or in default, except where (i) the amount or validity thereof is being contested in good faith by appropriate proceedings and Holdings or a Subsidiary has set aside on its books adequate reserves therefor in accordance with GAAP or (ii) the failure to make payment before delinquency or default could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
Section 5.04 Financial Statements, Reports, etc.. The Borrower shall furnish to the Administrative Agent (which will promptly furnish such information to the Lenders):
(a) within 120 days after the end of any Fiscal Year ending after the Closing Date (or, in the case of any Fiscal Year in which a Permitted Business Acquisition with total consideration of $250,000,000 or more has been consummated by the Borrower or any Subsidiary, 150 days after the end of such Fiscal Year), in each as such date may be extended by up to 45 days by the Administrative Agent in its reasonable discretion or, if later, and solely to the extent that the Borrower or any Parent Entity is subject to the Exchange Act’s reporting requirements, the date on which the SEC, pursuant to its rules and regulations, has permitted the Borrower or such Parent Entity to file its applicable annual report on Form 10-K, a copy of the audited consolidated balance sheet of the Borrower and its consolidated Subsidiaries (including, for purposes of this Section 5.04(a), the Securitization Entities to the extent consolidated in accordance with GAAP) as at the end of such Fiscal Year and the related audited consolidated statements of comprehensive income (loss), member(s)’ equity (deficit) and cash flows for such year, in each case setting forth in comparative form the figures for the previous year, reported by Ernst & Young LLP or other independent certified public accountants of nationally recognized standing
(which report shall not be subject to a “going concern” or scope of audit qualification (except for any such qualification pertaining to, or disclosure of an exception or qualification resulting from, the maturity (or impending maturity) of any Facility or any other Indebtedness, any breach or anticipated breach of any financial covenant or the activities, operations, financial results, assets or liabilities of any Unrestricted Subsidiary or any Securitization Entity), but may include a “going concern” or “emphasis of matter” explanatory paragraph or like statement) to the effect that such consolidated financial statements fairly present, in all material respects, the financial position and results of operations of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP;
(b) within 60 days after the end of each of the first three fiscal quarters of each Fiscal Year (or, in the case of any fiscal quarter (and the two immediately succeeding fiscal quarters) in which a Permitted Business Acquisition with total consideration of $250,000,000 or more has been consummated by the Borrower or any Subsidiary, 90 days after the end of each such fiscal quarter), commencing with the fiscal quarter ending June 30, 2024, in each case as such date may be extended by up to 45 days by the Administrative Agent in its reasonable discretion or, if later, and solely to the extent that the Borrower or any Parent Entity is subject to the Exchange Act’s reporting requirements, the date on which the SEC, pursuant to its rules and regulations, has permitted the Borrower or such Parent Entity to file its applicable annual report on Form 10-Q, a copy of the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries (including, for purposes of this Section 5.04(b), the Securitization Entities to the extent consolidated in accordance with GAAP) as at the end of such quarter and the related unaudited consolidated statements of comprehensive income (loss) and of cash flows for such quarter and the portion of the Fiscal Year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Financial Officer as fairly presenting in all material respects the financial position and results of operation of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP (subject to normal year-end audit adjustments and the absence of footnotes);
(c) within five Business Days after any delivery of financial statements under clause (a) or (b) above, (A) a Compliance Certificate (i) certifying that to the knowledge of the certifying Responsible Officer, no Default or Event of Default has occurred and is continuing since the date of the last Compliance Certificate delivered pursuant to this Section 5.04(c) or, if such a Default or an Event of Default has occurred and is continuing, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto and (ii) commencing with the end of the second full fiscal quarter ending after the Closing Date, if the Testing Condition is satisfied, setting forth computations in reasonable detail demonstrating compliance with the Financial Covenant (only to the extent applicable) and (B) a customary management discussion and analysis of operating results;
(d) promptly after the same become publicly available, copies of all periodic and other publicly available reports, proxy statements and, to the extent requested by the Administrative Agent, other materials filed by Holdings, the Borrower or any of the Subsidiaries with the SEC (or equivalent regulatory body in the relevant jurisdiction), or after an initial public offering, distributed to its stockholders generally, as applicable; provided, however, that such reports, proxy statements, filings and other materials required to be delivered pursuant to this clause (d) shall be deemed delivered for purposes of this Agreement when posted to the website of the Borrower (or Holdings or any Parent Entity referred to in Section 5.04(h)) or become publicly available via EDGAR, the SEC website (or website of any equivalent regulatory body in the relevant jurisdiction) or another publicly available reporting service;
(e) prior to the consummation of any Qualified IPO, concurrently with any delivery of financial statements under clause (a) above (or such later date as the Administrative Agent may agree
in its reasonable discretion), commencing with delivery of the financial statements for the Fiscal Year ending December 31, 2024, a consolidated annual budget for the Fiscal Year following the Fiscal Year covered by such financial statements in a form customarily prepared by Holdings (collectively, the “Budget”); and
(f) promptly from time to time, such other customary information regarding the operations, business affairs and financial condition, or “know your customer” information of Holdings, the Borrower or any of the Subsidiaries, or compliance with the terms of any Loan Document as in each case the Administrative Agent may reasonably request (for itself or on behalf of any Lender) and to the extent such information is reasonably available to the Borrower; provided, however, that none of Holdings, the Borrower or any Subsidiary shall be required to disclose or provide any information (i) that constitutes non-financial trade secrets or non-financial proprietary information of Holdings, the Borrower or any of the Subsidiaries or any of their respective customers and/or suppliers, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or any of their respective representatives) is prohibited by any applicable Requirement of Law, (iii) that is subject to attorney-client or similar privilege or constitutes attorney work product or (iv) in respect of which Holdings, the Borrower or any Subsidiary owes confidentiality obligations to any third party (provided such confidentiality obligations were not entered into solely in contemplation of the requirements of this proviso).
The Borrower hereby acknowledges and agrees that all financial statements furnished pursuant to clauses (a), (b) and (d) above are hereby deemed to be Borrower Materials suitable for distribution, and to be made available, to Public Lenders as contemplated by Section 9.17 and may be treated by the Administrative Agent and the Lenders as if the same had been marked “PUBLIC” in accordance with such paragraph (unless the Borrower otherwise notifies the Administrative Agent in writing on or prior to delivery thereof).
For the avoidance of doubt, for purposes of this Section 5.04, financial statements and similar financial reporting on a consolidated basis will include the Borrower and each of its Securitization Entities, and may include any or all of the Borrower’s Unrestricted Subsidiaries, in each case to the extent consolidated in accordance with GAAP. If at any time the annual and quarterly financial information required by Section 5.04(a) or Section 5.04(b) includes the accounts of any Unrestricted Subsidiary of the Borrower, then such financial information shall, if the accounts of such Unrestricted Subsidiaries are, taken as a whole, material (as determined by the Borrower in good faith), be accompanied by either (i) a reasonably detailed summary of the adjustments necessary to eliminate the accounts of such Unrestricted Subsidiaries or (ii) stand-alone unaudited financial statements of such Unrestricted Subsidiary or Unrestricted Subsidiaries (as a group or otherwise), together with an unaudited reconciliation to the financial information of the Borrower and its Subsidiaries (or any Parent Entity in accordance with the succeeding paragraph), which reconciliation shall include the following items: revenue, finance costs, profit/loss for the period, cash and cash equivalents, total assets, total liabilities, equity and capital expenditures.
Notwithstanding the foregoing (but subject to the immediately preceding paragraph), the obligations in paragraphs (a), (b), (c) and (e) of this Section 5.04 may instead be satisfied with respect to any financial statements of the Borrower by furnishing (A) the applicable financial statements of any Parent Entity or (B) the Borrower’s or any Parent Entity’s Form 10-K or 10-Q (or similar filing on Form 20-F and/or Form 6-K), as applicable, filed with the SEC or any securities exchange, in each case, within the time periods specified in such paragraphs and without any requirement to provide notice of such filing to any Person; provided that, with respect to each of clauses (A) and (B), (i) if (1) such financial statements relate to any Parent Entity and (2) such Parent Entity (or any other Parent Entity that is a subsidiary of such Parent Entity) has any material operations (as determined by the Borrower in good
faith and other than any operations that are attributable to such Parent Entity’s ownership of the Borrower and its Subsidiaries), such financial statements or the Form 10-K or Form 10-Q (or similar filing on Form 20-F and/or Form 6-K), as applicable, shall be accompanied by consolidating information (which need not be audited) that summarizes in reasonable detail the differences between the information relating to such Parent Entity, on the one hand, and the information relating to the Borrower and its consolidated Subsidiaries on a standalone basis, on the other hand, which consolidating information shall be certified by a Responsible Officer of the Borrower as having been fairly presented in all material respects and (ii) to the extent such statements are in lieu of statements required to be provided under paragraph (a), such statements shall be accompanied by an audit report that would satisfy the applicable requirements set forth in paragraph (a) as if the references to the Borrower therein were references to such Parent Entity.
Notwithstanding the foregoing, no financial statement required to be delivered pursuant to paragraph (a) or (b) shall be required to include acquisition or purchase accounting adjustments relating to the Transactions, any Permitted Business Acquisition or other Investment or any other transaction not prohibited by the Loan Documents to the extent it is not practicable or convenient to include any such adjustments in such financial statement.
Section 5.05 Litigation and Other Notices. The Borrower shall furnish to the Administrative Agent (which will promptly thereafter furnish to the Lenders) written notice of the following promptly after any Responsible Officer of the Borrower obtains actual knowledge thereof:
(a) any Default or Event of Default, specifying the nature and extent thereof and the corrective action (if any) proposed to be taken with respect thereto;
(b) the filing or commencement of, or any written non-frivolous threat or notice of intention of any person to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority or in arbitration, against Holdings, the Borrower or any of its Subsidiaries as to which an adverse determination is reasonably probable and which, if adversely determined, would reasonably be expected to have a Material Adverse Effect;
(c) the occurrence of any event specific to Holdings, the Borrower or any of the Subsidiaries that is not a matter of general public knowledge and that has had or would reasonably be expected to have a Material Adverse Effect;
(d) [reserved]; and
(e) the occurrence of any ERISA Event that, together with all other ERISA Events that have occurred, would reasonably be expected to have a Material Adverse Effect.
Section 5.06 Compliance with Laws.
(a) The Borrower shall, and shall cause its Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect; provided that this Section 5.06 shall not apply to Environmental Laws, which are the subject of Section 5.09, or to laws related to Taxes, which are the subject of Section 5.03.
(b) Subject to Section 3.21(b), The Borrower shall, and shall cause its Subsidiaries to, comply with the USA PATRIOT Act (as applicable), applicable Sanctions Laws, and Anti-Corruption Laws in all material respects.
(c) Notwithstanding anything in this Section 5.06 or Section 3.21 or 3.22 to the contrary, the representations, warranties and covenants of any Subsidiary that is not a Loan Party are subject to and limited by Requirements of Law applicable to such Subsidiary in its jurisdiction of organization; it being understood and agreed that to the extent that any such Subsidiary is unable to make any such representation or warranty or perform any such covenant as a result of the application of this sentence, such Subsidiary shall be deemed to have represented and warranted that it is in compliance, in all material respects, with, and the Borrower shall cause such Subsidiary to comply in all material respects with, any equivalent Requirements of Law relating to Sanctions Laws and Anti-Corruption Laws applicable to such Subsidiary in its jurisdiction of organization.
Section 5.07 Maintaining Records; Access to Properties and Inspections. The Borrower shall, and shall cause its Subsidiaries to, maintain all financial records in accordance with GAAP and permit any persons designated by the Administrative Agent to visit and inspect the financial records and the properties of the Borrower or any of its Subsidiaries at reasonable times, upon reasonable prior notice to the Borrower, once each calendar year, and to make extracts from and copies of such financial records, and permit any persons designated by the Administrative Agent upon reasonable prior notice to the Borrower to discuss the affairs, finances and condition of the Borrower or any of its Subsidiaries with the officers thereof and independent accountants therefor (so long as the Borrower has the opportunity to participate in any such discussions with such accountants), in each case, subject to reasonable requirements of confidentiality, including requirements imposed by law or by contract; provided that, upon the occurrence and during the continuation of an Event of Default, the Administrative Agent may exercise such rights as often as reasonably requested.
Section 5.08 Use of Proceeds. The Borrower and the Thai Borrower shall use the proceeds of the Loans made and Letters of Credit issued in the manner contemplated by Section 3.12.
Section 5.09 Compliance with Environmental Laws. The Borrower shall, and shall cause its Subsidiaries to, comply and make reasonable efforts to cause all lessees and other persons occupying its properties to comply, with all Environmental Laws applicable to its operations and properties; and obtain and renew all material authorizations and permits required pursuant to Environmental Law for its operations and properties, in each case in accordance with Environmental Laws, except, in each case with respect to this Section 5.09, to the extent the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Notwithstanding anything to the contrary contained herein or in any other Loan Document, neither the Borrower nor any Subsidiary shall be obligated hereunder or thereunder to deliver at any time any environmental report to the Administrative Agent, the Collateral Agent, any Lender or any Issuing Bank.
Section 5.10 Further Assurances; Additional Security.
(a) The Borrower shall cause each of the Loan Parties to satisfy the Collateral and Guarantee Requirement with respect to any Material Real Property of such Loan Party that is acquired after the Closing Date, no later than the later of (i) 180 days after the acquisition of such Material Real Property or (ii) the date that financial statements are next required to be delivered pursuant to Section 5.04(a) or (b) following the fiscal quarter in which such acquisition occurs (or such later date as the Collateral Agent may agree in its reasonable discretion).
(b) If any additional direct or indirect Subsidiary of the Borrower is formed or acquired after the Closing Date (with any Subsidiary Redesignation resulting in an Unrestricted Subsidiary becoming a Subsidiary being deemed to constitute the acquisition of a Subsidiary) and if such Subsidiary is a Subsidiary Loan Party pursuant to the definition thereof, the Borrower shall cause the Collateral and Guarantee Requirement to be satisfied with respect to such Subsidiary and with respect to any Equity Interests in or Indebtedness of such Subsidiary owned by or on behalf of any Loan Party, in each case by the date that financial statements are next required to be delivered pursuant to Section 5.04(a) or (b) following the fiscal quarter in which such formation or acquisition occurs (or, in any case, such later date as the Collateral Agent may agree in its reasonable discretion).
(c) The Borrower shall furnish to the Collateral Agent written notice, no later than 90 days thereafter (or such later date as the Collateral Agent may agree in its reasonable discretion), of any change (A) in any Loan Party’s corporate or organization name, (B) in any Loan Party’s identity or organizational or corporate form, (C) in any Loan Party’s organizational identification number, if applicable or (D) in any Loan Party’s jurisdiction of organization or incorporation; provided that no notice shall be required to the extent such change will not adversely affect the perfection of Liens granted pursuant to the Security Documents.
(d) Notwithstanding any provision of any Loan Document to the contrary, the Collateral and Guarantee Requirement and the other provisions of this Section 5.10 and the other Loan Documents with respect to Collateral need not be satisfied with respect to any of the following (collectively, the “Excluded Property”): (i) any Real Property other than Material Real Property, (ii) motor vehicles, airplanes and other assets subject to certificates of title, letter of credit rights (in each case, other than to the extent a Lien on such assets or such rights can be perfected by filing a Uniform Commercial Code financing statement that is otherwise required to be filed for the benefit of the Secured Parties under the terms of the Security Documents) and commercial tort claims,(iii) pledges and security interests (1) prohibited or restricted by applicable law, rule, regulation or contractual obligation (with respect to any such contractual obligation, only to the extent such restriction is permitted under Section 6.09(c)), (2) that would result in a breach, termination (or a right of termination) or default under any contract, instrument, lease, license, permit or other document (including pursuant to any “change of control” or similar provision) or that would permit any person (other than any Loan Party) to amend any rights, benefits or obligations of the relevant Loan Party in a manner adverse to such Loan Party (in each case, except to the extent such prohibition is unenforceable after giving effect to the applicable anti-assignment provisions of Article 9 of the Uniform Commercial Code) or (3) which could require governmental (including regulatory) consent, approval, license or authorization to be pledged (unless such consent, approval, license or authorization has been received, it being understood that there shall be no obligation on the part of the Borrower or any Subsidiary to seek such consent, approval, license or authorization), (iv) assets to the extent a security interest in such assets could reasonably be expected to result in material adverse Tax consequences (including to the direct or indirect equity holders in the Borrower) as determined in good faith by the Borrower,(v) any lease, license or other agreement, or any property subject thereto, to the extent that a grant of a security interest therein would violate or invalidate such lease, license or agreement or create a right of termination in favor of any other party thereto (other than any Loan Party) after giving effect to the applicable anti-assignment provisions of Article 9 of the Uniform Commercial Code, (vi) those assets as to which the Borrower determines in good faith that the cost or other consequence of obtaining such a security interest or perfection thereof are excessive in relation to the benefits to the Secured Parties (as determined by the Borrower in good faith) afforded thereby, (vii) any governmental licenses or state or local licenses, franchises, charters and authorizations, to the extent security interests in such licenses, franchises, charters or authorizations are prohibited or restricted thereby after giving effect to the applicable anti-assignment provisions of Article 9 of the Uniform Commercial Code, (viii) any “intent-to-use” applications for trademark or service mark
registrations filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. §1051, unless and until an Amendment to Allege Use or a Statement of Use under Section 1(c) or 1(d) of the Lanham Act has been filed and deemed in conformance with Section 1(a) of the Lanham Act or examined and accepted by the United States Patent and Trademark Office, (ix) (1) Securitization Assets sold, contributed or otherwise transferred to any Securitization Entity or otherwise pledged, factored, transferred or sold in connection with any Permitted Securitization Financing and (2) any other assets subject to Liens securing Permitted Securitization Financings, (x) any cash and cash equivalents, deposit accounts, commodity accounts and securities accounts (including securities entitlements and related assets) (but, in each case, excluding cash or cash equivalents representing the identifiable proceeds of Collateral or a security interest in which is automatically perfected or perfected solely by filing of a Uniform Commercial Code financing statement in a form otherwise required to be filed pursuant to the Security Documents), (xi) any Excluded Securities, (xii) any Third Party Funds, (xiii) any equipment or other asset that is subject to a Lien permitted by any of clauses (c), (i), (j) or (mm) of Section 6.02 or is otherwise subject to a purchase money debt or a Finance Lease Obligation, in each case, as permitted by Section 6.01, if the contract or other agreement providing for such debt or Finance Lease Obligation prohibits, or requires the consent of any person (other than any Loan Party) as a condition to the creation of, any other security interest on such equipment or asset and, in each case, such prohibition or requirement is permitted hereunder (after giving effect to the applicable anti-assignment provisions of Article 9 of the Uniform Commercial Code or other applicable law), (xiv) farm products, as extracted collateral, manufactured homes, health care insurance receivables, timber to be cut or aircraft engines, satellites, ships or railroad rolling stock and (xv) property not required by the Collateral and Guarantee Requirement to be subject to any Lien to secure the Secured Obligations; provided that the Borrower may from time to time elect to cause any assets that would otherwise constitute Excluded Property hereunder to become Collateral under the Loan Documents (but shall have no obligation to do so) with the consent of the Administrative Agent (not to be unreasonably withheld, conditioned or delayed); provided, further, that the Collateral Agent shall have received such security documents as are customary for the applicable jurisdiction and reasonably requested by the Collateral Agent. Notwithstanding anything to the contrary in any Loan Document, (A) the Collateral Agent may grant extensions of time or waivers (which may be retroactive) of any requirement for the creation or perfection of security interests, the granting of guarantees, the obtaining of insurance (including title insurance) or surveys with respect to particular assets or any other matter set forth or described in this Section 5.10, the Collateral and Guarantee Requirement or any Security Document, without the consent of any other Secured Party, (B) no perfection by control, control agreement or control, lockbox or similar arrangement shall be required with respect to any deposit accounts, securities accounts or commodities accounts or any other assets other than by delivery of certificated securities and similar instruments constituting Collateral and expressly required by the terms of the Security Documents, (C) no source code escrow arrangements or registration of any Intellectual Property shall be required, (D) no landlord, mortgagee or bailee waivers (including any estoppel, collateral access letters or similar types of waiver) shall be required, (E) with respect to any Loan Party, no security documents or instruments governed by, or perfection or other actions under, the law of a jurisdiction other than the United States of America pursuant to the laws thereof shall be required; provided that this clause shall not apply to pledge or security agreements as may be mutually agreed by the Collateral Agent and the Borrower with respect to any Designated Guarantor or Designated Foreign Borrower, (F) no periodic filing shall be required to be made (other than as expressly required pursuant to a Security Document) and no notice shall be required to be sent to insurers, third-party account debtors or other contractual third parties prior to an Event of Default that is continuing, (G) Liens required to be granted from time to time pursuant to, or any other requirements of, the Collateral and Guarantee Requirement and the Security Documents shall be subject to exceptions and limitations set forth in the Security Documents, (H) no specific listing or scheduling of Collateral shall be required, (I) to the extent any Mortgaged Property is located in a jurisdiction with mortgage recording or similar tax, the amount secured by the Security Document with respect to such Mortgaged Property shall be limited to the fair
market value of such Mortgaged Property as determined in good faith by the Borrower (subject to any applicable laws in the relevant jurisdiction or such lesser amount agreed to by the Collateral Agent), (J) any joinder agreement or supplement with respect to any Person that is required to become a Subsidiary Loan Party or to deliver Collateral may, at the election of the Borrower, permit the qualification of any representations or warranties in any of the Loan Documents by reference to schedules attached to such joinder or supplement to the extent necessary to ensure any such representation or warranty is true and correct and (K) the Collateral provided by any Loan Party may be limited to minimize stamp duty, notarization, registration or other applicable fees, taxes and duties where the benefit afforded to the Secured Parties is outweighed by such expenses (as determined by the Borrower in good faith).
(e) Subject to Section 5.10(d) and the other limitations on the requirement to create or perfect any security interest, Holdings shall, and shall cause its Subsidiaries to, subject to the Legal Reservations, execute any and all further documents, Uniform Commercial Code financing statements, agreements and instruments, and take all such further actions (including the filing and recording of Uniform Commercial Code financing statements, fixture filings, Mortgages and other documents), that the Collateral Agent may reasonably request (including, without limitation, those required by applicable law), to ensure the perfection and priority of the security interests created or intended to be created pursuant to the Security Documents, all at the expense of the Loan Parties.
(f) For the avoidance of doubt, notwithstanding anything to the contrary contained herein or in any other Loan Document, Holdings, the Borrower and the Subsidiaries shall not be obligated hereunder or thereunder to enter into any Hedging Agreement in connection with hedging interest rate exposure with respect to the Loan Obligations, the Loans or any other extensions of credit hereunder or any other Indebtedness of Holdings, the Borrower or any such Subsidiary.
Section 5.11 Rating. The Borrower shall exercise commercially reasonable efforts to obtain and to maintain (a) public ratings (but, in each case, not to obtain a specific rating) from any two of Fitch, Moody’s and S&P for the Initial Term B Loans and (b) public corporate credit ratings and corporate family ratings (but, in each case, not to obtain a specific rating) from any two of Fitch, Moody’s and S&P in respect of the Borrower or a Parent Entity.
Section 5.12 Post-Closing. The Borrower shall, and shall cause its Subsidiaries to, take all necessary actions to satisfy the items described on Schedule 5.12 within the applicable period of time specified in such Schedule (or such longer period as the Administrative Agent may agree in its reasonable discretion). Notwithstanding anything to the contrary in any Loan Document, no misrepresentation, default or breach of any Loan Document shall occur as a result of the failure to take any action contemplated by Schedule 5.12 prior to the time at which such action is required to be taken pursuant to this Section 5.12.
Section 5.13 Ownership of Material Intellectual Property. The Borrower or its Subsidiaries shall own or possess the right to use and continue to own or possess the right to use all Material Intellectual Property; provided, that this Section 5.13 shall not prohibit any Disposition of Material Intellectual Property (i) to the extent constituting Securitization Assets in connection with or in contemplation of a Permitted Securitization Financing or Foreign Customer Finance Program, (ii) in connection with a Disposition (or a series of related transactions constituting a Disposition) of assets or Equity Interests that is otherwise permitted under the terms of this Agreement or (iii) in connection with the granting of a Permitted Lien. The Borrower shall not, and shall ensure that its Subsidiaries shall not, sell or otherwise transfer Material Intellectual Property to any Unrestricted Subsidiary or designate as an Unrestricted Subsidiary any Subsidiary that owns Material Intellectual Property; provided that this sentence shall not restrict a sale or transfer in the form of a non-exclusive license or an exclusive license
or other transfer (A) if limited by territory or field of use, (B) entered into for legitimate business purposes (as determined by the Borrower in good faith) that is entered into to effect a bona fide joint venture with a third party that is not an Affiliate of the Borrower or (C) in the ordinary course of business.
Section 5.14 Business of the Borrower and the Subsidiaries. The Borrower shall, and shall cause its Subsidiaries to, engage only in those material lines of business that consist of (a) the business or business activity conducted by any of them on the Closing Date or any other Similar Business or (b) such other lines of business to which the Administrative Agent may consent.
Section 5.15 Maintenance of Fiscal Year. The Borrower shall maintain its Fiscal Year-end as in effect on the Closing Date; provided that the Borrower may, upon written consent of the Administrative Agent (not to be unreasonably withheld, conditioned or delayed), change its Fiscal Year-end to another date, in which case the Borrower and the Administrative Agent will, and are hereby authorized to (without requiring the consent of any other Person, including any Lender), make any adjustments to this Agreement that are necessary to reflect such change in Fiscal Year.
Section 5.16 Transactions with Affiliates. (a) The Borrower shall ensure that neither it nor its Subsidiaries sell or transfer any property or assets to, or purchase or acquire any property or assets from, or otherwise engage in any other transaction with, any of its Affiliates (other than the Borrower and the Subsidiaries or any person that becomes a Subsidiary as a result of such transaction) in a transaction (or series of related transactions) involving aggregate consideration in excess of the greater of (x) $50,000,000 and (y) 0.125 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Periods, unless such transaction is (i) otherwise permitted (or required) under this Agreement or (i) upon terms that are substantially no less favorable to the Borrower or such Subsidiary, as applicable, than would be obtained in a comparable arm’s-length transaction with a person that is not an Affiliate, as determined by the Borrower in good faith.
(b) The foregoing clause (a) shall not prohibit, to the extent otherwise not prohibited by this Agreement,
(i) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, equity purchase agreements, stock options and stock ownership plans approved by the Board of Directors of any Parent Entity or of the Borrower,
(ii) loans or advances to directors, officers, employees or consultants of any Parent Entity, the Borrower or any of the Subsidiaries in accordance with Section 6.04(e), or the Guarantee of loans to any such directors, officers, employees or consultants in accordance with Section 6.01(b)(ii),
(iii) transactions among the Borrower or any Subsidiary or joint venture or any entity that becomes a Subsidiary as a result of such transaction (including via merger, consolidation or amalgamation in which the Borrower or a Subsidiary is the surviving entity),
(iv) (A) the payment of fees, reasonable out-of-pocket costs and indemnities to directors, officers, consultants and employees of any Parent Entity, the Borrower and the Subsidiaries in the ordinary course of business or for payment in connection with services rendered not otherwise prohibited hereunder and (B) the payment of expenses and indemnities to
the BDT Investor and its Affiliates in connection with the ownership and management of any Parent Entity, the Borrower and its Subsidiaries (including Unrestricted Subsidiaries),
(v) if applicable, the Transactions and permitted transactions, agreements and arrangements in existence on the Closing Date and, to the extent involving aggregate consideration in excess of $20,000,000, set forth on Schedule 5.16 or any amendment thereto or replacement thereof or similar arrangement to the extent such amendment, replacement or arrangement is not adverse to the Lenders when taken as a whole in any material respect (as determined by the Borrower in good faith),
(vi) (A) any employment agreements entered into by the Borrower or any of the Subsidiaries in the ordinary course of business, (B) any subscription agreement or similar agreement pertaining to the repurchase of Equity Interests pursuant to put/call rights or similar rights with employees, officers, consultants or directors, and (C) any employee compensation, benefit plan or arrangement, any health, disability or similar insurance plan which covers employees, and any reasonable employment contract and transactions pursuant thereto,
(vii) Restricted Payments permitted under Section 6.06, including payments to any Parent Entity, Investments permitted under Section 6.04, Indebtedness permitted under Section 6.01 and Dispositions and fundamental changes permitted under Section 6.05,
(viii) [reserved],
(ix) (i) so long as no Specified Event of Default then exists or would result therefrom, the payment of management, monitoring, consulting, advisory and similar fees to the BDT Investor in an amount not to exceed in any Fiscal Year the greater of (x) $12,000,000 and (y) 0.03 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period, it being understood that (x) during any such Specified Event of Default, such fees may continue to accrue and become payable upon the waiver, termination or cure of such Specified Event of Default and (y) any amount not paid in any Fiscal Year may be carried forward and paid in subsequent Fiscal Years without limitation as to amount, but otherwise subject to the requirements of this Section, (ii) customary termination fees payable to the BDT Investor, (iii) customary compensation to the BDT Investor or other Affiliates in connection with financial advisory, consulting, financing, underwriting or placement services or in respect of other investment banking activities (including in connection with acquisitions and divestitures) and other transaction fees, which are either (A) not in excess of 3% of the total enterprise value or transaction value of the applicable transaction or (B) approved, or made pursuant to arrangements approved, by the majority of the members of the board of directors (or similar governing body) or a majority of members of the board of directors (or similar governing body) of the Borrower or any Parent Entity in good faith, (iv) the payment of or reimbursement for any indemnification obligations and expenses (and similar amounts) owed to any BDT Investor and any of their respective directors, officers, members of management, managers, employees and consultants and (v) customary compensation to Affiliates or the BDT Investor in connection with offshoring, operational transformation, separation support and similar services, in the case of this clause (v) to the extent approved, or made pursuant to arrangements approved, by the majority of the members of the board of directors (or similar governing body) of the Borrower or any Parent Entity in good faith, in each case of clauses (i)-(v) whether currently due or paid in respect of accruals from prior periods,
(x) transactions for the purchase or sale of goods, equipment, products, parts and services entered into in the ordinary course of business,
(xi) any transaction in respect of which the Borrower delivers to the Administrative Agent a letter addressed to the Board of Directors of any Parent Entity or of the Borrower from an accounting, appraisal or investment banking firm, in each case of nationally recognized standing that is in the good faith determination of any Parent Entity or of the Borrower, as applicable, qualified to render such letter, which letter states that (i) such transaction is on terms that are substantially no less favorable to the Borrower or such Subsidiary, as applicable, than would be obtained in a comparable arm’s-length transaction with a person that is not an Affiliate or (ii) such transaction is fair to the Borrower or such Subsidiary, as applicable, from a financial point of view,
(xii) the payment of all fees, expenses, bonuses and awards related to the Transactions, including fees to the BDT Investor,
(xiii) transactions with joint ventures for the purchase or sale of goods, equipment, products, parts and services entered into in the ordinary course of business or consistent with past practice or industry norm,
(xiv) the issuance, sale or transfer of Equity Interests of any Subsidiary to the Borrower or any other Subsidiary and capital contributions by the Borrower or any Subsidiary to any other Subsidiary,
(xv) the issuance of Equity Interests of any Parent Entity to the management of any Parent Entity, the Borrower or any Subsidiary in connection with the Transactions,
(xvi) payments by any Parent Entity, the Borrower and the Subsidiaries pursuant to a Tax sharing agreement or arrangement (whether written or as a matter of practice) that complies with clause (v) of Section 6.06(b),
(xvii) transactions in connection with any Permitted Securitization Financing,
(xviii) transactions that are (i) approved by a majority of the Directors of any Parent Entity or of the Borrower in good faith, (ii) made in compliance with applicable law and (iii) otherwise permitted under this Agreement,
(xix) transactions with customers, clients or suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business or consistent with past practice or industry norm otherwise in compliance with the terms of this Agreement that are fair to Holdings, the Borrower or the Subsidiaries (in the good faith determination of the Borrower (or any Parent Entity)),
(xx) transactions between the Borrower or any of the Subsidiaries and any person, a director of which is also a director of the Borrower or any Parent Entity; provided, however, that (A) such director abstains from voting as a director of the Borrower or such Parent Entity, as the case may be, on any matter involving such other person and (B) such person is not an Affiliate of the Borrower for any reason other than such director’s acting in such capacity,
(xxi) transactions permitted by, and complying with, the provisions of Section 6.05,
(xxii) transactions constituting any part of a Permitted Reorganization or IPO Reorganization Transaction or the Transactions, including the payment of Transaction Expenses;
(xxiii) any purchase by Holdings of the Equity Interests of the Borrower;
provided that any Equity Interests of the Borrower purchased by Holdings (prior to a Qualified IPO of the Borrower) shall be pledged to the Collateral Agent (the relevant certificates or other instruments (if any) representing such Equity Interests shall be delivered to the Collateral Agent) on behalf of the Lenders to the extent required by the Security Agreement; and
(xxiv) (i) transactions with any Securitization Entity in connection with Permitted Securitization Financings or Foreign Customer Finance Programs and (ii) transactions effected pursuant to a Permitted Securitization Financing in the ordinary course of business (including (x) the payment of fees to, or obligation to reimburse, any Securitization Entity in respect of letters of credit issued to the account of such Securitization Entity for the benefit of the Borrower and its Subsidiaries and (y) the servicing of Securitization Assets, Receivables Assets, related Leased Property and Leases sold, contributed, assigned or pledged by the Borrower or any of its Subsidiaries pursuant to the applicable Permitted Securitization Documents) or in connection with any Foreign Customer Finance Program.
Section 5.17 Lender Calls. Upon the request of the Administrative Agent following each delivery of financial statements pursuant to Section 5.04(a) or Section 5.04(b) (commencing with respect to the financial statements delivered for the fiscal quarter ending December 31, 2024), the Borrower shall participate in a conference call with Lenders arranged by the Administrative Agent to provide discussion and analysis with respect to the financial condition and results of operations of the Borrower and its Subsidiaries at a time at which the Borrower and the Administrative Agent mutually agree. Notwithstanding the foregoing, at the election of the Borrower, such conference call may be held jointly with any similar conference call organized with respect to any other Indebtedness or other securities of the Borrower or its Subsidiaries or Parent Entities.
Section 5.18 Holdings Covenant. Notwithstanding any other provision of this Agreement, Holdings hereby covenants and agrees with each Lender that, from and after the Closing Date and until the Termination Date, unless the Required Lenders shall otherwise consent in writing:
(a) subject to paragraph (b) below, it shall not own or acquire any material assets (other than cash and cash equivalents) or engage in any material business or activity other than (i) the ownership of all the outstanding Equity Interests in the Borrower and activities incidental thereto, (ii) the maintenance of its corporate existence and activities incidental thereto, including general and corporate overhead, (iii) activities required to comply with applicable laws, (iv) the receipt of, or the making of, Restricted Payments, in each case, to the extent not prohibited by Section 6.06 and not inconsistent with paragraph (b) below, (v) the obtainment of, and the payment of, any fees and expenses for management, consulting, investment banking and advisory services to the extent otherwise permitted by this Agreement, (vi) compliance with its obligations under the Loan Documents or any credit agreement, indenture or other agreement in respect of Indebtedness not prohibited under Section 6.01, (vii) substantially concurrently with any issuance of IPO Equity, the redemption, purchase or retirement of any Equity Interests of any Parent Entity or the Borrower using the proceeds of, or conversion or exchange of any Equity Interests of any Parent Entity or the Borrower for, such IPO Equity, (viii) in connection with, and following the completion of, a Qualified IPO, activities necessary or reasonably
advisable for or incidental to the initial registration and listing of Holdings’ or the Borrower’s Equity Interests and the continued existence of Holdings or the Borrower as a public company, (ix) activities incidental to legal, tax and accounting matters in connection with any of the foregoing activities, including without limitation the provision of management services to the Borrower and its Subsidiaries, entering into confidentiality agreements, and maintaining insurance, (x) activities incidental to the administration of and participation in any stock option plan or other long term incentive plan of any Parent Entity; (xi) the creation, incurrence, assumption or existence of any Indebtedness or other liabilities not prohibited by paragraph (b) or (c) below, (xii) activities incidental to Permitted Business Acquisitions or similar Investments consummated by the Borrower and the Subsidiaries, including the formation of acquisition vehicle entities and intercompany loans and/or Investments incidental to such Permitted Business Acquisitions or similar Investments and (xiii) the incurrence of Management Notes and payments in respect thereof permitted by Section 6.06;
(b) (i) the only Equity Interests which Holdings shall hold shall be the Equity Interests in the Borrower and the Thai Borrower and (ii) the only Indebtedness in respect of which Holdings shall be the creditor shall be loans or other Indebtedness to the Borrower and its Subsidiaries which is not prohibited under this Agreement;
(c) it shall not create, incur, assume or permit to exist any Indebtedness or other liabilities except (i) Indebtedness created or permitted to be incurred under the Loan Documents and (ii) any Guarantee of Indebtedness permitted under Section 6.01; and
(d) it shall not create, incur, assume or permit to exist any Lien other than (i) Liens created under the Loan Documents and (ii) Liens permitted by Section 6.02 on any of the Equity Interests issued by the Borrower held by Holdings or intercompany receivables held by Holdings.
ARTICLE VI
Negative Covenants
The Borrower covenants and agrees with each Lender that, until the Termination Date, unless the Required Lenders (or, in the case of Section 6.11, the Required Revolving Facility Lenders voting as a single Class) shall otherwise consent in writing, the Borrower will not, nor (except in the case of Section 6.06) will it permit any of the Subsidiaries, to:
Section 6.01 Indebtedness. Incur, create or assume any Indebtedness, except:
(a) (i) Indebtedness existing or committed on the Closing Date (provided that any such item of Indebtedness that is individually in excess of $20,000,000 shall be set forth on Schedule 6.01) and (ii) any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness (other than intercompany Indebtedness Refinanced with Indebtedness owed to a Person not affiliated with the Borrower or any Subsidiary);
(b) (i) Indebtedness created hereunder (including pursuant to Section 2.21, 2.22 or 2.23) and under the other Loan Documents and (ii) any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness;
(c) Indebtedness of the Borrower or any Subsidiary pursuant to Hedging Agreements entered into for non-speculative purposes;
(d) Indebtedness owed to (including obligations in respect of letters of credit or bank guarantees or similar instruments for the benefit of) any Person providing workers’ compensation, health, disability or other employee benefits or property, casualty or liability insurance to the Borrower or any Subsidiary, pursuant to reimbursement or indemnification obligations to such Person, in each case in the ordinary course of business or consistent with past practice or industry practices;
(e) Indebtedness among the Borrower and any of its Subsidiaries; provided, that Indebtedness of any Loan Party to any Subsidiary that is not a Loan Party shall be subordinated in right of payment to any Indebtedness otherwise incurred pursuant to this Section 6.01(e);
(f) Indebtedness in respect of performance bonds, bid bonds, appeal bonds, surety bonds and completion guarantees and similar obligations, in each case provided in the ordinary course of business or consistent with past practice or industry practices, including those incurred to secure health, safety and environmental obligations in the ordinary course of business or consistent with past practice or industry practices;
(g) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business or other cash management services, in each case incurred in the ordinary course of business;
(h) (i) Indebtedness of a Subsidiary acquired after the Closing Date or a Person merged or consolidated with the Borrower or any Subsidiary after the Closing Date and Indebtedness otherwise assumed by the Borrower or any Subsidiary in connection with the acquisition of assets or Equity Interests (including a Permitted Business Acquisition or other permitted Investment), where such acquisition, merger or consolidation is not prohibited by this Agreement and such assumed Indebtedness was not incurred in contemplation of such acquisition, merger or consolidation and (ii) any Permitted Refinancing Indebtedness incurred to Refinance any such Indebtedness;
(i) (i) Finance Lease Obligations, purchase money or mortgage financings and other Indebtedness incurred by the Borrower or any Subsidiary prior to or within 270 days after the acquisition, lease, construction, repair, replacement or improvement of the respective property (real or personal, and whether through the direct purchase of property or the Equity Interest of any person owning such property) permitted under this Agreement in order to finance such acquisition, lease, construction, repair, replacement or improvement, in an aggregate principal amount that immediately after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, together with the aggregate principal amount of any other Indebtedness outstanding pursuant to this Section 6.01(i)(i), would not exceed sum of (1) the greater of (x) $200,000,000 and (y) 0.50 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period plus (2) an unlimited amount so long as the Net Secured Leverage Ratio (assuming all Indebtedness incurred pursuant to this Section 6.01(i) (including Indebtedness for which this clause (2) is being tested) or similar Indebtedness outstanding under Section 6.01(a), is secured by Collateral) on a Pro Forma Basis is not greater than 6.00:1.00, (ii) Finance Lease Obligations incurred by the Borrower or any Subsidiary to finance (whether prior to or within 270 days after) the acquisition, lease, construction, repair, replacement or improvement of computer equipment (including servers), storage equipment, networking equipment and other equipment and similar assets related to the business of the Borrower and the Subsidiaries and any finance lease obligations not prohibited hereunder and (iii) any Permitted Refinancing Indebtedness in respect of the foregoing;
(j) (i) Finance Lease Obligations and any other Indebtedness incurred by the Borrower or any Subsidiary arising from any Sale and Lease-Back Transaction not prohibited by this
Agreement, (ii) Finance Lease Obligations or other obligations or deferrals attributable to capital spending and (iii) any Permitted Refinancing Indebtedness in respect of the foregoing;
(k) (i) other Indebtedness of the Borrower or any Subsidiary, in an aggregate principal amount that, immediately after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, together with the aggregate principal amount of any other Indebtedness outstanding pursuant to this Section 6.01(k) or incurred in reliance on the Incremental Amount on reliance of the proviso below, would not exceed the greater of (x) $350,000,000 and (y) 0.88 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period (provided that, at the option of the Borrower, amounts available under this Section 6.01(k) may be reallocated to increase clause (i) of the “Incremental Amount”, which shall be deemed to be a utilization of this Section 6.01(k) (unless reallocated in accordance with the definition of “Incremental Amount”) and, to the extent secured, Section 6.02(ii)), and (ii) any Permitted Refinancing Indebtedness in respect thereof;
(l) (i) Indebtedness of the Borrower or any Subsidiary (“Contribution Debt”) in an aggregate outstanding principal amount up to 200% of the amount of cash or Permitted Investments, or the fair market value (as determined by the Borrower in good faith) of other property contributed to or received by the Borrower after the Closing Date in respect of (x) the issuance or sale of its Qualified Equity Interests or Equity Interests of any Parent Entity to the extent contributed to the Borrower in cash, Permitted Equity or property other than cash (or, in each case, member loans on terms reasonably acceptable to the Administrative Agent) or (y) contributions to its Permitted Equity (or member loans on terms reasonably acceptable to the Administrative Agent) (in each case of clauses (x) and (y), other than proceeds from the sale of Equity Interests to, or contributions from, the Borrower or any of its Subsidiaries), in each case to the extent such capital contributions or other proceeds do not constitute Permitted Cure Securities and were not included in the calculation of the Cumulative Credit and (ii) any Permitted Refinancing Indebtedness in respect thereof;
(m) Guarantees (including any co-issuance) by the Borrower and/or any Subsidiary of Indebtedness or other obligations of the Borrower or any Subsidiary and/or any joint venture otherwise not prohibited to be incurred pursuant to this Section 6.01; provided that in the case of any such Guarantee by any Loan Party or Subsidiary of the obligations of any joint venture that is not a Subsidiary, the related investment is permitted under Section 6.04;
(n) Indebtedness arising from agreements of the Borrower or any Subsidiary providing for indemnification, adjustment of purchase or acquisition price or similar obligations (including earn-outs), in each case, incurred or assumed in connection with the Transactions, any Permitted Business Acquisition, other Investments or the disposition of any business, assets or a Subsidiary not prohibited by this Agreement;
(o) Indebtedness in respect of letters of credit, bank guarantees, warehouse receipts or similar instruments issued to support performance obligations and trade-related letters of credit (other than obligations in respect of other Indebtedness) in the ordinary course of business or consistent with past practice or industry practices;
(p) [Reserved];
(q) (i) Indebtedness of the Borrower and its Subsidiaries secured by Liens on Collateral that are Other First Liens in aggregate outstanding principal amount at any time outstanding not to exceed the sum of (A) the available capacity under the Incremental Starter Amount, plus (B) the available capacity under the Incremental Prepayment Amount, plus (C) an unlimited amount, so long as
for purposes of this clause (C), immediately after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, the Net First Lien Leverage Ratio on a Pro Forma Basis is not greater than the greater of (I) 5.00 to 1.00 and (II) if such Indebtedness is incurred in connection with a Permitted Business Acquisition (including through a merger or consolidation) or an Investment, where such acquisition, merger, consolidation or Investment is not prohibited by this Agreement, the Net First Lien Leverage Ratio as of the most recently ended Test Period prior thereto; provided, that (x) the aggregate principal amount of Indebtedness outstanding under this clause (q)(i) at such time that is incurred by a Subsidiary other than a Subsidiary Loan Party shall not exceed, when taken together with the aggregate principal amount of any other Indebtedness outstanding pursuant to this Section 6.01(q)(i), Section 6.01(r)(i), Section 6.01(s)(i) and Section 6.01(z)(i) that are incurred by Subsidiaries other than the Subsidiary Loan Parties, the greater of (x) $200,000,000 and (y) 0.50 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period and (y) the incurrence of any Indebtedness for borrowed money pursuant to this clause (q)(i) shall be subject to the last paragraph of this Section 6.01 and (ii) any Permitted Refinancing Indebtedness in respect thereof;
(r) (i) Indebtedness of the Borrower and its Subsidiaries secured by Liens on Collateral that are Junior Liens in aggregate outstanding principal amount at any time outstanding not to exceed the sum of (A) the available capacity under the Incremental Starter Amount, plus (B) the available capacity under the Incremental Prepayment Amount, plus (C) an unlimited amount, so long as for purposes of this clause (C), immediately after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, either (A) the Net Secured Leverage Ratio on a Pro Forma Basis is not greater than the greater of (I) 5.50 to 1.00 and (II) if such Indebtedness is incurred in connection with a Permitted Business Acquisition (including through a merger or consolidation) or an Investment, where such acquisition, merger, consolidation or Investment is not prohibited by this Agreement, the Net Secured Leverage Ratio as of the most recently ended Test Period or (B) the Cash Interest Coverage Ratio on a Pro Forma Basis is not less than the lesser of (I) 2.00 to 1.00 and (II) if such Indebtedness is incurred in connection with a Permitted Business Acquisition (including through a merger or consolidation) or an Investment, where such acquisition, merger, consolidation or Investment is not prohibited by this Agreement, the Cash Interest Coverage Ratio as of the most recently ended Test Period; provided that (x) the aggregate principal amount of Indebtedness outstanding under this clause (r)(i) at such time that is incurred by a Subsidiary other than a Subsidiary Loan Party shall not exceed, when taken together with the aggregate principal amount of any other Indebtedness outstanding pursuant to Section 6.01(q)(i), this Section 6.01(r)(i), Section 6.01(s)(i) and Section 6.01(z)(i) that are incurred by Subsidiaries other than the Subsidiary Loan Parties, the greater of (x) $200,000,000 and (y) 0.50 times EBITDA calculated on a Pro Forma Basis for the most recently ended Test Period and (y) the incurrence of any Indebtedness for borrowed money pursuant to this clause (r)(i) shall be subject to the last paragraph of this Section 6.01 and (ii) any Permitted Refinancing Indebtedness in respect thereof;
(s) (i) Indebtedness of the Borrower and its Subsidiaries that is unsecured or secured by non-Collateral assets in aggregate outstanding principal amount at any time outstanding not to exceed the sum of (A) the available capacity under the Incremental Starter Amount, plus (B) the available capacity under the Incremental Prepayment Amount, plus (C) an unlimited amount, so long as for purposes of this clause (C), immediately after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, either (A) the Net Total Leverage Ratio on a Pro Forma Basis is not greater than the greater of (I) 6.00 to 1.00 and (II) if such Indebtedness is incurred in connection with a Permitted Business Acquisition (including through a merger or consolidation) or an Investment, where such acquisition, merger, consolidation or Investment is not prohibited by this Agreement, the Net Total Leverage Ratio as of the most recently ended Test Period or (B) the Cash Interest Coverage Ratio on a Pro Forma Basis is not less than the lesser of (I) 2.00 to 1.00 and (II) if such Indebtedness is incurred in connection with a Permitted Business Acquisition (including through a merger or consolidation) or an
Investment, where such acquisition, merger, consolidation or Investment is not prohibited by this Agreement, the Cash Interest Coverage Ratio as of the most recently ended Test Period; provided that (x) the aggregate principal amount of Indebtedness outstanding under this clause (s)(i) at such time that is incurred by a Subsidiary other than a Subsidiary Loan Party shall not exceed, when taken together with the aggregate principal amount of any other Indebtedness outstanding pursuant to Section 6.01(q)(i), Section 6.01(r)(i), this Section 6.01(s)(i) and Section 6.01(z)(i) that are incurred by Subsidiaries other than the Subsidiary Loan Parties, the greater of (x) $200,000,000 and (y) 0.50 times EBITDA calculated on a Pro Forma Basis for the most recently ended Test Period and (y) the incurrence of any Indebtedness for borrowed money pursuant to this clause (s)(i) shall be subject to the last paragraph of this Section 6.01 and (ii) any Permitted Refinancing Indebtedness in respect thereof;
(t) (i) Indebtedness of Subsidiaries that are not Subsidiary Loan Parties in an aggregate principal amount outstanding that, immediately after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, together with the aggregate principal amount of any other Indebtedness outstanding pursuant to this Section 6.01(t), would not exceed the sum of (I) greater of (x) $200,000,000 and (y) 0.50 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period and (II) the sum of 90% of the face amount of such Subsidiaries’ accounts receivables plus 60% of the book value of such Subsidiaries’ inventory, plus 100% of such Subsidiaries’ cash and cash equivalents (determined in good faith by the Borrower and excluding cash and cash equivalents from the proceeds of the incurrence of Indebtedness) and (i) any Permitted Refinancing Indebtedness in respect thereof;
(u) Indebtedness incurred in the ordinary course of business in respect of obligations of the Borrower or any Subsidiary to pay the deferred purchase price of goods or services or progress payments in connection with such goods and services; provided that such obligations are incurred in connection with open accounts extended by suppliers on customary trade terms in the ordinary course of business and not in connection with the borrowing of money or any Hedging Agreements;
(v) Indebtedness representing deferred compensation to directors, officers, employees, consultants or independent contractors of the Borrower or any Subsidiary (or, to the extent such work is done for the Borrower or the Subsidiaries, any direct or indirect Parent Entity thereof) incurred in the ordinary course of business;
(w) Indebtedness consisting of Disqualified Stock issued to and held by the Borrower or any Subsidiary;
(x) obligations, including among the Borrower and its Subsidiaries, in respect of or relating to Cash Management Agreements;
(y) (i) Refinancing Notes and (ii) any Permitted Refinancing Indebtedness incurred in respect thereof;
(z) (i) Indebtedness of the Borrower and its Subsidiaries secured by Liens on Collateral that are Other First Liens, secured by Liens on Collateral that are Junior Liens or secured by Liens on non-Collateral assets or that is unsecured in an aggregate principal amount outstanding not to exceed at the time of incurrence the sum of (1) (a) the Incremental Starter Amount available at such time (giving effect to any reclassification or reallocation) minus (b) the sum of (A) the aggregate outstanding principal amount of all Incremental Term Loans and Incremental Revolving Facility Commitments, in each case incurred or established after the Closing Date and outstanding at such time pursuant to Section 2.21 and other Indebtedness incurred pursuant to Sections 6.01(q)(i), 6.01(r)(i) and 6.01(s)(i), in each
case utilizing clause (i) of the definition of Incremental Amount and (B) the aggregate outstanding principal amount of any Indebtedness pursuant to this Section 6.01(z)(i)(1) plus (2) (a) the Incremental Prepayment Amount available at such time (giving effect to any reclassification or reallocation) minus (b) the sum of (A) the aggregate outstanding principal amount of all Incremental Term Loans and Incremental Revolving Facility Commitments, in each case incurred or established after the Closing Date and outstanding at such time pursuant to Section 2.21 and other Indebtedness incurred pursuant to Sections 6.01(q)(i), 6.01(r)(i) and 6.01(s)(i), in each case utilizing clause (iii) of the definition of Incremental Amount and (2) the aggregate outstanding principal amount of any Indebtedness pursuant to this Section 6.01(z)(i)(2); provided that (x) the aggregate principal amount of Indebtedness outstanding under this clause (z)(i) at such time that is incurred by a Subsidiary other than a Subsidiary Loan Party shall not exceed, when taken together with the aggregate principal amount of any other Indebtedness outstanding pursuant to Section 6.01(q)(i), Section 6.01(r)(i), Section 6.01(s)(i) and this Section 6.01(z)(i) that are incurred by Subsidiaries other than the Subsidiary Loan Parties, the greater of (x) $200,000,000 and (y) 0.50 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period and (y) the incurrence of any Indebtedness for borrowed money pursuant to this clause (z)(i) shall be subject to the last paragraph of this Section 6.01 and (ii) any Permitted Refinancing Indebtedness in respect thereof;
(aa) (i) Indebtedness for working capital purposes of Subsidiaries that are not Subsidiary Loan Parties in an aggregate principal amount outstanding that, immediately after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, not exceeding the greater of (x) $200,000,000 and (y) 0.50 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period and (ii) any Permitted Refinancing Indebtedness in respect thereof;
(bb) (i) Indebtedness of, incurred on behalf of, or representing Guarantees of Indebtedness of, joint ventures in an aggregate principal amount that, immediately after giving effect to the incurrence of such Indebtedness and the use of proceeds thereof, together with the aggregate principal amount of any other Indebtedness outstanding pursuant to this Section 6.01(bb), would not exceed the greater of (x) $150,000,000 and (y) 0.375 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period and (ii) any Permitted Refinancing Indebtedness in respect thereof;
(cc) Indebtedness of the Borrower or any Subsidiary to current or former officers, directors, consultants and employees thereof or of any Parent Entity, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Borrower or any Parent Entity permitted by Section 6.06, in an aggregate amount, together with Indebtedness permitted by Section 6.01(ii), not exceeding the greater of (x) $70,000,000 and (y) 0.175 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period;
(dd) Indebtedness consisting of obligations of the Borrower or any Subsidiary under deferred compensation or other similar arrangements incurred by such person in connection with the Transactions and Permitted Business Acquisitions or any other Investment permitted hereunder;
(ee) Indebtedness of the Borrower or any Subsidiary to or on behalf of any joint venture (regardless of the form of legal entity) that is not a Subsidiary arising in the ordinary course of business in connection with the cash management operations (including with respect to intercompany self-insurance arrangements) of the Borrower and the Subsidiaries;
(ff) Indebtedness consisting of (i) the financing of insurance premiums or (ii) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;
(gg) Indebtedness supported by a Letter of Credit, in a principal amount not in excess of the amount available under such Letter of Credit (or a letter of credit issued under any other revolving credit or letter of credit facility permitted by Section 6.01);
(hh) Indebtedness in an aggregate principal amount outstanding at any time not to exceed the Available RP Capacity Amount;
(ii) Indebtedness consisting of Guarantees of third party loans and advances to officers, directors, employees or consultants of any Parent Entity, Holdings, the Borrower or any Subsidiary in connection with such person’s purchase of Equity Interests of Holdings (or any Person formed to hold Equity Interests in Holdings or any Parent Entity on behalf of officers, directors, employees or consultants of any Parent Entity, Holdings, the Borrower or any Subsidiary), in an aggregate amount, together with Indebtedness permitted by Section 6.01(cc), not exceeding the greater of (x) $70,000,000 and (y) 0.175 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period;
(jj) (i) to the extent constituting Indebtedness, the payment of fees to, or obligation to reimburse, any Securitization Entity in respect of letters of credit issued to the account of such Securitization Entity for the benefit of the Borrower and its Subsidiaries in the ordinary course and for customary business purposes and (ii) (A) Permitted Securitization Financing Indebtedness and Guarantees thereof permitted by Limited Recourse and (B) Indebtedness in connection with any Foreign Customer Finance Program, in each case, subject to Limited Recourse to any Loan Party and the Thai Borrower;
(kk) (i) Indebtedness of the Borrower or any of its Subsidiaries in respect of reimbursement obligations under any bi-lateral or syndicated letter of credit (or similar instrument) facility in an aggregate principal or face amount at any time outstanding not to exceed the greater of (x) $60,000,000 and (y) 0.15 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period and (ii) any Permitted Refinancing Indebtedness in respect thereof;
(ll) Indebtedness in respect of Management Notes;
(mm) Indebtedness in respect of intercompany loans among Holdings, the Borrower and its Subsidiaries as of the Closing Date or established in connection with consummation of the Transactions;
(nn) unfunded pension fund and other employee benefit plan obligations and liabilities incurred by the Borrower and/or any Subsidiary in the ordinary course of business to the extent that the unfunded amounts would not otherwise cause an Event of Default under Section 7.01(k);
(oo) all premium (if any, including tender premiums) expenses, defeasance costs, interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (a) through (nn) above or refinancings thereof;
(pp) [reserved];
(qq) (i) unsecured Indebtedness provided by the BDT Investor or any of its Affiliates and issued or incurred by the Borrower or any of its Subsidiaries; provided that (1) such Indebtedness is subordinated to the payment of all Loan Obligations on customary terms or on other terms reasonably acceptable to the Administrative Agent, (2) such Indebtedness is not incurred or guaranteed by any Subsidiary of the Borrower that is not also (or also made) a Subsidiary Loan Party hereunder, (3) no principal amount of such Indebtedness shall be required to be paid (whether in the form of amortization, payment at maturity, mandatory prepayment, sinking fund or otherwise) earlier than 91 days following the Latest Maturity Date of all Initial Term B Loans outstanding at the time of such issuance or incurrence, (4) no interest in respect of such Indebtedness shall be due and payable in cash prior to the Latest Maturity Date of all Initial Term B Loans outstanding at the time of such issuance or incurrence, (5) the terms of such Indebtedness shall not require the maintenance or achievement of any financial performance standards (other than as a condition to the taking of actions that would otherwise be prohibited by the terms of such Indebtedness) and shall have covenants and events of default no less favorable to the Borrower than the terms of the Facilities (taken as a whole and as determined by the Borrower in good faith) and (6) such Indebtedness shall not be convertible into any Indebtedness that would not otherwise comply with the requirements of this Section 6.01(qq) or any Equity Interests other than Qualified Equity Interests and (ii) Permitted Refinancing Indebtedness in respect thereof; and
(rr) (i) additional Indebtedness incurred in connection with a Permitted Business Acquisition or similar Investment in an aggregate outstanding principal amount not to exceed the greater of (x) $400,000,000 and (y) 1.0 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period and (ii) Permitted Refinancing Indebtedness in respect thereof.
Further, for purposes of determining compliance with this Section 6.01:
(A) Indebtedness need not be permitted solely by reference to one category of permitted Indebtedness (or any portion thereof) described in Sections 6.01(a) through (rr) (including, for the avoidance of doubt, with respect to the clauses set forth in the definition of “Incremental Amount”) but may be permitted in part under any combination thereof,
(B) in the event that an item of Indebtedness (or any portion thereof) meets the criteria of one or more of the categories of permitted Indebtedness (or any portion thereof) described in Sections 6.01(a) through (rr) (including, for the avoidance of doubt, with respect to the clauses set forth in the definition of “Incremental Amount”), the Borrower may, in its sole discretion, classify or reclassify, or later divide, classify or reclassify (as if incurred at such later time), such item of Indebtedness (or any portion thereof) in any manner that complies with this Section 6.01 and at the time of incurrence, classification or reclassification will be entitled to only include the amount and type of such item of Indebtedness (or any portion thereof) in one of the above clauses (or any portion thereof) and such item of Indebtedness (or any portion thereof) shall be treated as having been incurred or existing pursuant to only such clause or clauses (or any portion thereof) without giving pro forma effect to such item (or portion thereof) when calculating the amount of Indebtedness that may be incurred, classified or reclassified pursuant to any other clause (or portion thereof) at such time; provided that all Indebtedness outstanding on the Closing Date under this Agreement shall at all times be deemed to have been incurred pursuant to clause (b) of this Section 6.01, and
(C) for purpose of calculating the Net First Lien Leverage Ratio, the Net Secured Leverage Ratio, the Net Total Leverage Ratio and the Cash Interest Coverage Ratio under Sections 6.01(b)(i), (p), (q), (r) and (s) on any date of incurrence of Indebtedness pursuant to such Sections 6.01(b)(i), (p), (q), (r) and/or (s) the net cash proceeds funded by financing sources upon the incurrence of such Indebtedness incurred at such time shall not be netted against the applicable amount of
Consolidated Debt for purposes of such calculation of the Net First Lien Leverage Ratio, the Net Secured Leverage Ratio or the Net Total Leverage Ratio, at such time. In addition, with respect to any Indebtedness that was permitted to be incurred hereunder on the date of such incurrence, any Increased Amount of such Indebtedness shall also be permitted hereunder after the date of such incurrence.
This Agreement will not treat (1) unsecured Indebtedness as subordinated or junior to secured Indebtedness merely because it is unsecured or (2) senior Indebtedness as subordinated or junior to any other senior Indebtedness merely because it has a junior priority with respect to the same collateral.
With respect to any Indebtedness for borrowed money incurred under Sections 6.01(q)(i), 6.01(r)(i), and 6.01(z)(i), (A) if such Indebtedness is secured by assets that are Collateral, it shall be subject to an applicable Intercreditor Agreement, (B) if such Indebtedness is in the form of term Indebtedness, (1) the stated maturity date of any such Indebtedness shall be no earlier than the Initial Term B Facility Maturity Date as in effect at the relevant time and (2) the Weighted Average Life to Maturity of such Indebtedness shall be no shorter than the remaining Weighted Average Life to Maturity of the Initial Term B Loans in effect at the relevant time (in each case of (1) and (2), except for (x) Customary Bridge Loans and (y) the Inside Maturity Basket) and (C) if such Indebtedness is in the form of revolving Indebtedness, the stated maturity date of any such Indebtedness shall be no earlier than the Initial Revolving Facility Maturity Date as in effect at the relevant time.
Section 6.02 Liens. Create, incur or assume any Lien securing Indebtedness on any property or assets (including stock or other securities of any person) of the Borrower or any Subsidiary at the time owned by it or on any income or revenues or rights in respect of any thereof, except the following (collectively, “Permitted Liens”):
(a) Liens on property or assets of the Borrower and the Subsidiaries existing on the Closing Date (or created following the Closing Date pursuant to agreements in existence on the Closing Date requiring the creation of such Liens) and, to the extent securing an item of Indebtedness in an individual principal amount in excess of $20,000,000, set forth on Schedule 6.02(a) and any modifications, replacements, renewals or extensions thereof; provided that such Liens shall secure only those obligations that they secure on the Closing Date (and any Permitted Refinancing Indebtedness in respect of such obligations permitted by Section 6.01) and shall not subsequently apply to any other property or assets of the Borrower or any Subsidiary other than (A) after-acquired property that is affixed or incorporated into the property covered by such Lien, and (B) proceeds and products thereof;
(b) any Lien created under the Loan Documents (including Liens created under the Security Documents securing obligations in respect of Secured Hedge Agreements and Secured Cash Management Agreements) or permitted in respect of any Mortgaged Property by the terms of the applicable Mortgage;
(c) any Lien on any property or asset of any Subsidiary securing Indebtedness or Permitted Refinancing Indebtedness permitted by Section 6.01(h); provided that such Lien does not apply to any other property or assets of the Borrower or any of the Subsidiaries not securing such Indebtedness at the date of the acquisition of such property or asset and accessions and additions thereto and proceeds and products thereof (other than after-acquired property required to be subjected to such Lien pursuant to the terms of such Indebtedness (and refinancings thereof));
(d) Liens for Taxes, assessments or other governmental charges or levies not yet delinquent by more than 30 days or that are being contested in compliance with Section 5.03;
(e) Liens imposed by law, such as landlord’s, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, supplier’s, construction or other like Liens, securing obligations that are not overdue by more than 60 days or that are being contested in good faith by appropriate proceedings and in respect of which, if applicable, the Borrower or any Subsidiary shall have set aside on its books reserves in accordance with GAAP;
(f) (i) pledges and deposits and other Liens made in the ordinary course of business
in compliance with the Federal Employers Liability Act (or any similar act or legislation in other jurisdictions) or any other workers’ compensation, unemployment insurance and other social security laws or regulations and deposits securing liability to insurance carriers under insurance or self-insurance arrangements in respect of such obligations and (i) pledges and deposits and other Liens securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefit of) insurance carriers providing property, casualty or liability insurance to the Borrower or any Subsidiary;
(g) deposits and other Liens to secure the performance of bids, trade contracts (other than for Indebtedness), leases (other than Finance Lease Obligations), statutory obligations, surety and appeal bonds, performance and return of money bonds, bids, leases, government contracts, trade contracts, agreements with utilities, and other obligations of a like nature (including letters of credit in lieu of any such bonds or to support the issuance thereof) incurred in the ordinary course of business, including those incurred to secure health, safety and environmental obligations in the ordinary course of business;
(h) (i) zoning restrictions (including, without limitation, building codes and other
land use laws regulating the use or occupancy of Real Property imposed by any Governmental Authority), easements, survey exceptions, trackage rights, leases (other than Finance Lease Obligations), licenses, special assessments, rights-of-way, covenants, conditions, restrictions and declarations on or with respect to the use of Real Property, servicing agreements, development agreements, site plan agreements and other similar encumbrances imposed by law or arising in the ordinary course of business and (i) title defects or irregularities or encroachments or survey defects, in each case that are of a minor nature and that, in the aggregate, do not interfere in any material respect with the ordinary conduct of the business of the Borrower or any Subsidiary;
(i) Liens securing Indebtedness permitted by Section 6.01(i) or (j); provided that such Liens do not apply to any property or assets of the Borrower or any Subsidiary other than the property or assets acquired, leased, constructed, replaced, repaired or improved with such Indebtedness (or the Indebtedness Refinanced thereby) or sold in the applicable Sale and Lease-Back Transaction, and accessions and additions thereto, proceeds and products thereof, customary security deposits and related property; provided, further, that individual financings provided by one lender may be cross-collateralized to other financings provided by such lender (and its Affiliates);
(j) Liens arising out of Sale and Lease-Back Transactions not prohibited by this Agreement, so long as such Liens attach only to the property sold and being leased in such transaction and any accessions and additions thereto or proceeds and products thereof and related property;
(k) Liens securing judgments that do not constitute an Event of Default under Section 7.01(j);
(l) Liens disclosed by the title insurance policies delivered on or subsequent to the Closing Date and pursuant to the Collateral and Guarantee Requirement, Section 5.10 or Schedule 5.12
and any replacement, extension or renewal of any such Lien; provided that such replacement, extension or renewal Lien shall not cover any property other than the property that was subject to such Lien prior to such replacement, extension or renewal; provided, further, that the Indebtedness and other obligations secured by such replacement, extension or renewal Lien are permitted by this Agreement;
(m) any interest or title of a lessor or sublessor under any leases or subleases entered into by the Borrower or any Subsidiary in the ordinary course of business;
(n) Liens that are contractual rights of set-off (and related pledges) (i) relating to the establishment of depository relations with banks and other financial institutions not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposits, sweep accounts, reserve accounts or similar accounts of the Borrower or any Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower or any Subsidiary, including with respect to credit card charge-backs and similar obligations, or (iii) relating to purchase orders and other agreements entered into with customers, suppliers or service providers of the Borrower or any Subsidiary in the ordinary course of business;
(o) Liens (i) arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights, (ii) attaching to commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business, (iii) encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to brokerage accounts incurred in the ordinary course of business and not for speculative purposes, (iv) in respect of Third Party Funds, (v) in favor of credit card companies pursuant to agreements therewith or (vi) relating to Cash Management Agreements;
(p) Liens securing obligations in respect of trade-related letters of credit, bankers’ acceptances, bank guarantees or similar obligations permitted under Sections 6.01(f), (k) or (o) and covering the property (or the documents of title in respect of such property) financed by such letters of credit, bankers’ acceptances or similar obligations and the proceeds and products thereof;
(q) leases or subleases, licenses or sublicenses (including with respect to Intellectual Property) granted to others in the ordinary course of business not adversely interfering in any material respect with the business of the Borrower and the Subsidiaries, taken as a whole;
(r) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(s) Liens solely on any cash earnest money deposits made by the Borrower or any of the Subsidiaries in connection with any letter of intent or purchase agreement in respect of any Investment permitted hereunder;
(t) (i) Liens with respect to property, assets or Equity Interests of any Subsidiary that is not a Loan Party securing Indebtedness or other obligations of a Subsidiary that is not a Loan Party not prohibited hereunder and (ii) Liens with respect to property, assets or Equity Interests of the applicable joint venture or the Equity Interests of such joint venture securing Indebtedness permitted under Section 6.01(bb);
(u) Liens on any amounts held by a trustee or agent under any indenture or other debt agreement issued in escrow pursuant to customary escrow arrangements pending the release thereof,
or under any indenture or other debt agreement pursuant to customary discharge, redemption or defeasance provisions;
(v) the prior rights of consignees and their lenders under consignment arrangements entered into in the ordinary course of business;
(w) agreements to subordinate any interest of the Borrower or any Subsidiary in any accounts receivable or other proceeds arising from inventory consigned by the Borrower or any of the Subsidiaries pursuant to an agreement entered into in the ordinary course of business;
(x) Liens arising from precautionary Uniform Commercial Code financing statements or similar filing regarding operating leases or other obligations not constituting Indebtedness;
(y) Liens (i) on Equity Interests of, or loans to, joint ventures (A) securing obligations of such joint venture or (B) pursuant to the relevant joint venture agreement or arrangement and (ii) on Equity Interests of, or loans to, Unrestricted Subsidiaries;
(z) Liens on securities that are the subject of repurchase agreements constituting Permitted Investments under clause (c) of the definition thereof;
(aa) [reserved];
(bb) Liens securing insurance premiums financing arrangements; provided that such Liens are limited to the applicable unearned insurance premiums;
(cc) in the case of Real Property that constitutes a leasehold interest, any Lien to which the fee simple interest (or any superior leasehold interest) is subject;
(dd) Liens securing Indebtedness or any other obligation (i) in favor of the Borrower or any Subsidiary Loan Party and (ii) granted by any Subsidiary that is not Loan Party in favor of any Subsidiary that is not a Loan Party;
(ee) Liens (i) securing Indebtedness in respect of Hedging Agreements entered into for non-speculative purposes and (ii) on cash or Permitted Investments securing Indebtedness in respect of Hedging Agreements entered into for non-speculative purposes;
(ff) Liens on goods or inventory the purchase, shipment or storage price of which is financed by a commercial letter of credit, bank guarantee or bankers’ acceptance issued or created for the account of the Borrower or any Subsidiary in the ordinary course of business; provided that such Lien secures only the obligations of the Borrower or such Subsidiaries in respect of such letter of credit, bank guarantee or banker’s acceptance to the extent permitted under Section 6.01;
(gg) Liens on cash, Permitted Investments or non-Collateral assets securing obligations in respect of Indebtedness incurred pursuant to Section 6.01(kk);
(hh) [Reserved];
(ii) (i) Liens on Collateral that are Other First Liens, so long as such Other First Liens secure Indebtedness permitted by Sections 6.01(b), 6.01(k), 6.01(l), 6.01(q), 6.01(y), 6.01(z) or 6.01(rr) (and, in each case, Permitted Refinancing Indebtedness in respect thereof), (i) Liens on Collateral that are Junior Liens, so long as such Junior Liens secure Indebtedness permitted by Section
6.01(b), 6.01(k), 6.01(l), 6.01(r), 6.01(y), 6.01(z), 6.01(hh) or 6.01(rr) (and, in each case, Permitted Refinancing Indebtedness in respect thereof) and (ii) Liens on non-Collateral assets, so long as such Liens secure Indebtedness permitted by Sections 6.01(k), 6.01(l), 6.01(s), 6.01(z) or 6.01(hh) (and in each case, Permitted Refinancing Indebtedness in respect thereof);
(jj) Liens arising out of conditional sale, title retention or similar arrangements for the sale or purchase of goods by the Borrower or any of the Subsidiaries in the ordinary course of business;
(kk) Liens to secure any Indebtedness issued or incurred to Refinance (or successive Indebtedness issued or incurred for subsequent Refinancings) as a whole, or in part, any Indebtedness secured by any Lien permitted by this Section 6.02 (but without reloading any dollar- or asset-based basket); provided, however, that (v) with respect to any Liens on the Collateral being incurred under this clause (kk), if Liens on the Collateral securing the Indebtedness being Refinanced (if any) were Junior Liens, then such Liens on such Collateral being incurred under this clause (kk) shall also be Junior Liens, (w) with respect to any Liens on the Collateral being incurred under this clause (kk), if Liens on the Collateral securing the Indebtedness being Refinanced (if any) were Other First Liens, then such Liens on such Collateral being incurred under this clause (kk) may be Other First Liens, Junior Liens and/or Liens on assets that are not Collateral, (x) (other than Liens contemplated by the foregoing clauses (v) and (w)) such new Lien shall be limited to all or part of the same type of property that secured the original Lien (plus improvements on and accessions to such property, proceeds and products thereof, customary security deposits and any other assets pursuant to after-acquired property clauses to the extent such assets secured (or would have secured) the Indebtedness being Refinanced), (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount (or accreted value, if applicable) or, if greater, committed amount of the applicable Indebtedness at the time the original Lien became a Lien permitted hereunder, (B) unpaid accrued interest and premium (including tender premiums) and (C) an amount necessary to pay any associated underwriting discounts, defeasance costs, fees, commissions and expenses and (z) on the date of the incurrence of the Indebtedness secured by such Liens, the grantors of any such Liens shall be the grantors of the Liens securing the Indebtedness being Refinanced, grantors that would have been obligated to secure such Indebtedness or Loan Parties;
(ll) other Liens with respect to property or assets of the Borrower or any Subsidiary which are not Collateral or that are secured by Liens on the Collateral that are Junior Liens so long as such Junior Liens are subject to a Permitted Junior Intercreditor Agreement not to exceed the greater of (x) $200,000,000 and (y) 0.50 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period;
(mm) Liens on property of, or on Equity Interests or Indebtedness of, any Person existing at the time (A) such Person becomes a Subsidiary or (B) such Person or property is acquired by the Borrower or any Subsidiary; provided that (i) such Liens do not extend to any other assets of the Borrower or any Subsidiary (other than accessions and additions thereto and proceeds or products thereof and other than after-acquired property), (ii) such Liens secure only those obligations which they secure on the date such Person becomes a Subsidiary or the date of such acquisition (and any extensions, renewals, replacements or refinancings thereof) and (iii) such Liens were not incurred in contemplation of such acquisition; and
(nn) (i) Liens granted in respect of Securitization Assets, Receivables Assets, related Leased Property, related Leases, equipment loans and related assets transferred to (or in respect of which a Lien is granted to) Securitization Entities or Persons that are not Subsidiaries of the Borrower in
connection with one or more Permitted Securitization Financings or Foreign Customer Finance Programs, (ii) Liens consisting of any right of set-off granted to any financial institution acting as a lockbox bank in connection with a Permitted Securitization Financing or any Foreign Customer Finance Program, (iii) Liens for the purpose of perfecting the ownership interests or Liens of a purchaser or other assignee of Securitization Assets, Receivables Assets, related Leased Property, related Leases, equipment loans and related assets pursuant to any Permitted Securitization Financing or Foreign Customer Finance Program, and cash deposits or other Liens for the purpose of securing Limited Recourse obligations, (iv) Liens arising in connection with other sales, contributions or other transfers of Securitization Assets, Receivables Assets, related Leased Property and related Leases permitted hereunder without recourse to the Borrower or the Subsidiary Loan Parties and (v) Liens on Equity Interests or property of a Foreign Subsidiary in connection with Foreign Customer Finance Programs.
For purposes of determining compliance with this Section 6.02, (A) a Lien securing an item of Indebtedness need not be permitted solely by reference to one category of permitted Liens (or any portion thereof) described in Sections 6.02(a) through (nn) but may be permitted in part under any combination thereof and (B) in the event that a Lien securing an item of Indebtedness (or any portion thereof) meets the criteria of one or more of the categories of permitted Liens (or any portion thereof) described in Sections 6.02(a) through (nn), the Borrower may, in its sole discretion, classify or reclassify, or later divide, classify or reclassify (as if incurred at such later time), such Lien securing such item of Indebtedness (or any portion thereof) in any manner that complies with this Section 6.02 and at the time of incurrence, classification or reclassification will be entitled to only include the amount and type of such Lien or such item of Indebtedness secured by such Lien (or any portion thereof) in one of the above clauses (or any portion thereof) and such Lien securing such item of Indebtedness (or any portion thereof) will be treated as being incurred or existing pursuant to only such clause or clauses (or any portion thereof) without giving pro forma effect to such item (or any portion thereof) when calculating the amount of Liens or Indebtedness that may be incurred, classified or reclassified pursuant to any other clause (or any portion thereof) at such time. In addition, with respect to any revolving loan Indebtedness or commitment to incur Indebtedness that is designated to be incurred on the date of first incurrence of such Indebtedness or Commitment, any Lien that does or that shall secure such Indebtedness may also be designated by the Borrower or any Subsidiary to be incurred on such date and, in such event, any related subsequent actual incurrence of such Lien shall be deemed for purposes of Sections 6.01 and 6.02 of this Agreement, without duplication, to be incurred on such prior date (and on any subsequent date until such commitment is funded or terminated or such election is rescinded), including for purposes of calculating usage of any Permitted Lien. In addition, with respect to any Lien securing Indebtedness that was permitted to secure such Indebtedness at the time of the incurrence of such Indebtedness, such Lien shall also be permitted to secure any Increased Amount of such Indebtedness.
Section 6.03 [Reserved].
Section 6.04 Investments, Loans and Advances. Make any Investment, except:
(a) Investments in connection with the Transactions;
(b) (i) Investments (including intercompany loans) among the Borrower and its Subsidiaries (or among Subsidiaries) and (ii) Guarantees by the Borrower or any Subsidiary of Indebtedness or other obligations not prohibited hereunder of the Borrower or any Subsidiary;
(c) Permitted Investments and Investments that were Permitted Investments when made;
(d) Investments arising out of the receipt by the Borrower or any Subsidiary of non-cash consideration for the Disposition of assets permitted under Section 6.05;
(e) loans and advances to officers, directors, employees or consultants of any Parent Entity, the Borrower or any Subsidiary (i) in the ordinary course of business in an aggregate outstanding amount (valued at the time of the making thereof, and without giving effect to any subsequent change in value) not to exceed the greater of (x) $20,000,000 and (y) 0.05 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period at any time outstanding, (ii) in respect of payroll payments and expenses in the ordinary course of business and (iii) in connection with such person’s purchase of Equity Interests of Holdings (or any Parent Entity) solely to the extent that the amount of such loans and advances shall be received by the Borrower in cash as Permitted Equity;
(f) accounts receivable, security deposits and prepayments arising and trade credit granted in the ordinary course of business and any assets or securities received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss and any prepayments and other credits to suppliers made in the ordinary course of business;
(g) Hedging Agreements entered into for non-speculative purposes;
(h) Investments existing on, or contractually committed as of, the Closing Date and, to the extent any such individual Investment is in an amount in excess of $20,000,000, set forth on Schedule 6.04 and any extensions, renewals, replacements or reinvestments thereof, so long as the aggregate amount of all Investments pursuant to this clause (h) is not increased at any time above the amount of such Investment existing or committed on the Closing Date (other than pursuant to an increase as required by the terms of any such Investment as in existence on the Closing Date or as otherwise permitted by this Section 6.04);
(i) Investments resulting from pledges and deposits under Sections 6.02(f), (g), (o), (r), (s), and (ee);
(j) loans and advances (including in respect of Loan Receivables) to suppliers and customers or users of the Borrower or any Subsidiary’s products or customers of distributors of such products (i) in connection with any Foreign Customer Finance Program or (ii) otherwise in the ordinary course of business;
(k) Investments constituting (i) Permitted Business Acquisitions and (ii) any Investment in any Subsidiary that is not a Loan Party in an amount required to permit such Subsidiary to consummate a Permitted Business Acquisition, which amount is applied, directly or indirectly, by such Subsidiary to consummate such Permitted Business Acquisition;
(l) [reserved];
(m) Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with or judgments against, customers and suppliers, in each case in the ordinary course of business or Investments acquired by the Borrower or a Subsidiary as a result of a foreclosure by the Borrower or any of the Subsidiaries with respect to any secured Investments or other transfer of title with respect to any secured Investment in default;
(n) Investments of a Subsidiary acquired after the Closing Date or of a Person merged into or consolidated with the Borrower or a Subsidiary after the Closing Date, in each case, (i) to the extent such acquisition, merger or consolidation is permitted under this Section 6.04, (ii) in the case of any acquisition, merger or consolidation, in accordance with Section 6.05 and (iii) to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;
(o) acquisitions by the Borrower of obligations of one or more directors, officers or other employees or consultants of any Parent Entity, the Borrower or any Subsidiary in connection with
such director’s, officer’s, employee’s or consultant’s acquisition of Equity Interests of the Borrower or any Parent Entity, so long as no cash is actually advanced by the Borrower or any of the Subsidiaries to such directors, officers, employees or consultants in connection with the acquisition of any such obligations;
(p) Guarantees by the Borrower or any Subsidiary of operating leases (other than Finance Lease Obligations) or of other obligations that do not constitute Indebtedness, in each case entered into by the Borrower or any Subsidiary in the ordinary course of business;
(q) Investments to the extent that payment for such Investments is made with Equity Interests of, or the cash proceeds of the issuance of Equity Interests of, any Parent Entity; provided that the issuance of such Equity Interests, and the cash proceeds thereof, are not included in any determination of the Cumulative Credit or as a Cure Amount;
(r) Investments in connection with any Permitted Securitization Financing or Foreign Customer Finance Program (including (i) Investments arising out of or in connection with sales, contributions and other transfers of Securitization Assets pursuant to any Permitted Securitization Financing or Foreign Customer Finance Program, (ii) to the extent necessary to effect a refinancing of a Permitted Securitization Financing or Foreign Customer Finance Program, Investments consisting of the contribution of the Equity Interests of a Securitization Entity by the Borrower or any of its Subsidiaries to any Subsidiary of the Borrower or to another Securitization Entity and (iii) to the extent constituting an Investment, any deposit of cash payable to or belonging to any Securitization Entity as required by and in accordance with any Permitted Securitization Documents);
(s) Investments consisting of Restricted Payments permitted under Section 6.06;
(t) Investments in the ordinary course of business consisting of Uniform Commercial Code Article 3 endorsements for collection or deposit and Uniform Commercial Code Article 4 customary trade arrangements with customers;
(u) Investments, including among the Borrower and its Subsidiaries, in connection with Cash Management Agreements;
(v) Guarantees permitted under Section 6.01 (except to the extent such Guarantee is expressly subject to this Section 6.04);
(w) advances in the form of a prepayment of expenses, so long as such expenses are being paid in accordance with customary trade terms of the Borrower or any Subsidiary;
(x) Investments by the Borrower and the Subsidiaries, including loans to any direct or indirect parent of the Borrower, if the Borrower or any other Subsidiary would otherwise be permitted
to make a Restricted Payment in such amount (provided that the amount of any such Investment shall also be deemed to be a Restricted Payment under the appropriate clause of Section 6.06 for all purposes of this Agreement);
(y) Investments in Similar Businesses; provided that the aggregate outstanding amount of Investments made after the Closing Date pursuant to this Section 6.04(y) shall not exceed the greater of (x)$160,000,000 and (y) 0.40 times EBITDA calculated on a Pro Forma Basis for the most recently ended Test Period;
(z) Investments in connection with the acquisition of retail locations from franchisees;
(aa) to the extent constituting Investments, purchases and acquisitions of inventory, supplies, materials and equipment or purchases of contract rights or licenses or leases of Intellectual Property in each case in the ordinary course of business;
(bb) the formation of Subsidiaries and Unrestricted Subsidiaries; provided that (x) any capitalization of such Subsidiary or Unrestricted Subsidiary, as the case may be, must be an Investment otherwise permitted hereunder and (y) such formation shall not be in violation of Section 5.10;
(cc) Investments in joint ventures; provided that the aggregate outstanding amount of Investments made after the Closing Date pursuant to this Section 6.04(cc) shall not exceed the greater of (x) $215,000,000 and (y) 0.55 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period;
(dd) Investments in connection with Permitted Bond Hedge Transactions;
(ee) (1) Investments in any Unrestricted Subsidiaries, in an aggregate outstanding amount not to exceed the greater of (x) $110,000,000 and (y) 0.275 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period minus (2) any portion of the Available URS Reallocation Amount used for any other purpose pursuant to the definition thereof;
(ff) other Investments so long as, immediately after giving effect to such Investment, the Net First Lien Leverage Ratio on a Pro Forma Basis would not exceed either (x) 5.00 to 1.00 or (y) the Net First Lien Leverage Ratio as of the most recently ended Test Period prior to giving effect to such Investment;
(gg) [reserved];
(hh) other Investments in an aggregate amount not to exceed the Cumulative Credit;
(ii) other Investments in an aggregate outstanding amount not to exceed the sum of (1) the greater of (x) $160,000,000 and (y) 0.40 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period, plus (2) the sum of the Available URS Reallocation Amount, the Available RDP Reallocation Amount and the Available RP Reallocation Amount;
(jj) Investments (including in joint ventures) in connection with Permitted Reorganizations and IPO Reorganization Transactions;
(kk) Investments in joint ventures to the extent required by, or made pursuant to, applicable buy/sell arrangements and/or similar binding arrangements;
(ll) Investments consisting of the licensing or contribution of Intellectual Property rights pursuant to joint marketing arrangements with other Persons;
(mm) any Investment made by any Unrestricted Subsidiary prior to the date on which such Unrestricted Subsidiary is designated as a Restricted Subsidiary so long as the relevant Investment was not made in contemplation of the designation of such Unrestricted Subsidiary as a Restricted Subsidiary; and
(nn) the issuance by the Borrower or its Subsidiaries of letters of credit, bank guarantees or similar instruments for the benefit of the Securitization Entities in an amount not to exceed the greater of (x) $85,000,000 and (y) 0.22 times EBITDA calculated on a Pro Forma Basis for the most recently ended Test Period.
Any Investment in any person other than the Borrower or a Subsidiary Loan Party that is otherwise permitted by this Section 6.04 may be made through intermediate Investments in Subsidiaries that are not Loan Parties (other than Unrestricted Subsidiaries or Securitization Entities) and such intermediate Investments shall be disregarded for purposes of determining the outstanding amount of Investments pursuant to any clause set forth above.
For purposes of determining compliance with this covenant, (A) an Investment need not be permitted solely by reference to one category of permitted Investments (or portion thereof) described in the above clauses but may be permitted in part under any combination thereof and (B) in the event that an Investment (or any portion thereof) meets the criteria of one or more of the categories of permitted Investments (or any portion thereof) described in the above clauses, the Borrower may, in its sole discretion, classify or reclassify, or later divide, classify or reclassify (as if made at such later time), such permitted Investment (or any portion thereof) in any manner that complies with this Section 6.04 and at the time of such Investment, classification or reclassification will be entitled to only include the amount and type of such Investment (or any portion thereof) in one of the categories of permitted Investments (or any portion thereof) described in the above clauses and such Investment (or any portion thereof) shall be treated as having been made or existing pursuant to only such clause or clauses (or any portion thereof) without giving pro forma effect to such item (or portion thereof) when calculating the amount of Investments that may be made, classified or reclassified pursuant to any other clause (or portion thereof) at such time.
Section 6.05 Mergers, Consolidations, Sales of Assets and Acquisitions. Merge into or consolidate with any other person, or permit any other person to merge into or consolidate with it, or Dispose of (in one transaction or in a series of related transactions) all or any part of its assets (whether now owned or hereafter acquired), or Dispose of any Equity Interests of any Subsidiary, or purchase, lease or otherwise acquire (in one transaction or a series of related transactions) all of the assets of any other person or a division or line of business of a person, in each case with respect to assets having a fair market value in excess of (i) in any individual transaction or series of related transactions, the greater of (x) $40,000,000 and (y) 0.10 times EBITDA as of the most recently ended Test Period and (ii) for all other transactions not excluded pursuant to the preceding clause (i), in any Fiscal Year, the greater of (x) $60,000,000 and (y) 0.15 times EBITDA as of the most recently ended Test Period, except that this Section 6.05 shall not prohibit:
(a) (i) Disposition of inventory, or the sale of receivables pursuant to non-recourse factoring arrangements, in each case in the ordinary course of business by the Borrower or any Subsidiary, (ii) the acquisition or lease (pursuant to an operating lease) of any other asset in the ordinary course of business by the Borrower or any Subsidiary or, with respect to operating leases, otherwise for fair market value on market terms (as determined in good faith by the Borrower), (iii) the Disposition of surplus, obsolete, damaged or worn out equipment or other property by the Borrower or any Subsidiary in the ordinary course of business or consistent with past practice or industry norm or determined in good faith by the Borrower to be no longer used or useful or necessary in the operation of the business of the Borrower or any Subsidiary, (iv) assignments by the Borrower and any Subsidiary in connection with insurance arrangements of their rights and remedies under, and with respect to, any acquisition or merger agreement entered into in connection with a Permitted Business Acquisition or similar Investment in respect of any breach of representations and warranties set forth therein or (v) the Disposition of Permitted Investments in the ordinary course of business;
(b) (i) the merger or consolidation of any Subsidiary of the Borrower (other than the
Thai Borrower) with or into the Borrower in a transaction in which the Borrower is the survivor, (ii) the merger or consolidation of any Subsidiary with or into any other Subsidiary (including an Unrestricted Subsidiary) in a transaction in which the surviving or resulting entity is or becomes a Subsidiary (other than an Unrestricted Subsidiary) (or, in the case of any merger or consolidation involving the Thai Borrower, is the Thai Borrower) and, in the case of each of clauses (i) and (ii), no person other than the Borrower or a Subsidiary receives any consideration (unless otherwise permitted by Section 6.04), (iii) [reserved], (iv) the liquidation or dissolution or change in form of entity of any Subsidiary (other than the Thai Borrower) if the Borrower determines in good faith that such liquidation, dissolution or change in form is in the best interests of the Borrower and is not materially disadvantageous to the Lenders, (v) any Subsidiary (other than the Thai Borrower) may merge or consolidate with any other person in order to effect an Investment permitted pursuant to Section 6.04 so long as the continuing or surviving person shall be a Subsidiary (unless otherwise permitted by Section 6.04), which shall be the Borrower if such merger or consolidation involves the Borrower (in each case, unless otherwise permitted by Section 6.04) and which together with each of its Subsidiaries shall have complied with any applicable requirements of Section 5.10 or (vi) any Subsidiary (other than the Thai Borrower) may merge or consolidate with any other person in order to effect an Asset Sale otherwise permitted pursuant to this Section 6.05;
(c) Dispositions to a Subsidiary (upon voluntary liquidation or otherwise);
(d) Sale and Lease-Back Transactions not prohibited by this Agreement;
(e) (i) Investments permitted by Section 6.04, Permitted Liens permitted by Section 6.02 and Restricted Payments permitted by Section 6.06 and (ii) any Disposition made in connection with the Transactions;
(f) Dispositions of defaulted receivables in the ordinary course of business and not as part of an accounts receivables financing transaction;
(g) other Dispositions of assets; provided that the Net Proceeds thereof, if any, are applied in accordance with Section 2.11(b) to the extent required thereby;
(h) Permitted Business Acquisitions (including any merger, consolidation or amalgamation in order to effect a Permitted Business Acquisition);
(i) leases, licenses or subleases or sublicenses of any real or personal property or Intellectual Property or assignments of the same in the ordinary course of business;
(j) Dispositions of inventory or Dispositions or abandonment of Intellectual Property of the Borrower and the Subsidiaries determined in good faith to be no longer used or useful, necessary, otherwise not material in the operation of the business of the Borrower or any of the Subsidiaries or no longer economical to maintain;
(k) Dispositions in an amount not to exceed the greater of (x) $75,000,000 and (y) 0.20 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period during any Fiscal Year which, if not used in any such year, may be carried back to the immediately preceding Fiscal Year and carried forward to any subsequent Fiscal Year;
(l) (i) Dispositions (including by capital contribution) of assets to Securitization
Entities to the extent specifically required pursuant to, or in connection with, any Permitted Securitization Financing or Foreign Customer Finance Program and (ii) sales, contributions and other transfers of Securitization Assets, Receivables Assets, related Leased Property, related Leases, equipment loans and related assets (including contract rights) by the Borrower and its Subsidiaries (including the Securitization Entities) in connection with any Permitted Securitization Financing pursuant to the applicable Permitted Securitization Documents, including any Disposition in lieu of an Investment that would be permitted under Section 6.04(r);
(m) to the extent constituting a Disposition, any termination, settlement or extinguishment of obligations in respect of any Hedging Agreement and Dispositions in connection with Cash Management Agreements;
(n) any exchange of assets for services and/or other assets used or useful in a Similar Business of comparable or greater value; provided that to the extent the consideration received consists of assets, at least 90% of the consideration received by the transferor consists of assets or services that will be used in a business or business activity permitted hereunder;
(o) the Borrower or Subsidiary may be merged, consolidated or amalgamated with or into (including pursuant to any successive mergers, consolidations or amalgamations of entities) the Borrower or any other Subsidiary (the continuing or surviving person after giving effect to such transaction or successive transactions, the “Surviving Person”); provided that (i) in the case of any such merger, consolidation or amalgamation by, with or into the Borrower, either (A) the Borrower shall be the Surviving Person or (B) if the Surviving Person is not the Borrower, either (1) (x) the Surviving Person shall be an entity organized or existing under the laws of the United States of America, any state thereof or the District of Columbia and (y) the Surviving Person shall expressly assume the Loan Obligations of the Borrower, as applicable, in a manner reasonably satisfactory to the Administrative Agent (any Surviving Person that assumes the Loan Obligations of the Borrower, a “Successor Borrower”) or (2) in the case of a merger, consolidation or amalgamation of an Additional Borrower, such Additional Borrower resigns as the Borrower prior to or substantially concurrently with the consummation of such merger, consolidation or amalgamation in accordance with Section 1.12; it being understood and agreed that if the foregoing conditions are satisfied, the Successor Borrower will succeed to, and be substituted for, the Borrower under this Agreement and the other Loan Documents and (ii) in the case of any such merger, consolidation or amalgamation by, with or into the Thai Borrower, either (A) the Thai Borrower shall be the Surviving Person or (B) if the Surviving Person is not the Thai Borrower, (x) the Surviving Person shall be an entity organized or existing under the laws of Thailand
and (y) the Surviving Person shall expressly assume the Loan Obligations of the Thai Borrower, as applicable, in a manner reasonably satisfactory to the Administrative Agent;
(p) Dispositions of the Equity Interests of, or Indebtedness owed by, or other securities issued by, any Unrestricted Subsidiary;
(q) [Reserved];
(r) (i) to the extent constituting a Disposition, any deposit of cash payable to or
belonging to any Securitization Entity as required by and in accordance with any Permitted Securitization Document, (ii) the sale or discount, in each case without recourse, of Receivables Assets arising in the ordinary course of business, but only in connection with the compromise or collection thereof to the extent not transferred in connection with any Permitted Securitization Financing or Foreign Customer Finance Program or (iii) to the extent necessary to effect a refinancing of a Permitted Securitization Financing or a Foreign Customer Finance Program, Dispositions of the Equity Interests of a
Securitization Entity by the Borrower or any of its Subsidiaries to the Borrower, any Subsidiary of the Borrower or to another Securitization Entity; provided, that such Disposition shall either be for arm’s length consideration or constitute an Investment under Section 6.04(r);
(s) Dispositions of non-core assets acquired in connection with a Permitted Business Acquisition or other Permitted Investment or made to obtain the approval of an anti-trust authority and any Dispositions made to comply with an order of any agency or state authority or other regulatory body or any applicable law or regulation;
(t) Dispositions of Investments in joint ventures to the extent required by, or made pursuant to, applicable buy/sell arrangements and/or similar binding arrangements;
(u) Dispositions, mergers, consolidations, amalgamations, conveyances or similar events constituting any part of a Permitted Reorganization or IPO Reorganization Transaction;
(v) Dispositions of assets which (i) are not Collateral not to exceed the greater of (x) $200,000,000 and (y) 0.50 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period or (ii) were purchased with Equity Interests of, or the cash proceeds of the issuance of Equity Interests of, any Parent Entity (and contributed to the Borrower as cash, property or Permitted Equity) or the Borrower so long as such proceeds were not applied to increase the Cumulative Credit (provided that any such Equity Interests issued by the Borrower shall be Qualified Equity Interests);
(w) (i) sales of Loan Receivables and equipment loans on a non-recourse basis to a third parties in an amount equal to at least 70% (or with respect to sales of equipment loans under a Foreign Customer Finance Program, 50%) of the fair market value thereof and (ii) the sale of accounts receivable and similar Receivables Assets pursuant to arrangements customary to the industry or any Foreign Customer Finance Program.;
(x) the sale of accounts receivable and similar Receivables Assets pursuant to arrangements customary to the industry, pursuant to a customary factoring agreement or otherwise in the ordinary course of business;
(y) any merger, consolidation, Disposition, amalgamation, conveyance or similar event the purpose of which is to reincorporate or reorganize that does not result in the material impairment of the guarantees under the Loan Documents and the security interest of the Collateral Agent
for the benefit of the Lenders in the Collateral or the Guarantees in favor of the Lenders, in each case, taken as a whole; and
(z) Dispositions in connection with any Permitted Bond Hedge Transaction, any Permitted Warrant Transaction or any Packaged Right.
Notwithstanding anything to the contrary contained in Section 6.05 above, no Disposition of assets under Section 6.05(g) shall be permitted unless (i) such Disposition is for at least fair market value (as determined in good faith by the Borrower), or if not for fair market value, the shortfall is permitted as an Investment under Section 6.04 and (ii) at least 75% (or 50% if the proceeds of such Disposition will not be subject to the reinvestment rights contemplated by the definition of “Net Proceeds”) of the proceeds of such Disposition (except to Loan Parties and other than any consideration consisting of a Permitted Asset Swap) consist of cash or Permitted Investments; provided that the provisions of this clause (ii) shall not apply to any individual transaction or series of related transactions involving assets with a fair market value (as determined in good faith by the Borrower) of not more than the greater of (x) $60,000,000 and (y) 0.15 times EBITDA calculation on a Pro Forma basis for the then most recently ended Test Period or to other transactions involving assets with a fair market value (as determined in good faith by the Borrower) of not more than the greater of (x) $120,000,000 and (y) 0.30 times EBITDA calculated on a Pro Forma basis for the then most recently ended Test Period; provided, further, that for purposes of this clause (ii), each of the following shall be deemed to be cash: (a) the amount of any liabilities (as shown on the Borrower’s or such Subsidiary’s most recent balance sheet or in the notes thereto) that are assumed by the transferee of any such assets or are otherwise cancelled in connection with such transaction, (b) any notes or other obligations or other securities or assets received by the Borrower or such Subsidiary from the transferee that are converted by the Borrower or such Subsidiary into cash within 180 days after receipt thereof (to the extent of the cash received), (c) any Designated Non-Cash Consideration received by the Borrower or any of its Subsidiaries in such Disposition having an aggregate fair market value (as determined in good faith by the Borrower), taken together with all other Designated Non-Cash Consideration received pursuant to this clause (c) that is at that time outstanding, not to exceed the greater of (x) $150,000,000 and (y) 0.375 times EBITDA calculated on a Pro Forma basis for the most recently ended Test Period (with the fair market value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value), (d) the amount of Indebtedness of any Subsidiary that is no longer a Subsidiary as a result of the Asset Sale, to the extent that Holdings, the Borrower and each other Subsidiary are released from any guarantee of payment of such Indebtedness in connection with such Asset Sale and (e) consideration consisting of Indebtedness of the Borrower or a Subsidiary (other than Indebtedness that is subordinated in right of payment to the Loan Obligations) received from Persons who are not Holdings, the Borrower or a Subsidiary in connection with the Asset Sale and that is cancelled. For purposes of this Section 6.05, the fair market value of any assets Disposed of by the Borrower or any Subsidiary shall be determined in good faith by the Borrower and may be determined either, at the option of the Borrower, at the time of such Disposition or as of the date of the definitive agreement with respect to such Disposition.
For purposes of determining compliance with this Section 6.05, (A) a Disposition need not be permitted solely by reference to one category of permitted Disposition (or any portion thereof) described in this Section 6.05 but may be permitted in part under any combination thereof and (B) in the event that a Disposition (or any portion thereof) meets the criteria of one or more of the categories of permitted Disposition (or any portion thereof) described this Section 6.05, the Borrower may, in its sole discretion, classify or reclassify, or later divide, classify or reclassify (as if incurred at such later time) such Disposition (or any portion thereof) in any manner that complies with this Section 6.05 and at the time of such Disposition, classification or reclassification will be entitled to only include the amount and type of
such Disposition (or any portion thereof) in one of the above clauses (or any portion thereof) and such Disposition (or any portion thereof) will be treated as being made or existing pursuant to only such clause or clauses (or any portion thereof) without giving pro forma effect to such item (or any portion thereof) when calculating the amount of Dispositions that may be made, classified or reclassified pursuant to any other clause (or portion thereof) at such time.
Section 6.06 Dividends and Distributions. Declare or pay any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, with respect to any Equity Interests of the Borrower or its Subsidiaries (other than dividends and distributions on Equity Interests payable solely by the issuance of additional Equity Interests (other than Disqualified Stock) of the person paying such dividends or distributions) or directly or indirectly redeem, purchase, retire or otherwise acquire for value (or permit any Subsidiary to purchase or acquire) any of the Borrower’s or its Subsidiaries’ Equity Interests or set aside any amount for any such purpose (other than through the issuance of additional Equity Interests (other than Disqualified Stock) of the person redeeming, purchasing, retiring or acquiring such shares) (all of the foregoing, but excluding any payment on account of any Indebtedness convertible into or exchangeable for Equity Interests or on account of Packaged Rights, “Restricted Payments”); provided, however, that:
(a) Restricted Payments to comply with the obligations of any Parent Entity under any customary (as determined by the Borrower in good faith) “tax receivable agreement” established in connection with a Qualified IPO of Holdings or such Parent Entity;
(b) Restricted Payments may be made in respect of (i) general corporate operating and overhead, legal, accounting and other professional fees and expenses of Holdings or any Parent Entity, (ii) fees and expenses related to any public offering or private placement of Equity Interests or Indebtedness of Holdings or any Parent Entity, whether or not consummated, (iii) franchise and similar Taxes and other fees and expenses in connection with the maintenance of Holdings’ (or any Parent Entity’s) existence and Holdings’ (or any Parent Entity’s indirect) ownership of the Borrower or its Subsidiaries (including its Unrestricted Subsidiaries and Securitization Entities), (iv) payments permitted by Section 5.16(b) (other than Section 5.16(b)(vii)), (v) (a) in respect of any taxable period for which the Borrower and/or any of its Subsidiaries (including its Unrestricted Subsidiaries and Securitization Entities) are members of a consolidated, combined, affiliated, unitary or similar Tax group for U.S. federal and/or applicable state, local or foreign Tax purposes of which a direct or indirect parent of the Borrower is the common parent, or for which the Borrower is a disregarded entity for U.S. federal income Tax purposes that is wholly owned (directly or indirectly) by a C corporation for U.S. federal and/or applicable state, local or foreign Tax purposes, Restricted Payments to any direct or indirect parent of the Borrower in an amount not to exceed the amount of any U.S. federal, state, local and/or foreign income Taxes that the Borrower and/or its Subsidiaries, as applicable, would have paid for such taxable period had the Borrower and/or its Subsidiaries, as applicable, been a stand-alone taxpayer or a stand-alone group and (b) in respect of any taxable period for which the Borrower is a partnership or disregarded entity for U.S. federal and/or applicable state, local or foreign Tax purposes (other than a disregarded entity that is wholly owned (directly or indirectly) by a C corporation for U.S. federal and/or applicable state, local or foreign Tax purposes), Restricted Payments to any direct or indirect parent of the Borrower in an amount necessary to permit such direct or indirect parent of the Borrower to pay or, if such parent is a partnership or disregarded entity for U.S. federal income tax purposes, to make a pro rata distribution to its owners such that each direct or indirect owner of the Borrower receives an amount from such distribution sufficient to enable such owner to pay its U.S. federal, state, local and/or foreign income Taxes (as applicable) attributable to the taxable income of Borrower and its Subsidiaries that is allocated to such owner with respect to such taxable period (assuming that each owner is subject to Tax at the highest combined marginal federal, state, local and/or foreign income Tax rate applicable to any
owner for such taxable period and taking into account the deductibility of state and local income Taxes for U.S. federal income Tax purposes (and any limitations thereon), any losses of the Borrower and its Subsidiaries that are available to reduce taxable income (taking into account the limitations on the use of net operating losses by taxable corporations), any basis steps ups under Section 734(b) or 743(b) of the Code and the character of any income, gain or loss) and (vi) customary salary, bonus and other benefits payable to, and indemnities provided on behalf of, officers, directors, employees and consultants of any Parent Entity, in each case in order to permit any Parent Entity to make such payments;
(c) Restricted Payments may be made, the proceeds of which are used to purchase or redeem the Equity Interests of any Parent Entity (including related stock appreciation rights or similar securities) held by future, current or former directors, consultants, officers, members of management or employees (and their respective estates, heirs, family members, spouses, domestic partners, former spouses or former domestic partners) of any Parent Entity, the Borrower or any of the Subsidiaries; provided that the aggregate amount of such purchases or redemptions under this clause (c) purchased other than upon such person’s death, disability, retirement or termination of employment or pursuant to any Plan or stock rights agreement shall not exceed in any Fiscal Year, which, if not used in any Fiscal Year, may be carried back to the immediately preceding Fiscal Year and carried forward to any subsequent Fiscal Year, the sum of (1) (i) prior to a Qualified IPO, the greater of (x) $40,000,000 and (y) 0.10 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period and (ii) following a Qualified IPO, the greater of (x) $80,000,000 and (y) 0.20 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period, plus (2) the amount of net proceeds contributed to the Borrower that were received by any Parent Entity during such Fiscal Year from sales of Equity Interests of any Parent Entity to directors, consultants, officers or employees of any Parent Entity, the Borrower or any Subsidiary in connection with permitted employee compensation and incentive arrangements (provided that such proceeds are not included in any determination of the Cumulative Credit), plus (3) the amount of net proceeds of any key-man life insurance policies received during such Fiscal Year, plus (4) the amount of any cash bonuses otherwise payable to members of management, directors or consultants of any Parent Entity, the Borrower or any Subsidiaries in connection with the Transactions that are foregone in return for the receipt of Equity Interests; provided, further, that cancellation of Indebtedness owing to the Borrower or any Subsidiary from officers, directors and members of management of Holdings, any Parent Entity, the Borrower or any Subsidiaries in connection with a repurchase of Equity Interests of Holdings or any Parent Entity will not be deemed to constitute a Restricted Payment for purposes of this Section 6.06;
(d) any Person may make non-cash repurchases of Equity Interests deemed to occur upon exercise of stock options if such Equity Interests represent a portion of the exercise price of such options;
(e) Restricted Payments may be made in an aggregate amount equal to a portion of the Cumulative Credit on the date of such election that the Borrower elects to apply to this Section 6.06(e); provided that no Restricted Payment made in reliance on the Cumulative Credit Growth Amount shall be permitted if a Specified Event of Default shall have occurred and be continuing;
(f) [reserved];
(g) Restricted Payments may be made to pay, or to allow any Parent Entity to make payments, in cash, in lieu of the issuance of fractional shares, upon the exercise of warrants or upon the conversion or exchange of Equity Interests of any such person;
(h) after a Qualified IPO, Restricted Payments may be made to pay, or to allow any Parent Entity to pay, dividends and make distributions to, or repurchase or redeem shares from, its equity holders in an amount per annum equal to the sum of (x) 7.00% of the net cash proceeds received from such Qualified IPO plus (y) 7.00% of the Market Capitalization;
(i) Restricted Payments may be made to finance any Investment by any Parent Entity that if made by the Borrower or any Subsidiary directly would be permitted to be made pursuant to Section 6.04; provided that (A) such Restricted Payment shall be made substantially concurrently with the closing of such Investment, (B) such Parent Entity shall, immediately following the closing thereof, cause (1) all property acquired (whether assets or Equity Interests) to be contributed to the Borrower or a Subsidiary or (2) the merger, consolidation or amalgamation (to the extent permitted in Section 6.05) of the person formed or acquired into the Borrower or a Subsidiary in order to consummate such Permitted Business Acquisition or Investment, in each case, in accordance with the requirements of Section 5.10 and (C) such Investment shall not be included in the calculation of the Cumulative Credit;
(j) other Restricted Payments may be made in an aggregate amount not to exceed the sum of (1) the greater of (i) $220,000,000 and (ii) 0.55 times EBITDA calculated on a Pro Forma Basis for the Test Period ended immediately prior to the date of such Restricted Payment, minus (2) any portion of the Available RP Reallocation Amount used for any purpose pursuant to the definition thereof;
(k) any Restricted Payment may be made pursuant to (i) conversions or exchanges by holders (including any cash payment upon conversions), payments of interest or principal, redemptions or required repurchases with respect to any Convertible Indebtedness permitted to be incurred under the terms of this Agreement, (ii) any payments in connection with a Permitted Bond Hedge Transaction and (iii) the settlement of any related Permitted Warrant Transaction (x) by delivery of shares of Equity Interests of any Parent Entity upon settlement thereof or (y) by (A) set-off against the related Permitted Bond Hedge Transaction or (B) payment of an early termination amount thereof in common stock upon any early termination thereof;
(l) Restricted Payments may be made on or before thirty days following the Closing Date in connection with the Closing Date Dividend;
(m) other Restricted Payments may be made; provided that no Specified Event of Default has occurred and is continuing or would result therefrom and after giving effect to such Restricted Payment, the Net First Lien Leverage Ratio on a Pro Forma Basis as of the most recently ended Test Period would not exceed 4.50 to 1.00;
(n) [reserved];
(o) Restricted Payments constituting any part of a Permitted Reorganization or IPO Reorganization Transaction;
(p) Restricted Payments constituting Equity Interests of, or Indebtedness owed to, the Borrower or a Subsidiary by, an Unrestricted Subsidiary (or a Subsidiary that owns an Unrestricted Subsidiary so long as such Subsidiary owns no material assets other than Equity Interests and Indebtedness of an Unrestricted Subsidiary); provided that the primary asset of such Unrestricted Subsidiary is not cash or cash equivalents;
(q) so long as no Specified Event of Default shall have occurred and be continuing, Restricted Payments in an aggregate amount not to exceed in any Fiscal Year the greater of (x)
$65,000,000 and (y) 0.15 times EBITDA calculated on a Pro Forma Basis for the most recently ended Test Period, which if not used in any Fiscal Year, may be carried back to the immediately preceding Fiscal Year and carried forward to any subsequent Fiscal Year, to enable any Parent Entity to (x) pay dividends on Preferred Equity Interests, including dividends, that were not paid on the original payment date specified therefor or (y) redeem any such Preferred Equity Interests; and
(r) dividends or distributions to permit any Parent Entity to make payments on promissory notes (“Management Notes”) issued to any directors, officers, employees or consultants of any Parent Entity, the Borrower or any of their respective Subsidiaries to finance the purchase of Equity Interests of Holdings or any Parent Entity or options to purchase Equity Interests of Holdings or any Parent Entity upon the death, disability or retirement or other termination of employment of any such director, officer, employee or consultant; provided that the aggregate amount of payments that are made in reliance on this Section 6.06(r) (net of any proceeds received by Holdings in connection with resales of any Equity Interests or options to purchase Equity Interests so purchased) shall not exceed in any Fiscal Year, which, if not used in any Fiscal Year, may be carried back to the immediately preceding Fiscal Year and carried forward to the immediately subsequent Fiscal Year, the sum of (1) the greater of (x) $50,000,000 and (y) 0.125 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period, plus (2) the amount of net proceeds of any key-man life insurance policies received during such Fiscal Year.
Notwithstanding anything herein to the contrary the foregoing provisions of this Section 6.06 will not prohibit the payment of any Restricted Payment or the consummation of any redemption, purchase, defeasance or other payment within 60 days after the date of declaration thereof or the giving of notice, as applicable, if at the date of declaration or the giving of such notice such payment would have complied with the provisions of this Agreement.
For purposes of determining compliance with this Section 6.06, (A) a Restricted Payment need not be permitted solely by reference to one category of permitted Restricted Payments (or any portion thereof) described in this Section 6.06 but may be permitted in part under any combination thereof and (B) in the event that a Restricted Payment (or any portion thereof) meets the criteria of one or more of the categories of permitted Restricted Payments (or any portion thereof) described this Section 6.06, the Borrower may, in its sole discretion, classify or reclassify, or later divide, classify or reclassify (as if incurred at such later time) such Restricted Payment (or any portion thereof) in any manner that complies with this Section 6.06 and at the time of such Restricted Payment, classification or reclassification will be entitled to only include the amount and type of such Restricted Payment (or any portion thereof) in one of the above clauses (or any portion thereof) and such Restricted Payment (or any portion thereof) will be treated as being made or existing pursuant to only such clause or clauses (or any portion thereof) without giving pro forma effect to such item (or any portion thereof) when calculating the amount of Restricted Payments that may be made, classified or reclassified pursuant to any other clause (or portion thereof) at such time.
Section 6.07 [Reserved].
Section 6.08 [Reserved].
Section 6.09 Limitation on Payments and Modifications of Indebtedness; Etc. (a) Amend or modify in any manner materially adverse to the Lenders when taken as a whole (as determined in good faith by the Borrower), or grant any waiver or release under or terminate in any manner (if such granting or termination shall be materially adverse to the Lenders when taken as a whole (as determined in good faith by the Borrower)), the articles or certificate of incorporation, by-laws, limited liability company
operating agreement, partnership agreement or other organizational or constitutive documents of the Borrower, the Thai Borrower or any of the Subsidiary Loan Parties.
(b) (i) Make, directly or indirectly, any cash payment of, or in respect of, principal of or interest on any Junior Financing, or any cash payment, including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination in respect of any Junior Financing, in each case in excess of the greater of (x) $50,000,000 and (y) 0.125 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period (a “Restricted Debt Payment”), except for:
(A) Refinancings with any Indebtedness permitted to be incurred under Section 6.01 (which, to the extent such Indebtedness being refinanced is secured by Junior Liens, such refinancing Indebtedness shall be unsecured or secured on a junior lien basis);
(B) payments of regularly-scheduled interest and fees due thereunder, other non-principal payments thereunder, any mandatory prepayments of principal, interest and fees thereunder, scheduled payments thereon necessary to avoid the Junior Financing from constituting “applicable high yield discount obligations” within the meaning of Section 163(i)(l) of the Code, and, to the extent this Agreement is then in effect, principal on the scheduled maturity date of any Junior Financing (or within twelve months thereof);
(C) Restricted Debt Payments with the proceeds contributed or received by the Borrower from the issuance, sale or exchange by any Parent Entity of Equity Interests (solely to the extent contributed to the Borrower in cash or Permitted Equity); provided that such proceeds are not included in any determination of the Cumulative Credit, as a Cure Amount;
(D) Restricted Debt Payments made no more than one year prior to the stated maturity or time required for the payment of such principal amount, sinking fund or similar deposit;
(E) Restricted Debt Payments in an aggregate amount, not to exceed the portion of the Cumulative Credit on the date of such election that the Borrower elects to apply to this Section 6.09(b)(i)(E); provided that no Restricted Debt Payment made in reliance on the Cumulative Credit Growth Amount shall be permitted if a Specified Event of Default shall have occurred and be continuing;
(F) other Restricted Debt Payments in an aggregate amount not to exceed the sum of (1) the greater of (x) $150,000,000 and (y) 0.375 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period, plus (2) the Available RP Reallocation Amount, minus (3) any portion of the Available RDP Reallocation Amount used for any other purpose pursuant to the definition thereof;
(G) conversion of Junior Financing to, or prepayments or redemptions with the proceeds of, Qualified Equity Interests of the Borrower or any Subsidiary or Equity Interests of any Parent Entity, that do not increase the Cumulative Credit, constitute a Cure Amount; and
(H) other Restricted Debt Payments; provided that no Specified Event of Default has occurred and is continuing or would immediately result therefrom and, after giving effect to such payment or distribution, the Net First Lien Leverage Ratio on a Pro Forma Basis would not exceed 4.50 to 1.00; or
(ii) Amend or modify, or permit the amendment or modification of, any provision of any Junior Financing that constitutes Material Indebtedness, or any agreement, document or instrument evidencing or relating thereto, other than amendments or modifications that (A) do not contravene binding intercreditor or subordination agreements or (B) otherwise comply with the definition of “Permitted Refinancing Indebtedness.”
For purposes of determining compliance with this Section 6.09(b), (A) a Restricted Debt Payment need not be permitted solely by reference to one category of permitted Restricted Payments (or any portion thereof) described in this Section 6.09(b) but may be permitted in part under any combination thereof and (B) in the event that a Restricted Debt Payment (or any portion thereof) meets the criteria of one or more of the categories of permitted Restricted Payments (or any portion thereof) described this Section 6.09(b), the Borrower may, in its sole discretion, classify or reclassify, or later divide, classify or reclassify (as if incurred at such later time) such Restricted Debt Payment (or any portion thereof) in any manner that complies with this Section 6.09(b) and at the time of such Restricted Debt Payment, classification or reclassification will be entitled to only include the amount and type of such Restricted Debt Payment (or any portion thereof) in one of the above clauses (or any portion thereof) and such Restricted Debt Payment (or any portion thereof) will be treated as being made or existing pursuant to only such clause or clauses (or any portion thereof) without giving pro forma effect to such item (or any portion thereof) when calculating the amount of Restricted Debt Payments that may be made, classified or reclassified pursuant to any other clause (or portion thereof) at such time.
(c) Permit any Subsidiary Loan Party to enter into any agreement or instrument that by its terms restricts the granting of Liens by the Borrower or such Subsidiary Loan Party pursuant to the Security Documents, in each case other than those arising under any Loan Document, except, in each case, restrictions existing by reason of:
(A) restrictions imposed by applicable law;
(B) contractual encumbrances or restrictions in effect on the Closing Date, including under Indebtedness existing on the Closing Date that is permitted under Section 6.01(a) or any agreements related to any Permitted Refinancing Indebtedness in respect of any such Indebtedness and, in each case, any similar contractual encumbrances or restrictions and any amendment, modification, supplement, replacement or refinancing of such agreements or instruments that does not materially expand the scope of any such encumbrance or restriction (as determined in good faith by the Borrower);
(C) any restriction on a Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of the Equity Interests or assets of a Subsidiary pending the closing of such sale or disposition;
(D) customary provisions in joint venture agreements and other similar agreements applicable to joint ventures entered into in the ordinary course of business;
(E) any restrictions imposed by any agreement relating to secured Indebtedness permitted by this Agreement to the extent that such restrictions apply only to the property or assets securing such Indebtedness;
(F) any restrictions imposed by any agreement relating to Indebtedness incurred pursuant to Section 6.01 or Permitted Refinancing Indebtedness in respect thereof, to the extent such restrictions are not materially more restrictive, taken as a whole, than the restrictions contained in this Agreement or are market terms at the time of issuance (in each case as determined in good faith by the Borrower);
(G) customary provisions contained in leases or licenses of Intellectual Property and other similar agreements entered into in the ordinary course of business;
(H) customary provisions restricting subletting or assignment of any lease governing a leasehold interest;
(I) customary provisions restricting assignment of any agreement entered into in the ordinary course of business;
(J) customary restrictions and conditions contained in any agreement relating to the sale, transfer, lease or other disposition of any asset permitted under Section 6.05 pending the consummation of such sale, transfer, lease or other disposition;
(K) customary restrictions and conditions contained in the document relating to any Lien, so long as (1) such Lien is a Permitted Lien and such restrictions or conditions relate only to the specific asset subject to such Lien, and (2) such restrictions and conditions are not created for the purpose of avoiding the restrictions imposed by this Section 6.09;
(L) customary net worth provisions contained in Real Property leases entered into by Subsidiaries, so long as the Borrower has determined in good faith that such net worth provisions would not reasonably be expected to impair the ability of the Borrower and the Subsidiaries to meet their ongoing obligations;
(M) any agreement in effect at the time such subsidiary becomes a Subsidiary, so long as such agreement was not entered into in contemplation of such person becoming a Subsidiary;
(N) restrictions in agreements representing Indebtedness permitted under Section 6.01 (i) of a Subsidiary that is not a Subsidiary Loan Party, (ii) that are, taken as a whole, in the good faith judgment of the Borrower, not materially more restrictive than customary market terms for Indebtedness of such type, (iii) that are, taken as a whole, in the good faith judgment of the Borrower, not materially more restrictive than the restrictions in the Loan Documents or (iv) that, in the good faith determination of the Borrower, will not materially impair the ability of the Borrower to make the payments required under the Loan Documents;
(O) customary restrictions contained in leases, subleases, licenses or Equity Interests or asset sale agreements otherwise permitted hereby as long as such restrictions relate to the Equity Interests and assets subject thereto;
(P) restrictions on cash or other deposits imposed by customers under contracts entered into in the ordinary course of business;
(Q) restrictions contained in any Permitted Securitization Document or in respect of any Permitted Securitization Financing or any Foreign Customer Finance Program; and
(R) any encumbrances or restrictions of the type referred to above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of or similar arrangements to the contracts, instruments or obligations referred to in clauses (A) through (Q) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements, refinancings or similar arrangements are, in the good faith judgment of the Borrower, not materially more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions as contemplated by such provisions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement, refinancing or similar arrangement.
Section 6.10 [Reserved].
Section 6.11 Financial Covenant. With respect to the Revolving Facility only, permit the Net First Lien Leverage Ratio as of the last day of any fiscal quarter (beginning with the end of the second full fiscal quarter ending after the Closing Date), solely to the extent that on such date the Testing Condition is satisfied, to exceed 8.50 to 1.00.
ARTICLE VII
Events of Default
Section 7.01 Events of Default. In case any of the following events, as applicable to the Borrower, the Thai Borrower and its Subsidiaries that are Material Subsidiaries and, where set forth below, Holdings (each, an “Event of Default”):
(a) any representation or warranty made or deemed made by the Borrower or any Subsidiary herein or in any other Loan Document or any certificate or document delivered pursuant hereto or thereto shall prove to have been false or misleading in any material respect when so made or deemed made and such false or misleading representation or warranty (if curable) shall remain false or misleading in any material respect for a period of 30 days after notice thereof from the Administrative Agent to the Borrower;
(b) default shall be made in the payment of any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise; provided that any such failure to pay caused by administrative or technical error (or any error in calculation) or Erroneous Payment, in each case, pursuant to an invoice from the Administrative Agent of a lessor amount than the amount due, shall not
constitute an Event of Default (or Specified Event of Default) if payment is made within two Business Days of the Administrative Agent notifying the Borrower of such error;
(c) default shall be made in the payment of any interest on any Loan or the reimbursement with respect to any L/C Disbursement or in the payment of any Fee or any other amount (other than an amount referred to in clause (b) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue un-remedied for a period of five Business Days; provided that any such failure to pay caused by administrative or technical error (or any error in calculation) or Erroneous Payment, in each case, pursuant to an invoice from the Administrative Agent of a lessor amount than the amount due, shall not constitute a Default or an Event of Default (or Specified Event of Default) if payment is made within two Business Days of the Administrative Agent notifying the Borrower of such error;
(d) default shall be made in the due observance or performance by Holdings (to the extent applicable to it) or the Borrower or the Thai Borrower of any covenant, condition or agreement contained in, Sections 5.01(a) or 5.05(a) or Article VI; provided that the failure to observe or perform the Financial Covenant shall not in and of itself constitute an Event of Default with respect to any Term Facility unless the Required Revolving Facility Lenders have terminated the Revolving Facility Commitments and have accelerated the Revolving Facility Loans then outstanding as a result of such breach; provided, further, that (x) the delivery of a notice of Default or Event of Default at any time or (y) the curing of the underlying Default or Event of Default with respect to which notice is required to be given will, in each case, cure an Event of Default arising from the failure to timely deliver such notice of Default or Event of Default, as applicable, unless, in the case of clause (y) only, a Responsible Officer of Holdings or another Loan Party had Knowledge of the Default or Event of Default. For purposes of this Section 7.01(d)), “Knowledge” by a Responsible Officer of Holdings or another Loan Party includes the knowledge that such individual would have obtained if such individual had acted in good faith to discharge his or her duties with the same level of diligence and care as would reasonably be expected from an officer in a substantially similar position, assuming Holdings or such other Loan Party maintains reasonable routines, policies, processes and procedures for communicating significant information to the Responsible Officer (“Processes”) and there is reasonable compliance with Processes;
(e) default shall be made in the due observance or performance by Holdings (to the extent applicable to it), the Borrower, the Thai Borrower or any Material Subsidiary that is a Loan Party of any covenant, condition or agreement contained in any Loan Document (other than those specified in clauses (b), (c) and (d) above) and such default shall continue un-remedied for a period of 30 days after notice thereof from the Administrative Agent to the Borrower;
(f) the Borrower, the Thai Borrower or any Material Subsidiary that is a Loan Party fails to observe or perform any agreement or condition relating to any Material Indebtedness (other than Indebtedness among the Borrower and its Subsidiaries, or Indebtedness held exclusively by an Affiliate of a Loan Party) that (A) results in any Material Indebtedness becoming due prior to its scheduled maturity or (B) enables or permits (with all applicable grace periods having expired) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness, as applicable, to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that (w) this clause (f) shall not apply to any secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness if such sale or transfer is permitted hereunder, (x) for the avoidance of doubt, no Default or Event of Default shall result hereunder as a result of any failure, breach or default that would have otherwise occurred under clauses (A) or (B) but for any notice period or grace period while such notice or grace period remains in effect, (y) no Default or Event of Default shall result
hereunder as a result of any failure to observe or perform any financial covenant unless and until such breach or default has resulted in the acceleration of the applicable Indebtedness and the termination of commitments thereunder and (z) no Default or Event of Default shall result hereunder unless the applicable failure to observe or perform is not remedied and not waived by the holders of the applicable Indebtedness prior to any termination of Commitments or acceleration of Loans pursuant to this Article VII; provided, further, that this clause (f) shall not apply to any redemption, exchange, repurchase, conversion or settlement with respect to any Convertible Indebtedness, or satisfaction of any condition giving rise to or permitting the foregoing;
(g) there shall have occurred a Change of Control;
(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Borrower, the Thai Borrower or any of the Material Subsidiaries that are Loan Parties, or of a substantial part of the property or assets of the Borrower, the Thai Borrower or any Material Subsidiaries that are Loan Parties, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, moratorium, judicial management, receivership or similar law, (ii) the appointment of a receiver, liquidator, administrative receiver, compulsory manager, receiver and manager, administrator, judicial manager, provisional liquidator, trustee, custodian, sequestrator, conservator or similar officer or official for the Borrower, the Thai Borrower or any of the Material Subsidiaries that are Loan Parties or for a substantial part of the property or assets of the Borrower, the Thai Borrower or any of the Material Subsidiaries that are Loan Parties or (iii) the winding-up or liquidation of the Borrower, the Thai Borrower or any Material Subsidiary that is a Loan Party (except in a transaction permitted hereunder); and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;
(i) the Borrower, the Thai Borrower or any Material Subsidiary that is a Loan Party shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in clause (h) above, (iii) apply for or consent to the appointment of a receiver, insolvency practitioner, judicial manager, trustee, custodian, sequestrator, conservator or similar official for the Borrower, the Thai Borrower or any Material Subsidiary that is a Loan Party or for a substantial part of the property or assets of the Borrower, the Thai Borrower or any Material Subsidiary that is a Loan Party, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) commence any legal proceedings or court procedure in relation to an insolvency or in relation to any restructuring by way of a scheme of arrangement (for the avoidance of doubt, this shall not include any solvent reorganization), or (vii) become unable or admit in writing its inability or fail generally to pay its debts as they become due;
(j) the failure by the Borrower, the Thai Borrower or any Material Subsidiary that is a Loan Party to pay one or more final monetary judgments in an aggregate amount in excess of the greater of (x) $150,000,000 and (y) 0.375 times EBITDA calculated on a Pro Forma Basis for the then most recently ended Test Period (to the extent not covered by insurance and third party indemnities), which judgments are not discharged or effectively waived or stayed for a period of 60 consecutive days;
(k) (i) an ERISA Event shall have occurred or (ii) the Borrower or any Material Subsidiary that is a Restricted Subsidiary shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan; and in each case, such event or
condition, together with all other such events or conditions, if any, would reasonably be expected to have a Material Adverse Effect; or
(l) (i) any Loan Document shall for any reason be asserted in writing by Holdings, the Borrower, the Thai Borrower or any other Loan Party not to be a legal, valid and binding obligation of any party thereto (other than in accordance with its terms), (ii) any security interest purported to be created by any Security Document and to extend to assets that constitute a material portion of the Collateral, taken as a whole, shall cease to be, or shall be asserted in writing by the Borrower or any other Loan Party not to be (other than, in each case, in accordance with its terms), a valid and perfected security interest (perfected as or having the priority required by this Agreement or the relevant Security Document and subject to such limitations and restrictions as are set forth herein and therein) in the securities, assets or properties covered thereby, except to the extent that any such loss of perfection or priority results from the failure of the Collateral Agent to maintain possession of certificates or instruments actually delivered to it representing securities pledged under the Security Documents or to file Uniform Commercial Code continuation statements or take the actions described on Schedule 3.04 and except to the extent that such loss is covered by a lender’s title insurance policy and the Collateral Agent shall be reasonably satisfied with the credit of such insurer or (iii) a material portion of the Loan Guarantees pursuant to the Loan Documents, taken as a whole, shall cease to be in full force and effect (other than in accordance with the terms thereof), or shall be asserted in writing by Holdings, the Borrower or any Loan Party not to be in effect or not to be legal, valid and binding obligations (other than in accordance with the terms thereof);
then, and in every such event (other than (x) an event with respect to the Borrower or the Thai Borrower under the US Bankruptcy Code described in clause (h) or (i) above and (y) an event described in clause (d) above arising with respect to a failure to comply with the Financial Covenant, unless the Required Revolving Facility Lenders have terminated the Revolving Facility Commitment and have accelerated the Revolving Facility Loans then outstanding as a result of such breach), and at any time thereafter during the continuance of such event, the Administrative Agent, at the request of the Required Lenders, shall, by notice to the Borrower or the Thai Borrower (as applicable), take any or all of the following actions, at the same or different times: (i) terminate forthwith the Commitments, (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower or the Thai Borrower, as applicable, accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower and the Thai Borrower, anything contained herein or in any other Loan Document to the contrary notwithstanding and (iii) if the Loans have been declared due and payable pursuant to clause (ii) above, demand Cash Collateral pursuant to Section 2.05(j); and in any event with respect to the Borrower or the Thai Borrower under the U.S. Bankruptcy Code described in clause (h) or (i) above, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower or the Thai Borrower, as applicable, accrued hereunder and under any other Loan Document, shall automatically become due and payable and the Administrative Agent shall be deemed to have made a demand for Cash Collateral to the full extent permitted under Section 2.05(j), without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower and the Thai Borrower, anything contained herein or in any other Loan Document to the contrary notwithstanding. In the case of an Event of Default under clause (d) above arising with respect to a failure to comply with the Financial Covenant and at any time thereafter during the continuance of such event, subject to Section 7.03, the Administrative Agent, at the request of the Required Revolving Facility Lenders, shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate
forthwith the Revolving Facility Commitments and (ii) declare the Revolving Facility Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Revolving Facility Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower or the Thai Borrower (as applicable) accrued hereunder with respect to such Revolving Facility Loans, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower and the Thai Borrower, anything contained herein or in any other Loan Document to the contrary notwithstanding.
Section 7.02 Treatment of Certain Payments. Subject to the terms of any applicable Intercreditor Agreement, any amount received by the Administrative Agent or the Collateral Agent from any Loan Party or the Thai Borrower (or from proceeds of any Collateral) following any acceleration of the Loan Obligations under this Agreement or any Event of Default with respect to the Borrower or Thai Borrower under Section 7.01(i) or (j), in each case that is continuing, shall be applied: (i) first, ratably, to pay any fees, indemnities or expense reimbursements then due to the Administrative Agent or the Collateral Agent from the Borrower or Thai Borrower (other than in connection with any Secured Cash Management Agreement or Secured Hedge Agreement), (ii) second, towards payment of interest and fees then due from the Borrower or Thai Borrower hereunder, in each case, ratably among the parties entitled thereto in accordance with the amounts of interest, fees and payments then due to such parties, (iii) third, towards payment of principal of Swingline Loans and unreimbursed L/C Disbursements then due from the Borrower hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed L/C Disbursements then due to such parties, (iv) fourth, towards payment of other Secured Obligations (including Secured Obligations owing under or in respect of any Secured Cash Management Agreement or Secured Hedge Agreement) then due from the Borrower, the Thai Borrower or any Subsidiary hereunder or thereunder, ratably among the parties entitled thereto in accordance with the amounts of such Secured Obligations then due to such parties and (v) last, the balance, if any, after all of the Secured Obligations have been paid in full, to the Borrower or as otherwise required by Requirements of Law.
Section 7.03 Right to Cure. Notwithstanding anything to the contrary contained in Section 7.01, in the event that the Borrower fails (or, but for the operation of this Section 7.03, would fail) to comply with the requirements of the Financial Covenant, until the expiration of the 15th Business Day subsequent to the date financial statements are required to be delivered pursuant to Sections 5.04(a) or (b) (the “Cure Expiration Date”), the Borrower or any Parent Entity shall have the right to issue Permitted Cure Securities for cash (provided that any Permitted Cure Securities issued by any Parent Entity are contributed to the Borrower in cash) or, in the case of the Borrower, otherwise receive cash contributions to its capital (the “Cure Right”), and upon the receipt of such cash by the Borrower (the “Cure Amount”), pursuant to the exercise of the Cure Right, the Borrower’s compliance with the Financial Covenant shall be recalculated giving effect to a pro forma adjustment by which either (I) the outstanding principal amount of Revolving Facility Loans shall be reduced or (II) EBITDA shall be increased with respect to such applicable quarter and any four-quarter period that contains such quarter, in each case solely for the purpose of determining the Borrower’s compliance with the Financial Covenant and not for any other purpose under this Agreement, by an amount equal to the Cure Amount; provided that (i) in each four consecutive fiscal quarter period there shall be at least two fiscal quarters in which a Cure Right is not exercised, (ii) a Cure Right shall not be exercised more than five times during the term of the Revolving Facility (with one additional Cure Right permitted to be exercised following entry into an Extension Amendment pursuant to Section 2.22), (iii) for purposes of this Section 7.03, the Cure Amount shall be no greater than the amount required for purposes of complying with the Financial Covenant or to reduce the aggregate principal amount of Revolving Facility Loans outstanding to a level such that the Testing Condition is no longer satisfied, as applicable, and (iv) there shall be no pro forma
reduction in Indebtedness (other than with respect to whether the Testing Condition was satisfied) with the proceeds of the exercise of the Cure Right for determining compliance with the Financial Covenant for the fiscal quarter in respect of which such Cure Right is exercised (either directly through prepayment or indirectly as a result of the netting of Unrestricted Cash). If, after giving effect to the adjustments in this Section 7.03, the Borrower shall then be in compliance with the requirements of the Financial Covenant or the Testing Condition would not be satisfied, as applicable, the Borrower shall be deemed to have satisfied the requirements of the Financial Covenant as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of the Financial Covenant or the triggering of the Testing Condition that had occurred shall be deemed cured (or, to not have occurred) for the purposes of this Agreement. Until the Cure Expiration Date, no Default or Event of Default shall be deemed to have occurred on the basis of any failure to comply with the Financial Covenant and neither the Administrative Agent nor any Lender may exercise any rights or remedies under Section 7.01 (or under any other Loan Document) on the basis of any actual or purported Event of Default arising with respect to a failure to comply with the Financial Covenant (and any other Default as a result thereof), in each case, until and unless the Cure Expiration Date has occurred without the Cure Amount having been received; provided, however, no Revolving Facility Lender shall be required to fund any Revolving Facility Loans and no Issuing Bank shall be required to issue, amend or extend any Letter of Credit until such time as the Borrower shall have received the Cure Amount.
Notwithstanding any provision of this Section 7.03 to the contrary, in the event that as a result of any year-end audit adjustment, any previously-consummated exercise of the Cure Right was not sufficient to fully satisfy the requirements set forth in this Section 7.03 for a fiscal quarter, the Borrower shall be entitled to make a “true-up” exercise of such previously-consummated Cure Right within fifteen (15) Business Days following the date any Compliance Certificate is required to be delivered for such fiscal year pursuant to Section 5.04(c) with respect to the financial statements under Section 5.04(a) or (b) and such “true-up” shall cure any Event of Default arising from the failure to exercise such previously-consummated Cure Right in the requisite amount (and, for the avoidance of doubt, shall not count against any cap on the number of Cure Rights that may be exercised hereunder).
ARTICLE VIII
The Agents
Section 8.01 Appointment.
(a) Each Lender and each Issuing Bank hereby irrevocably designates and appoints the Administrative Agent and the Collateral Agent as the administrative agent and the collateral agent, respectively, of such Lender or Issuing Bank under this Agreement and the other Loan Documents, and each such Lender and Issuing Bank irrevocably authorizes the Administrative Agent and the Collateral Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent and the Collateral Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent and the Collateral Agent shall not have any 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 Agreement or any other Loan Document or otherwise exist against the Administrative Agent and the Collateral Agent.
(b) Each Secured Party (other than the Collateral Agent) hereby, and by its acceptance of the benefits of the Security Documents, (i) appoints and authorizes the Collateral Agent to act as the collateral agent of such Secured Party for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Secured Obligations, together with such powers and discretion as are reasonably incidental thereto, (ii) authorizes and directs the Collateral Agent (whether or not by or through employees or agents) to exercise such rights, remedies, powers and discretions as are specifically delegated to or conferred upon the Collateral Agent under the Security Documents, together with such powers and discretions as are reasonably incidental thereto and to take such action on its behalf as may from time to time be authorized under or in accordance with the Security Documents, (iii) agrees that the Collateral Agent shall have the authority to act as the exclusive agent of such Secured Party with respect to the enforcement of any provision of any Security Document, the exercise of remedies hereunder or thereunder and the giving or withholding of any consent or approval hereunder or thereunder relating to any Collateral or any Loan Party’s or Thai Borrower’s obligations with respect thereto except as expressly provided in the Loan Documents, (iv) agrees that it shall not take any action to enforce any provision of any Security Document against Holdings or any pledgor or to exercise any remedy hereunder or thereunder or to give any consents or approvals hereunder or thereunder except as expressly provided in the Loan Documents and (v) agrees to be bound by the Security Documents and the terms of any Intercreditor Agreement entered into in accordance with Section 8.11. In this connection, the Collateral Agent (and any Subagents appointed by the Collateral Agent pursuant to Section 8.02 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Documents, or for exercising any rights or remedies thereunder at the direction of the Collateral Agent) shall be entitled to the benefits of this Article VIII (including, without limitation, Section 8.07) as though the Collateral Agent (and any such Subagents) were an “Agent” under the Loan Documents, as if set forth in full herein with respect thereto.
Section 8.02 Delegation of Duties. The Administrative Agent and the Collateral Agent may execute any of their respective duties under this Agreement and the other Loan Documents (including for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof)) by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. No Agent shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. Each Agent may also from time to time, when it deems it to be necessary or desirable, appoint one or more trustees, co-trustees, collateral co-agents, collateral subagents or attorneys-in-fact (each, a “Subagent”) with respect to all or any part of the Collateral; provided that no such Subagent shall be authorized to take any action with respect to any Collateral unless and except to the extent expressly authorized in writing by the Administrative Agent or the Collateral Agent. Should any instrument in writing from the Borrower, the Thai Borrower or any other Loan Party be required by any Subagent so appointed by an Agent to more fully or certainly vest in and confirm to such Subagent such rights, powers, privileges and duties, the Borrower shall, or shall cause such Loan Party or Thai Borrower to, execute, acknowledge and deliver any and all such instruments promptly upon request by such Agent. If any Subagent, or successor thereto, shall become incapable of acting, resign or be removed, all rights, powers, privileges and duties of such Subagent, to the extent permitted by law, shall automatically vest in and be exercised by the Administrative Agent or the Collateral Agent until the appointment of a new Subagent. No Agent shall be responsible for the negligence or misconduct of any agent, attorney-in-fact or Subagent that it selects with reasonable care.
Section 8.03 Exculpatory Provisions. None of the Agents, or their respective Affiliates or any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a
final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such person’s own gross negligence or willful misconduct) or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party, the Thai Borrower or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by any Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party or the Thai Borrower to perform its obligations hereunder or thereunder. No Agent shall 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 Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party or the Thai Borrower. No Agent shall have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, (a) no Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing, and (b) no Agent shall, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by such Agent or any of its Affiliates in any capacity. The Agents shall be deemed not to have knowledge of any Default or Event of Default unless and until written notice describing such Default or Event of Default is given to the Administrative Agent by the Borrower, a Lender or an Issuing Bank. No Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Security Documents, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent. No Cash Management Bank or Hedge Bank that obtains the benefits of Section 7.02, any Guarantee or any Collateral by virtue of the provisions hereof or of any Guarantee or any Security Document shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents. Without limiting the generality of the foregoing, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Secured Obligations arising under Secured Cash Management Agreements or Secured Hedge Agreements unless the Administrative Agent has received written notice of such Secured Obligations, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be.
Section 8.04 Reliance by Agents. Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) or conversation believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper person. Each Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to any Credit Event, that by its terms must be fulfilled to the satisfaction of a Lender or any Issuing Bank, each Agent may presume that
such condition is satisfactory to such Lender or Issuing Bank unless such Agent shall have received notice to the contrary from such Lender or Issuing Bank prior to such Credit Event. Each Agent may consult with legal counsel (including counsel to the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. Each Agent may deem and treat the Lender specified in the Register with respect to any amount owing hereunder as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with such Agent. Each Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, any other requisite group of Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Each Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, any other requisite group of 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.
Section 8.05 Notice of Default. Neither Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless such Agent has received written notice from a Lender, Holdings or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default.” In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, any other requisite group of Lenders); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.
Section 8.06 Non-Reliance on Agents and Other Lenders. Each Lender and Issuing Bank expressly acknowledges that neither the Agents nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates have made any representations or warranties to it and that no act by any Agent hereafter taken, including any review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation or warranty by any Agent to any Lender. Each Lender and Issuing Bank represents to the Agents that it has, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of, and investigation into the business, operations, property, financial and other condition and creditworthiness of, the Loan Parties and their affiliates and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative 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 any Loan Party
or any affiliate of a Loan Party that may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates.
Section 8.07 Indemnification.
(a) The Lenders agree to indemnify each Agent and the Revolving Facility Lenders agree to indemnify each Issuing Bank and Swingline Lender (with respect to the USD Revolving Facility), in each case, in its capacity as such (to the extent not reimbursed by Holdings or the Borrower and without limiting the obligation of Holdings or the Borrower to do so), in the amount of its pro rata share (based on its share of the aggregate USD Revolving Facility Credit Exposure or its share of the aggregate Thai Baht Revolving Facility Credit Exposure, as applicable, and, in the case of the indemnification of each Agent, outstanding Term Loans and unused Commitments hereunder; provided that the aggregate principal amount of Swingline Loans owing to the Swingline Lender and of L/C Disbursements owing to any Issuing Bank shall be considered to be owed to the USD Revolving Facility Lenders or Thai Baht Revolving Facility Lenders, as applicable, ratably in accordance with their respective share of the aggregate USD Revolving Facility Credit Exposure or Thai Baht Revolving Facility Credit Exposure, as applicable) (determined at the time such indemnity is sought), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent, such Issuing Bank or Swingline Lender in any way relating to or arising out of the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent, Issuing Bank or Swingline Lender 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 that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent’s, Issuing Bank’s or Swingline Lender’s gross negligence or willful misconduct. The failure of any Lender to reimburse any Agent, Issuing Bank or Swingline
Lender, as the case may be, promptly upon demand for its ratable share of any amount required to be paid by the Lenders to such Agent, Issuing Bank or Swingline Lender, as the case may be, as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse such Agent, Issuing Bank or Swingline Lender, as the case may be, for its ratable share of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse such Agent, Issuing Bank or Swingline Lender, as the case may be, for such other Lender’s ratable share of such amount. The agreements in this Section 8.07(a) shall survive the payment of the Loans and all other amounts payable hereunder.
(b) Upon an Event of Default, regardless of whether such Event of Default has been cured or waived, each Revolving Lender with a Revolving Facility Commitment (other than the Initial Thai Baht Revolving Lender) shall, upon three Business Days’ written notice, pay to the Administrative Agent, for the benefit of the Thai Baht Revolving Facility Lenders not later than 1:00 p.m., New York City time on the requested date of payment in such notice in U.S. Dollars (taking into account appropriate exchange rates at such time as determined by the Administrative Agent) its pro rata share of the funded Loans under the Thai Baht Revolving Facility calculated based on the aggregate principal amount of all Revolving Facility Commitments; provided, as used in this Section 8.07(b), the Revolving Facility Commitment shall be considered to be the total amount of all USD Revolving Facility
Commitments (including any refinancing, replacements, extensions or other modifications thereof) and Thai Baht Revolving Facility Commitments (including any refinancing, replacements, extensions or other modifications thereof), collectively, at the time of such Event of Default (an “Event of Default Thai Baht Funding”). Upon an Event of Default Thai Baht Funding, the Event of Default Thai Baht Funding shall automatically be deemed to be a usage of the USD Revolving Facility (including any refinancing, replacement, extensions or modifications thereof) in the amount of such Event of Default Thai Baht Funding and a Loan Obligation of the Borrower and the other Loan Parties with a corresponding decrease in outstanding Loans under the Thai Baht Revolving Facility.
Section 8.08 Agent in Its Individual Capacity. Each Agent and its affiliates may make loans to, accept deposits from, and generally engage in any kind of business with any Loan Party as though such Agent were not an Agent. With respect to its Loans made or renewed by it and with respect to any Letter of Credit issued, or Letter of Credit or Swingline Loan participated in, by it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.
Section 8.09 Successor Agents. The Administrative Agent may resign as Administrative Agent and Collateral Agent upon 30 days’ notice to the Lenders and the Borrower and, when such resignation is effective, the Administrative Agent shall also automatically and unconditionally be deemed to have resigned as Swingline Lender hereunder. If the Administrative Agent shall resign as Administrative Agent and Collateral Agent under this Agreement and the other Loan Documents, then the Borrower shall have the right, subject to the consent of the Required Lenders (which shall not be unreasonably withheld, delayed or conditioned) (so long as no Specified Event of Default shall have occurred and be continuing, in which case the Required Lenders shall have the right), to appoint a successor which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States, whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent and Collateral Agent, and the term “Administrative Agent” and “Collateral Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent and Collateral Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. If no successor agent has accepted appointment as Administrative Agent and Collateral Agent by the date that is 30 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective (except in the case of the Collateral Agent holding collateral security on behalf of such Secured Parties, the retiring Collateral Agent shall continue to hold such collateral security as nominee until such time as a successor Collateral Agent is appointed), and the Lenders shall assume and perform all of the duties of the Administrative Agent and Collateral Agent hereunder until such time, if any, as the Borrower (or the Required Lenders) appoint a successor agent as provided for above. After any retiring Administrative Agent’s resignation as Administrative Agent and Collateral Agent, the provisions of this Section 8.09 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent and Collateral Agent under this Agreement and the other Loan Documents. Notwithstanding anything herein to the contrary, no Ineligible Institution (nor any Affiliate thereof) may be appointed as a successor Administrative Agent.
Section 8.10 Arrangers and Bookrunners. Notwithstanding any other provision of this Agreement or any provision of any other Loan Document, each of the persons named on the cover page hereof or otherwise herein as Joint Bookrunner, Co-Documentation Agent or Arranger is named as such for recognition purposes only, and in its capacity as such shall have no rights, duties, responsibilities or liabilities with respect to this Agreement or any other Loan Document, except (i) with respect to the representations, warranties and agreements expressly set forth in Section 2.17 and (ii) each such person
and its Affiliates shall be entitled to the rights expressly stated to be applicable to them in Sections 9.05 and 9.17 (subject to the applicable obligations and limitations as set forth therein).
Section 8.11 Security Documents, Collateral Agent and Intercreditor Agreement. The Lenders and the other Secured Parties authorize the Collateral Agent to release any Collateral or Guarantors in accordance with Section 9.18 or if approved, authorized or ratified in accordance with Section 9.08.
The Lenders and the other Secured Parties hereby irrevocably authorize and instruct the Collateral Agent to, without any further consent of any Lender or any other Secured Party, enter into (or acknowledge and consent to) or amend, renew, extend, supplement, restate, replace, waive or otherwise modify any Permitted Junior Intercreditor Agreement, any Permitted Pari Passu Intercreditor Agreement, or any other intercreditor agreement with the collateral agent or other representatives of the holders of Indebtedness that is to be secured by a Lien on the Collateral that is not prohibited (including with respect to priority) under this Agreement and to subject the Secured Obligations and the Liens on the Collateral securing the Secured Obligations to the provisions thereof (any of the foregoing, an “Intercreditor Agreement”); provided that the Collateral Agent shall take any such action at the request of any Loan Party. The Lenders and the other Secured Parties irrevocably agree that (x) the Collateral Agent may rely exclusively on a certificate of a Responsible Officer of any Loan Party as to whether any such other Liens are not prohibited and (y) any Intercreditor Agreement entered into by the Collateral Agent shall be binding on the Secured Parties, and each Lender and the other Secured Parties hereby agrees that it will take no actions contrary to the provisions of, if entered into and if applicable, any Intercreditor Agreement. The foregoing provisions are intended as an inducement to any provider of any Indebtedness not prohibited by Section 6.01 hereof to extend credit to the Loan Parties.
Section 8.12 Right to Realize on Collateral and Enforce Guarantees. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party or the Thai Borrower, (i) the Administrative Agent (irrespective of whether the principal of any Loan Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise (A) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of any or all of the Loan Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Issuing Banks and the Administrative Agent and any Subagents allowed in such judicial proceeding, and (B) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and (ii) any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and Issuing Bank to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders and the Issuing Banks, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under the Loan Documents. Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or Issuing Bank any plan of reorganization, arrangement, adjustment or composition affecting the Loan Obligations or the rights of any Lender or Issuing Bank or to authorize the Administrative Agent to vote in respect of the claim of any Lender or Issuing Bank in any such proceeding.
Anything contained in any of the Loan Documents to the contrary notwithstanding, the Borrower, the Administrative Agent, the Collateral Agent and each Secured Party hereby agree that (a)
no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Guarantee, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by the Administrative Agent, on behalf of the Secured Parties in accordance with the terms hereof and all powers, rights and remedies under the Security Documents may be exercised solely by the Collateral Agent, and (b) in the event of a foreclosure by the Collateral Agent on any of the Collateral pursuant to a public or private sale or other disposition, the Collateral Agent or any Lender may be, to the extent permitted by, and in accordance with, applicable law, the purchaser or licensor of any or all of such Collateral at any such sale or other disposition and the Collateral Agent, as agent for and representative of the Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless the Required Lenders shall otherwise agree in writing) shall be entitled, to the extent permitted by, and in accordance with, applicable law, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Loan Obligations as a credit on account of the purchase price for any collateral payable by the Collateral Agent at such sale or other Disposition.
Section 8.13 Withholding Tax. To the extent required by any applicable Requirement of Law, the Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax. If the IRS or any authority of the United States or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender for any reason (including because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstances that rendered the exemption from, or reduction of, withholding Tax ineffective), such Lender shall indemnify the Administrative Agent (to the extent that the Administrative Agent has not already been reimbursed by any applicable Loan Party and without limiting the obligation of any applicable Loan Party to do so) fully for all amounts paid, directly or indirectly, by the Administrative Agent as Tax or otherwise, including penalties, fines, additions to Tax and interest, together with all expenses incurred, including legal expenses, allocated staff costs and any out of pocket expenses. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this Section 8.13.
Section 8.14 Erroneous Payment.
(a) If the Administrative Agent notifies a Lender, Issuing Bank or Secured Party, or any Person who has received funds on behalf of a Lender, Issuing Bank or Secured Party (any such Lender, Issuing Bank, Secured Party or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender, Issuing Bank, Secured Party or other Payment Recipient on its behalf) (any such funds, whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Lender, Issuing Bank or Secured Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such demand
was made to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
(b) Without limiting immediately preceding clause (a), each Payment Recipient hereby further agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) or (z) that such Payment Recipient otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part) in each case:
(i) (A) in the case of immediately preceding clauses (x) or (y), an error shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(ii) the applicable Lender, Issuing Bank or Secured Party shall (and shall cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of such error) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 8.14(b).
(c) Each Lender, Issuing Bank or Secured Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender, Issuing Bank or Secured Party under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Lender, Issuing Bank or Secured Party from any source, against any amount due to the Administrative Agent under immediately preceding clause (a) or under the indemnification provisions of this Agreement.
(d) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance with immediately preceding clause (a), from any Lender or Issuing Bank that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to any such Lender or Issuing Bank at any time, (i) such Lender or Issuing Bank (the “Erroneous Payment Assigning Lender”) shall be deemed to have assigned its Loans (but not its Commitments) of the relevant Class with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid interest, and is hereby (together with Holdings) deemed to execute and deliver an Assignment and Acceptance (or, to the extent applicable, an agreement incorporating an Assignment and Acceptance by reference pursuant to an electronic platform as to which the Administrative Agent and such parties are participants) with respect to such Erroneous Payment Deficiency Assignment, and such Erroneous Payment Assigning
Lender shall deliver any Notes evidencing such Loans to the Borrower or the Administrative Agent, (ii) the Administrative Agent as the assignee Lender shall be deemed to acquire the Erroneous Payment Deficiency Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee shall become a Lender or Issuing Bank, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the Erroneous Payment Assigning Lender shall cease to be a Lender or Issuing Bank, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such Erroneous Payment Assigning Lender and (iv) the Administrative Agent may reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment. The Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment in accordance with this Agreement and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Erroneous Payment Assigning Lender shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Erroneous Payment Assigning Lender (and/or against any recipient that receives funds on its respective behalf). For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender or Issuing Bank and such Commitments shall remain available in accordance with the terms of this Agreement. In addition, each party hereto agrees that, except to the extent that the Administrative Agent has acquired legal title pursuant to an effective Erroneous Payment Deficiency Assignment, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of the applicable Erroneous Payment Assigning Lender under the Loan Documents with respect to each Erroneous Payment Return Deficiency (the “Erroneous Payment Subrogation Rights”).
(e) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Loan Obligations owed by the Borrower, the Thai Borrower or any other Loan Party; provided that clause (d) (above) and this clause (e) shall not be interpreted to accelerate the due date for, or have the effect of accelerating the due date for, the Loan Obligations of the Loan Parties or the Thai Borrower relative to the timing for payment of the Loan Obligations that would have been payable had such Erroneous Payment not been made by the Administrative Agent; provided, further, that for the avoidance of doubt, clause (d) (above) and this clause (e) shall not apply to the extent any such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from or on behalf of the Borrower, the Thai Borrower or any other Loan Party for the purpose of making such Erroneous Payment.
(f) In the event that a Revolving Facility Loan is assigned pursuant to clause (d) above, then (i) for purposes of determining “Required Lenders”, “Required Revolving Facility Lenders”, or any other provision hereof specifying the number or percentage of Revolving Facility Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, (x) the unused Commitment of the applicable Class of an Erroneous Payment Assigning Lender shall be deemed to be reduced by the Erroneous Payment Assigned Amount (as defined below) of such Erroneous Payment Assigning Lender and (y) the Erroneous Payment Assigned Amount held by the Administrative Agent shall be included as Revolving Facility Loans of the applicable Class in any determination under such defined terms or provisions, (ii) the amount of the Revolver Commitment Fee payable to any Revolving Facility Lender shall not be increased as a result of such assignment, (iii) the amount available to be borrowed by the Borrower from the Erroneous Payment Assigning Lender in respect of the affected Class of Revolving Facility Commitments shall not be increased as a result of such assignment, (iv) to the extent appropriate and relating to the determination of the proper recipient of any payment attributable to the applicable Erroneous Payment Assigned Amount, such Erroneous Payment
Assigned Amount shall be treated as a part of the Revolving Facility Credit Exposure of the Administrative Agent with respect to the affected Class and (v) otherwise, such Erroneous Payment Assigned Amount shall be treated as a part of the Revolving Facility Credit Exposure of the Erroneous Payment Assigning Lender, including for purposes of determining participations in Letters of Credit or Swingline Loans. For purposes hereof, “Erroneous Payment Assigned Amount” shall mean, as to any Erroneous Payment Assigning Lender, the principal amount assigned in accordance with clause (d) above (taking into account any prepayment or repayment from time to time of such principal amount in accordance with the terms of this Agreement).
(g) To the extent permitted by applicable law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine.
(h) Each party’s obligations, agreements and waivers under this Section 8.14 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender or Issuing Bank, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Loan Obligations (or any portion thereof) under any Loan Document.
Section 8.15 Certain ERISA Matters.
(a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:
(i) such Lender is not using “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments or this Agreement,
(ii) the prohibited transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,
(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the
Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or
(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.
(b) In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that the Administrative Agent is not a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).
Section 8.16 Ineligible Institutions, Affiliate Lenders, Etc. The Administrative Agent shall have no duty to (x) inquire as to or investigate the accuracy of any representation or deemed representation as to whether a Lender is an Ineligible Institution, an Affiliate Lender or a Net Short Lender, (y) verify any statements in any officer’s certificates delivered to it or (z) otherwise ascertain or monitor whether any Lender, Assignee or Participant or prospective Lender, Assignee or Participant is a an Ineligible Institution, an Affiliate Lender or a Net Short Lender or (in the case of Net Short Lenders) make any calculations, investigations or determinations with respect to any derivative contracts and/or net short positions. Without limiting the foregoing, the Administrative Agent shall not (A) be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions hereof relating to Ineligible Institutions, Affiliate Lenders or Net Short Lenders or (B) have any liability with respect to or arising out of any assignment or participation of Loans to any Ineligible Institution or Net Short Lender.
ARTICLE IX
Miscellaneous
Section 9.01 Notices; Communications. (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in Section 9.01(b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by electronic means as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(i) if to any Loan Party, the Thai Borrower, the Administrative Agent, the Collateral Agent, the Issuing Banks or the Swingline Lender as of the Closing Date, to the address, electronic mail address or telephone number specified for such person on Schedule 9.01; and
(ii) if to any other Lender or any other Issuing Bank, to the address, electronic mail address or telephone number specified in its Administrative Questionnaire.
(b) Notices and other communications to the Lenders and the Issuing Banks hereunder may be delivered or furnished by electronic communication (including the Internet or intranet websites) pursuant to procedures approved by the Administrative Agent. The Administrative Agent or the Borrower may, in their discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by them; provided that approval of such procedures may be limited to particular notices or communications.
(c) Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received. Notices delivered through electronic communications to the extent provided in Section 9.01(b) above shall be effective as provided in such Section 9.01(b). Notices sent to an electronic mail address shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment); provided that if such notice is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
(d) Any party hereto may change its address, telecopy number or other information for notices and other communications hereunder by notice to the other parties hereto.
(e) Documents required to be delivered pursuant to Section 5.04 may be delivered electronically (including as set forth in Section 9.17) and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 9.01, or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender entitled to access thereto and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent). Except for any Compliance Certificate required by Section 5.04(c), the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.
Section 9.02 Survival of Agreement. All covenants, agreements, representations and warranties made by the Loan Parties and the Thai Borrower herein, in the other Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and each Issuing Bank and shall survive the making by the Lenders of the Loans and the execution and delivery of the Loan Documents and the issuance of the Letters of Credit, regardless of any investigation made by such persons or on their behalf, and shall continue in full force and effect until the Termination Date. Without prejudice to the survival of any other agreements contained herein, indemnification and reimbursement obligations contained herein (including pursuant to Sections 2.15, 2.16, 2.17 and 9.05) shall survive the Termination Date.
Section 9.03 [Reserved].
Section 9.04 Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted
hereby (including any Affiliate of an Issuing Bank that issues any Letter of Credit), except that (i) except as permitted by Section 6.05, neither the Borrower nor the Thai Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (in the case of the Borrower) and the Thai Baht Revolving Facility Lenders (in the case of the Thai Borrower) (and any attempted assignment or transfer by the Borrower or the Thai Borrower, as applicable, without such consent shall be null and void and, with respect to any assignment or transfer to any Ineligible Institution, subject to Section 9.04(i)) and (i) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 9.04. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of an Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in clause (c) of this Section 9.04), and, to the extent expressly contemplated hereby, the Related Parties of each of the Agents, the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement or the other Loan Documents.
(b) (i) Subject to the conditions set forth in sub-clause (ii) below, any Lender may assign to one or more Eligible Assignees (any assignee, an “Assignee”) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of:
(A) the Borrower, which consent, with respect to the assignment of a Term Loan, will be deemed to have been given if the Borrower has not responded within ten Business Days after the delivery of any request for such consent; provided that no consent of the Borrower shall be required for (x) an assignment of a Term Loan to a Lender, an Affiliate of a Lender, an Approved Fund (as defined below), or in the case of assignments during the primary syndication of the Initial Term B Loans to persons identified to and agreed by the Borrower in writing prior to the Closing Date or (y) an assignment of a Revolving Facility Commitment or Revolving Facility Loan to a Revolving Facility Lender, an Affiliate of a Revolving Facility Lender or Approved Fund with respect to a Revolving Facility Lender or, in each case, if a Specified Event of Default has occurred and is continuing, any other person; and
(B) the Administrative Agent, the Swingline Lender and each Issuing Bank; provided that (i) no consent of the Swingline Lender or any Issuing Bank shall be required (x) for an assignment of all or any portion of a Term Loan or Term Facility Commitment or (y) for an assignment of a Revolving Facility Commitment or Revolving Facility Loan to a Revolving Facility Lender, an Affiliate of a Revolving Facility Lender or Approved Fund with respect to a Revolving Facility Lender, (ii) no consent of the Administrative Agent shall be required for an assignment of all or any portion of a Term Loan or Term Facility Commitment to a Lender, an Affiliate of a Lender, an Approved Fund, the Borrower or an Affiliate of the Borrower otherwise made in accordance with this Agreement, (iii) no consent of the Administrative Agent shall be required for an assignment of a Revolving Facility Commitment or Revolving Facility Loan to a Revolving Facility Lender, an Affiliate of a Revolving Facility Lender or Approved Fund with respect to a Revolving Facility Lender and (iv) the only consent required (other than from the Borrower as set forth in clause (A) above) for an assignment of a Thai Baht Revolving Facility Commitment or a Thai Baht Revolving Facility Loan shall be the Thai Baht Revolving Facility Lenders.
(ii) Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, an assignment of the entire remaining amount of the assigning Lender’s Commitments or Loans under any Facility or as otherwise agreed by the Borrower and the Administrative Agent, the amount of the Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than (x) $1,000,000 or an integral multiple of $1,000,000 in excess thereof in the case of Term Loans or Term Facility Commitments and (y) $5,000,000 or an integral multiple of $1,000,000 in excess thereof in the case of Revolving Facility Loans or Revolving Facility Commitments, provided that such amounts shall be aggregated in respect of each Lender and its Affiliates or Approved Funds (with simultaneous assignments to or by two or more Related Funds shall be treated as one assignment);
(B) the parties to each assignment shall (1) execute and deliver to the Administrative Agent an Assignment and Acceptance via an electronic settlement system acceptable to the Administrative Agent or (2) if previously agreed with the Administrative Agent, manually execute and deliver to the Administrative Agent an Assignment and Acceptance, in each case together with a processing and recordation fee of $3,500 (which fee may be waived or reduced in the reasonable discretion of the Administrative Agent and shall not be payable in the case of any assignment to the Borrower or any Affiliate of the Borrower);
(C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire and any Tax forms and information required to be delivered pursuant to Section 2.17; and
(D) the Assignee shall not be the Borrower or any of the Borrower’s
Affiliates or Subsidiaries except in accordance with Section 9.04(g) or Section 9.21.
For the purposes of this Section 9.04, “Approved Fund” shall mean any Person (other than a natural person (or a holding company, investment vehicle or trust for, or owned and operated by or for the primary benefit of a natural person)) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
Upon the request of any Lender, the Administrative Agent may make the list of Ineligible Institutions at the relevant time and such Lender may provide the list to any potential assignee for the purpose of verifying whether such person is an Ineligible Institution, in each case so long as such Lender and such potential assignee agree to keep the list of Ineligible Institutions confidential in accordance with the terms of this Agreement. Any assigning Lender shall, in connection with any potential assignment, provide to the Borrower a copy of its request (including the name of the prospective assignee) concurrently with its delivery of the same request to the Administrative Agent irrespective of whether or not a Specified Event of Default has occurred and is continuing.
(iii) Subject to acceptance and recording thereof pursuant to sub-clause (v) below, from and after the effective date specified in each Assignment and Acceptance the
Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.05 (subject to the limitations and requirements of those Sections)); provided that an Assignee shall not be entitled to receive any greater payment pursuant to Section 2.17 than the applicable assignor would have been entitled to receive had no such assignment occurred. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with clause (c) of this Section 9.04 (except to the extent such participation is not permitted by such clause (c) of this Section 9.04, in which case such assignment or transfer shall be null and void).
(iv) The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices in the United States a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal and interest amounts of the Loans and Revolving L/C Exposure owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent, the Issuing Banks, the Swingline Lender and the Lenders shall treat each person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by Holdings, the Borrower, the Issuing Banks, the Swingline Lender and any Lender, at any reasonable time and from time to time upon reasonable prior notice; provided that (x) no Lender shall, in such capacity, have access to, or be otherwise permitted to review any information in the Register other than information with respect to such Lender and (y) no Issuing Bank or Swingline Lender shall, in such capacity, have access to, or be otherwise permitted to review any information in the Register other than information with respect to the USD Revolving Facility. It is intended that the Register be maintained such that the Loans are in registered form for the purposes of the Code.
(v) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an Assignee, the Assignee’s completed Administrative Questionnaire (unless the Assignee shall already be a Lender hereunder), the processing and recordation fee referred to in clause (b) of this Section 9.04, if applicable, and any written consent to such assignment required by clause (b) of this Section 9.04 and any applicable Tax forms, the Administrative Agent shall accept such Assignment and Acceptance and promptly record the information contained therein in the Register. No assignment, whether or not evidenced by a promissory note, shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this sub-clause (v).
(c) (i) Any Lender may, without the consent of the Borrower, the Administrative Agent, the Swingline Lenders or Issuing Banks, sell participations in Loans and Commitments to one or more Eligible Assignees (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall
remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent, the Issuing Banks and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and the other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement and the other Loan Documents; provided that (x) such agreement may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that both (1) requires the consent of each Lender directly affected thereby pursuant to clauses (i), (ii), (iii) or (vi) of the second proviso to Section 9.08(b) and (2) directly adversely affects such Participant (but, for the avoidance of doubt, not any waiver of any Default or Event of Default) and (y) no other agreement with respect to amendment, modification or waiver may exist between such Lender and such Participant. Subject to clause (c)(iii) of this Section 9.04, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 (subject to the limitations and requirements of those Sections and Section 2.19) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to clause (b) of this Section 9.04. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.06 as though it were a Lender; provided that such Participant shall be subject to Section 2.18(c) as though it were a Lender.
(ii) Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts and interest amounts of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”). The entries in the Participant Register shall be conclusive absent manifest error, and each party hereto shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. Without limitation of the requirements of this Section 9.04(c), no Lender shall have any obligation to disclose all or any portion of a Participant Register to any person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans or other Loan Obligations under any Loan Document), except to the extent that such disclosure is necessary to establish that such Commitment, Loan or other Loan Obligation is in registered form for U.S. federal income Tax purposes or is otherwise required by applicable law. Each Lender shall make a copy of its Participant Register, to the extent it has one, available for review by Holdings and the Borrower from time to time as such persons may reasonably request. It is intended that each Participant Register be maintained such that the Loans are in registered form for the purposes of the Code. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(iii) A Participant shall not be entitled to receive any greater payment under Sections 2.15, 2.16 or 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless such entitlement to receive a greater payment is the result of a change in law after the date of the participation.
(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (other than to any Person who would not be an Eligible Assignee) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other central bank and in the case of any Lender that is an Approved Fund, any pledge or assignment to any holders of obligations owed, or securities issued, by such Lender, including to any trustee for, or any other representative of, such holders, and this Section 9.04 shall not
apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or Assignee for such Lender as a party hereto.
(e) The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue Notes to any Lender requiring Notes to facilitate transactions of the type described in clause (d) above.
(f) If the Borrower wishes to replace the Loans or Commitments under any Facility with ones having different terms, it shall have the option, with the consent of the Administrative Agent (not to be unreasonably withheld, conditioned or delayed) and subject to at least three Business Days’ advance notice to the Lenders under such Facility, instead of prepaying the Loans or reducing or terminating the Commitments to be replaced, to (i) require the Lenders under such Facility to assign such Loans or Commitments to the Administrative Agent or its designees and (ii) amend the terms thereof in accordance with Section 9.08 (with such replacement, if applicable, being deemed to have been made pursuant to Section 9.08(d)). Pursuant to any such assignment, all Loans and Commitments to be replaced shall be purchased at par (allocated among the Lenders under such Facility in the same manner as would be required if such Loans were being optionally prepaid or such Commitments were being optionally reduced or terminated by the Borrower), accompanied by payment of any accrued interest and fees thereon and any amounts owing pursuant to Section 9.05(b). By receiving such purchase price, the Lenders under such Facility shall automatically be deemed to have assigned the Loans or Commitments under such Facility pursuant to the terms of the form of Assignment and Acceptance attached hereto as Exhibit A, and accordingly no other action by such Lenders shall be required in connection therewith. The provisions of this clause (f) are intended to facilitate the maintenance of the perfection and priority of existing security interests in the Collateral during any such replacement.
(g) Notwithstanding anything to the contrary in this Agreement, including Section 2.18, any of Holdings or its Subsidiaries, including the Borrower, may purchase by way of assignment and become an Assignee with respect to Term Loans at any time and from time to time from Lenders in accordance with Section 9.04(b) hereof (each, a “Permitted Loan Purchase”); provided that (A) no Permitted Loan Purchase shall be made from the proceeds of any extensions of credit under the Revolving Facility, (B) upon consummation of any such Permitted Loan Purchase, the Loans purchased pursuant thereto shall be deemed to be automatically and immediately cancelled and extinguished, (C) the assignee and the assignor shall execute and deliver to the Administrative Agent a Permitted Loan Purchase Assignment and Acceptance (and for the avoidance of doubt, (x) shall make the representations and warranties set forth in the Permitted Loan Purchase Assignment and Acceptance and (y) shall not be required to execute and deliver an Assignment and Acceptance pursuant to Section 9.04(b)(ii)(B)) and (D) no Event of Default would be continuing immediately after giving effect on a Pro Forma Basis to such Permitted Loan Purchase.
(h) In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or sub-participations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, each Issuing Bank, Swingline Lender or any other Lender hereunder (and interest accrued thereon) and
(y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit and Swingline Loans in accordance with its Revolving Facility Percentage; provided that notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
(i) Notwithstanding anything to the contrary in this Agreement, including Section 2.18, if any assignment or participation under this Section 9.04 is made to any Ineligible Institution without the Borrower’s prior written consent, or to any Person without the consent of the Borrower in circumstances where the consent of the Borrower is otherwise required (and is not deemed to have been given in accordance with Section 9.04(b)(i)(A)), then the Borrower may, at their expense, upon notice to the applicable Ineligible Institution and the Administrative Agent, (i) terminate any Commitment of such Ineligible Institution or other Person and repay all outstanding Loan Obligations of the Borrower owing to such Ineligible Institution or other Person, (ii) purchase any Loans held by such Ineligible Institution or such other Person by paying the lesser of (x) par and (y) the amount that such Ineligible Institution or other Person paid to acquire such Loans, plus accrued and unpaid interest thereon and accrued and unpaid fees and other amounts payable to it hereunder (provided that any Loans repurchased pursuant to this clause (i)(ii) shall be immediately and automatically cancelled) and/or (iii) require such Ineligible Institution or such other Person to assign (in accordance with and subject to the restrictions contained in this Section 9.04) all of its rights, interests and obligations under this Agreement to one or more Eligible Assignees and if such Ineligible Institution or such other Person does not execute and deliver to the Administrative Agent a duly executed Assignment and Acceptance within two Business Days of the date on which the Eligible Assignee executes and delivers such Assignment and Acceptance to such Ineligible Institution or such other Person, then such Ineligible Institution or such other Person shall be deemed to have executed and delivered such Assignment and Acceptance without any action on its part; provided that (A) in the case of clauses (i) and (ii), no Loan Party shall be liable to the relevant Ineligible Institution under Section 2.16 if any Eurocurrency Loan or Term SOFR Loan owing to such Ineligible Institution is repaid or purchased other than on the last day of the Interest Period relating thereto, (B) in the case of clause (iii), the relevant assignment shall otherwise comply with this Section 9.04 (except that no registration and processing fee required under this Section 9.04 shall be required with any assignment pursuant to this paragraph) and (C) in no event shall such Ineligible Institution or other Person be entitled to receive amounts set forth in Section 2.13(c).
(j) Notwithstanding anything to the contrary contained in this Agreement, any Erroneous Payment Deficiency Assignment of any Revolving Facility Loan pursuant to Section 8.14 may occur without the assignment of a corresponding amount of Revolving Facility Commitments of the applicable Erroneous Payment Assigning Lender.
Section 9.05 Expenses; Indemnity. (a) The Borrower agrees to pay (i) all reasonable and documented out-of-pocket expenses (including, without duplication, Other Taxes) incurred by the Administrative Agent or the Collateral Agent in connection with the preparation of this Agreement and the other Loan Documents, or by the Administrative Agent or the Collateral Agent in connection with the administration of this Agreement and any amendments, modifications or waivers of the provisions hereof or thereof, including the reasonable fees, charges and disbursements of Paul Hastings LLP, counsel for the Administrative Agent, the Collateral Agent and the Arrangers, and, if necessary, the reasonable fees, charges and disbursements of one local counsel per jurisdiction, and (ii) all reasonable and documented out-of-pocket expenses (including, without duplication, Other Taxes) incurred by the Agents, any Issuing Bank or any Lender in connection with the enforcement of their rights in connection with this Agreement and the other Loan Documents, in connection with the Loans made or the Letters of Credit issued
hereunder, including the fees, charges and disbursements of a single counsel for all such persons, taken as a whole, and, if necessary, a single local counsel in each appropriate jurisdiction for all such persons, taken as a whole (and, in the case of an actual or perceived conflict of interest where such person affected by such conflict informs the Borrower of such conflict and thereafter retains its own counsel, of another firm of counsel for such affected person).
(b) The Borrower agrees to indemnify the Administrative Agent, the Collateral Agent, the Arrangers, the Co-Documentation Agent, the Bookrunners, each Issuing Bank, each Swingline Lender, each Lender, each of their respective Affiliates, successors and assignors, and each of their respective directors, officers, employees, agents, trustees, advisors and members (each such person being called an “Indemnitee”) against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, charges and disbursements (excluding the allocated costs of in-house counsel and limited to not more than one counsel for all such Indemnitees, taken as a whole, and, if necessary, a single local counsel in each appropriate jurisdiction for all such Indemnitees, taken as a whole (and, in the case of an actual or perceived conflict of interest where the Indemnitee affected by such conflict informs the Borrower of such conflict and thereafter retains its own counsel, of another firm of counsel for such affected Indemnitee)), incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto and thereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated hereby, (ii) the use of the proceeds of the Loans or the use of any Letter of Credit (including any refusal by any Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any violation of or liability under Environmental Laws by the Borrower or any Subsidiary, (iv) any actual or alleged presence, Release of or exposure to Hazardous Materials at, under, on, from or to any property owned, leased or operated by the Borrower or any Subsidiary or (v) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto and regardless of whether such matter is initiated by a third party or by Holdings, the Borrower, or any of their subsidiaries or Affiliates, creditors or security holders; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a final, non-appealable judgment of a court of competent jurisdiction to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee or any of its Related Parties, (y) are determined by a final, non-appealable judgment of a court of competent jurisdiction to have arose from a material breach of such Indemnitee’s or any of its Related Parties’ obligations under any Loan Document or (z) arose from any claim, actions, suits, inquiries, litigation, investigation or proceeding that does not involve an act or omission of the Borrower or any of its Affiliates and is brought by an Indemnitee against another Indemnitee (other than any claim, actions, suits, inquiries, litigation, investigation or proceeding against any Agent or Arranger in its capacity as such, unless such claim, action, suit, inquiry, litigation, investigation or proceeding arose from the gross negligence, bad faith or willful misconduct of such Agent or Arranger or any of its Related Parties (as determined by a court of competent jurisdiction in a final, non-appealable judgment)). None of the Indemnitees (or any of their respective affiliates) shall be responsible or liable to the BDT Investor, Holdings, the Borrower or any of their respective subsidiaries, Affiliates or stockholders or any other person or entity for any special, indirect, consequential or punitive damages, which may be alleged as a result of the Facilities or the Transactions; provided that the foregoing shall not limit any Loan Party’s indemnity obligations to the extent special, indirect, consequential or punitive damages are included in any third party claim in connection with which such Indemnitee is entitled to receive indemnification hereunder. The provisions of this Section 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Loan Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, any Issuing Bank or any Lender. All amounts due under this Section 9.05 shall be payable within 30 days after written demand therefor accompanied by reasonable documentation with respect to any reimbursement, indemnification or other amount requested.
(c) This Section 9.05 shall not apply to any Taxes (other than Taxes that represent losses, claims, damages, liabilities and related expenses resulting from a non-Tax claim), which shall be governed exclusively by Section 2.17 and, to the extent set forth therein, Section 2.15.
(d) To the fullest extent permitted by applicable law, no party to this Agreement shall assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof (other than, in the case of the Borrower, in respect of any such damages incurred or paid by an Indemnitee to a third party for which such Indemnitee is otherwise entitled to indemnification pursuant to this Section 9.05). No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.
(e) The agreements in this Section 9.05 shall survive the resignation of the Administrative Agent, the Collateral Agent or any Issuing Bank, the replacement of any Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all the other Loan Obligations and the termination of this Agreement.
Section 9.06 Right of Set-off. If an Event of Default shall have occurred and be continuing, each Lender (and, in the case of Citicorp North America, Inc., its Affiliates) and each Issuing Bank is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other Indebtedness at any time owing by such Lender or such Issuing Bank to or for the credit or the account of Holdings, the Borrower or any Subsidiary against any of and all the obligations of Holdings or the Borrower now or hereafter existing under this Agreement or any other Loan Document held by such Lender or such Issuing Bank, irrespective of whether or not such Lender or such Issuing Bank shall have made any demand under this Agreement or such other Loan Document and although the obligations may be unmatured; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.25 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Loan Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender and each Issuing Bank under this Section 9.06 are in addition to other rights and remedies (including other rights of set-off) that such Lender or such Issuing Bank may have.
Section 9.07 Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSES OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (OTHER THAN AS
EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER, INCLUDING BUT NOT LIMITED TO THE VALIDITY, INTERPRETATION, CONSTRUCTION, BREACH, ENFORCEMENT OR TERMINATION HEREOF AND THEREOF, AND WHETHER ARISING IN CONTRACT OR TORT OR OTHERWISE, SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THEREOF (OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1401 AND SECTION 5-1402).
Section 9.08 Waivers; Amendment. (a) No failure or delay of the Administrative Agent, any Issuing Bank or any Lender in exercising any right or power hereunder or under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, each Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by Holdings, the Borrower, the Thai Borrower or any other Loan Party therefrom shall in any event be effective unless the same shall be permitted by clause (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on Holdings, the Borrower, the Thai Borrower or any other Loan Party in any case shall entitle such person to any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified except (x) as provided in Sections 2.21, 2.22, 2.23 and 2.24, (y) in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by Holdings, the Borrower and the Required Lenders or the Administrative Agent at the direction thereof (or, in respect of any waiver, amendment or modification of Section 2.11(b) or (c), the Required Prepayment Lenders, rather than the Required Lenders, or the Administrative Agent at the direction thereof) and (z) in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by each Loan Party that is a party thereto and the Administrative Agent and consented to by the Required Lenders (provided that, except as set forth in clause (vi) below, only the consent of the Administrative Agent or the Collateral Agent, as the case may be, shall be required to waive, amend or modify any Security Document or instrument delivered in connection therewith in any manner that is not otherwise inconsistent with this Agreement); provided, however, that no such agreement shall:
(i) decrease or forgive the principal amount of, or extend the final maturity
of, or decrease the rate of interest on, any Loan or any L/C Disbursement, or extend the stated expiration of any Letter of Credit beyond the applicable Revolving Facility Maturity Date (except as provided in Section 2.05(c)), without the prior written consent of each Lender directly adversely affected thereby (which, notwithstanding the foregoing, such consent of such Lender directly adversely affected thereby shall be the only consent required hereunder to make such modification); provided that no amendment to the financial definitions in this Agreement or waiver or modification of any Default or Event of Default (or of any obligation of the Borrower to pay interest at the default rate of interest under Section 2.13(c)) shall constitute a reduction in the rate of interest for purposes of this clause (i),
(ii) increase or extend the Commitment of any Lender, or decrease the Commitment Fees, L/C Participation Fees or any other Fees of any Lender without the prior
written consent of such Lender (which, notwithstanding the foregoing, such consent of such Lender shall be the only consent required hereunder to make such modification); provided that waivers or modifications of conditions precedent, covenants, Defaults or Events of Default, mandatory prepayments or of a mandatory reduction in the aggregate Commitments shall not constitute an increase or extension of the Commitments of any Lender for purposes of this clause (ii),
(iii) extend or waive any scheduled principal installment or reduce the
amount due on the due date for any scheduled principal installment or extend any date on which payment of interest on any Loan or any L/C Disbursement or any Fees is due, without the prior written consent of each Lender directly adversely affected thereby (which, notwithstanding the foregoing, such consent of such Lender directly adversely affected thereby shall be the only consent required hereunder to make such modification); provided that no amendment to the financial definitions in this Agreement or any waiver or modifications of Defaults or Events of Default, mandatory prepayments or of a mandatory reduction in the aggregate Commitments shall constitute an increase or extension of the Commitments of any Lender for purposes of this clause (iii),
(iv) amend the provisions of Section 7.02 with respect to the pro rata
application of payments (and order of payments) required thereby in a manner that by its terms modifies the application of such payments required thereby to be on a less than pro rata basis (or modify the “waterfall” of payments), without the prior written consent of each Lender adversely affected thereby (which, notwithstanding the foregoing, such consent of such Lender directly adversely affected thereby shall be the only consent required hereunder to make such modification); provided that this clause (iv) shall not apply (A) to amendments or steps to give effect to the intended priority of obligations expressly permitted by the Loan Documents as of the Closing Date to be senior to the obligations in respect of any Facility, (B) to any debtor in possession or similar financing under applicable Debtor Relief Laws or (C) to amendments or steps to give effect to the intended priority of obligations incurred after the Closing Date and with respect to which each Lender adversely affected thereby was offered the right to participate ratably therein (each, a “Permitted Modification”),
(v) amend or modify the provisions of this Section 9.08 or the definition of the terms “Required Lenders,” “Majority Lenders,” “Required Revolving Facility Lenders”, “Required USD Revolving Facility Lenders”, “Required Thai Baht Revolving Facility Lenders”, “Required Prepayment Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the prior written consent of each Lender adversely affected thereby, in each case except, for the avoidance of doubt, as otherwise provided in Section 9.08(d) (it being understood that additional extensions of credit pursuant to this Agreement may be included in the determination of any such requisite group of Lenders on substantially the same basis as the Loans and Commitments are included on the Closing Date),
(vi) release all or substantially all of the Collateral or all or substantially all of the Subsidiary Loan Parties from their respective Loan Guarantees under the Guarantee Agreement,
(vii) effect any waiver, amendment or modification that by its terms adversely affects the rights in respect of payments or Collateral of the Thai Baht Revolving Facility Lenders participating in the Thai Baht Revolving Facility or otherwise adversely affects the Thai
Baht Revolving Facility or the Thai Baht Revolving Facility Lenders differently from those USD Revolving Facility Lenders participating in the USD Revolving Facility, without the consent of the Required Thai Baht Revolving Facility Lenders participating in the adversely affected Thai Baht Revolving Facility, and
(viii) (x) subordinate the payment priority of all or substantially all of the Loan Obligations or the Loan Guarantees and/or (y) subordinate the Liens with respect to all or substantially all of the value of the Collateral securing the Facilities, in each case, without the prior written consent of each Lender directly and adversely affected thereby, other than in connection with permitted asset sales, Dispositions, sale leasebacks, capital leases, mergers, liquidations, dissolutions or as otherwise permitted under this Agreement and other than in connection with any debtor-in-possession (or equivalent or similar) financing or use of Collateral in an insolvency proceeding or any other proceeding under any debtor relief laws or as permitted under any Intercreditor Agreement, in each case to any other Indebtedness solely in the form of third party Indebtedness for borrowed money unless such adversely affected Lender is offered the opportunity to participate on no less than a pro rata basis and on the same terms in such other Indebtedness.
Provided, further, that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Collateral Agent, the Swingline Lender or an Issuing Bank hereunder without the prior written consent of the Administrative Agent, the Collateral Agent, the Swingline Lender or such Issuing Bank acting as such at the effective date of such agreement, as applicable. Each Lender shall be bound by any waiver, amendment or modification authorized by this Section 9.08 and any consent by any Lender pursuant to this Section 9.08 shall bind any Assignee of such Lender.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have the right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be affected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.
(c) Without the consent of any Lender or Issuing Bank, the Loan Parties and the Administrative Agent and/or Collateral Agent may (in their respective sole discretion, or shall, to the extent required by any Loan Document) enter into any amendment, modification or waiver of any Loan Document, or enter into any new agreement or instrument, to effect (1) the granting, perfection, protection, expansion or enhancement of any security interest in any Collateral or additional property to become Collateral for the benefit of the Secured Parties or the granting of additional guarantees, to include holders of Other First Liens in the benefit of the Security Documents in connection with the incurrence of any Other First Lien Debt, or as required by local law (or upon the advice of counsel) to give effect to, or protect any security interest for the benefit of the Secured Parties, in any property or so that the security interests therein comply with applicable law or this Agreement or in each case to otherwise enhance the rights or benefits of any Lender under any Loan Document (including, in all cases, to add a Designated Guarantor as a Subsidiary Loan Party or an Additional Borrower as a Borrower) and/or (2) the provisions of Section 1.08, 1.10, 1.12, 2.04, 2.05, 5.10, 5.14, 5.15 or 5.16, or any other provision specifying that any waiver, amendment or modification may be made with the consent or approval only of specified persons. The Administrative Agent and the Borrower may, without the consent of any Lender, enter into amendments or modifications to this Agreement or any of the other Loan
Documents or enter into additional Loan Documents as the Administrative Agent reasonably deems appropriate in order to implement any Benchmark Replacement or any Benchmark Replacement Conforming Changes or otherwise effectuate the terms of Section 2.14 in accordance with the terms of Section 2.14.
(d) Notwithstanding the foregoing, the consent of the Required Lenders shall not be required, and this Agreement may be amended (or amended and restated), waived or supplemented with the written consent of the Lenders providing the relevant Loans, the Administrative Agent, Holdings and the Borrower (a) to provide for and/or to integrate in a manner not inconsistent with Section 2.21, 2.22, 2.23 and/or 2.24, as the case may be, any Incremental Term Loan Commitments, Incremental Revolving Facility Commitments, Refinancing Term Loans, Replacement Revolving Facility Commitments, Extended Revolving Loans and/or Extended Term Loans to be outstanding hereunder from time to time and to permit the accrued interest and fees and other obligations in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Initial Term B Loans and the Revolving Facility Loans and the accrued interest and fees and other obligations in respect thereof, in each case as an existing Class or as a new Class as provided for in Section 2.21, 2.22, 2.23 and/or 2.24, as the case may be, (b) to include appropriately the holders of such extensions of credit in any determination of the requisite lenders required hereunder, including the Required Lenders, the Required Prepayment Lenders, the Required Revolving Facility Lenders, the Required USD Revolving Facility Lenders, the Required Thai Baht Revolving Facility Lenders or any other requisite group of lenders, (c) to integrate any Other First Lien Debt and/or (d) to cure any ambiguity, omission, defect, inconsistency or to provide for any reasonable adjustment of a technical nature with respect to the provisions of this Agreement with respect to the borrowing and repayment of such extensions of credit.
(e) [Reserved].
(f) [Reserved].
(g) With respect to the incurrence of any secured or unsecured Indebtedness (including any Intercreditor Agreement relating thereto), the Borrower may elect (in its sole discretion, but shall not be obligated) to deliver to the Administrative Agent a certificate of a Responsible Officer at least three Business Days prior to the incurrence thereof (or such shorter time as the Administrative Agent may agree in its reasonable discretion), together with either drafts of the material documentation relating to such Indebtedness or a description of such Indebtedness (including a description of the Liens intended to secure the same or the subordination provisions thereof, as applicable) in reasonably sufficient detail to be able to make the determinations referred to in this paragraph, which certificate shall either, at the Borrower’s election, (x) state that the Borrower has determined in good faith that such Indebtedness satisfies the requirements of the applicable provisions of Sections 6.01 and 6.02 (taking into account any other applicable provisions of this Section 9.08), in which case such certificate shall be conclusive evidence thereof or (y) request the Administrative Agent to confirm, based on the information set forth in such certificate and any other information reasonably requested by the Administrative Agent, that such Indebtedness satisfies such requirements, in which case the Administrative Agent may determine whether, in its reasonable judgment, such requirements have been satisfied (in which case it shall deliver to the Borrower a written confirmation of the same), with any such determination of the Administrative Agent to be conclusive evidence thereof, and the Lenders hereby authorize the Administrative Agent to make such determinations.
(h) Notwithstanding, anything to the contrary in any Loan Document, this Agreement shall not be amended, waived or otherwise modified without the written consent of the Required USD Revolving Facility Lenders voting as a single Class (rather than the Required Lenders),
the Administrative Agent and the Borrower with respect to (i) the provisions of Section 4.01, solely as they relate to the USD Revolving Facility Loans, Swingline Loans and USD Letters of Credit and (ii) with respect to the waiver of any Default or Event of Default or the waiver of any other conditions to a Credit Event with respect to the USD Revolving Facility Loans, Swingline Loans and USD Letters of Credit as set forth in Section 4.01 and (iii) the waiver of any Default or Event of Default that results from any representation made or deemed made in connection with any Credit Event in respect of the USD Revolving Facility.
(i) Notwithstanding, anything to the contrary in any Loan Document, this Agreement shall not be amended, waived or otherwise modified without the written consent of the Required Thai Baht Revolving Facility Lenders voting as a single Class (rather than the Required Lenders), the Administrative Agent and the Thai Borrower with respect to (i) the provisions of Section 4.01, solely as they relate to the Thai Baht Revolving Facility Loans, and Thai Baht Letters of Credit, (ii) with respect to the waiver of any Default or Event of Default or the waiver of any other conditions to a Credit Event with respect to the Thai Baht Revolving Facility Loans, and Thai Baht Letters of Credit as set forth in Section 4.01 and (iii) the waiver of any Default or Event of Default that results from any representation made or deemed made in connection with any Credit Event in respect of the Thai Baht Revolving Facility.
(j) Subject to Section 9.08(b)(vii), notwithstanding anything to the contrary in any Loan Document, (i) this Agreement may be amended, waived or otherwise modified with the written consent of solely the Required Revolving Facility Lenders voting as a single Class (rather than the Required Lenders), the Administrative Agent, Holdings, and the Borrower with respect to the provisions of Section 6.11, the waiver of any Default or Event of Default in respect of Section 6.11.
(k) Notwithstanding anything to the contrary in any Loan Document, in connection with any determination as to whether the requisite Lenders have (A) consented (or not consented) to any waiver, amendment or modification of any provision of this Agreement or any other Loan Document or any departure by any Loan Party therefrom, (B) otherwise acted on any matter related to this Agreement or any Loan Document or (C) directed or required the Administrative Agent, the Collateral Agent or any Lender to undertake any action (or refrain from taking any action) with respect to, or under, this Agreement or any other Loan Document, any Lender (other than an Excluded Lender) that, as a result of its interest (or its and its Covered Affiliates’ collective interests) in any total return swap, total rate of return swap, credit default swap or other derivative contract (other than any such total return swap, total rate of return swap, credit default swap or other derivative contract entered into pursuant to bona fide market making activities), has a net short position with respect to any of the Loans or Commitments hereunder or with respect to any other tranche, class or series of Indebtedness for borrowed money incurred or issued by the Borrower or any of its Subsidiaries or Parent Entities at such time of determination (including commitments with respect to any revolving credit facility) (each such item of Indebtedness, including the Loan and Commitments, “Specified Indebtedness” and each such Lender, a “Net Short Lender”) shall have no right to vote with respect to any waiver, amendment or modification of this Agreement or any other Loan Documents and shall be deemed to have voted its interest as a Lender without discretion in the same proportion as the allocation of voting with respect to such matter by Lenders who are not Net Short Lenders (including in any plan of reorganization). In connection with any waiver, amendment or modification of this Agreement or the other Loan Documents, each Lender (other than any Excluded Lender) will be deemed to have represented to the Borrower and the Administrative Agent that it does not constitute a Net Short Lender, in each case, unless such Lender shall have notified the Borrower and the Administrative Agent prior to the requested response date with respect to such waiver, amendment or modification that it constitutes a Net Short Lender (it being understood and agreed
that the Borrower and the Administrative Agent shall be entitled to rely on each such representation and deemed representation).
(l) For purposes of the preceding clause:
(i) “Covered Affiliate” means any Affiliate of a Lender (provided that for this purpose, Affiliates shall not include Persons that are subject to customary procedures to prevent the sharing of confidential information between such Lender and such Person if such Person has fiduciary duties to investors or other equityholders of such Person and such investors or equityholders are not the same as the investors or equityholders of such Lender).
(ii) “Excluded Lender” means (A) any Lender that is a Regulated Bank, (B) any Revolving Facility Lender as of the Closing Date and (C) any Affiliate of a Regulated Bank to the extent that (1) all of the equity of such Affiliate is directly or indirectly owned by either (I) such Regulated Bank or (II) a parent entity that also owns, directly or indirectly, all of the equity of such Regulated Bank and (2) such Affiliate is a securities broker or dealer registered with the SEC under section 15 of the Securities Exchange Act of 1934).
(iii) “Regulated Bank” means a commercial bank with a consolidated combined capital surplus of at least $5,000,000,000 that is (i) a U.S. depository institution the deposits of which are insured by the Federal Deposit Insurance Corporation; (ii) a corporation organized under section 25A of the U.S. Federal Reserve Act of 1913; (iii) a branch, agency or commercial lending company of a foreign bank operating pursuant to approval by and under the supervision of the Board under 12 CFR part 211; (iv) a non-U.S. branch of a foreign bank managed and controlled by a U.S. branch referred to in clause (iii); or (v) any other U.S. or non-U.S. depository institution or any branch, agency or similar office thereof supervised by a bank regulatory authority in any jurisdiction.
(iv) For purposes of determining whether a Lender (alone or together with its Covered Affiliates) has a “net short position” on any date of determination: (i) derivative contracts with respect to any Specified Indebtedness and such contracts that are the functional equivalent thereof shall be counted at the notional amount of such contract in Dollars, (ii) notional amounts in other currencies shall be converted to the Dollar equivalent thereof by such Lender in a commercially reasonable manner consistent with generally accepted financial practices and based on the prevailing conversion rate (determined on a mid-market basis) on the date of determination, (iii) derivative contracts in respect of an index that includes the Borrower, any Parent Entity or any Subsidiary or any instrument issued or guaranteed by the Borrower, any Parent Entity or any Subsidiary shall not be deemed to create a short position with respect to such Specified Indebtedness, so long as (x) such index is not created, designed, administered or requested by such Lender or its Covered Affiliates and (y) the Borrower, its Parent Entities and the other Subsidiaries and any instrument issued or guaranteed by such persons, collectively, shall represent less than 5% of the components of such index, (iv) derivative transactions that are documented using either the 2014 ISDA Credit Derivatives Definitions or the 2003 ISDA Credit Derivatives Definitions (collectively, the “ISDA CDS Definitions”) shall be deemed to create a short position with respect to the relevant Specified Indebtedness if such Lender or its Covered Affiliates is a protection buyer or the equivalent thereof for such derivative transaction and (x) the relevant Specified Indebtedness is a “Reference Obligation” under the terms of such derivative transaction (whether specified by name in the related documentation, included as a “Standard Reference Obligation” on the most recent list published by Markit, if “Standard Reference Obligation” is specified as applicable in the relevant documentation or in any other
manner), (y) the relevant Specified Indebtedness would be a “Deliverable Obligation” under the terms of such derivative transaction or (z) the Borrower, any Parent Entity or any Subsidiary is designated as a “Reference Entity” under the terms of such derivative transaction and (v) credit derivative transactions or other derivatives transactions not documented using the ISDA CDS Definitions shall be deemed to create a short position with respect to any Specified Indebtedness if such transactions offer the Lender or its Covered Affiliates protection against a decline in the value of such Specified Indebtedness, or in the credit quality of the Borrower, any Parent Entity or any Subsidiary, in each case, other than as part of an index so long as (x) such index is not created, designed, administered or requested by such Lender or its Covered Affiliates and (y) the Borrower, any Parent Entity, the Borrower and the Subsidiaries, and any instrument issued or guaranteed by such persons, collectively, shall represent less than 5% of the components of such index.
Section 9.09 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the applicable interest rate, together with all fees and charges that are treated as interest under applicable law (collectively, the “Charges”), as provided for herein or in any other document executed in connection herewith, or otherwise contracted for, charged, received, taken or reserved by any Lender or any Issuing Bank, shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by such Lender in accordance with applicable law, the rate of interest payable hereunder, together with all Charges payable to such Lender or such Issuing Bank, shall be limited to the Maximum Rate; provided that such excess amount shall be paid to such Lender or such Issuing Bank on subsequent payment dates to the extent not exceeding the legal limitation.
Section 9.10 Entire Agreement. This Agreement, the other Loan Documents and the agreements regarding certain Fees referred to herein constitute the entire contract between the parties relative to the subject matter hereof. Any previous agreement among or representations from the parties or their Affiliates with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents. Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any party other than the parties hereto and thereto any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.
Section 9.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
Section 9.12 Severability. In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
Section 9.13 Counterparts; Electronic Execution of Assignments and Certain Other Documents.
(a) This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which, when taken together, shall constitute but one contract, and shall become effective as provided in Section 9.03. Delivery of an executed counterpart to this Agreement by facsimile transmission (or other electronic transmission pursuant to procedures approved by the Administrative Agent) shall be as effective as delivery of a manually signed original.
(b) Subject to paragraph (c) below, delivery of an executed counterpart of a signature page to this Agreement by facsimile or by email as a “.pdf” or “.tif” attachment shall be effective as delivery of a manually executed counterpart of this Agreement. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in this Agreement, any other Loan Document or any other document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include electronic signatures, electronic records or the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
(c) In respect of the Loan Document relating to Thai Baht Revolving Facility Borrowing or the Thai Borrower where a signature is delivered by any Party by facsimile transmission or other electronic transmissions as a “.pdf” or “.tif” attachment, its original in wet ink shall be subsequent delivered by the relevant Party.
Section 9.14 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
Section 9.15 Jurisdiction; Consent to Service of Process. (a) Subject to any provisions to the contrary in any Loan Document governed by the law of a jurisdiction other than the United States, any state thereof or the District of Columbia, each party hereto irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in the borough of Manhattan, and of the United States District Court of the Southern District of New York sitting in the borough of Manhattan, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding shall be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or in any other Loan Document shall affect any right that the Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other
Loan Document against the Borrower, the Thai Borrower or any other Loan Party or its properties in the courts of any jurisdiction.
(b) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any court of the State of New York sitting in the borough of Manhattan, or the United States District Court of the Southern District of New York, and any appellate court from any thereof. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement or any other Loan Document to serve process in any other manner permitted by law. The Thai Borrower hereby irrevocably appoints the Borrower as its authorized agent to accept and acknowledge service of any and all process which may be served in any suit, action or proceeding of the nature referred to in this Section 9.15 and the Borrower hereby accepts such appointment. The Thai Borrower agrees that such service (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by law, be taken and held to be valid personal service upon and personal delivery to it.
Section 9.16 Confidentiality. Each of the Lenders, each Issuing Bank and each of the Agents or any of their respective branches or Affiliates agrees that it shall maintain in confidence any information relating to Holdings, any Parent Entity, the Borrower and any Subsidiary furnished to it by or on behalf of Holdings, any Parent Entity, the Borrower or any Subsidiary (other than information that (a) has become generally available to the public other than as a result of a disclosure by such party, (b) has been independently developed by such Lender, such Issuing Bank or such Agent without violating this Section 9.16 or (c) was already in such Lender’s possession or available to such Lender, such Issuing Bank or such Agent from a third party having, to such person’s knowledge, no obligations of confidentiality to Holdings, any Parent Entity, the Borrower or any other Loan Party or any of their respective Affiliates) and shall not reveal the same other than to its directors, trustees, officers, employees and advisors with a need to know and any numbering, administration or settlement service providers or to any person that approves or administers the Loans on behalf of such Lender (so long as each such person shall have been instructed to keep the same confidential in accordance with this Section 9.16), except: (A) to the extent necessary to comply with law or any legal process or the requirements of any Governmental Authority, the National Association of Insurance Commissioners or of any securities exchange on which securities of the disclosing party or any Affiliate of the disclosing party are listed or traded (in which case, to the extent practicable and not prohibited by applicable law, such person shall inform the Borrower promptly thereof prior to disclosure), (B) as part of normal reporting or review procedures to, or examinations by, Governmental Authorities or self-regulatory authorities, including the National Association of Insurance Commissioners or the Financial Industry Regulatory Authority, Inc. or their equivalent in any jurisdiction (in which case, except with respect to any routine or ordinary course audit or examination conducted by bank accountants or any regulatory authority or self-regulatory authority exercising examination or regulatory authority, to the extent practicable and not prohibited by applicable law, such person shall inform the Borrower promptly thereof prior to disclosure), (C) to its parent companies, Affiliates and its and its Affiliates’ employees, directors, legal counsel, independent auditors, professionals and other experts, advisors, officers, service providers or agents (so long as each such person shall have been instructed to keep the same confidential in accordance with this Section 9.16), (D) in order to enforce its rights under any Loan Document in a legal proceeding or to the extent applicable and reasonably necessary or advisable, for purposes of establishing a “due diligence” defense
or in connection with the exercise of any remedy or enforcement of any rights hereunder, (E) to any pledgee under Section 9.04(c) or any other prospective assignee of, or prospective Participant in, any of its rights under this Agreement (so long as such person shall have been instructed to keep the same confidential in accordance with this Section 9.16), (E) to any direct or indirect contractual counterparty in Hedging Agreements or such contractual counterparty’s professional advisor (so long as such contractual counterparty or professional advisor to such contractual counterparty agrees to be bound by the provisions of this Section 9.16); provided that, in the case of clauses (E) and (F), no information may be provided to any Ineligible Institution or person who is known to be acting on behalf of or fronting an Ineligible Institution, (G) with the written consent of the Borrower and (H) to any rating agency when required by such rating agency in connection with rating such Lender, provided that, prior to any such disclosure, such rating agency shall undertake in writing to preserve the confidentiality of any confidential information relating to Holdings, any Parent Entity, the Borrower and any Subsidiary received by such rating agency from the Agent or any Lender. Each Loan Party consents to the publication by the Administrative Agent or any Lender of customary advertising material relating to the transactions contemplated hereby using the name, product photographs, logo or trademark of such Loan Party. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to the agents and the Lenders in connection with the administration of this Agreement, the other Loan Documents and the Commitments. For the avoidance of doubt, nothing herein prohibits any individual from communicating or disclosing information regarding suspected violations of laws, rules, or regulations to a governmental, regulatory, or self-regulatory authority without any notification to any person in accordance with applicable laws, rules, regulations, or regulatory guidance.
Section 9.17 Platform; Borrower Materials. The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arrangers will make available to the Lenders and the Issuing Banks materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”), and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information (or, if Holdings is not at the time a public reporting company, material information of a type that would not reasonably be expected to be publicly available if Holdings were a public reporting company) with respect to Holdings, the Borrower or the Subsidiaries or any of their respective securities) (each, a “Public Lender”). the Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (i) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof, (ii) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Arrangers, the Issuing Banks and the Lenders to treat such Borrower Materials as solely containing information that is either (A) publicly available information or (B) not material (although it may be sensitive and proprietary) with respect to Holdings, the Borrower or the Subsidiaries or any of their respective securities for purposes of United States Federal and state securities laws (provided, however, that such Borrower Materials shall be treated as set forth in Section 9.16, to the extent such Borrower Materials constitute information subject to the terms thereof), (iii) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Investor” and (iv) the Administrative Agent and the Arrangers shall be entitled to treat the Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Investor.” Any Loan Documents shall be deemed to be “PUBLIC” and may be made available on the “Public Investor” portion of the Platform.
Section 9.18 Release of Liens and Guarantees.
(a) The Lenders, the Issuing Banks and the other Secured Parties hereby irrevocably agree that the Liens granted to the Collateral Agent by the Loan Parties on any Collateral shall be automatically released or terminated, as applicable: (i) in full upon the occurrence of the Termination Date as set forth in Section 9.18(d) below, (ii) upon the Disposition (or any merger, consolidation or amalgamation to effect such Disposition) (including transfers of Securitization Assets in connection with a Permitted Securitization Financing or a Foreign Customer Finance Program) of such Collateral by any Loan Party to a person that is not (and is not required to immediately become) a Loan Party in a transaction not prohibited by this Agreement, (iii) to the extent that such Collateral comprises property leased to a Loan Party, upon termination or expiration of such lease, (iv) if the release of such Lien is approved, authorized or ratified in writing by the Required Lenders (or such other percentage of the Lenders whose consent may be required in accordance with Section 9.08), (v) to the extent that the property constituting such Collateral is owned by any Loan Party, upon the release of such Loan Party from its obligations under its Loan Guarantee in accordance with the Loan Documents, (vi) pursuant to any binding Intercreditor Agreement, (vii) as required by the Collateral Agent to effect any Disposition of Collateral in connection with any exercise of remedies of the Collateral Agent pursuant to the Security Documents, (viii) upon any property becoming Excluded Property. Furthermore, the Lenders, the Issuing Banks and the other Secured Parties hereby irrevocably authorize the Administrative Agent and the Collateral Agent to release or subordinate any Lien on any property granted to or held by the Administrative Agent or the Collateral Agent under any Loan Document to the holder of any Lien on such property that is permitted by clauses (c), (f), (g), (i), (j), (n), (t), (u), (ee)(ii), (kk), (mm) or (nn) of Section 6.02, in each case to the extent the contract or agreement pursuant to which such Lien is granted prohibits the Liens under the Loan Documents on such property or requires the subordination thereof, and the Administrative Agent and the Collateral Agent shall do so upon request of any Loan Party; provided that upon the request of the Administrative Agent, the Borrower shall deliver to the Administrative Agent a certificate of a Responsible Officer of the Borrower certifying as to the applicable matters described in this sentence. Any such release (other than pursuant to clause (i) above) shall not in any manner discharge, affect, or impair the Secured Obligations or any Liens (other than the Liens released) upon (or obligations (other than those released) of the Loan Parties in respect of) all interests retained by the Loan Parties, including the proceeds of any Disposition, to the extent otherwise constituting Collateral.
(b) In addition, the Lenders, the Issuing Banks and the other Secured Parties hereby irrevocably agree that a Subsidiary Loan Party shall be automatically released from its Loan Guarantee and its other obligations under the Loan Documents upon consummation of any transaction not prohibited hereunder resulting in such Subsidiary Loan Party ceasing to constitute a Subsidiary Loan Party or otherwise becoming an Excluded Subsidiary; provided that no Subsidiary Loan Party shall be automatically released from its obligations under the Loan Documents solely by reason of such Subsidiary Loan Party becoming an Excluded Subsidiary of the type described in clause (b) of the definition thereof unless either (x) it is no longer a direct or indirect Subsidiary of the Borrower or (y) such Subsidiary Loan Party ceases to be a Wholly Owned Subsidiary as a result of a sale or transfer of Equity Interests to (A) a person that is not an Affiliate of the Borrower or (B) an Affiliate of the Borrower if, in the case of this clause (B), such sale or transfer is made for a bona fide business purpose of the Borrower and its Subsidiaries and not for the primary purpose of evading the Collateral and Guarantee Requirement (as determined by the Borrower in good faith, in consultation with the Administrative Agent).
(c) The Collateral Agent may rely conclusively on a certificate provided to it by any Loan Party upon its reasonable request as to any matter of fact described in the preceding clauses (a) and (b) without further inquiry.
(d) The Lenders, the Issuing Banks and the other Secured Parties hereby authorize the Administrative Agent and the Collateral Agent, as applicable, to execute and deliver any instruments, documents, and agreements necessary or desirable to evidence and confirm the release of any Loan Party or Collateral pursuant to the foregoing provisions of this Section 9.18 and to return to Holdings, the Borrower or its applicable Subsidiary all possessory collateral (including any certificates or instruments) held by it in respect of any Collateral so released, all without the need for further consent of any Lender or any other Secured Party. For the avoidance of doubt, upon any such release, any representation, warranty or covenant contained in any Loan Document relating to any such Loan Party or such Collateral shall no longer be deemed to be made.
(e) Notwithstanding anything to the contrary contained herein or any other Loan Document, on the Termination Date, all Liens granted to the Collateral Agent by the Loan Parties on any Collateral and all obligations of the Borrower, the Thai Borrower and the other Loan Parties under any Loan Documents (other than such obligations that expressly survive the Termination Date pursuant to the terms hereof) shall, in each case, be automatically released and, upon request of the Borrower, the Administrative Agent and/or the Collateral Agent, as applicable, shall (without notice to, or any vote or consent of, any Secured Party) take such actions as shall be required to evidence the release its security interest in all Collateral (including returning to Holdings or the Borrower all possessory collateral (including any certificates or instruments) held by it in respect of any Collateral), and to evidence the release of all such obligations under any Loan Document, whether or not on the date of such release there may be any (i) outstanding obligations in respect of any Secured Hedge Agreements or any Secured Cash Management Agreements or (ii) contingent indemnification obligations or expense reimbursement claims not then due. Any such release of obligations shall be deemed subject to the provision that such obligations shall be reinstated if after such release any portion of any payment in respect of the obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Loan Party or the Thai Borrower, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any Loan Party or the Thai Borrower or any substantial part of its respective property, or otherwise, all as though such payment had not been made.
(f) The Administrative Agent and the Collateral Agent shall promptly (and the Secured Parties hereby authorize and direct the Administrative Agent and the Collateral Agent to) take such action and execute any such documents or instruments as may be reasonably requested by the Borrower in connection with any release or termination contemplated by this Section 9.18; provided that such release shall be without recourse to or warranty by the Administrative Agent or Collateral Agent, other than as to the authority of the Administrative Agent or Collateral Agent to execute and deliver any such document or instrument. The Borrower agrees to pay all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent or the Collateral Agent (and their respective representatives) in connection with taking such actions.
(g) For the avoidance of doubt, (i) Secured Obligations in respect of any Secured Cash Management Agreement or Secured Hedge Agreement shall be secured and guaranteed pursuant to the Security Documents only to the extent that, and for so long as, the other Secured Obligations are so secured and guaranteed, and the discharge of obligations in respect of Secured Cash Management Agreements or Secured Hedge Agreements shall not be a condition to the occurrence of the Termination Date, (ii) no person shall have any voting rights under any Loan Document solely as a result of the
existence of obligations owed to it under any such Secured Hedge Agreement or Secured Cash Management Agreement and (iii) no release of Collateral or any Loan Guarantee or any other obligations pursuant to this Agreement or any other Loan Document shall require the consent of any holder of obligations under Secured Hedge Agreements or Secured Cash Management Agreements.
Section 9.19 Conflicts with Permitted Securitization Financings and Foreign Customer Finance Programs. Each of the parties hereto agrees that nothing in this Agreement or any other Loan Document is intended to conflict with any Permitted Securitization Financing or Foreign Customer Finance Program. In the event of any conflict or apparent conflict between any term, covenant, condition or provision of this Agreement or any other Loan Document and any term, covenant, condition or provision of a Permitted Securitization Financing or Foreign Customer Finance Program, as applicable, this Agreement and such Loan Document shall be interpreted to the maximum extent possible to avoid causing any “Default,” “Event of Default,” “Rapid Amortization Event,” “Potential Rapid Amortization Event,” “Manager Termination Event” or “Potential Manager Termination Event,” each as defined under a Permitted Securitization Financing or Foreign Customer Finance Program, as applicable, and such interpretation shall control and govern.
Section 9.20 USA PATRIOT Act Notice. Each Lender that is subject to the USA PATRIOT Act and the Beneficial Ownership Regulation and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act and the Beneficial Ownership Regulation, it is required to obtain, verify and record information that identifies each Loan Party and the Thai Borrower, which information includes the name and address of each Loan Party and the Thai Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party and the Thai Borrower in accordance with the USA PATRIOT Act and the Beneficial Ownership Regulation. The Borrower and the Thai Borrower shall, promptly following a request by the Administrative agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests that is necessary in order for the Administrative Agent or such Lender to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, include the USA PATRIOT Act and the Beneficial Ownership Regulation.
Section 9.21 Affiliate Lenders.
(a) Each Lender who is an Affiliate of the Borrower (other than any Debt Fund Affiliate, Holdings, the Borrower or any Subsidiary) (each, an “Affiliate Lender”), in connection with any (i) consent (or decision not to consent) to any amendment, modification, waiver, consent or other action with respect to any of the terms of any Loan Document, (ii) other action on any matter related to any Loan Document or (iii) direction to the Administrative Agent, the Collateral Agent or any Lender to undertake any action (or refrain from taking any action) with respect to or under any Loan Document, agrees that, except with respect to any amendment, modification, waiver, consent or other action (1) described in clauses (i), (ii), (iii), (iv), (v) or (vi) of the first proviso of Section 9.08(b) or (2) that adversely affects such Affiliate Lender (in its capacity as a Lender) in a disproportionately adverse manner as compared to other Lenders, such Affiliate Lender shall be deemed to have voted its interest as a Lender without discretion in such proportion as the allocation of voting with respect to such matter by Lenders who are not Affiliate Lenders. Each Affiliate Lender hereby acknowledges, agrees and consents that if, for any reason, its vote to accept or reject any plan pursuant to the US Bankruptcy Code is not deemed to have been so voted, then such vote will be (x) deemed not to be in good faith and (y) “designated” pursuant to Section 1126(e) of the US Bankruptcy Code such that the vote is not counted in determining whether the applicable class has accepted or rejected such plan in accordance with Section 1126(c) of the US Bankruptcy Code; provided that Debt Fund Affiliates will not be subject to such
voting limitations and will be entitled to vote as any other Lender; provided that Debt Fund Affiliates may not account for more than 49.9% of the “Required Lenders” in any Required Lender vote. Each Affiliate Lender hereby irrevocably appoints the Administrative Agent (such appointment being coupled with an interest) as such Affiliate Lender’s attorney-in-fact, with full authority in the place and stead of such Affiliate Lender and in the name of such Affiliate Lender, from time to time in the Administrative Agent’s discretion to take any action and to execute any instrument that the Administrative Agent may deem reasonably necessary to carry out the provisions of this clause (a).
(b) Notwithstanding anything to the contrary in this Agreement, no Affiliate Lender shall have any right to (1) attend (including by telephone) any meeting or discussions (or portion thereof) among the Administrative Agent or any Lender to which representatives of the Borrower are not then present, (2) receive any information or material prepared by Administrative Agent or any Lender or any communication by or among Administrative Agent and/or one or more Lenders, except to the extent such information or materials have been made available to the Borrower or its Subsidiaries or their representatives, (3) make or bring (or participate in, other than as a passive participant in or recipient of its pro rata benefits of) any claim, in its capacity as a Lender, against Administrative Agent, the Collateral Agent or any other Lender with respect to any duties or obligations or alleged duties or obligations of such Agent or any other such Lender under the Loan Documents, (4) receive advice of counsel to the Administrative Agent, the Collateral Agent or any Lender (or challenge any assertion of attorney-client privilege by such counsel), (5) purchase any Term Loan if, immediately after giving effect to such purchase, Affiliate Lenders in the aggregate would own Term Loans with an aggregate principal amount in excess of 25% of the aggregate principal amount of all Term Loans then outstanding or (6) purchase any Revolving Facility Loans or Revolving Facility Commitments. Each Lender (other than any other Affiliate Lender) that assigns any Loans to an Affiliate Lender shall deliver to the Administrative Agent, the Borrower and such Affiliate Lender a customary Big Boy Letter.
(c) Notwithstanding anything herein to the contrary, (1) each Affiliate Lender shall have the right (but shall not be obligated to) to contribute any Term Loans, Incremental Equivalent Debt or Refinancing Notes acquired by it to Holdings, the Borrower or any of its Subsidiaries for the purpose of canceling such Term Loans, Incremental Equivalent Debt or Refinancing Notes, and in exchange therefor such Affiliate Lender may receive debt or equity securities of such entity or a direct or indirect parent entity or subsidiary thereof that are otherwise permitted to be issued by such entity at such time, it being understood that (x) in the case of any Term Loans, such Term Loans shall be cancelled immediately upon such contribution and (y) any such contribution shall be treated as a capital contribution that builds the Cumulative Credit pursuant to clause (l) of the definition thereof by an amount equal to the fair market value (as determined by Holdings in good faith) of the Term Loans, Incremental Equivalent Debt, Refinancing Notes or other applicable debt for borrowed money so contributed.
Section 9.22 [Reserved].
Section 9.23 [Reserved].
Section 9.24 Acknowledgment and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among the parties hereto, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.
Section 9.25 No Advisory or Fiduciary Responsibility.
(a) In connection with all aspects of each transaction contemplated hereby, each Loan Party and the Thai Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that (i) the Facilities provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document) are an arm’s-length commercial transaction between Holdings and its Subsidiaries, on the one hand, and the Agents, the Arrangers, the Issuing Banks and the Lenders, on the other hand, and the Borrower are capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents (including any amendment, waiver or other modification hereof or thereof), (ii) in connection with the process leading to such transaction, each of the Agents, the Arrangers, the Issuing Banks and the Lenders is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary, for the Borrower or any of its Affiliates, stockholders, creditors or employees or any other Person, (iii) none of the Agents, the Arrangers, the Issuing Banks or the Lenders has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Borrower with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Loan Document (irrespective of whether any Agent or Lender has advised or is currently advising the Borrower or any of its Affiliates on other matters) and none of the Agents, the Arrangers, the Issuing Banks or the Lenders has any obligation to the Borrower or any of its Affiliates with respect to the financing transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents, (iv) the Agents, the Arrangers, the Issuing Banks and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from, and may conflict with, those of the Borrower and its Affiliates, and none of the Agents, the Arrangers, the Issuing Banks or the Lenders has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship and (v) the Agents, the
Arrangers, the Issuing Banks and the Lenders have not provided and will not provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Loan Document) and the Loan Parties and the Thai Borrower have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate. Each Loan Party and the Thai Borrower hereby waives and releases, to the fullest extent permitted by law, any claims that it may have against the Agents, the Arrangers, the Issuing Banks and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty under applicable law relating to agency and fiduciary obligations.
(b) Each Loan Party and the Thai Borrower acknowledges and agrees that each Lender, the Arrangers, the Issuing Banks and any Affiliate thereof may lend money to, invest in, and generally engage in any kind of business with, any of the Borrower, Holdings, the BDT Investor, any Affiliate thereof or any other person or entity that may do business with or own securities of any of the foregoing, all as if such Lender, Arranger, Issuing Bank or Affiliate thereof were not a Lender, Arranger, Issuing Bank or an Affiliate thereof (or an agent or any other person with any similar role under the Facilities) and without any duty to account therefor to any other Lender, Arranger, Issuing Bank, Holdings, the Borrower, the BDT Investor or any Affiliate of the foregoing. Each Lender, Arranger, Issuing Bank and any Affiliate thereof may accept fees and other consideration from Holdings, the Borrower, the BDT Investor or any Affiliate thereof for services in connection with this Agreement, the Facilities or otherwise without having to account for the same to any other Lender, Arranger, Issuing Bank, Holdings, the Borrower, the BDT Investor or any Affiliate of the foregoing. Some or all of the Lenders, Arrangers and Issuing Banks may have directly or indirectly acquired certain equity interests (including warrants) in Holdings, the Borrower, the BDT Investor or an Affiliate thereof or may have directly or indirectly extended credit on a subordinated basis to Holdings, the Borrower, the BDT Investor or an Affiliate thereof. Each party hereto, on its behalf and on behalf of its Affiliates, acknowledges and waives the potential conflict of interest resulting from any such Lender, Arranger, Issuing Bank or an Affiliate thereof holding disproportionate interests in the extensions of credit under the Facilities or otherwise acting as arranger or agent thereunder and such Lender, Arranger, Issuing Bank or any Affiliate thereof directly or indirectly holding equity interests in or subordinated debt issued by Holdings, the Borrower, the BDT Investor or an Affiliate thereof.
Section 9.26 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Hedging Agreements or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
(a) In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate
of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
(b) As used in this Section 9.26, the following terms have the following meanings:
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Covered Entity” means any of the following:
(i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(ii) a “covered bank” as that term is defined in, and interpreted in accordance with 12 C.F.R. § 47.3(b); or
(iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
Section 9.27 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Thai Borrower and each Loan Party in respect of any such sum due from it to the Administrative Agent or any Lender hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or such Lender, as the case may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or such Lender, as the case may be, may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or any Lender from the Thai Borrower or any Loan Party in the Agreement Currency, the Thai Borrower or such Loan Party agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender, as the case may be, against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or any Lender in such currency, the Administrative Agent or
such Lender, as the case may be, agrees to return the amount of any excess to the Thai Borrower or such Loan Party (or to any other Person who may be entitled thereto under applicable Requirement of Law).
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
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| ALLIANCE LAUNDRY HOLDINGS |
| LLC, as Holdings |
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| By: | |
| Name: |
| Title: |
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| ALLIANCE LAUNDRY SYSTEMS |
| LLC, as Borrower |
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| | |
| By: | |
| Name: |
| Title: |
[Signature Page to Credit Agreement]
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| ALLIANCE LAUNDRY (THAILAND) |
| COMPANY LIMITED, as Thai Borrower |
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| | |
| By: | |
| Name: |
| Title: |
[Signature Page to Credit Agreement]
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| CITIBANK N.A., as Administrative Agent, Collateral Agent, Swingline Lender, an Issuing Bank and as a Lender |
| |
| | | |
| By: |
|
| | Name: |
|
| | Title: |
|
[Signature Page to Credit Agreement]
| | | | | | | | | | | |
| [ ],as a Lender |
| | | |
| | | |
| | | |
| | | |
| By: |
|
| | | |
| | Name: |
| | Title: |
[Signature Page to Credit Agreement]
Exhibit 10.2
Execution Version
AMENDED AND RESTATED
PURCHASE AGREEMENT
BETWEEN
ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC
as Buyer
AND
ALLIANCE LAUNDRY SYSTEMS LLC,
as Seller
DATED AS OF JUNE 8, 2018
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| Page |
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| ARTICLE I. | DEFINITIONS | |
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| SECTION 1.1 | Definitions | 2 |
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| ARTICLE II. | PURCHASE AND SALE OF SPECIFIED ASSETS | |
| | | | |
| SECTION 2.1 | Initial Transfer of Specified Assets; Subsequent Transfers of Specified Assets prior to the Restatement Date | 2 |
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| SECTION 2.2 | Subsequent Transfers of Specified Assets | 2 |
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| SECTION 2.3 | Timing of Conveyances | 3 |
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| SECTION 2.4 | Consideration for, and Characterization of, Purchases | 3 |
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| SECTION 2.5 | No Recourse | 4 |
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| SECTION 2.6 | No Assumption of Obligations Relating to Specified Assets or Contracts | 4 |
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| SECTION 2.7 | True Sales and True Contributions | 4 |
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| SECTION 2.8 | [Reserved] | 5 |
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| SECTION 2.9 | [Reserved] | 5 |
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| SECTION 2.10 | Calculation of Purchase Price | 5 |
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| SECTION 2.11 | [Reserved] | 5 |
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| SECTION 2.12 | Purchase Mechanics | 5 |
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| SECTION 2.13 | [Reserved] | 6 |
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| SECTION 2.14 | Application of Collections and Other Funds | 6 |
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| SECTION 2.15 | Servicing of Specified Assets | 6 |
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| SECTION 2.16 | Payments and Computations, Etc | 7 |
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| ARTICLE III. | REPRESENTATIONS AND WARRANTIES | |
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| SECTION 3.1 | Representations and Warranties of the Seller | 7 |
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| SECTION 3.2 | Representations and Warranties of Buyer | 13 |
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| ARTICLE IV. | CONDITIONS | |
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| SECTION 4.1 | Conditions to Obligation of Buyer | 14 |
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| SECTION 4.2 | Conditions to Obligation of the Seller | 15 |
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| SECTION 4.3 | Effect of Transfer | 16 |
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| ARTICLE V. | ADDITIONAL AGREEMENTS | |
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| SECTION 5.1 | Affirmative Covenants | 16 |
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| SECTION 5.2 | Reporting and Noticing Requirements | 19 |
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| SECTION 5.3 | Negative Covenants | 21 |
TABLE OF CONTENTS
(continued)
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| Page |
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| ARTICLE VI. | ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE SPECIFIED ASSETS | |
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| SECTION 6.1 | Rights of Buyer | 23 |
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| SECTION 6.2 | Responsibilities of the Seller | 23 |
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| SECTION 6.3 | Further Action Evidencing Purchases | 24 |
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| SECTION 6.4 | Collection of Specified Assets; Rights of Buyer and Its Assignees | 24 |
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| ARTICLE VII. | TERMINATION | |
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| SECTION 7.1 | Termination by the Seller | 25 |
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| SECTION 7.2 | Automatic Termination | 25 |
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| ARTICLE VIII. | INDEMNIFICATION | |
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| SECTION 8.1 | Indemnities by the Seller | 26 |
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| ARTICLE IX. | MISCELLANEOUS PROVISIONS | |
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| SECTION 9.1 | Amendments; Waivers, Etc | 27 |
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| SECTION 9.2 | Notices | 28 |
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| SECTION 9.3 | Cumulative Remedies | 28 |
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| SECTION 9.4 | Binding Effect; Assignability; Survival of Provisions | 28 |
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| SECTION 9.5 | Governing Law | 28 |
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| SECTION 9.6 | Costs, Expenses and Taxes | 28 |
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| SECTION 9.7 | Submission to Jurisdiction | 29 |
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| SECTION 9.8 | WAIVER OF JURY TRIAL | 29 |
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| SECTION 9.9 | Integration | 29 |
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| SECTION 9.10 | Counterparts | 29 |
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| SECTION 9.11 | Acknowledgment and Consent | 30 |
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| SECTION 9.12 | No Partnership or Joint Venture | 30 |
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| SECTION 9.13 | No Proceedings | 30 |
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| SECTION 9.14 | Severability of Provisions | 30 |
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| SECTION 9.15 | Further Assurances | 30 |
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| SECTION 9.16 | Survival | 31 |
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| SECTION 9.17 | Amendment and Restatement | 31 |
EXHIBITS
Exhibit A-1 – [Reserved]
Exhibit A-2 - Form of Subsequent PA Assignment
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| APPENDICES |
| |
| Appendix A | Definitions |
Appendix B | Notice Addresses and Procedures |
| |
| SCHEDULES |
| |
| Schedule Number | Description |
| 3.1(k) | Perfection Certificate - Seller |
3.1(p) | Listing of Lockbox and Bank Accounts |
This AMENDED AND RESTATED PURCHASE AGREEMENT, dated as of June 8, 2018 this “Agreement”), is made by and between ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC, a Delaware limited liability company (together with its permitted successors and assigns, the “Buyer”), and ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company individually, and as Servicer (in its individual capacity, “ALS,” or “Seller”).
WHEREAS, pursuant to the Purchase Agreement, dated as of June 12, 2015, among the parties hereto (as amended, restated, supplemented or otherwise modified through the date hereof, the “Original Agreement”), Buyer purchased from Seller, from time to time, Loans and all Related Security (as such terms are defined in the Original Agreement);
WHEREAS, pursuant to the Original Agreement, Seller sold to Buyer from time to time such Loans and Related Security (as such terms are defined in the Original Agreement);
WHEREAS, pursuant to the Pooling and Servicing Agreement, dated as of June 12, 2015 (as amended, restated, supplemented or otherwise modified through the date hereof, the “Original Pooling and Servicing Agreement”), Buyer sold or otherwise transferred such Loans and Related Security (as such terms are defined in the Original Agreement), to Alliance Laundry Equipment Receivables Trust 2015-A (together with its permitted successors and assigns, the “Issuer”);
WHEREAS, pursuant to the Indenture, dated as of June 12, 2015 (as amended, restated, supplemented or otherwise modified through the date hereof, the “Original Indenture”), the Issuer issued notes (any such issued notes collectively the “Securities”) to fund its acquisition of such Loans and Related Security (as such terms are defined in the Original Agreement);
WHEREAS, pursuant to the Original Indenture, the Issuer has pledged, among other things, its rights in such Loans and Related Security (as such terms are defined in the Original Agreement), including its rights under the Original Agreement, to the Indenture Trustee under the Indenture for the benefit of the Securityholders;
WHEREAS, the parties to the Original Pooling and Servicing Agreement have agreed to amend and restate the Original Pooling and Servicing Agreement, and the parties to the Original Indenture have agreed to amend and restate the Original Indenture; and
WHEREAS, in connection with the amendment and restatement of the Original Pooling and Servicing Agreement and the Original Indenture, the parties hereto desire to amend and restate the Original Agreement in its entirety as set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the other good and valuable consideration and the mutual terms and covenants herein contained, the parties hereto agree to amend and restate the Original Agreement as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 Definitions. Capitalized terms used but not otherwise defined in this Agreement shall have the respective meanings assigned them in Part A of Appendix A hereto, as it may be amended, supplemented or modified from time to time, and such capitalized terms used herein but not otherwise defined in Part A of Appendix A hereto shall have the respective meanings assigned them in Part I of Appendix A to the Amended and Restated Pooling and Servicing Agreement, dated as of the date hereof (the “Pooling and Servicing Agreement”), as it may be amended, supplemented or modified from time to time. All references herein to “the Agreement” or “this Agreement” are to this Purchase Agreement as it may be amended, supplemented or modified from time to time, the exhibits hereto and the capitalized terms used herein which are defined in Appendix A hereto, and all references herein to Articles, Sections and subsections are to Articles, Sections or subsections of this Agreement unless otherwise specified. The rules of construction set forth in Part B of such Appendix A hereto shall be applicable to this Agreement.
ARTICLE II.
PURCHASE AND SALE OF SPECIFIED ASSETS
SECTION 2.1 Initial Transfer of Specified Assets; Subsequent Transfers of Specified Assets prior to the Restatement Date.
(a) On the terms and subject to the conditions set forth in the Original Agreement (including the conditions precedent set forth in Article IV of the Original Agreement), the Seller transferred to the Buyer, effective as of the Closing Date, all of the Seller’s right, title and interest in, to and under (i) each Loan that was listed on the Funding Date Data Pool Report delivered on the Closing Date, which report contained data as of the Initial Cutoff Date; (ii) all Related Security with respect to all Loans described in clause (i); (iii) the Lockbox Accounts, the Bank Accounts, all documents, instruments and agreements relating to the Lockbox Accounts and the Bank Accounts, and all amounts from time to time on deposit in the Lockbox Accounts or the Bank Accounts; (iv) all Records relating to any of the foregoing; and (v) all Proceeds of the foregoing, including Collections.
(b) On the terms and subject to the conditions set forth in the Original Agreement (including the conditions precedent set forth in Article IV of the Original Agreement), the Seller transferred to Buyer, and Buyer accepted from the Seller, after the Closing Date and prior to the Restatement Date, all of the Seller’s right, title and interest in, to and under (i) each Loan that was listed on a Funding Date Data Pool Report delivered with respect to the related Funding Date after the Closing Date and prior to the Restatement Date; (ii) all Related Security with respect to all Loans described in clause (i); (iii) all Records relating to any of the foregoing; and (iv) all Proceeds of the foregoing, including Collections.
SECTION 2.2 Subsequent Transfers of Specified Assets. On the terms and subject to the conditions set forth in this Agreement (including the conditions precedent set forth
in Article IV), the Seller agrees to transfer to Buyer (which transfer shall be characterized as set forth in Section 2.4), and Buyer agrees to accept from the Seller, at the times set forth in Section 2.3, all of the Seller’s right, title and interest in, to and under:
(a) each Loan that is listed on a Funding Date Data Pool Report delivered two (2) Business Days prior to the related Funding Date (provided, however, that once per calendar quarter, such Funding Date Data Pool Report may be delivered one (1) Business Day prior to the related Funding Date), which report shall contain data as of the Loan Cutoff Date;
(b) all Related Security with respect to all Loans described in Section 2.2(a) above;
(c) all Records relating to any of the foregoing; and
(d) all Proceeds of the foregoing, including Collections.
As used herein, (i) “Purchased Loans” means the items listed above in Sections 2.1(a)(i), 2.1(b)(i) and 2.2(a), (ii) “Related Assets” means the items listed above in Sections 2.1(a)(ii) through (a)(v), Sections 2.1(b)(ii) through (iv) and Sections 2.2(b) through (d), collectively, and (iii) “Specified Assets” means the Purchased Loans and the Related Assets collectively.
SECTION 2.3 Timing of Conveyances. Subject to the satisfaction of the terms and conditions of Section 4.1:
(a) Initial Closing Date Conveyances; Conveyances prior to the Restatement Date. The Specified Assets described in Section 2.1(a) were conveyed by the Seller to the Buyer on the Closing Date pursuant to a written assignment substantially in the form of Exhibit A-1 to the Original Agreement and executed and delivered on June 12, 2015 (the “Initial PA Assignment”). The Specified Assets described in Section 2.1(b) were conveyed by the Seller to the Buyer on the applicable Funding Dates after the Closing Date and prior to the Restatement Date pursuant to a written assignment substantially in the form of Exhibit A-2 to the Original Agreement (each an “Original Subsequent PA Assignment”).
(b) Regular Purchases. On the Restatement Date, and thereafter from time to time until the earlier to occur of (x) the Conversion Date and (y) the closing of the Seller’s business on the Purchase Termination Date, any Purchased Loans and Related Assets shall be transferred by the Seller to the Buyer pursuant to a written assignment substantially in the form of Exhibit A-2 (each a “Subsequent PA Assignment” and, together with the Initial PA Assignment and the Original Subsequent PA Assignments, the “PA Assignments”), on the Purchase Date set forth in a Funding Date Data Pool Report delivered by the Seller to the Buyer that lists such Purchased Loans; provided, however, that such purchases and sales of Loans shall occur not more frequently than three times per calendar week.
SECTION 2.4 Consideration for, and Characterization of, Purchases. (a) On the terms and subject to the conditions set forth in this Agreement, Buyer agrees to make Purchase Price payments to, and accept capital contributions from, the Seller in accordance with the provisions of Section 2.12.
(b) The transfers contemplated in Section 2.1 and Section 2.2 of Purchased Loans that are Eligible Loans as of the related Purchase Date shall be treated as (x) sales to the extent of cash received by the Seller from Buyer on the related Purchase Date and (y) to the extent the Total Consideration is in excess of the amount set forth in clause (x), a contribution to the capital of the Buyer in the amount of such excess. The transfers of Purchased Loans contemplated in Sections 2.1 and 2.2 that are not Eligible Loans as of the related Purchase Date shall be treated as a capital contribution to the Buyer.
SECTION 2.5 No Recourse. Except as specifically provided in this Agreement, the sale and purchase of Specified Assets under this Agreement shall be without recourse to the Seller; it being understood that the Seller shall be liable to Buyer for all representations, warranties, covenants and indemnities made by the Seller pursuant to the terms of this Agreement, all of which obligations are limited so as not to constitute recourse to the Seller for the credit risk of the Obligors under any Purchased Loans.
SECTION 2.6 No Assumption of Obligations Relating to Specified Assets or Contracts. None of the Buyer, the Servicer, the Issuer, the Indenture Trustee or any Third Party Financier shall have any obligation or liability to any Obligor or other customer or client of the Seller, including any obligation to perform any of the obligations of the Seller under any Specified Asset. No such obligation or liability is intended to be assumed by the Buyer, the Servicer, the Issuer, the Indenture Trustee or any Third Party Financier, and any assumption is hereby expressly disclaimed.
SECTION 2.7 True Sales and True Contributions. The Seller and Buyer intend the transfers of Specified Assets hereunder to be absolute conveyances by the Seller to Buyer that are absolute and irrevocable and that provide Buyer with the full benefits of ownership of the Specified Assets, and (other than for tax purposes) neither the Seller nor Buyer intend the transactions contemplated hereunder to be, or for any purpose to be characterized as, loans from Buyer to the Seller. Without limiting or otherwise affecting the preceding sentence, and solely for tax purposes, the transactions contemplated by the Basic Documents will be treated as a financing by the Seller. However, in the event that, notwithstanding the intent of the parties, any Specified Assets are determined to be property of the Seller’s estate, then (i) this Agreement also shall be deemed to be a security agreement within the meaning of the UCC, and (ii) the conveyance by the Seller provided for in this Agreement shall be deemed to be a grant by the Seller to Buyer of all of the Seller’s right, title and interest in, to and under the Specified Assets, whether now or hereafter existing or created, to secure (1) the rights of Buyer hereunder, (2) a loan by Buyer to the Seller in the amount of the Total Consideration and (3) without limiting the foregoing, the payment and performance of the Seller’s obligations (whether monetary or otherwise) hereunder. The Seller and Buyer shall, to the extent consistent with this Agreement, take such actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the Specified Assets, such security interest would be deemed to be a perfected security interest of first priority (subject to Permitted Adverse Claims) in favor of Buyer under Applicable Law and shall be maintained as such throughout the term of this Agreement. The parties agree that the foregoing sales of Specified Assets constitute sales of “tangible chattel paper” or “promissory notes” as described in the UCC, and that this Agreement shall create a security interest in favor of the Buyer as the purchaser of the Specified Assets. Notwithstanding such intent, if the arrangements with respect to the Specified Assets hereunder
are deemed for any purpose to constitute a loan and not a purchase and sale or contribution of such Specified Assets, it is the intention of the parties hereto that this Agreement shall still constitute a security agreement under Applicable Law, and the Seller hereby grants to the Buyer a first priority perfected security interest (subject to Permitted Adverse Claims) in all of the Seller’s right, title and interest, whether now owned or hereafter acquired, in, to and under the Specified Assets, and all money, accounts, general intangibles, payment intangibles, chattel paper, instruments, documents, goods, supporting obligations, investment property, deposit accounts, securities accounts, certificates of deposit, letters of credit, letter-of-credit rights, and advices of credit consisting of, arising from or related to the Specified Assets, and all proceeds thereof, to secure its obligations hereunder, including its obligation to remit to the Buyer, or its successors and assigns, all Collections of the Specified Assets and other proceeds of the Specified Assets.
SECTION 2.8 [Reserved].
SECTION 2.9 [Reserved].
SECTION 2.10 Calculation of Purchase Price. With respect to each Purchase Date when Specified Assets are transferred to Buyer from the Seller pursuant to Section 2.2, the “Purchase Price” to be paid by the Buyer to the Seller on such Purchase Date for the applicable Specified Assets that are Eligible Loans, shall be determined in accordance with the following formula:
PP = AUB x PPP
where:
PP = the aggregate Purchase Price for the applicable Specified Assets to be purchased from the Seller on such Purchase Date;
AUB = the “Aggregate Unpaid Balance” of the applicable Purchased Loans that are to be transferred from the Seller on the applicable Purchase Date. For purposes of this calculation, “Aggregate Unpaid Balance” shall mean the sum of the Unpaid Balance of each applicable Loan to be transferred from the Seller on such Purchase Date, calculated as of the close of business on the third Business Day prior to such Purchase Date; and
PPP = 100%.
SECTION 2.11 [Reserved].
SECTION 2.12 Purchase Mechanics. (a) (i) To the extent Buyer has sufficient funds to make a cash payment to the Seller of the Purchase Price, then the Buyer shall purchase from the Seller on each Purchase Date, the Purchased Loans that are Eligible Loans and the associated Related Assets pursuant to Section 2.2, and in each case on the terms and subject to the conditions of this Agreement, and Buyer shall pay to the Seller the Purchase Price for the
applicable Purchased Loans and the associated Related Assets in cash, to the extent that Buyer has cash available to make such payment pursuant to Section 2.14.
(ii) To the extent the Buyer has insufficient funds to make a cash payment to the Seller of the Purchase Price on any Purchase Date, then the Seller shall be deemed to have made a capital contribution to the Buyer in the amount of such deficiency (that is, in an amount equal to the difference between (x) an amount equal to the aggregate Purchase Price that would be payable for all Eligible Loans and the associated Related Assets transferred on such applicable Purchase Date had they all been sold for cash (such amount, the “Total Consideration”) less (y) the Purchase Price actually paid for all Eligible Loans transferred on such Purchase Date) on such Purchase Date with respect to the remainder of the Purchased Loans that are Eligible Loans and the associated Related Assets, pursuant to Section 2.2 on the terms and subject to the conditions of this Agreement.
(b) The Seller shall be deemed to have made a capital contribution to the Buyer on each Purchase Date of the Purchased Loans that are not Eligible Loans and the associated Related Assets as of such Purchase Date.
(c) If on any Business Day, any of the Buyer, the Issuer, the Administrative Agent, or the Required Noteholders reasonably determines that any Purchased Loan that was identified as an Eligible Loan on the related Funding Date Data Pool Report or the associated Related Assets failed to comply with the representations set forth in Section 3.1 on the Purchase Date on which such Purchased Loan was transferred by the Seller to Buyer, then, the Seller shall, at its election, either repurchase the affected Purchased Loans for the Purchase Price equal to the Warranty Payment for such Loan or provide the Buyer (or the Issuer as its assignee) with a Substitute Loan, at the times and in accordance with the procedures set forth in Section 2.12 or 2.13 as applicable of the Pooling and Servicing Agreement.
SECTION 2.13 [Reserved].
SECTION 2.14 Application of Collections and Other Funds. If, on any day, Buyer receives payments from the Trust as permitted by the Indenture, Buyer shall apply the funds as follows:
(a) first, to pay its existing expenses and to set aside funds for the payment of expenses that are then accrued (in each case to the extent such expenses are permitted to exist under the applicable Third Party Documents);
(b) second, to pay the unpaid Purchase Price pursuant to Section 2.12 for the applicable Specified Assets which were purchased by Buyer from the Seller on such day; and
(c) third, if Buyer shall elect, to declare and pay distributions to ALS, in its capacity as the sole member of Buyer, to the extent permitted by law.
SECTION 2.15 Servicing of Specified Assets. Consistent with Buyer’s ownership of the Specified Assets, as between the parties to this Agreement, Buyer shall have
the sole right to service, administer and collect the Specified Assets and to assign and delegate such right to others.
SECTION 2.16 Payments and Computations, Etc. (a) All amounts to be paid by the Seller to Buyer hereunder shall be paid in accordance with the terms hereof no later than 11:30 a.m., New York City time, on the day when due in Dollars in immediately available funds to an account that Buyer shall from time to time specify in writing. Payments received by Buyer after such time shall be deemed to have been received on the next Business Day. In the event that any payment becomes due on a day that is not a Business Day, then the payment shall be made on the next Business Day. The Seller shall, to the extent permitted by law, pay to Buyer, on demand, interest on all amounts not paid when due hereunder at 2% per annum above the Base Rate plus the Applicable Margin (as each such term is defined in the Pooling and Servicing Agreement) on the date the payment was due; provided, however, that the interest rate shall not at any time exceed the maximum rate permitted by Applicable Law. All computations of interest payable hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first but excluding the last day) elapsed.
(b) All amounts to be paid by Buyer to the Seller hereunder shall be paid no later than 3:00 p.m., New York City time, on the day when due in Dollars in immediately available funds to an account that Seller shall from time to time specify in writing. Payments received by the Seller after such time shall be deemed to have been received on the next Business Day. In the event that any payment becomes due on a day that is not a Business Day, then such payment shall be made on the next Business Day.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Seller. The Seller makes the following representations and warranties for the benefit of the Buyer, the Issuer and the Third Party Financiers as to the Seller and as to the Specified Assets on which Buyer relies in accepting such Specified Assets. Unless otherwise provided below, such representations and warranties speak as of the Restatement Date, each Purchase Date and each Funding Date for the Specified Assets to be acquired or settled on such date, and shall survive the sale, transfer and assignment of such Specified Assets to Buyer and the subsequent assignment and transfer thereof to the Issuer:
(a) Organization and Good Standing. The Seller has been duly organized and is validly existing as a limited liability company in good standing under the laws of the State of Delaware, with power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted, and had at all relevant times, and now has, power, authority and legal right to acquire and own the Specified Assets;
(b) Due Qualification. The Seller is duly qualified to do business as a limited liability company in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business requires or shall require such qualification;
(c) Power and Authority. The Seller has the power and authority to execute and deliver this Agreement and to carry out its terms; the Seller has full power and authority to sell and assign the Specified Assets to Buyer, has duly authorized such sale and assignment to Buyer by all necessary limited liability company action; and the execution, delivery and performance of this Agreement have been duly authorized by the Seller by all necessary limited liability company action;
(d) Valid Sale; Binding Obligation. This Agreement, together with the delivery of a Funding Date Data Pool Report, when duly executed and delivered, shall constitute a valid sale, transfer and assignment of the Specified Assets specified therein, enforceable against creditors of the Seller; and this Agreement, together with the applicable Funding Date Data Pool Report, when duly executed and delivered, shall constitute a legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with its respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights in general and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law;
(e) No Violation. The consummation of the transactions contemplated by this Agreement and any Funding Date Data Pool Report, and the fulfillment of the terms of this Agreement and any Funding Date Data Pool Report, shall not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time, or both) a default under, the limited liability company agreement of the Seller, or any indenture, agreement, mortgage, deed of trust or other instrument to which the Seller is a party or by which it is bound, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement, mortgage, deed of trust or other instrument (other than this Agreement or any other Transaction Document), or violate any law (including without limitation any bulk sales, tax or similar laws) or, to the Seller’s knowledge, any order, rule or regulation applicable to the Seller of any Governmental Authority having jurisdiction over the Seller or any of its properties;
(f) No Proceedings. There are no proceedings or, to the Seller’s knowledge, investigations pending or, to the Seller’s knowledge, threatened, before any Governmental Authority having jurisdiction over the Seller or its properties (i) asserting the invalidity of this Agreement or any other Transaction Document, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any other Transaction Document, or (iii) seeking any determination or ruling that might materially and adversely affect the performance by the Seller of its obligations under, or the validity or enforceability of, this Agreement or any other Transaction Document;
(g) No Consent. No permit, consent, approval or authorization of, or declaration to or filing with, any Governmental Authority is required in connection with the execution, delivery and performance by the Seller of this Agreement or any other Transaction Document or the consummation by the Seller of the transactions contemplated hereby or thereby except as expressly contemplated herein or therein;
(h) Due Execution and Delivery. This Agreement and each of the other Transaction Documents to which it is a party have been duly executed and delivered on behalf of the Seller;
(i) Ability to Perform. No event has occurred which materially and adversely affects the Seller’s operations or its ability to perform its obligations under this Agreement or any other Transaction Document to which it is a party;
(j) Insolvency. The Seller (i) is not insolvent and will not be rendered insolvent by the transactions contemplated by this Agreement or any other Transaction Document and has an adequate amount of capital to conduct its business in the ordinary course and to carry out its obligations hereunder, (ii) does not intend to incur or believe that it shall incur debts that would be beyond its ability to pay as such debts mature, (iii) is not making such transfer with actual intent to hinder, delay or defraud any Person, and (iv) does not have assets that constitute unreasonably small capital to carry out its business as then conducted. The Seller does not contemplate the commencement of insolvency, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official with respect to it or any of its assets. The Seller is not selling or transferring the Specified Assets with any intent to hinder, delay or defraud its creditors;
(k) UCC Information. As of the Restatement Date, the information set forth on Schedule 3.1(k) is true, correct and complete in all material respects;
(l) [Reserved];
(m) Release of Lien. Each transfer of Specified Assets satisfies the requirements for release of all liens thereon set forth in the Credit Agreement, and all transfers shall satisfy the requirements for release set forth in any successor facility to the Credit Agreement;
(n) Eligible Loans. On the Restatement Date, each such Purchased Loan identified as an Eligible Loan on the Schedule of Loans and on each Purchase Date of Purchased Loans hereunder from the Seller, each such Purchased Loan identified as an Eligible Loan in the related Funding Date Data Pool Report, is an Eligible Loan;
(o) Accuracy of Information. All written information furnished by, or on behalf of, the Seller to Buyer or any Third Party Financier pursuant to or in connection with any Transaction Document, or any transaction contemplated herein or therein, does not and shall not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made not misleading, in each case on the date the statement was made and in light of the circumstances under which the statements were made or the information was furnished;
(p) Lockbox Banks and Payment Instructions. The names and addresses of all the banks, together with the account numbers of the accounts at such banks (and all related lockboxes and post office boxes), into which Collections are paid as of the Restatement Date are set forth in Schedule 3.1(p); such banks, accounts, lockboxes and post office boxes constitute all of the Lockbox Banks and Lockbox Accounts as of the Restatement Date, and all of such Lockbox Accounts are subject to Lockbox Agreements;
(q) [Reserved];
(r) [Reserved];
(s) Taxes. The Seller has filed all Federal income tax returns and all other material tax returns (including, without limitation, any bulk sales or similar tax returns) that are required to be filed by it whether in connection with this transaction or otherwise 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 Seller, no claim is being asserted, with respect to any such tax or assessment;
(t) Margin Regulations. No use of any funds obtained by the Seller under this Agreement will conflict with or contravene any of Regulations T, U and X promulgated by the Federal Reserve Board from time to time;
(u) Investment Company Act; Other Regulations. The Seller is not an “investment company,” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act. The Seller is not subject to regulation under any Federal or state statute or regulation which limits its ability to incur indebtedness;
(v) No Adverse Selection. No Purchased Loan is selected on any basis with the intent to adversely affect the value of any Third Party Financier’s right and interest under the applicable Third Party Documents;
(w) ERISA. As of the date hereof and as of each Purchase Date: (i) each of ALS 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 (ii) 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 a Material Adverse Effect;
(x) [Reserved];
(y) [Reserved];
(z) Conformity with Seller Policies. All Specified Assets (other than those not identified as Eligible Loans) were originated in the ordinary course of business and in conformity with the Credit and Collection Policy of the Seller as in effect at such time;
(aa) Security Interest Representations.
(i) In the event that the transfer of the Specified Assets pursuant to the terms of this Agreement is held not to constitute a “true sale” or “true contribution,” this Agreement creates a valid and continuing security interest (as defined in the UCC) in the Specified Assets in favor of the Buyer, which security interest is prior to all Liens (other
than Permitted Adverse Claims), and is enforceable as such against creditors of and purchasers from the Seller;
(ii) The Purchased Loans constitute “tangible chattel paper” within the meaning of the applicable UCC. The Equipment constitutes “equipment” and not “fixtures” under the UCC. The Equipment Notes constitute “instruments” within the meaning of the applicable UCC;
(iii) Immediately prior to the conveyance of the Specified Assets set forth in this Agreement and the Original Agreement, the Seller was the sole owner of such Specified Assets and owned and had good and marketable title to the Specified Assets, free and clear of any Lien, claim or encumbrance of any Person (whether senior, junior or pari passu) except for any Permitted Adverse Claim; provided, however, that the Seller makes no representation regarding the availability of a willing buyer for the Specified Assets;
(iv) The Seller has caused the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under Applicable Law in order to perfect the security interest in the Specified Assets granted to the Buyer and assigned to the Issuer (and the Indenture Trustee as assignee of the Issuer). All financing statements filed against the Seller in favor of the Buyer in connection herewith describing the Specified Assets contain a statement to the following effect: “A purchase of or security interest in any collateral described in this financing statement will violate the rights of the Buyer, the Issuer and the Indenture Trustee (as assignee of the Issuer)”;
(v) The Seller has not pledged, assigned, sold, granted a security interest in or otherwise conveyed any of the Specified Assets except for Permitted Adverse Claims. The Seller has not authorized the filing of, and is not aware of, any financing statements or documents of similar import against the Seller that include a description of collateral covering the Specified Assets other than any financing statement or document of similar import (i) relating to the security interest granted to the Buyer and assigned to the Issuer (and the Indenture Trustee as assignee of the Issuer) or (ii) that has been terminated. The Seller is not aware of any judgment or tax lien filings against the Seller;
(vi) The Seller or the Indenture Trustee has received a written acknowledgement from the Custodian that the Custodian is holding the only originally executed counterpart of each Equipment Note and the related security agreement on behalf of, and for the benefit of, the Indenture Trustee and is subject to the Custodian’s customary security and safekeeping procedures;
(vii) None of the Equipment Notes or Loans have any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Buyer’s and the Issuer’s assignee, the Indenture Trustee; and other than any holder of an Adverse Claim to be released simultaneously with the Purchase by the Buyer hereunder; and
(viii) The Seller has received all necessary consents and approvals required by the terms of the Specified Assets to pledge to the Buyer its interest and rights in such Specified Assets hereunder, under the Pooling and Servicing Agreement or the Indenture.
(bb) Representations With Respect to the Loans. Each Loan contains customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for realization against the collateral of the benefits of the security;
(cc) Compliance With Law. All requirements of applicable federal, state and local laws, and regulations thereunder, including the Equal Credit Opportunity Act, the Federal Reserve Board’s Regulation “B,” the Servicemembers’ Civil Relief Act of 2003, and any applicable bulk sales or bulk transfer law and other equal credit opportunity and disclosure laws, in respect of any of the Loans, have been complied with in all material respects, and each such Loan and the sale of each item of Equipment evidenced thereby complied at the time it was originated or made and now complies in all material respects with all legal requirements of the jurisdiction in which it was originated or made;
(dd) Binding Obligation. Each Loan is non-cancelable, in full force and effect and is the genuine, legal, valid and binding payment obligation in writing of the Obligor thereon, enforceable against such Obligor in accordance with its terms and the obligations of such Obligor under such Loan are irrevocable and unconditionally payable, except as may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors’ rights in general and by equity, regardless of whether such enforceability is considered in a proceeding in equity or at law;
(ee) Loans In Force. The obligations of an Obligor under any Loan have not been satisfied, subordinated or rescinded, and the Equipment securing any Loan has not been released from the Lien of the related Loan in whole or in part;
(ff) No Liens. There are, to ALS’s knowledge, no Liens or claims that have been filed for work, labor or materials affecting any Equipment securing any Loan that are or may be prior to, or equal or pari passu with, the security interest in the Equipment granted by the Loan;
(gg) Default. There has been no default, breach, violation or event permitting acceleration under the terms of any Loan, and no event has occurred and is continuing that with notice or the lapse of time (or both) would constitute a default, breach, violation or event permitting acceleration under the terms of any Loan, and ALS has not waived any of the foregoing, in each case except for payments on any Loans which are not more than sixty (60) days past due (measured from the date of any Scheduled Payment) as of the applicable Purchase Date;
(hh) Lawful Assignment. No Loan was originated in, or is subject to the laws of, any jurisdiction the laws of which would make unlawful the sale, transfer and assignment of such Loan under this Agreement or the Pooling and Servicing Agreement; and
(ii) Fair Consideration. The consideration received by the Seller hereunder with respect to the assets sold hereunder to Buyer is fair consideration having value reasonably
equivalent to the value of the Specified Assets sold by it and the performance of its obligations hereunder.
The representations and warranties set forth in this Section 3.1 shall survive until the Indenture is terminated in accordance with its terms. Any breaches of the representations and warranties set forth in this Section 3.1 may be waived only with the prior written consent of the Required Noteholders unless such waiver would amount to a waiver of an Event of Default under Section 5.1(e) of the Indenture or a Servicer Default under Section 9.01(m) of the Pooling and Servicing Agreement, which, in either such case, any such waiver shall require consent of the Special Required Noteholders.
SECTION 3.2 Representations and Warranties of Buyer. Buyer hereby makes the following representations and warranties for the benefit of the Seller, the Issuer and each Third Party Financier as of the Restatement Date and each Purchase Date:
(a) Organization and Good Standing. Buyer has been duly organized and is validly existing as a limited liability company in good standing under the laws of the State of Delaware, with power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted, and had at all relevant times, and now has, power, authority and legal right to acquire and own the Specified Assets;
(b) Due Qualification. Buyer is duly qualified to do business as a foreign limited liability company in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualification;
(c) Power and Authority. Buyer has the power and authority to execute and deliver this Agreement and to carry out its terms and the execution, delivery and performance of this Agreement have been duly authorized by Buyer by all necessary limited liability company action;
(d) No Violation. The consummation by Buyer of the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party, and the fulfillment of the terms of this Agreement and the other Transaction Documents to which it is a party, shall not conflict with, result in any breach of any of the terms and provisions of or constitute (with or without notice or lapse of time) a default under, the limited liability company agreement of Buyer, or any indenture, agreement, mortgage, deed of trust or other instrument to which Buyer is a party or by which it is bound, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than this Agreement, or any other Transaction Document to which it is a party), or violate any law or, to Buyer’s knowledge, any order, rule or regulation applicable to Buyer of any Governmental Authority having jurisdiction over Buyer or any of its properties;
(e) No Proceedings. There are no proceedings or, to Buyer’s knowledge, investigations pending or, to Buyer’s knowledge, threatened, before any Governmental Authority having jurisdiction over Buyer or its properties (i) asserting the invalidity of this Agreement or any other Transaction Document to which it is a party, (ii) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement or any other Transaction Document to which it is a party or (iii) seeking any determination or ruling that might materially and adversely affect the performance by Buyer of its obligations under, or the validity or enforceability of, this Agreement or any other Transaction Document to which it is a party;
(f) Binding Obligation. This Agreement shall constitute a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights in general and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law;
(g) No Consent. No permit, consent, approval or authorization of, or declaration to or filing with, any Governmental Authority is required in connection with the execution, delivery and performance by Buyer of this Agreement, or the consummation by Buyer of the transactions contemplated hereby except as expressly contemplated herein; and
(h) Insolvency. Buyer (i) is not insolvent and will not be rendered insolvent by the transactions contemplated by this Agreement or any other Transaction Document and has an adequate amount of capital to conduct its business in the ordinary course and to carry out its obligations hereunder, (ii) shall not intend to incur or believe that it shall incur debts that would be beyond its ability to pay as such debts mature, (iii) shall not make such transfer with actual intent to hinder, delay or defraud any Person and (iv) shall not have assets that constitute unreasonably small capital to carry out its business as then conducted. Buyer does not contemplate the commencement of insolvency, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official with respect to it or any of its assets.
ARTICLE IV.
CONDITIONS
SECTION 4.1 Conditions to Obligation of Buyer. The obligation of Buyer to purchase or acquire Specified Assets hereunder on any Purchase Date is subject to the satisfaction of the following conditions:
(a) Representations and Warranties True. The representations and warranties of the Seller in Section 3.1 shall be true and correct as of such Purchase Date with the same effect as if then made, and the Seller shall have performed all obligations to be performed by it hereunder on or prior to such Purchase Date.
(b) No Events. No Rapid Amortization Event, Servicer Default, Default or Event of Default shall have occurred on or prior to such Purchase Date.
(c) Computer Files Marked. In accordance with the Pooling and Servicing Agreement, the Servicer shall, on or prior to the related Purchase Date (i) cause the Contract Management System to be marked with a specified code to show that the Purchased Loans have been assigned and transferred in accordance with this Agreement and the related PA Assignment,
and (ii) prepare and hold in its capacity as Servicer on behalf of the Issuer and the Indenture Trustee the Schedule of Loans.
(d) Documents to be Delivered By the Seller.
(i) PA Assignments. On or prior to each Purchase Date on which Specified Assets are to be transferred to the Buyer, the Seller shall have executed and delivered to Buyer a Subsequent PA Assignment with respect to such Specified Assets;
(ii) Documents to Custodian. With respect to each Purchased Loan the Seller shall have delivered to the Custodian the Collateral Documents for each such Loan within the time period required pursuant to Section 2.09 of the Pooling and Servicing Agreement; and the Custodian shall have delivered a Custodian Receipt Certification with no exceptions with respect to such Purchased Loan;
(iii) UCC Financing Statement. On or prior to the Restatement Date (and any subsequent Purchase Date, as necessary to perfect, or continue the perfection of, Buyer’s ownership and security interest), the Seller shall have filed UCC financing statements sufficient to perfect the security interest set forth in Section 2.7;
(iv) Schedule of Loans. On or prior to the Restatement Date the Seller shall have delivered to Buyer, Indenture Trustee and the Administrative Agent the Schedule of Loans. On each Purchase Date after the Restatement Date, the Seller shall have delivered an update to the Schedule of Loans;
(v) Assignments; Schedules. On the Restatement Date and on each subsequent Purchase Date with respect to Loans, the Seller shall have delivered to Buyer, Indenture Trustee and the Administrative Agent copies of the Subsequent PA Assignment and Additional PSA Assignment, as applicable (as such terms are defined in the Pooling and Servicing Agreement); and
(vi) Other Documents. On such Purchase Date, the Seller shall provide such other documents as Buyer may reasonably request.
(e) Other Transactions. All conditions precedent under the Indenture and the other Basic Documents to the advance of the funds necessary for the Buyer to finance such purchase shall have been satisfied or waived.
(f) Performance of Obligations. The Seller shall have performed all obligations to be performed by it hereunder on or prior to such Purchase Date.
(g) Taxes. Such transfer shall not impose tax liability on the Trust and shall not affect the tax status of the Notes as debt held by the Holders.
SECTION 4.2 Conditions to Obligation of the Seller. The obligation of the Seller to sell the Purchased Loans to Buyer hereunder on any Purchase Date is subject to the satisfaction of the following conditions:
(a) Representations and Warranties True. The representations and warranties of Buyer hereunder shall be true and correct as of such Purchase Date, with the same effect as if then made, and Buyer shall have performed all obligations to be performed by it hereunder on or prior to such Purchase Date.
(b) Purchase Price. On each Purchase Date, Buyer shall pay to the Seller the Purchase Price payable on such date as provided in Section 2.12 of this Agreement.
SECTION 4.3 Effect of Transfer. Upon making an Advance pursuant to the Indenture and the Note Purchase Agreement, title to the Specified Assets shall vest in the Buyer, whether or not the conditions precedent to such transfer as set forth above were in fact satisfied.
ARTICLE V.
ADDITIONAL AGREEMENTS
SECTION 5.1 Affirmative Covenants. From the date hereof until the first day following the Purchase Termination Date on which the Obligations are paid in full, unless Buyer and each Third Party Financier shall otherwise give its prior written consent, the Seller hereby agrees that it will perform the covenants and agreements set forth in this section.
(a) Compliance with Laws, Etc. The Seller will comply, in all material respects, with all acts, rules, regulations, orders, decrees and directions of any Governmental Authority applicable to the Loans, the Equipment or any part thereof; provided, however, that the Seller may contest any act, regulation, order, decree or direction in any reasonable manner that shall not materially and adversely affect the rights of the Noteholders in the Specified Assets; and provided, further, that such contests shall be in good faith by appropriate proceedings and shall not subject the Agents or the Indenture Trustee to any civil or criminal liability or risk of loss of any Collateral.
(b) Preservation of Organizational Existence. The Seller will preserve and maintain its organizational existence, rights, franchises and privileges in the jurisdiction of its formation and existence, and qualify and remain qualified in good standing as a foreign entity in each jurisdiction where the failure to preserve and maintain such existence, rights, franchises, privileges and qualifications could reasonably be expected to result in a Material Adverse Effect.
(c) Specified Assets Reviews. The Seller shall, during normal business hours upon not less than three (3) Business Days’ prior notice, permit Buyer and each Third Party Financier and its agents or representatives, at the expense of the Seller, (i) to examine and make copies of and abstracts from, and to conduct accounting reviews of, all Records in the possession or under the control of the Seller relating to the Specified Assets generated by the Seller, and (ii) to visit the offices and properties of the Seller for the purpose of examining the materials described in clause (i) above, and to discuss matters relating to any Specified Assets of the Seller or the Seller’s performance hereunder with any of the Authorized Officers of the Seller or, with the prior consent of an Authorized Officer of the Seller, with employees of the Seller having knowledge of such matters (the examinations set forth in the foregoing clauses (i) and (ii) being herein called a “Seller Specified Assets Review”). Buyer and each Third Party Financier shall be
entitled to conduct such Seller Specified Assets Reviews whenever such Person, in its reasonable judgment, deems it appropriate.
(d) Keeping of Records and Books of Account. The Seller shall maintain and implement administrative and operating procedures (including an ability to recreate records evidencing its Specified Assets in the event of the destruction of the originals thereof), and shall keep and maintain all documents, books, records and other information that, in the reasonable determination of Buyer and the Third Party Financiers, are necessary or advisable in accordance with prudent industry practice and custom for transactions of this type for the collection of all Specified Assets. The Seller shall maintain at all times accurate and complete books, Records and accounts relating to the Specified Assets and related Contracts and all Collections thereon in which timely entries shall be made. Such books and Records shall be marked as set forth in Section 4.1(c) and shall include (i) all payments received and all credits and extensions granted with respect to the Purchased Loans and (ii) the return, rejection, repossession, or stoppage in transit of any merchandise, the sale of which has given rise to a Purchased Loan that has been purchased by Buyer.
(e) Performance and Compliance with Specified Assets and Related Contracts. The Seller will, at its expense, timely and fully perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts of the Seller related to the Specified Assets, the breach of which provisions, covenants or promises could reasonably be expected to result in a Material Adverse Effect.
(f) Location of Records and Offices. The Seller will keep all Records related to the Specified Assets (and all original documents relating thereto), at the addresses referred to in Schedule 3.1(k) or, upon not less than thirty (30) days’ prior notice given by the Seller to Buyer and each Third Party Financier, at such other locations set forth in such notice.
(g) Separate Organizational Existence of Buyer. The Seller hereby acknowledges that each Third Party Financier is entering into, or will enter into, the transactions contemplated by the applicable Third Party Documents in reliance upon Buyer’s identity as a legal entity separate from the Seller. Therefore, from and after the date hereof until the first day following the Purchase Termination Date on which all Obligations shall have been fully paid and performed, the Seller will take all necessary steps to continue its identity as a separate legal entity and to make it apparent to third Persons that the Seller is an entity with assets and liabilities distinct from those of Buyer and that Buyer is not a division of the Seller or ALS.
(h) Turnover of Collections. In the case any Collections are received by the Seller, the Seller shall remit such Collections, less any cash collections or other cash proceeds received with respect to indebtedness not constituting Specified Assets, to a Lockbox Account as soon as practicable, but in no event later than two (2) Business Days of receipt of such Collections, and, at all times prior to such remittance, the Seller shall itself hold such Collections in trust, for the exclusive benefit of the Buyer and its assigns and such Collections shall be maintained and segregated separate and apart from all other funds and money of the Seller until delivery of such Collections to Buyer.
(i) Payment Instructions to Obligors. The Seller shall instruct all Obligors to submit all payments either (i) to one of the lockboxes maintained at the Lockbox Banks for deposit in a Lockbox Account or (ii) directly to one of the Lockbox Accounts.
(j) Accuracy of Information. All written information furnished on and after the Restatement Date by the Seller to Buyer, the Servicer or any Third Party Financier pursuant to, or in connection with, any Third Party Document or any transaction contemplated herein or therein shall not contain any untrue statement of a material fact or omit to state material facts necessary to make the statements made not misleading, in each case on the date the statement was made and in light of the circumstances under which the statements were made or the information was furnished.
(k) Cross Collateralization. (1) With respect to an Obligor under a Purchased Loan, the Seller may be, or may become, a lender to such Obligor under another standalone commercial laundry equipment loan (the “Non-Trust Loan”). Each Purchased Loan and Non-Trust Loan is secured by the equipment purchased with the proceeds of that loan. In certain circumstances, a Purchased Loan may also purport to be secured by the equipment purchased with the proceeds of a Non-Trust Loan (such equipment and the Proceeds thereof being the “Common Non-Trust Collateral”), and/or a Non-Trust Loan may also purport to be secured by the equipment purchased with the proceeds of a Purchased Loan (such equipment and the Proceeds thereof being the “Common Trust Collateral”). In addition, in certain circumstances, a Purchased Loan and a Non-Trust Loan may have competing security interests in or also purport to be secured by collateral other than Common Trust Collateral or Common Non-Trust Collateral (such other collateral, the “Common Other Collateral”). The Common Non-Trust Collateral, the Common Trust Collateral and the Common Other Collateral are referred to herein together as the “Common Collateral.”
(2) The Seller agrees that with respect to each loan of each such Obligor (i) the security interest in such Common Trust Collateral granted to the Seller pursuant to any other Non-Trust Loan is, and shall be, junior and subordinate to the security interest created to secure the Purchased Loan; (ii) the Seller shall have no legal right to realize upon such Common Trust Collateral or exercise its rights under the Non-Trust Loan with respect to such Common Trust Collateral in any manner until all required payments in respect of any Purchased Loan that shares such Common Trust Collateral have been paid in full; (iii) in realizing upon such Common Trust Collateral, none of Buyer, Issuer, or any Third Party Financier shall have any obligation to protect or preserve the rights of the Seller in such Common Trust Collateral; and (iv) the Seller shall not sell or assign any Non-Trust Loan or any Common Trust Collateral without the prior written consent of the Administrative Agent. Buyer agrees that with respect to each Loan of each such Obligor (i) the security interest in such Common Non-Trust Collateral granted to secure the Purchased Loan and hereby assigned to Buyer is and shall be junior and subordinate to the security interest therein created by the Non-Trust Loan; (ii) Buyer, as assignee of the lien of the Seller, shall have no legal right to realize upon such Common Non-Trust Collateral or exercise its rights under the Purchased Loan with respect to such Common Non-Trust Collateral in any manner until all required payments in respect of the Non-Trust Loan have been made in full; and (iii) in realizing upon such Common Non-Trust Collateral, the Seller or its assignees shall have no obligation to protect or preserve the rights of Buyer, the Issuer or the Third Party Financier in such Common Non-Trust Collateral. The proceeds of the Common Other Collateral
shall be shared by the holders of the Purchased Loan and the Non-Trust Loan on a pro rata basis (based on relative outstanding principal amounts of the Purchased Loan and Non-Trust Loan).
(l) Notification of Breach. The Seller will advise Buyer, its assignees, the Issuer, the Indenture Trustee and each Third Party Financier promptly, in reasonable detail, upon discovery of the occurrence of a breach, in any material respect, by the Seller of any of its representations, warranties and covenants contained herein.
(m) Notice of Adverse Claim. The Seller shall notify Buyer, the Issuer, and each Third Party Financier, promptly after becoming aware of any Adverse Claim on any Specified Asset.
(n) Taxes. The Seller shall promptly pay all applicable taxes required to be paid in connection with the transfer of the Specified Assets by the Seller to Buyer, and acknowledges that Buyer and the Issuer shall have no responsibility with respect thereto. The Seller shall promptly pay and discharge, or cause the payment and discharge of, all federal income taxes (and all other material taxes) when due and payable by the Seller, except (i) such as may be paid thereafter without penalty or (ii) such as may be contested in good faith by appropriate proceeding and for which an adequate reserve has been established and is maintained in accordance with GAAP. The Seller shall promptly notify the Issuer, the Indenture Trustee, the Administrative Agent and the Noteholders of any material challenge, contest or proceeding pending by or against the Seller before any taxing authority.
SECTION 5.2 Reporting and Noticing Requirements.
(a) Reporting. The Seller will maintain, for itself and each of its Subsidiaries, a system of accounting established and administered in accordance with GAAP, and furnish to the Indenture Trustee and the Administrative Agent:
(i) as soon as publicly available and in any event by the Reporting Date after the end of each of the first three (3) quarterly fiscal periods of each fiscal year of ALH, the unaudited consolidated balance sheet of ALH and its consolidated subsidiaries as at the end of such period and the related unaudited consolidated statement of income and cash flows for ALH and its consolidated subsidiaries for such period and the portion of the fiscal year through the end of such period, accompanied by a certificate of an Authorized Officer of ALH, which certificate shall state that said consolidated financial statements fairly present in all material respects the consolidated financial condition and results of operations of ALH and its subsidiaries in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal fiscal year-end audit adjustments and the omission of footnotes);
(ii) as soon as publicly available and in any event by the Reporting Date after the end of each fiscal year of ALH, the consolidated balance sheet of ALH and its consolidated subsidiaries as at the end of such fiscal year and the related consolidated statement of income and cash flows for ALH and its consolidated subsidiaries for such 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 financial statements fairly present in all material respects the consolidated financial condition and results of operations of ALH and its consolidated subsidiaries as at the end of, and for, such fiscal year in accordance with GAAP; and
(iii) promptly upon transmission or receipt thereof, copies of any filings and registrations with, and reports to or from, the Securities and Exchange Commission (or the Ontario Securities Commission, as applicable) or any national securities exchange, or any successor agency, and copies of all proxy statements, and material notices, if any, as ALH or any of its Subsidiaries shall send to its equity holders generally or to a holder of any debenture, note or other indebtedness owed by ALH or any of its Subsidiaries;
(b) Compliance Certificate. The Seller will furnish to Buyer, at the time it furnishes each set of financial statements pursuant to clauses (a)(i) and (ii) above, a certificate of an Authorized Officer of ALS to the effect that, to the best of such Authorized Officer’s knowledge, ALS during such fiscal period or year has observed, performed or satisfied in all material respects all of its covenants, agreements and conditions, contained in this Agreement compliance with which has not been waived by the Indenture Trustee at the direction of the Required Noteholders.
(c) Change in Credit and Collection Policy. At least five (5) days prior to the effectiveness of any material change in, or amendment to, the Credit and Collection Policy, the Seller will furnish to the Buyer, the Issuer and each Third Party Financier, a copy of the Credit and Collection Policy then in effect and a notice indicating such change or amendment, unless such notice has already been provided by the Servicer under the Pooling and Servicing Agreement.
(d) Other Information. The Seller will furnish to the Buyer, the Issuer and each Third Party Financier such other information (including nonfinancial information and information regarding the financial condition, operations or business of ALH) as such Persons (or any of their respective assignees) may from time to time reasonably request.
(e) Other Notices. The Seller will notify in writing the Buyer, the Issuer and each Third Party Financier of any of the following within seven (7) Business Days after learning of the occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto:
(i) Insolvency Events. The occurrence of any Insolvency Event with respect to the Seller, by a statement of the treasurer, controller or senior financial officer of the Seller; and
(ii) Litigation. The institution of any litigation, arbitration proceeding or governmental proceeding against the Seller or any of its Subsidiaries, or to which the Seller or any of its Subsidiaries becomes party, in either case (i) with respect to any Third Party Document or (ii) which could reasonably be expected to have a Material Adverse Effect.
SECTION 5.3 Negative Covenants. From the date hereof until the first day following the Purchase Termination Date on which the Obligations are paid in full, unless Buyer and each Third Party Financier shall otherwise give its prior written consent, the Seller hereby agrees that it will perform the covenants and agreements set forth in this section.
(a) Sales, Liens, Etc. Except as otherwise provided herein or in any other Transaction Document and except for Permitted Adverse Claims, the Seller will not (i)(A) sell, assign (by operation of law or otherwise) or otherwise transfer to any Person, (B) pledge any interest in, (C) grant, create, incur, assume or permit to exist any Adverse Claim (other than Permitted Adverse Claims) to or in favor of any Person upon or with respect to, or (D) cause to be filed any financing statement or equivalent document relating to perfection with respect to any Specified Asset or any Contract related to any Specified Assets, or upon or with respect to any lockbox or account to which any Collections of any such Specified Assets are sent or any interest therein under the applicable Third Party Document(s), or (ii) assign to any Person any right to receive income from or in respect of any of the foregoing.
In the event that the Seller fails to keep any Specified Assets free and clear of any Adverse Claim (other than Permitted Adverse Claims), Buyer may (without limiting its other rights with respect to the Seller’s breach of its obligations hereunder) make expenditures necessary to release the Adverse Claim. Buyer shall be entitled to indemnification for any such expenditures pursuant to the indemnification provisions of Article VIII. Alternatively, Buyer may deduct such expenditures as an offset to the Purchase Price owed to the Seller hereunder.
(b) Extension or Amendment of Purchased Loans, Change in Credit and Collection Policy or Contracts. Except as the Servicer may be expressly permitted under the Pooling and Servicing Agreement, the Seller shall not, (i) extend, amend or otherwise modify the terms of any Purchased Loan or related Contract or (ii) change the terms and provisions of the Credit and Collection Policy in any material respect.
(c) Change in Payment Instructions to Obligors. Except as otherwise provided in the applicable Third Party Documents, the Seller will not (i) add or terminate any bank as a Lockbox Bank from those listed in Schedule 3.1(p) unless, prior to any such addition or termination, Buyer and the Third Party Financiers shall have received not less than five (5) Business Days’ prior written notice of the addition or termination and, not less than five (5) Business Days prior to the effective date of any such proposed addition or termination, Buyer and the Third Party Financiers shall have received (A) counterparts of the applicable type of Lockbox Agreement with each new Lockbox Bank, duly executed by such new Lockbox Bank and all other parties thereto and (B) copies of all other agreements and documents signed by the Lockbox Bank and such other parties with respect to any new Lockbox Account, all of which agreements and documents shall be reasonably satisfactory in form and substance to Buyer and the Third Party Financiers, or (ii) make any change in its instructions to Obligors, regarding payments to be made to any Lockbox Bank, other than changes in the instructions that direct Obligors to make payments to another Lockbox Account at such Lockbox Bank or another Lockbox Account.
(d) Change in Name. The Seller shall not change its name, identity or corporate structure in any manner that would, could or might make any financing statement or
continuation statement filed by the Seller in accordance with Section 6.3(a) seriously misleading within the meaning of Section 9-506 of the UCC, unless it shall have given Buyer, the Indenture Trustee and the Administrative Agent at least sixty (60) days prior written notice thereof and shall file such financing statements or amendments as may be necessary to continue the perfection of Buyer’s interest under this Agreement in the Specified Assets.
(e) Location. The Seller shall give Buyer, the Indenture Trustee and the Administrative Agent at least sixty (60) days prior written notice of any relocation of its “location” (within the meaning of Section 9-307 of the UCC) if, as a result of such relocation, the applicable provisions of the UCC would require the filing of any amendment of any previously filed financing or continuation statement or of any new financing statement. The Seller shall at all times maintain its “location” in United States of America.
(f) Accounting for Purchases. The Seller shall prepare its financial statements in accordance with GAAP, and any financial statements that are made publicly available and which are consolidated to include Buyer will contain footnotes stating that the Seller has sold or contributed to Buyer the Specified Assets. The Seller shall not prepare any financial statements that account for the transactions contemplated in this Agreement in any manner other than as a sale of the Specified Assets by the Seller to Buyer (except in each to the extent provided in Section 2.7).
(g) Other Liens or Interests. Except for the conveyances hereunder and as contemplated by this Agreement, the Indenture and the Pooling and Servicing Agreement, ALS shall not sell, pledge, assign or transfer the Specified Assets to any other Person, or grant, create, incur, assume or suffer to exist any Lien on any interest therein, and ALS shall defend the right, title and interest of Buyer and its assignees in, to and under the Specified Assets against all claims of third parties claiming through or under ALS.
(h) Pledge of Interest in Buyer. ALS shall not sell, pledge, assign or transfer its membership interest in Buyer, or grant, create, incur, assume or suffer to exist any Lien on its membership interest in Buyer; provided, however, that ALS may pledge or grant a security interest in such membership interest if such Person (and any of such Person’s successors and assigns) shall have agreed that it will not: (i) file a petition in bankruptcy against the Buyer or the Issuer until one (1) year and one (1) day after the Obligations shall have been paid in full following the occurrence of the Conversion Date, (ii) seek to substantively consolidate the Buyer or the Issuer in connection with a bankruptcy of ALS or any of its Affiliates, (iii) seek to realize on the assets of the Buyer or the Issuer, (iv) vote such membership interest with respect to any matters, without the consent of the Administrative Agent (at the direction of the Required Noteholders) and (v) challenge or contest any actions by the Indenture Trustee or any of the Noteholders or the Agents (including any claims by any of the Administrative Agent, the Noteholders, the Buyer, the Issuer or any of their respective assignees), or assert any claim against such parties in connection with the exercise by either the Indenture Trustee or any of the Noteholders or the Agents of any right or remedy available to it pursuant to the terms of the Basic Documents, or the exercise of any remedies, or receipt of any proceeds from any assets of Buyer following the occurrence of a Rapid Amortization Event or an Event of Default; provided, further, that ALS may amend the Buyer’s limited liability company agreement pursuant to an amendment in form and substance reasonably satisfactory to the Administrative Agent to create a
separate, non-voting membership interest in Buyer (the “Non-voting Interest”) (with no right to participate in the management of Buyer) which interest would give its holder the right to receive only allocations and distributions from the Buyer of amounts which are received by Buyer from the Issuer at the times and in the amounts set forth in the Basic Documents and pledge or grant to a pledgee a security interest solely in the Non-voting Interest (and not any other membership interest that ALS may have in the Buyer).
ARTICLE VI.
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE SPECIFIED ASSETS
SECTION 6.1 Rights of Buyer. (a) The Seller hereby authorizes Buyer, the Servicer and/or their respective designees to take any and all steps in the Seller’s name and on behalf of the Seller that Buyer, the Servicer and/or their respective designees determine are reasonably necessary or appropriate to collect all amounts due under any and all Specified Assets, including endorsing the name of the Seller on Equipment Notes, checks and other instruments representing Collections and enforcing the Seller’s rights under such Specified Assets.
(b) Except as expressly set forth in Section 2.12(a), Buyer shall have no obligation to account for any Specified Asset to the Seller. Buyer shall have no obligation to account for, or to return Collections, or any interest or other finance charge collected pursuant thereto, to the Seller, irrespective of whether such Collections and charges are in excess of the Purchase Price for the Specified Assets.
(c) Buyer shall have the unrestricted right to further assign, transfer, deliver, hypothecate, subdivide or otherwise deal with the Specified Assets, and all of Buyer’s right, title and interest in, to and under this Agreement.
(d) Buyer shall have the sole right to retain any gains or profits created by buying, selling or holding the Specified Assets and shall have the sole risk of and responsibility for losses or damages created by such buying, selling or holding.
SECTION 6.2 Responsibilities of the Seller. Anything herein to the contrary notwithstanding, the Seller hereby agrees:
(a) to perform all of its obligations hereunder and under the Contracts related to the Specified Assets to the same extent as if the Specified Assets had not been sold or contributed hereunder, and the exercise by Buyer or its designee or assignee of Buyer’s rights hereunder or in connection herewith shall not relieve the Seller from any of its obligations under the Related Contracts or Specified Assets; and
(b) to the extent that the Seller does not own the computer software that Seller uses to account for Specified Assets, the Seller shall use reasonable efforts to provide Buyer with such proprietary licenses, sublicenses and/or assignments of contracts as Buyer shall require with regard to all services and computer hardware or software used by the Seller that relate to the servicing of any Specified Assets.
SECTION 6.3 Further Action Evidencing Purchases. The Seller agrees that from time to time, at its expense, it will promptly, upon reasonable request, make, execute, endorse, acknowledge, execute, file and deliver all further instruments, documents, schedules, confirmatory assignments, conveyances, transfer endorsements, powers of attorney, certificates, reports and other assurances or instruments and take all further action, in order to perfect, protect or more fully evidence the purchase by Buyer or contribution to Buyer of the Specified Assets under this Agreement, or to enable Buyer to exercise or enforce any of its rights under any Transaction Document. The Seller further agrees that from time to time, at its expense, it will promptly, upon request, take all action that Buyer may reasonably request in order to perfect, protect or more fully evidence the purchase or contribution of the Specified Assets or to enable Buyer to exercise or enforce any of its rights hereunder or under any other Transaction Document. Without limiting the generality of the foregoing, the Seller will:
(a) execute and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as Buyer or the then Third Party Financiers may reasonably determine to be necessary or appropriate,
(b) place the legend set forth below on the originally executed counterpart of each Purchased Loan.
“This is the original of this instrument, and a security interest has been granted in this instrument to The Bank of New York Mellon, as Indenture Trustee for the benefit of the persons set forth in that certain Amended and Restated Indenture, dated as of June 8, 2018, between The Bank of New York Mellon, as Indenture Trustee and Alliance Laundry Equipment Receivables Trust 2015-A.”
The Seller hereby authorizes Buyer or its designee to file one or more financing or continuation statements, and amendments thereto and assignments thereof, relative to all or any of the Specified Assets of the Seller, in each case whether now existing or hereafter generated by the Seller. If (i) the Seller fails to perform any of its agreements or obligations under this Agreement and does not remedy the failure within the applicable cure period, if any, and (ii) Buyer in good faith reasonably believes that the performance of such agreements and obligations is necessary or appropriate to protect its interests under this Agreement, then Buyer or its designee may (but shall not be required to) perform, or cause performance of, such agreement or obligation and the reasonable expenses of Buyer or its designee or assignee incurred in connection with such performance shall be payable by the Seller as provided in Section 8.1.
SECTION 6.4 Collection of Specified Assets; Rights of Buyer and Its Assignees. (a) The Seller hereby transfers to Buyer the ownership of, and the exclusive dominion and control over, each of the Lockbox Accounts and all related lock-boxes owned by the Seller, and the Seller hereby agrees to take any further action that Buyer may reasonably request in order to effect or complete the transfer. The Seller further agrees to use reasonable efforts to prevent funds other than proceeds of the Specified Assets from being deposited in any Lockbox Account except as otherwise contemplated in the Lockbox Agreements.
(b) Buyer or the Indenture Trustee may, at any time after a Servicer Default has occurred and is existing, direct the Obligors of Purchased Loans originated by the Seller to
pay all amounts payable under any Specified Asset originated by the Seller directly to Buyer or its designees. Furthermore, the Seller shall, at the request of Buyer or the Indenture Trustee (at the direction of the Required Noteholders) or the Administrative Agent and at the Seller’s expense, promptly give notice of Buyer’s interest in such Purchased Loans to each Obligor and direct that payments be made directly to Buyer or its designee, which notice shall be acceptable in form and substance to Buyer. In addition, the Seller hereby (x) grants to Buyer an irrevocable power of attorney, with full power of substitution, coupled with an interest, to take in the name of the Seller all steps necessary or advisable to endorse, negotiate or otherwise realize on any writing or other right of any kind held or transmitted by the Seller or transmitted or received by Buyer (whether or not from the Seller) in connection with any Specified Assets; and (y) authorizes Buyer or the Indenture Trustee (at the direction of the Required Noteholders) or the Administrative Agent to take any and all steps in the Seller’s name and on its behalf that are necessary or desirable, in the reasonable determination of Buyer, to collect all amounts due under any and all Specified Assets originated by the Seller, including endorsing the Seller’s name on checks and other instruments representing Collections and enforcing such Specified Assets and the Contracts related to the Purchased Loans originated by the Seller.
(c) At any time when (i) a Servicer Default shall have occurred with respect to the Seller and remain continuing or (ii) a Servicer other than the related Seller has been designated, the Seller shall, at Buyer’s request, assemble all of the Records that evidence the Purchased Loans originated by the Seller and the Related Assets thereto and the Contracts related to such Purchased Loans, or that are otherwise necessary or desirable to collect such Specified Assets, and make the same available to Buyer or its designee at a place selected by Buyer or its designee.
ARTICLE VII.
TERMINATION
SECTION 7.1 Termination by the Seller. The Seller may terminate all of its agreements to sell Purchased Loans hereunder to Buyer by giving Buyer and each Third Party Financier not less than five (5) days’ prior written notice of their election not to continue to sell Purchased Loans to Buyer (the “Termination of Sale Notice”); provided that the Termination of Sale Notice must specify the effective date of termination.
SECTION 7.2 Automatic Termination. The agreement of the Seller to sell Purchased Loans hereunder, and the agreement of Buyer to purchase Purchased Loans from the Seller hereunder, shall terminate automatically upon the occurrence of any of the following events:
(a) at any time prior to such date, an event specified in the definition of Insolvency Event occurs (without regard to the sixty (60) day grace period specified in clause (i) of that definition) as a result of a case or proceeding being filed against the Seller;
(b) if the Internal Revenue Service or the PBGC files one or more Tax or ERISA Liens against the assets of Buyer or the Seller (including Purchased Loans), then (and for
so long as such Tax or ERISA Liens remain in place) Buyer shall not purchase any Specified Assets from the Seller; or
(c) the occurrence of the Conversion Date.
ARTICLE VIII.
INDEMNIFICATION
SECTION 8.1 Indemnities by the Seller.
The Seller agrees to indemnify and hold harmless the Buyer, the Issuer and each Third Party Financier and their respective Affiliates and the respective officers, directors and employees and agents of the same (each of the foregoing parties being an “RPA Indemnified Party”), from and against any and all claims, liabilities, losses, costs, expenses (including reasonable counsel fees and expenses) and damages, which may be incurred by or asserted against any RPA Indemnified Party relating to, arising out of or resulting from:
(i) a breach of any representation, warranty or covenant made in writing by the Seller, the Transferor or the Issuer;
(ii) the use, ownership, repossession (other than losses related to a decline in value of the Equipment repossessed) or operation by the Seller or any Affiliate thereof of any item of Equipment or other collateral therefor;
(iii) any taxes that may at any time be asserted against any RPA Indemnified Party with respect to the transactions contemplated in this Agreement, including any sales, gross receipts, general corporation, tangible personal property, privilege or license taxes (but not including any taxes asserted with respect to, and as of the date of, the sale of the Loans to the Buyer or the issuance and original sale of the Securities, or asserted with respect to ownership of the Loans, or federal or other income taxes arising out of distributions on the Securities, or any fees or other compensation payable to any such RPA Indemnified Party) and costs and expenses in defending against the same; and
(iv) the negligence, willful misfeasance or bad faith of the Seller or by reason of negligent disregard of the Seller’s obligations and duties under this Agreement,
other than (i) claims, liabilities, losses, costs, expenses and damages to the extent they result from the gross negligence or willful misconduct of an RPA Indemnified Party, (ii) to the extent the same includes losses in respect of Purchased Loans and reimbursement therefor that would constitute credit recourse to the Seller for the amount of any Specified Asset not paid by the related Obligor, (iii) to the extent the same constitutes recourse as a result of nonpayment by Obligors for credit reasons on the related Loans, (iv) to the extent the same constitutes recourse to the Seller for any obligation of the Issuer to increase or replenish the Available Drawing Amount (or to post cash or alternative collateral pursuant to Section 3.27 of the Indenture in substitution therefor) after the Restatement Date, (v) to the extent the same are or result from taxes on or measured by the net income of the RPA Indemnified Party and (vi) to the extent the same constitute consequential, special or punitive damages.
If any action or proceeding (including any governmental investigation) shall be brought or asserted against any RPA Indemnified Party in respect of which the indemnity provided above may be sought from Seller (the “Indemnifying Party”) each such RPA Indemnified Party shall promptly notify the Indemnifying Party in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the RPA Indemnified Party and the payment of all expenses and reasonable legal fees; provided that failure to notify the Indemnifying Party shall not relieve it from any liability it may have to such RPA Indemnified Party except to the extent that it shall be actually prejudiced thereby. The RPA Indemnified Party shall have the right to employ separate counsel in any such action and to participate in the defense thereof at the expense of the RPA Indemnified Party; provided, however that the fees and expenses of separate counsel to the RPA Indemnified Party in any such proceeding shall be at the expense of the Indemnifying Party if (i) the Indemnifying Party has agreed to pay such fees and expenses, (ii) the Indemnifying Party shall have failed to assume the defense of such action or proceeding or employ counsel reasonably satisfactory to the RPA Indemnified Party in any such action or proceeding within a reasonable time after the commencement of such action or (iii) the named parties to any such action or proceeding (including any impleaded parties) include both the RPA Indemnified Party and the Indemnifying Party, and the RPA Indemnified Party shall have been advised in writing by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Indemnifying Party which gives rise to a conflict of interest (in which case, if the RPA Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense of such action or proceeding on behalf of such RPA Indemnified Party, it being understood, however, that the Indemnifying Party shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time for the RPA Indemnified Parties, which firm shall be designated in writing by the RPA Indemnified Party and shall be reasonably acceptable to the RPA Indemnified Party). The Indemnifying Party shall not be liable for any settlement of any such action or proceeding effected without its written consent to the extent that any such settlement shall be prejudicial to the Indemnifying Party, but, if settled with its written consent, or if there is a final non- appealable judgment for the plaintiff in any such action or proceeding with respect to which the Indemnifying Party shall have received notice in accordance with this paragraph, the Indemnifying Party agrees to indemnify and hold the RPA Indemnified Parties harmless from and against any loss or liability by reason of such settlement or judgment.
ARTICLE IX.
MISCELLANEOUS PROVISIONS
SECTION 9.1 Amendments; Waivers, Etc. (a) The provisions of this Agreement may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and signed by Buyer, the Seller and the Required Noteholders, and then the waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. This Agreement shall not be amended unless (x) the Buyer shall have delivered the proposed amendment to the Third Party Financiers at least ten
(10) Business Days (or such shorter period as shall be acceptable to each of them) prior to the execution and delivery thereof and (y) such amendment would not result in any Material Adverse Effect.
(b) No failure or delay on the part of Buyer, any RPA Indemnified Party, or any Third Party Financier in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on the Seller in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by Buyer or any Third Party Financier under this Agreement shall, except as may otherwise be stated in the waiver or approval, be applicable to subsequent transactions.
No waiver or approval under this Agreement shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 9.2 Notices. All demands, notices and communications upon or to the Seller, the Servicer or any Third Party Financier under this Agreement shall be delivered as specified in Appendix B hereto.
SECTION 9.3 Cumulative Remedies. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Without limiting the foregoing, the Seller hereby authorizes Buyer, at any time and from time to time, to the fullest extent permitted by law, to set-off, against any Obligations of the Seller to Buyer that are then due and payable or that are not then due and payable from the Seller to Buyer but have then accrued, any and all indebtedness or other obligations at any time owing to the Seller by Buyer to or for the credit or the account of the Seller or that are not then due and payable from Buyer to the Seller but have then accrued.
SECTION 9.4 Binding Effect; Assignability; Survival of Provisions. This Agreement shall be binding upon and inure to the benefit of Buyer and the Seller and their respective successors and permitted assigns. The Seller may not assign any of its rights hereunder or any interest herein unless (i) it has obtained the prior written consent of the Buyer and the Special Required Noteholders and (ii) such assignment would not result in any Material Adverse Effect. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall remain in full force and effect until the first date following the Purchase Termination Date on which the Obligations payable to all Third Party Financiers shall have been fully paid, or such later time as the parties hereto shall agree. The rights and remedies with respect to any breach of any representation and warranty made by the Seller pursuant to Article III (including those remedies set forth in Section 2.12(c)) and the indemnification and payment provisions of Article VIII and Section 9.6 shall be continuing and shall survive any termination of this Agreement.
SECTION 9.5 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.6 Costs, Expenses and Taxes. In addition to the obligations of the Seller under Article VIII, the Seller agrees to pay on demand:
(a) all reasonable out-of-pocket and other costs and expenses in connection with the enforcement of this Agreement, the PA Assignments or the other Transaction Documents by Buyer, the Issuer or any Third Party Financier; and
(b) all stamp and other taxes and fees payable or determined to be payable in connection with the execution and delivery, and the filing and recording, of this Agreement or the other Transaction Documents, and agrees to indemnify each RPA Indemnified Party against any liabilities with respect to or resulting from any delay in paying or omission to pay the taxes and fees; provided, however, that in no event shall the Seller be liable for or pay any taxes (or interest, penalties, or additions to tax with respect thereto) imposed upon or measured by the income of any RPA Indemnified Party or any taxes imposed in lieu of income taxes.
SECTION 9.7 Submission to Jurisdiction. Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan in the City of New York, New York over any action or proceeding arising out of or relating to the Transaction Documents, and hereby (A) irrevocably agrees that all claims in respect of the action or proceeding may be heard and determined in such State or federal court and (B) irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of the action or proceeding.
As an alternative method of service, each of Buyer and the Seller also irrevocably consents to the service of any and all process in any action or proceeding by the mailing of copies of the process to Buyer or the Seller (as applicable) at its address specified herein. Nothing in this section shall affect the right of any party hereto to serve legal process in any other manner permitted by law or affect the right of any party hereto to bring any action or proceeding against the other party or any of its properties in the courts of any other jurisdiction.
SECTION 9.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR RELATING TO THE TRANSACTION DOCUMENTS OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION THEREWITH OR ARISING FROM ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OF EITHER OF THE PARTIES HERETO OR ANY OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THE TRANSACTION DOCUMENTS, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
SECTION 9.9 Integration. This Agreement and the other Transaction 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.
SECTION 9.10 Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which together shall constitute one and the same agreement. Executed counterparts may be delivered electronically.
SECTION 9.11 Acknowledgment and Consent. (a) The Seller acknowledges that, contemporaneously herewith, Buyer is transferring and otherwise conveying to the Third Party Financiers all of Buyer’s right, title and interest in, to and under the Specified Assets and this Agreement pursuant to the applicable Third Party Documents. The Seller hereby consents to the sale, transfer, assignment, set over and otherwise conveyance to the Third Party Financiers by Buyer of all right, title and interest of Buyer in, to and under the Specified Assets and all of Buyer’s rights to receive payments and pursue remedies under the applicable Third Party Documents (whether arising pursuant to the terms of this Agreement or otherwise available at law or in equity). The Seller further consents and agrees that the Noteholders (subject to the procedures in Article V of the Indenture) and the Indenture Trustee shall be third party beneficiaries of those obligations of the Seller under this Agreement and shall be entitled to enforce such obligations as if the Noteholders and the Indenture Trustee were parties to this Agreement.
(b) The Seller hereby agrees to execute all agreements, instruments and documents, and to take all other action, that Buyer reasonably determines is necessary or appropriate to evidence its consent described in subsection (a) above.
SECTION 9.12 No Partnership or Joint Venture. Nothing contained in this Agreement shall be deemed or construed by the parties hereto or by any third person to create the relationship of principal and agent or of partnership or of joint venture.
SECTION 9.13 No Proceedings. The Seller hereby agrees that it will not institute against Buyer or Issuer, or join any other Person in instituting against Buyer or Issuer, any insolvency proceeding (namely, any proceeding of the type referred to in the definition of Insolvency Event) so long as any Obligation payable to any Third Party Financier shall be due and unpaid or there shall not have elapsed one year plus one day since the last day on which any such Obligations shall have been due and unpaid. The agreement of the Seller set forth in this Section 9.13 shall survive the termination of this Agreement. The foregoing shall not limit the right of the Seller to file any claim in or otherwise take any action with respect to any insolvency proceeding that was instituted against Buyer or Issuer by any Person other than the Seller or any of its Affiliates (provided that no such action may be taken by the Seller until such proceeding has continued undismissed, unstayed and in effect for a period of ten (10) days).
SECTION 9.14 Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement or any of the other Transaction Documents shall for any reason whatsoever be held invalid, then the unenforceable covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement or the other Transaction Documents (as applicable) and shall in no way affect the validity or enforceability of the other provisions of this Agreement or any of the other Transaction Documents.
SECTION 9.15 Further Assurances. (a) Each of the parties hereto hereby agrees that it will cooperate in good faith and use commercially reasonable efforts to assist the
Administrative Agent in any sale or securitization of the Specified Assets to take place after the Conversion Date; provided, however, that each of the parties hereto agrees that it shall not be obligated to take any action (including making any changes or amendments to any of the Basic Documents), or provide any consent if such party would thereby incur any material obligations or liabilities as a result thereof; provided, further, that the Administrative Agent shall, at the written request of the assisting party, offer such party indemnification reasonably satisfactory to such party against any costs, liabilities and expenses incurred in providing any requested assistance.
(b) In the event of any Regulatory Change (as defined in the Note Purchase Agreement) which results in either (i) a determination that any CP Conduit is required, under generally accepted accounting principles, to consolidate its financial statements with any other entity, or (ii) a cost arising under Section 2.3 of the Note Purchase Agreement, the parties hereto agree to negotiate in good faith to amend the Basic Documents in order to eliminate the consolidation requirement; provided, however, that no party shall be obligated to take any action (or make any amendments) if in the reasonable opinion of such party any such amendment to the Basic Documents will be unlawful or otherwise disadvantageous or inconsistent with its policies or regulatory restrictions or result in any liability, unreimbursed cost or expense to such party.
SECTION 9.16 Survival. The representations and warranties set forth in this Agreement shall survive the transfer of the Specified Assets to the Buyer, the contribution of the Specified Assets by the Buyer to the Issuer and the further pledge by the Issuer to the Indenture Trustee and shall continue in full force and effect until the first day following the Purchase Termination Date on which the Obligations are paid in full.
SECTION 9.17 Amendment and Restatement. This Agreement amends and restates in its entirety the Original Agreement among the parties hereto. Upon the occurrence of the Restatement Date, (a) the terms and provisions of the Original Agreement shall be amended, superseded and restated in their entirety by the terms and provisions of this Agreement and, unless expressly stated to the contrary, each reference to the Original Agreement in any of the Basic Documents or any other document, instrument or agreement delivered in connection therewith shall mean and be a reference to this Agreement, (b) this Agreement is not intended to and shall not constitute a novation of the Original Agreement or the obligations and liabilities existing thereunder, (c) with respect to any date or time period occurring and ending prior to the Restatement Date, the rights and obligations of the parties to the Original Agreement shall be governed by the Original Agreement and the other Basic Documents (as defined therein) and (d) with respect to any date or time period occurring and ending on or after the Restatement Date, the rights and obligations of the parties hereto shall be governed by this Agreement and the other Basic Documents (as defined herein). The liens, security interests and other interests in the Specified Assets granted under the Original Agreement are and shall remain legal, valid, binding and enforceable to the extent also constituting Specified Assets hereunder. Each of the parties hereto hereby acknowledges and confirms the continuing existence and effectiveness of such liens, security interests and other interests in such Specified Assets granted under the Original Agreement, and further agrees that the execution and delivery of this Agreement shall not in any way release, diminish, impair, reduce or otherwise affect such liens, security interests and other interests in such Specified Assets granted under the Original Agreement.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be executed by their respective officers hereunto duly authorized as of the date and year first above written.
| | | | | | | | |
| ALLIANCE LAUNDRY SYSTEMS LLC,
in its individual capacity as Seller and as Servicer |
| | |
| | |
| | |
| By: | /s/ Todd M. Rice |
| | Name: Todd M. Rice |
| | Its: Vice President, Treasurer, and Assistant |
| | Secretary |
| | | | | | | | |
| ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES 2015 LLC |
| | |
| | |
| | |
| By: | /s/ Todd M. Rice |
| | Name: Todd M. Rice |
| | Its: President |
APPENDIX A
DEFINITIONS
A. All capitalized terms used in this Agreement but not otherwise defined shall have the respective meanings assigned to them in Part I of Appendix A to the Pooling and Servicing Agreement. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
“Aggregate Unpaid Balance” is defined in Section 2.10 of this Agreement.
“Agreement” is defined in the preamble to this Agreement.
“Authorized Officer” means, with respect to Buyer or the Seller, the Chief Executive Officer, the President, the Vice President, the Secretary, the Assistant Secretary, the Chief Financial Officer, the Treasurer, the Assistant Treasurer and any other Officer duly appointed by its board of managers.
“Bank Account” means any “deposit account” as defined in Section 9-102(a)(29) of the UCC, whether now owned or hereafter acquired by the Issuer.
“Buyer” is defined in the preamble to this Agreement.
“Collections” means, with respect to any Purchased Loan, all cash collections and other proceeds, whether in the form of cash, checks, drafts or other instruments, in respect of such Purchased Loan, Related Assets with respect to such Purchased Loan, whether the same represent principal, Finance Charges, insurance proceeds of Related Security (that the Seller or the Servicer applies in the ordinary course of its business to amounts owed in respect of any such Purchased Loan and net proceeds of any sale or other disposition of repossessed goods that were the subject of any such Purchased Loan), or otherwise, including all such amounts received on or after the applicable Loan Cutoff Date for such Purchased Loan.
“Common Non-Trust Collateral” is defined in Section 5.1(k) of this Agreement.
“Common Trust Collateral” is defined in Section 5.1(k) of this Agreement.
“Contract” means an agreement between the Seller and any Person pursuant to which such Person is obligated to make payments in respect of any Purchased Loans or Related Assets.
“Credit Agreement” means the Credit Agreement, dated as of August 31, 2015, among Alliance Laundry Systems LLC, Alliance Laundry Holdings LLC, the lenders party thereto from time to time, Bank of America, N.A., as administrative agent and swing line lender, Bank of Montreal, as an issuing lender, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BMO Capital Markets Corp. and PNC Capital Markets LLC, as joint lead arrangers and joint bookrunners, and the other agents identified therein, as such agreement may, for the avoidance of doubt, be amended, restated, modified, supplemented, refinanced or replaced from time to time.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that is treated as a single employer with the Seller 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 failure to satisfy the minimum funding standards of Section 412 of the Code or Section 302 of ERISA, whether or not waived, with respect to any Plan; (d) the filing pursuant to Section 412(c) of the Code or Section 302(c) 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 Seller or any ERISA Affiliates from any Plan or Multiemployer Plan; (f) the receipt by the Seller 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 Seller 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, within the meaning of Title IV of ERISA; and (h) the occurrence of a “prohibited transaction” with respect to which the Seller is a “disqualified person” (within the meaning of Section 4975 of the Code) or with respect to which the Seller could otherwise be liable.
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or any successor thereto or to the functions thereof.
“Finance Charges” means, with respect to a Contract, any finance, interest, late payment charges or similar charges owing by an Obligor pursuant to such Contract.
“Funding Date” means the Purchase Date on which Seller transfers property to the Buyer, and the date on which Buyer further transfers to the Issuer, Purchased Loans or an interest therein and, if applicable, the same are financed by a Third Party Financier.
“Funding Date Data Pool Report” means, with respect to any Funding Date related to the Loans, a report containing (i) a complete data profile report in Excel format substantially in the form to be agreed among the Seller, the Buyer and the Administrative Agent prior to the Restatement Date (including updated data of the Specified Assets held by the Buyer as of the end of such Funding Date, after giving effect to the contemplated transfer of Specified Assets on such Funding Date), (ii) the invoice numbers and associated Unpaid Balances of all Loans to be acquired by Buyer on such Funding Date, (iii) the Schedule of Loans as of the Loan Cutoff Date (which shall identify which Loans are Eligible Loans) and (iv) any other information reasonably requested by Buyer, the Indenture Trustee, the Administrative Agent or the Required Noteholders.
“GAAP” shall mean generally accepted accounting principles in the United States of America 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.
“Indemnifying Party” is defined in Section 8.1 of this Agreement.
“Initial PA Assignment” is defined in Section 2.3(a) of this Agreement.
“Loan Documents” shall mean, with respect to a Loan, the following documents:
(i) the fully executed endorsed original of the Equipment Note;
(ii) the original, fully executed Guaranty executed in respect of such Loan, if any;
(iii) the original, fully executed security agreement executed for such Loan, if any;
(iv) the acknowledgement from the applicable state or other governmental recording office confirming receipt of the UCC financing statement for such Loan filed by the Seller against the Obligor with respect to the related Equipment or the original UCC financing statement or a file-stamped copy of such financing statement with recording information indicated thereon;
(v) the Delivery and Acceptance Receipt for the Equipment relating to such Loan; and
(vi) the assignment of lease, landlord waiver, mortgagee waiver or deed, in each case, with respect to the real property on which the Equipment is located, if any.
“Material Adverse Effect” means, with respect to any event or circumstances, a material adverse effect on (a) the business, financial condition, operations or assets of the Issuer or of the Issuer, Buyer, the Seller or the Servicer (taken as a whole), (b) the ability of the Issuer, Buyer, the Seller or the Servicer to perform its obligations under any Basic Document, (c) the validity, enforceability of, or collectibility of, amounts payable by the Issuer, Buyer, the Seller or the Servicer under any Basic Document to which it is a party, (d) the status, existence, perfection or priority of the interest of any of the Third Party Financiers in the Specified Assets, (e) the validity, enforceability or collectibility of all or any portion of the Specified Assets (amounts in excess of $1,000,000 shall be deemed to result in a Material Adverse Effect) or (f) the ability of any of the Third Party Financiers to exercise its control or consent rights or monitor the performance of the Specified Assets and compliance of the Issuer, Buyer, the Seller or the Servicer to the Basic Documents.
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“Non-Trust Loan” is defined in Section 5.1(k) of this Agreement.
“Obligations” means (a) all obligations of Buyer and the Issuer to the Third Party Financiers arising under or in connection with the applicable Third Party Documents, and (b) all obligations of the Seller to Buyer and any other RPA Indemnified Party arising under or in connection with this Agreement or any other Transaction Documents, in each case howsoever
created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due.
“Obligor” means a Person obligated to make payments pursuant to a Purchased Loan and/or Contract.
“PA Assignment” is defined in Section 2.3(b) of this Agreement.
“PBGC” or “Pension Benefit Guaranty Corporation” means the Pension Benefit Guaranty Corporation created under Section 4002(a) of ERISA or any successor thereto.
“Permitted Adverse Claim” means (a) ownership, security interests or other rights and interests arising under the Transaction Documents and the Third Party Documents, (b) any Adverse Claim to be released simultaneously with the Purchase by Buyer hereunder, (c) Adverse Claims arising solely as a result of any action taken by any Third Party Financier under this Agreement or the applicable Transaction Documents, and (d) any tax, mechanics’ or other similar Liens that arise by operation of law.
“Plan” means any defined benefit plan maintained or contributed to by the Seller or any Subsidiary of the Seller or by any ERISA Affiliate of the Seller and which is insured by the PBGC and subject to Title IV of ERISA, other than a Multiemployer Plan.
“Purchase” means each purchase of Specified Assets by Buyer from the Seller under this Agreement.
“Purchase Date” means each date on which Specified Assets have been, may or shall be transferred by the Seller to the Buyer.
“Purchase Price” is defined in Section 2.10 of this Agreement.
“Purchase Termination Date” means the earlier to occur of (a) the date specified by the Seller pursuant to Section 7.1 of this Agreement and (b) the date on which any event referred to in Section 7.2 of this Agreement initially occurs.
“Purchased Loans” is defined in Section 2.2 of this Agreement.
“Records” means, with respect to any Purchased Loan, all Contracts and other documents, books, records and other information (including, without limitation, computer tapes, disks, punch cards, data processing software and related property and rights) relating to such Purchased Loan, any Related Security therefor and the related Obligor.
“Related Assets” is defined in Section 2.2 of this Agreement.
“Related Security” means, with respect to any Purchased Loan:
(i) the Loan Documents related thereto;
(ii) all of Seller’s rights to the related Equipment, including all security interests therein granted by Obligors pursuant to the Loan Documents related to such Purchased Loan and any other Collateral securing such Purchased Loan;
(iii) all rights, remedies, powers and privileges of the Seller under the applicable Loan Documents (including all rights of the Seller in and to the Equipment and other interests that are the subject of the applicable Loans);
(iv) all Servicing Records and other books and Records 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 related thereto and all Proceeds thereof;
(vi) all insurance policies covering the related Equipment and any proceeds with respect thereto;
(vii) to the extent not included in the foregoing, all “accounts,” “chattel paper,” “instruments,” “goods” and “general intangibles” (as defined in the UCC) relating to or constituting any and all of the foregoing in whole or in part; and
(viii) all replacements, substitutions, distributions on, or Proceeds of, any of the foregoing.
“Reporting Date” means:
(a) if ALH is required to report its financial statements to only the Securities and Exchange Commission, such date following the end of ALH’s annual or quarterly period as the Securities and Exchange Commission shall require for delivery of financial statements to it by ALH;
(b) if ALH is required to report its financial statements to only the Ontario Securities Commission, such date following the end of ALH’s annual or quarterly period as the Ontario Securities Commission shall require for delivery of financial statements to it by ALH;
(c) if ALH is required to report its financial statements to both the Securities and Exchange Commission and the Ontario Securities Commission, the earlier of such dates as such commission shall require for delivery of financial statements to it by ALH; or
(d) if ALH is not required to report its financial statements to either the Securities and Exchange Commission or the Ontario Securities Commission, forty-five (45) days after the end of each fiscal quarter of ALH and ninety (90) days after the end of each fiscal year of ALH.
“RPA Indemnified Losses” is defined in Section 8.1 of this Agreement.
“RPA Indemnified Party” is defined in Section 8.1 of this Agreement.
“Securities Act” means the Securities Act of 1933, as amended.
“Seller” means ALS.
“Seller Specified Assets Review” is defined in Section 5.1(c) of this Agreement.
“Servicing Records” shall mean all servicing records, including any and all servicing 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 the Specified Assets.
“Specified Assets” is defined in Section 2.2 of this Agreement.
“Subsequent PA Assignment” means an assignment by the Seller, substantially in the form of Exhibit A-2 to this Agreement, evidencing Buyer’s acquisition of the Specified Assets generated by the Seller, as it may be amended, supplemented or otherwise modified from time to time.
“Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a “Subsidiary” shall mean a Subsidiary of the Seller.
“Tax or ERISA Lien” means a lien arising under Section 6321 of the Internal Revenue Code or Section 303(k) or 4068 of ERISA.
“Termination of Sale Notice” is defined in Section 7.1 of this Agreement.
“Third Party Documents” means the Pooling and Servicing Agreement, and with respect to a Third Party Financier, all other documents executed in connection with the financing or guaranty or credit enhancement provided by such Third Party Financier (other than the Transaction Documents).
“Third Party Financier” means (i) the Noteholders under the Indenture and any agent thereof, and (ii) a Person other than Buyer, the Seller or its Affiliate which is to acquire from Buyer the title, ownership, beneficial interest or security interest in any Specified Assets pursuant to the applicable Third Party Documents.
“Total Consideration” is defined in Section 2.12(a) of this Agreement.
“Transaction Documents” means, collectively, this Agreement, the Pooling and Servicing Agreement, each Contract, the Lockbox Agreements, the Seller’s certificate of formation and limited liability company agreement and all other instruments, documents and agreements executed and delivered by the Seller in connection therewith.
“UCC” means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction.
“Unpaid Balance” means, with respect to any Purchased Loan as of the Loan Cutoff Date for such Purchased Loan, the unpaid principal balance of such Purchased Loan, as shown on the books of the Seller as of such date and as of any Accounting Date, the Loan Balance thereof.
“Write-Off” means any Purchased Loan that, consistent with the Credit and Collection Policy, has been written off as uncollectible.
B. Other Interpretative Matters. For purposes of any Transaction Document, unless otherwise specified therein: (1) accounting terms used and not specifically defined therein shall be construed in accordance with GAAP; (2) terms used in Article 9 of the New York UCC, and not specifically defined in that Transaction Document, are used therein as defined in such Article 9; (3) the term “including” means “including without limitation,” and other forms of the verb “to include” have correlative meanings; (4) references to any Person include such Person’s permitted successors; (5) in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”; (6) the words “hereof”, “herein” and “hereunder” and words of similar import refer to such Transaction Document as a whole and not to any particular provision of such Transaction Document; (7) references to “Section,” “Schedule” and “Exhibit” in such Transaction Document are references to Sections, Schedules and Exhibits in or to such Transaction Document; (8) the various captions (including any table of contents) are provided solely for convenience of reference and shall not affect the meaning or interpretation of such Transaction Document; and (9) references to any statute or regulation refer to that statute or regulation as amended from time to time, and include any successor statute or regulation of similar import.
APPENDIX B
Notice Addresses and Procedures
All requests, demands, directions, consents, waivers, notices, authorizations and communications provided or permitted under this Agreement to be made upon, given or furnished to or filed with the Seller, the Servicer, the Transferor or any Third Party Financier shall be in writing, personally delivered, sent by e-mail return receipt requested or mailed by certified mail return receipt requested, and shall be deemed to have been duly given upon receipt:
(a) in the case of the Buyer, at the following address:
Alliance Laundry Equipment Receivables 2015 LLC
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
with a copy to:
Alliance Laundry Equipment Receivables 2015 LLC
221 Shepard Street
Suite 200
Ripon, WI 54971-0990
Attention: General Counsel
Email: rob.macklin@alliancels.com
Telephone: (920) 748-7320
(b) in the case of the Seller and the Servicer, at the following address:
Alliance Laundry Systems LLC
221 Shepard Street
P.O. Box 990
Ripon, WI 54971-0990
Attention: Chief Financial Officer
Email: todd.rice@alliancels.com
Telephone: (920) 748-1716
with a copy to:
Alliance Laundry Systems LLC
221 Shepard Street
P.O. Box 990
Ripon, WI 54971-0990
Attention: General Counsel
Email: rob.macklin@alliancels.com
Telephone: (920) 748-7320
with a copy to:
Baker & McKenzie LLP
300 East Randolph St., Suite 5000
Chicago, IL 60601
Email: jai.khanna@bakermckenzie.com
(c) in the case of the Indenture Trustee, at its Corporate Trust Office
(d) in the case of the Issuer or the Owner Trustee, to the Owner Trustee at its
Corporate Trust Office, with copies to:
Alliance Laundry Equipment Receivables 2015 LLC
221 Shepard Street
Suite 200
Ripon, WI 54971-0990
Attention: Chief Financial Officer
Email: todd.rice@alliancels.com
Telephone: (920) 748-1716
and:
Alliance Laundry Equipment Receivables 2015 LLC
221 Shepard Street
Suite 200
Ripon, WI 54971-0990
Attention: General Counsel
Email: rob.macklin@alliancels.com
Telephone: (920) 748-7320
and:
Baker & McKenzie LLP
300 East Randolph St., Suite 5000
Chicago, IL 60601
Email: jai.khanna@bakermckenzie.com
The Issuer shall promptly transmit any notice received by it from the Noteholders to the Indenture Trustee and the Indenture Trustee shall likewise promptly transmit any notice received by it from the Noteholders to the Issuer.
(e) in the case of the Noteholders, to:
PNC Bank, National Association
300 Fifth Avenue
Pittsburgh, PA 15222
Attention: Robyn Reeher
Telephone: 412-768-3090
Fax: 844-679-0703
E-mail: robyn.reeher@pnc.com / abfadmin@pnc.com
Fifth Third Bank
c/o Asset Securitization Group
38 Fountain Square Plaza, MD 109046
Cincinnati, OH 45202
Attention: Andrew D. Jones
Telephone: 513-534-0836
Fax: 513-534-0319
E-mail: Andrew.Jones@53.com
E-mail: 53.Securitization.Bancorp@53.com
with a copy to:
c/o Asset Securitization Group
38 Fountain Square Plaza, MD 109046
Cincinnati, OH 45202
Attention: Patrick Berning
Telephone: 513-534-4661
Fax: 513-534-0319
E-mail: Patrick.Berning@53.com
E-mail: Richard.Manning@53.com
Bank of Montreal
BMO Capital Markets Corp.
115 S. LaSalle Street, 25th Floor West
Chicago, IL 60603
Attention: Conduit Management Team / Karen Louie
Telecopy No.: (312) 461-3189 / (312) 293-4908
E-mail: fundingdesk@bmo.com
E-mail: Karen.louie@bmo.com
or at such other address as shall be designated by such party in a written notice to the other parties to this Agreement.
Where any Basic Document provides for notice to the Noteholders of any condition or event, such notice shall be sufficiently given (unless otherwise expressly provided in a Basic Document) if it is in writing and mailed, first-class, postage prepaid to each Noteholder affected by such condition or event, at such Person’s address as it appears on the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed in such Basic Document for the giving of such notice. If notice to Noteholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Noteholder shall affect the sufficiency of such notice with respect to other Noteholders, and any notice that
is mailed in the manner herein provided shall conclusively be presumed to have been duly given regardless of whether such notice is in fact actually received.
Exhibit 10.3
Execution Version
AMENDED AND RESTATED
NOTE PURCHASE AGREEMENT
Dated as of June 8, 2018
among
ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES TRUST 2015-A,
Issuer,
ALLIANCE LAUNDRY SYSTEMS LLC,
as the Servicer,
ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC,
as the Transferor,
THE NOTE PURCHASERS PARTY HERETO,
PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent and a Funding Agent,
THE OTHER FUNDING AGENTS PARTY HERETO,
and
PNC CAPITAL MARKETS LLC,
as Structuring Agent
________________
Relating to
Alliance Laundry Equipment Receivables Trust 2015-A Notes
________________
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| | Page |
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| ARTICLE 1 | DEFINITIONS | 2 |
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| 1.1 | Definitions | 2 |
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| 1.2 | Other Definitional Provisions | 9 |
| | |
| ARTICLE 2 | AMOUNT AND TERMS OF COMMITMENTS | 9 |
| | |
| 2.1 | Purchases | 9 |
| | |
| 2.2 | Interest, Fees, Expenses, Payments, Etc | 14 |
| | |
| 2.3 | Requirements of Law | 15 |
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| 2.4 | Taxes | 17 |
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| 2.5 | Indemnification | 21 |
| | |
| 2.6 | Expenses, etc | 24 |
| | |
| 2.7 | Deliveries by Note Purchasers | 25 |
| | |
| 2.8 | Non-Renewing Committed Purchasers | 25 |
| | |
| 2.9 | Optional Prepayments; Reduction and Termination of Commitments | 27 |
| | |
| 2.10 | Successor LIBOR | 28 |
| | |
| ARTICLE 3 | CONDITIONS PRECEDENT | 29 |
| | |
| 3.1 | Conditions to Restatement Date | 29 |
| | |
| 3.2 | Condition to Additional Purchases | 32 |
| | |
| ARTICLE 4 | REPRESENTATIONS AND WARRANTIES | 33 |
| | |
| 4.1 | Representations and Warranties of the Issuer | 33 |
| | |
| 4.2 | Representations and Warranties of the Transferor and the Servicer | 33 |
| | |
| 4.3 | Representations and Warranties of the Note Purchasers | 34 |
| | |
| ARTICLE 5 | COVENANTS | 35 |
| | |
| 5.1 | Covenants | 35 |
| | |
| ARTICLE 6 | THE NOTE AGENTS | 36 |
| | |
| 6.1 | Authorization and Action of the Note Agents | 36 |
| | |
| 6.2 | Note Agent’s Reliance, Etc | 38 |
| | |
| 6.3 | Credit Decision | 39 |
| | |
| 6.4 | Indemnification of each Note Agent | 39 |
| | |
| 6.5 | Note Agents in their Individual Capacity | 40 |
| | |
| 6.6 | Successor Administrative Agent; Successor Funding Agent | 40 |
| | |
| 6.7 | Payments by a Funding Agent | 41 |
| | |
TABLE OF CONTENTS
(continued)
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| | Page |
| | |
| ARTICLE 7 | SECURITIES LAWS; TRANSFERS | 41 |
| | |
| 7.1 | Transfers of Notes | 41 |
| | |
| 7.2 | Tax Characterization | 46 |
| | |
| ARTICLE 8 | MISCELLANEOUS | 46 |
| | |
| 8.1 | Amendments and Waivers | 46 |
| | |
| 8.2 | Notices | 47 |
| | |
| 8.3 | No Waiver; Cumulative Remedies | 49 |
| | |
| 8.4 | Successors and Assigns | 49 |
| | |
| 8.5 | Successors to Servicer | 50 |
| | |
| 8.6 | Counterparts | 50 |
| | |
| 8.7 | Severability | 50 |
| | |
| 8.8 | Integration | 50 |
| | |
| 8.9 | Governing | 50 |
| | |
| 8.10 | Jurisdiction; Consent to Service of Process | 50 |
| | |
| 8.11 | Termination | 51 |
| | |
| 8.12 | Limited Recourse; No Proceedings | 51 |
| | |
| 8.13 | Survival of Representations and Warranties | 52 |
| | |
| 8.14 | Effect of Regulatory Change | 52 |
| | |
| 8.15 | Waiver of Jury Trial | 52 |
| | |
| 8.16 | Excess Funds | 52 |
| | |
| 8.17 | Acknowledgement and Consent to Bail-In of EEA Financial Institutions | 53 |
| | |
| 8.18 | Confidentiality | 53 |
| | |
| 8.19 | Noteholder Direction | 55 |
Exhibit A Form of Transfer Supplement
Schedule I Completion of Information and Signatures for Transfer Supplement
Schedule II List of Investing Offices, Addresses for Notices, Assigned Interests and
Purchase and Liquidity Percentages
Schedule III Form of Transfer Effective Notice
Exhibit B Form of Advance Notice
Annex A Letter of Credit
Annex B Note Purchaser Commitments
Annex C Investing Offices, Notice Information and Wire Instructions
Annex D Cap Notional Schedule
This AMENDED AND RESTATED NOTE PURCHASE AGREEMENT, dated as of June 8, 2018 (this “Agreement”), is made by and among ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES TRUST 2015-A, a Delaware statutory trust (together with its successors and assigns, the “Issuer”), ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company, individually (“ALS”) and as the Servicer (the “Servicer”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC, a Delaware limited liability company (“ALER”), as the Transferor (the “Transferor”), the NOTE PURCHASERS (as hereinafter defined) from time to time party hereto, the FUNDING AGENTS for the Purchaser Groups from time to time party hereto (each such party, together with their respective successors in such capacity, a “Funding Agent”), PNC BANK, NATIONAL ASSOCIATION (“PNC”), as administrative agent for the Note Purchasers (the “Administrative Agent”) and PNC CAPITAL MARKETS LLC, as structuring agent (the “Structuring Agent”).
W I T N E S S E T H:
WHEREAS, the Issuer, the Servicer and the Transferor are parties to that certain Pooling and Servicing Agreement, dated as of June 12, 2015 (as amended, restated, supplemented or otherwise modified through the date hereof, the “Original Pooling and Servicing Agreement”), pursuant to which, among other things, the Transferor has assigned, transferred and conveyed, and has agreed to assign, transfer and convey, its right, title and interest in, to and under certain Loans to the Issuer, and the Servicer has agreed to service such Loans;
WHEREAS, the parties to the Original Pooling and Servicing Agreement have agreed to amend and restate the Original Pooling and Servicing Agreement on the Restatement Date;
WHEREAS, the Issuer and The Bank of New York Mellon, as trustee (together with its successors in such capacity, the “Indenture Trustee”), are parties to that certain Indenture, dated as of June 12, 2015 (as amended, restated, supplemented or otherwise modified through the date hereof, the “Original Indenture”);
WHEREAS, the parties to the Original Indenture have agreed to amend and restate the Original Indenture on the Restatement Date;
WHEREAS, pursuant to the Note Purchase Agreement, dated as of June 12, 2015 (as amended, restated, supplemented or otherwise modified through the date hereof, the “Original Note Purchase Agreement”), among, inter alios, the Issuer, the Servicer, the Transferor, the Note Purchasers party thereto (collectively, the “Existing Note Purchasers”) and the Administrative Agent (as successor to Natixis, New York Branch), the Existing Note Purchasers purchased Receivables Notes and Equipment Asset Notes and made Advance Increases (as such terms are defined in the Original Note Purchase Agreement) on the terms and conditions set forth therein (the aggregate outstanding principal balance of such purchased Notes and Advance Increases as of the date hereof (as such terms are defined in the Original Note Purchase Agreement) is referred to as the “Existing Note Principal Balance”); and
WHEREAS, in connection with the amendment and restatement of the Original Pooling and Servicing Agreement and the Original Indenture, the parties hereto have agreed to amend and restate the Original Note Purchase Agreement in its entirety to become effective and binding on the parties hereto pursuant to the terms of this Agreement, and it has been agreed by the parties to the Original Note Purchase Agreement that (a) the commitments which the Existing Note Purchasers have agreed to extend to the Issuer under the Original Note Purchase Agreement shall be extended or advanced upon the amended and restated terms and conditions contained in this Agreement, (b) the Existing Note Principal Balance and other Outstanding Obligations (as defined in the Original Note Purchase Agreement) outstanding under the Original Note Purchase Agreement shall be governed by and deemed to be outstanding under the amended and restated terms and conditions contained in this Agreement, with the intent that the terms of this Agreement shall supersede the terms of the Original Note Purchase Agreement (each of which shall hereafter have no further effect upon the parties thereto, other than for accrued fees and expenses accrued and owing and indemnification amounts accrued and owing, under the terms of the Original Note Purchase Agreement, in each case, on or prior to the Restatement Date or arising (in the case of indemnification amounts) under the terms of the Original Note Purchase Agreement), and (c) the Receivables Notes and Equipment Asset Notes (as such terms are defined in the Original Note Purchase Agreement) shall be extinguished, and the Indenture Trustee shall authenticate and deliver new Notes to each Purchaser on the Restatement Date.
NOW THEREFORE, in consideration of the mutual covenants herein contained, and other good and valuable consideration, the receipt and adequacy of which are hereby expressly acknowledged, the parties hereto agree as follows:
ARTICLE 1 DEFINITIONS
1.1Definitions. All capitalized terms used herein as defined terms and not defined herein shall have the meanings given to them in Part I of Appendix A to the Amended and Restated Pooling and Servicing Agreement, dated as of the date hereof (the “Pooling and Servicing Agreement”), as it may be amended or otherwise modified from time to time with the consent of the Required Note Owners, the Required Note Purchasers and the Administrative Agent.
“Accounting Based Consolidation Event” shall mean the consolidation, for financial and/or regulatory accounting purposes, of all or any portion of the assets and liabilities of a CP Conduit that are subject to this Agreement or any other Basic Document with all or any portion of the assets and liabilities of an Affected Party. An Accounting Based Consolidation Event shall be deemed to occur on the date any Affected Party shall acknowledge in writing that any such consolidation of the assets and liabilities of a CP Conduit shall occur.
“Additional Amounts” shall mean on any date of determination, any amounts then due and payable by the Issuer (determined without regard to limitations on the sources of payment thereof) pursuant to this Agreement, other than Monthly Interest and the Note Principal Balance.
“Adjusted Commitment” shall mean on any date of determination, (i) with respect to a CPC Committed Purchaser, such CPC Committed Purchaser’s Commitment minus the
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| -2- | Note Purchase Agreement |
aggregate outstanding principal amount of its Support Advances to its related CP Conduit or (ii) with respect to a Committed Purchaser that is not a CPC Committed Purchaser, such Committed Purchaser’s Commitment.
“Administrative Agent” has the meaning specified in the preamble to this Agreement.
“Advance” shall mean each advance made on the Notes on each Borrowing Date.
“Advance Notice” shall mean a notice delivered by the Issuer to each Funding Agent and the Indenture Trustee pursuant to Section 2.1(c) requesting an Advance, substantially in the form attached as Exhibit B, with the most recently delivered Borrowing Base Certificate attached thereto.
“Affected Party” shall mean, with respect to any CP Conduit, any Support Party of such CP Conduit.
“Agreement” has the meaning specified in the preamble to this Agreement.
“ALER” has the meaning specified in the preamble to this Agreement.
“ALS” has the meaning specified in the preamble to this Agreement.
“Assignee” and “Assignment” have the respective meanings specified in Section 7.1(e).
“Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
“Bail-In Legislation” shall mean, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.
“BMO” shall mean Bank of Montreal.
“BMO Corp.” shall mean BMO Capital Markets Corp.
“Borrowing Date” shall mean each date on which an Advance occurs.
“Commitment” shall mean, for any Committed Purchaser, the maximum amount of such Note Purchaser’s commitment to purchase a portion of the Aggregate Note Principal Balance as set forth on Annex B or the Transfer Supplement by which such Committed Purchaser became a party to this Agreement or assumed the Commitment (or a portion thereof) of another Note Purchaser pursuant to Transfer Supplement(s) executed by such Note Purchaser and its Assignee(s) and delivered pursuant to Section 7.1. In the event that a Note Purchaser is a CPC Committed Purchaser which maintains a portion of its Commitment hereunder in relation to
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| -3- | Note Purchase Agreement |
more than one CP Conduit, such Note Purchaser shall be deemed to hold separate Commitments hereunder in each such capacity.
“Committed Purchaser” shall mean each Note Purchaser identified as a Committed Purchaser on the signature pages hereto or in the Transfer Supplement pursuant to which such Note Purchaser, and any Assignee of such Note Purchaser to the extent such Assignee has assumed, pursuant to a Transfer Supplement, the Commitment of such Note Purchaser.
“Conduit Assignee” shall mean any commercial paper conduit designated by a CP Conduit from time to time to accept an assignment from such CP Conduit of all or a portion of its Percentage Interest.
“CP Conduit” shall mean any Note Purchaser which is designated as a CP Conduit on the signature pages hereto or in the Transfer Supplement pursuant to which it became a party to this Agreement.
“CPC Committed Purchaser” shall mean, with respect to a CP Conduit, each Note Purchaser identified as a Committed Purchaser for such CP Conduit on the signature pages hereto or in the Transfer Supplement pursuant to which such CP Conduit became a party hereto, and any Assignee of such Note Purchaser to the extent such Assignee has assumed, pursuant to a Transfer Supplement, the Commitment of such Note Purchaser.
“Delayed Amount” has the meaning specified in Section 2.1(i)(i).
“Delayed Funding Date” has the meaning specified in Section 2.1(i)(i).
“Delayed Funding Notice” has the meaning specified in Section 2.1(i)(i).
“Delayed Funding Shortfall” has the meaning specified in Section 2.1(i)(vi).
“Delaying Note Purchaser” has the meaning specified in Section 2.1(i)(i).
“Delaying Purchaser Group” has the meaning specified in Section 2.1(i)(i).
“Dissenting Committed Purchaser” shall mean, with respect to a Noteholder that has provided notice of its objection to an ALS Change of Control to the Administrative Agent and the Issuer within thirty (30) days following the Issuer’s delivery of the applicable Change of Control Notice (such objection to be deemed given by the applicable Noteholder if no written consent is received by the Administrative Agent and the Issuer within such thirty (30) day period) and any related Committed Purchaser that has concurrently provided written notice to the Administrative Agent and the Issuer that it elects to terminate its Commitments on the four (4) month anniversary date of such ALS Change of Control.
“Downgraded Purchaser” has the meaning specified in Section 7.1(j).
“EEA Financial Institution” shall mean (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA
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Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” shall mean any of the member states of the European Union, the United Kingdom, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” shall mean any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“Excess Funds” has the meaning specified in Section 8.16.
“Excluded Taxes” has the meaning specified in Section 2.4(a).
“Facility Limit” shall mean $400,000,000.
“FATCA” shall mean Sections 1471 through 1474 of the Internal Revenue Code as of the date of this Agreement (or any amended or successor version of FATCA that is substantively comparable thereto), and any current or future regulations promulgated thereunder, or official interpretations or other guidance issued in connection therewith, including any intergovernmental agreements issued pursuant thereto.
“Funding Agent” has the meaning specified in the preamble to this Agreement.
“Indemnitee” has the meaning specified in Section 2.5(a).
“Indenture Trustee” has the meaning specified in the recitals to this Agreement.
“Investing Office” shall mean initially, the office of any Note Purchaser (if any) designated as such on Annex C or in the Transfer Supplement by which it became a party to this Agreement, and thereafter, such other office of such Note Purchaser or such Assignee as may be designated in writing to the applicable Funding Agent, the Administrative Agent, the Issuer, the Transferor, the Servicer and the Indenture Trustee by such Note Purchaser or Assignee.
“Investment Letter” shall mean the letter delivered by each Note Purchaser that is substantially in the form attached as Exhibit D to the Indenture.
“Issuer” has the meaning specified in the recitals to this Agreement.
“Liquidity Percentage” shall mean, for a CPC Committed Purchaser, such CPC Committed Purchaser’s Adjusted Commitment with respect to its related CP Conduit as a
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percentage of the aggregate Adjusted Commitments of all CPC Committed Purchasers for such CP Conduit.
“Maximum Purchase Amount” shall mean (i) for any CP Conduit which is not a Committed Purchaser, the aggregate Commitments of the CPC Committed Purchasers in its Purchaser Group and (ii) for any Committed Purchaser, its Commitment.
“Monthly Interest” shall mean, for any Distribution Date, the Monthly Interest and Fees for the Interest Period immediately preceding such Distribution Date.
“Monthly Interest and Fees” shall mean, for any Interest Period, the sum of (i) interest on the Aggregate Note Principal Balance for such Interest Period computed pursuant to Section 2.2(a) and Section 2.2(e), plus (ii) the Unused Facility Fee with respect to such Interest Period.
“Non-Delaying Purchaser Group” has the meaning specified in Section 2.1(i)(iii).
“Note Agent” has the meaning specified in Section 6.1(a).
“Note Owners” shall mean the Note Purchasers that are owners of record of the Notes or, with respect to any Note held by a Funding Agent hereunder as nominee on behalf of Note Purchasers in a Purchaser Group, the Note Purchasers that are beneficial owners of such Note as reflected on the books of such Funding Agent in accordance with this Agreement and the Basic Documents.
“Note Purchasers” shall mean, collectively, the CP Conduits and the Committed Purchasers that are members of a Purchaser Group.
“Original Advance Notice” has the meaning specified in Section 2.1(i)(iv).
“Participant” has the meaning specified in Section 7.1(d).
“Participation” has the meaning specified in Section 7.1(d).
“Percentage Interest” shall mean, for a Note Purchaser on any day, the percentage equivalent of (a) the sum of (i) the portion of the Existing Note Principal Balance (if any) purchased by such Note Purchaser under the Original Note Purchase Agreement, plus (ii) the aggregate portion of Advances (if any) purchased by such Note Purchaser on and after the Restatement Date pursuant to this Agreement, plus (iii) the aggregate Note Principal Balance as of such day with respect to any interest in any Note acquired by such Note Purchaser on or after the Restatement Date as an Assignee from another Note Purchaser pursuant to a Transfer Supplement executed and delivered pursuant to Section 7.1, minus (iv) the aggregate amount of principal payments made on and after the Restatement Date with respect to the Notes to such Note Purchaser prior to such day, minus (v) the aggregate Note Principal Balance as of such day with respect to any interest in such Note Purchaser’s Note assigned by such Note Purchaser to an Assignee pursuant to a Transfer Supplement on or after the Restatement Date, executed and delivered pursuant to Section 7.1, divided by (b) the Aggregate Note Principal Balance on such day.
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“Permitted Transferee” shall mean (i) prior to the Conversion Date, each Note Purchaser, each Funding Agent (in its individual capacity), the Administrative Agent (in its individual capacity), each Conduit Assignee which has been consented to as a potential Transferee by the Transferor (which consent shall not be unreasonably withheld), each Person who has been consented to as a potential Transferee by the Transferor (which consent shall not be unreasonably withheld) or (ii) after the Conversion Date or otherwise if the Transferee is a Transferee of a Note or the rights thereunder and not of any Commitment, any Transferee.
“Primary Purchaser” shall mean with respect to each Purchaser Group, each CP Conduit, and to the extent that a Purchaser Group does not contain a CP Conduit, each Note Purchaser in such Purchaser Group.
“Purchaser Group” shall mean each group of Note Purchasers consisting of at least one Committed Purchaser and a Funding Agent. Purchaser Groups may also contain a CP Conduit. The Note Purchaser Groups as of the Restatement Date shall be (i) PNC, as a Committed Purchaser and as a Funding Agent, (ii) Fairway Finance Company, LLC, as a CP Conduit, BMO, as a Committed Purchaser, and BMO Corp., as a Funding Agent, and (iii) Fifth Third Bank, as a Committed Purchaser and as a Funding Agent.
“Purchaser Percentage” shall mean, with respect to a Primary Purchaser, its Maximum Purchase Amount as a percentage of the Facility Limit.
“Regulatory Change” shall mean, as to each Note Purchaser, Participant or Affected Party, any change, or any generally accepted change in the interpretation or application, occurring after the date of the execution and delivery of this Agreement or, if later, the date of the execution and delivery of the Transfer Supplement by which it became party to this Agreement; in the case of a Participant, any change occurring after the date on which its Participation became effective; or in the case of an Affected Party, any change occurring after the date it became such an Affected Party, in any (or the adoption after such date of any new):
(i)United States federal or state law or foreign law applicable to such Note Purchaser, Participant or Affected Party; or
(ii)regulation, interpretation, directive, guideline or request (whether or not having the force of law) applicable to such Note Purchaser, Participant or Affected Party of any court or other judicial authority or any Governmental Authority charged with the interpretation or administration of any law referred to in clause (i) or of any fiscal, monetary, banking or other Governmental Authority or central bank having jurisdiction over such Note Purchaser, Participant or Affected Party or charged with the administration, interpretation or application of any such regulation, interpretation, directive, guideline or request. For avoidance of doubt, any interpretation of Accounting Research Bulletin No. 51 (or any revision or amendment to any existing interpretation thereof) by the Financial Accounting Standards Board or any Accounting Based Consolidation Event shall constitute a Regulatory Change herein.
For the avoidance of doubt and notwithstanding anything to the contrary contained herein, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all
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requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Regulatory Change” regardless of the date enacted, adopted or issued.
“Replacement Purchaser” has the meaning specified in Section 7.1(j).
“Required Note Owners” as to any Purchaser Group, shall mean, at any time, Note Owners having more than two-thirds of the aggregate Percentage Interests of all Note Owners in such Purchaser Group.
“Required Note Purchasers” as to any Purchaser Group, shall mean, at any time, Committed Purchasers having Commitments aggregating more than two-thirds of all of the Commitments in such Purchaser Group.
“Requirement of Law” shall mean, as to any Person, any law, treaty, rule or regulation, or determination of an arbitrator or Governmental Authority, in each case applicable to or binding upon such Person or to which such Person is subject, whether federal, state or local (including usury laws, the Federal Truth in Lending Act and Regulation Z and Regulation B of the Board of Governors of the Federal Reserve System).
“Restatement Date” shall mean June 8, 2018.
“Revocation or Reduction Notice” has the meaning specified in Section 2.1(i)(iv).
“Successor Servicer” shall have the meaning specified in Section 8.5.
“Support Advances” shall mean, with respect to a CPC Committed Purchaser and its related CP Conduit, any participation held by such CPC Committed Purchaser in such CP Conduit’s Percentage Interest in the Aggregate Note Principal Balance which was purchased from such CP Conduit pursuant to a Support Facility and any loans or other advances made by such CPC Committed Purchaser to such CP Conduit pursuant to a Support Facility to fund such CP Conduit’s making or maintaining its purchases hereunder up to the amount of the related Advance (but excluding any such loans or advances made to fund such CP Conduit’s obligations to pay interest, fees or other similar amounts relating to the funding of its making or maintaining its purchases hereunder).
“Support Facility” shall mean any liquidity or credit support agreement with a CP Conduit which relates to this Agreement (including any master repurchase agreement or an agreement to purchase an assignment of or participation in Notes), it being understood that such liquidity or credit support may also relate to other transactions.
“Support Party” shall mean any bank, insurance company or other financial institution extending or having a commitment to extend funds to or for the account of or to provide credit support for the benefit of a CP Conduit (including by agreement to purchase an assignment of or participation in Notes) under a Support Facility. Each CPC Committed Purchaser for a CP Conduit which is a CP Conduit shall be deemed to be a Support Party for such CP Conduit.
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“Taxes” has the meaning specified in Section 2.4(a).
“Transfer” has the meaning specified in Section 7.1(c).
“Transfer Supplement” has the meaning specified in Section 7.1(e).
“Transferee” has the meaning specified in Section 7.1(c).
“Transferor” has the meaning specified in the preamble to this Agreement.
“Write-Down and Conversion Powers” shall mean, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.
“written” or “in writing” (and other variations thereof) shall mean any form of written communication or a communication by means of telex, telecopier device, telegraph or cable.
1.2 Other Definitional Provisions.
(a)Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings as set forth herein when used in any certificate or other document made or delivered pursuant hereto.
(b)The rules of construction set forth in Part II of Appendix A to the Pooling and Servicing Agreement shall be applicable to this Agreement.
ARTICLE 2 AMOUNT AND TERMS OF COMMITMENTS
2.1Purchases.
(a)[Reserved].
(b)On and subject to the terms and conditions of this Agreement (including Article 3 and clause (g) below), on and after the Restatement Date and prior to the Conversion Date, each Primary Purchaser may purchase its Purchaser Percentage of any Advance offered for purchase hereunder for a purchase price equal to the portion of such Advance so purchased. The determination of whether an initial Primary Purchaser will make such purchase may be made by the related Funding Agent for such Primary Purchaser.
(c)Each purchase of any Advance hereunder shall be in accordance with the provisions hereof upon delivery of an Advance Notice by the Issuer to each Funding Agent and the Indenture Trustee received no later than 3:00 p.m., New York City time, at least two (2) Business Days prior to the applicable Borrowing Date (except that once per calendar quarter, commencing June 2018, the Issuer shall only be required to provide one (1) Business Day’s notice), in each case except as otherwise agreed by the Issuer and the Noteholders. Each Advance Notice shall be irrevocable and shall specify an Advance of at least $1,000,000, unless
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each Committed Purchaser otherwise agrees, and in an integral multiple of $100,000. The Issuer may not deliver more than three Advance Notices in any calendar week, unless each Funding Agent otherwise agrees, which consent shall not be unreasonably withheld. All Advances shall be made in Dollars.
(d)Subject to the satisfaction of the applicable conditions set forth in Article 3 and clause (g) below, each CP Conduit which is a Committed Purchaser and each other Committed Purchaser which is not a CPC Committed Purchaser shall make a purchase of a Note or an increase in the Note Principal Balance of its Note on the applicable Funding Date in an amount equal to the Advance, for a purchase price equal to its share of such Advance so purchased. Each CP Conduit which is not a Committed Purchaser shall notify the Funding Agent for its Purchaser Group by 10:00 a.m., New York City time, on the applicable Funding Date whether it has elected to make the purchase offered to it pursuant to Section 2.1(b). In the event that a CP Conduit which is not a Committed Purchaser shall not have timely provided such notice, such CP Conduit shall be deemed to have elected not to make such purchase. Such Funding Agent shall notify each CPC Committed Purchaser for such CP Conduit on or prior to 11:00 a.m., New York City time, on the applicable Funding Date if such CP Conduit has not elected to purchase its entire Purchaser Percentage of the Advance, which notice shall specify (i) the identity of such CP Conduit, (ii) the portion of the Advance which such CP Conduit has not elected to purchase as provided above, and (iii) the respective Liquidity Percentages of such CPC Committed Purchasers on such Funding Date (as determined by such Funding Agent in good faith; for purposes of such determination, such Funding Agent shall be entitled to rely conclusively on the most recent information provided by such CP Conduit or its agent or by the agent for its Support Parties). Subject to receiving such notice and the satisfaction of the applicable conditions set forth in Article 3 and clause (g) below, each of such CP Conduit’s CPC Committed Purchasers shall make a purchase of Notes on the applicable Funding Date in an amount equal to its Liquidity Percentage of the portion of the Advance which such CP Conduit has not elected to purchase, for a purchase price equal to its share of the Advance so purchased.
(e)All purchases made pursuant to this Note Purchase Agreement by each Note Purchaser in a Purchaser Group shall be evidenced by one Note for such Purchaser Group issued pursuant to the Indenture in the name of the related Funding Agent for such Purchaser Group or, if requested by such Funding Agent, in the name of the relevant Primary Purchaser. Each Note Purchaser’s purchase price payable pursuant to Section 2.1(b) or 2.1(d) shall be made available to the Issuer at such account as it shall direct or to the Funding Agent for its Purchaser Group at the account of the Funding Agent specified in Section 8.2(b), subject to the fulfillment of the applicable conditions set forth in Article 3, if to the Funding Agent, at or prior to 2:00 p.m., New York City time, and if to the Issuer, at or prior to 3:00 p.m., New York City time, on the applicable Funding Date, by deposit of immediately available funds. If such funds are to be remitted to a Funding Agent, such Funding Agent shall promptly notify the Issuer and the Transferor in the event that any Note Purchaser either fails to make such funds available to such Funding Agent before such time or notifies such Funding Agent that it will not make such funds available to such Funding Agent before such time. Subject to (i) such Funding Agent’s receipt of such funds and (ii) the fulfillment of the applicable conditions set forth in Article 3, as determined by such Funding Agent, such Funding Agent will, not later than 3:00 p.m., New York City time on such Funding Date, make such funds available, in the same type of funds
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received, by wire transfer thereof to the account of the Issuer in the United States specified in the applicable Advance Notice.
(f)Notwithstanding the fulfillment of the applicable conditions set forth in Article 3 with respect to a purchase, in the event that a CP Conduit which is not a Committed Purchaser elected to make a purchase on a Funding Date but failed to make its purchase price available to the Funding Agent for its Purchaser Group when required by Section 2.1(e), such CP Conduit shall be deemed to have rescinded its election to make such purchase, and none of the Issuer, the Transferor or any other Person shall have any claim against such CP Conduit by reason of its failure to timely make such purchase. In any such case, such Funding Agent shall give notice of such failure not later than 1:00 p.m., New York City time, on the Funding Date to each CPC Committed Purchaser for such CP Conduit and to the Issuer and the Transferor, which notice shall specify (i) the identity of such CP Conduit, (ii) the amount of the purchase which it had elected but failed to make and (iii) the respective Liquidity Percentages of such CPC Committed Purchasers on such Funding Date (as determined by such Funding Agent in good faith; for purposes of such determination, such Funding Agent shall be entitled to rely conclusively on the most recent information provided by such CP Conduit or its agent or by the agent for its Support Parties). Subject to receiving such notice, each of such CP Conduit’s CPC Committed Purchasers shall purchase a portion of the Aggregate Note Principal Balance in an amount equal to its Liquidity Percentage of the amount described in clause (ii) above at or before 2:00 p.m., New York City time, on such Funding Date and otherwise in accordance with Section 2.1(d). Subject to such Funding Agent’s receipt of such funds, such Funding Agent will not later than 3:00 p.m., New York City time, on such Funding Date make such funds available, in the same type of funds received, by wire transfer thereof to the account of the Issuer described in Section 2.1(e), which payment shall be deemed to be timely for purposes hereof and of the Indenture.
(g)Notwithstanding anything herein to the contrary, in no event (i) shall a Committed Purchaser be required on any date to make a purchase of an Advance which would result in its Percentage Interest of the Aggregate Note Principal Balance, determined after giving effect to such purchase, exceeding its Adjusted Commitment with respect thereto; or (ii) may any Advance be offered for purchase hereunder, nor shall any Note Purchaser be obligated to purchase any Advance, to the extent that, after giving effect to such Advance, the Aggregate Note Principal Balance would exceed the Facility Limit.
(h)[Reserved].
(i)Notwithstanding anything to the contrary in this Section 2.1:
(i)After the Issuer delivers an Advance Notice pursuant to Section 2.1(c), any Note Purchaser (or its Funding Agent) may, not later than (A) the same day as the Issuer’s delivery of such Advance Notice, if such Advance Notice was delivered at or prior to 11:00 a.m., New York City time, and (B) otherwise, 10:00 a.m., New York City time, on the Business Day after the Issuer’s delivery of such Advance Notice, deliver a written notice (a “Delayed Funding Notice”) to the Issuer and the Administrative Agent of its intention to fund its share of the related Advance (such share, the “Delayed Amount”) on a date (the date of such funding, the “Delayed Funding Date”) that is on or
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before the thirty-fifth (35th) day following the date of such Advance Notice (or if such day is not a Business Day, then on the next succeeding Business Day) rather than on the requested Borrowing Date. A Note Purchaser that delivers a Delayed Funding Notice with respect to any Borrowing Date shall be referred to herein as a “Delaying Note Purchaser” with respect to such Borrowing Date, and any Purchaser Group containing a Delaying Note Purchaser shall be referred to as a “Delaying Purchaser Group” with respect to such Borrowing Date.
(ii)No Note Purchaser may deliver a Delayed Funding Notice until after its delivery to the Issuer and the Administrative Agent of a written certification to the effect that (x) such Note Purchaser is required to comply with a “liquidity coverage ratio” which impacts such Note Purchaser’s interests or obligations hereunder and (y) implementing the delay funding mechanics provided herein reduces the negative impact of such “liquidity coverage ratio”. No Note Purchaser may request any amount payable under Section 2.3 in respect of any impact of a “liquidity coverage ratio” on its unused Commitment hereunder during any time or with respect to any time such Note Purchaser is or was a Delaying Note Purchaser.
(iii)If any Delaying Purchaser Group timely delivers a Delayed Funding Notice with respect to any Borrowing Date, then the Administrative Agent shall use reasonable efforts on the Business Day preceding such Borrowing Date to notify each Purchaser Group that is not a Delaying Purchaser Group with respect to such Borrowing Date (each, a “Non-Delaying Purchaser Group”) and such notice shall constitute a notice that such Note Purchaser may in its sole discretion, make such Advance by deposit of immediately available funds to the Issuer at such account as it shall direct by 1:00 p.m. New York City time on the Borrowing Date, in an amount equal to such Non-Delaying Purchaser Group’s proportionate share (based upon the Commitments of the Committed Purchaser(s) in each Non-Delaying Purchaser Group relative to the sum of the Maximum Purchase Amounts of the Non-Delaying Purchaser Groups) of the aggregate Delayed Amount with respect to such Borrowing Date. Each Note Purchaser in a Non-Delaying Purchaser Group shall use commercially reasonable efforts to fund on the requested Borrowing Date, but in any event not later than one (1) Business Day after such requested Borrowing Date, its share of the Delayed Amount of such Advance. For the avoidance of doubt, no Note Purchaser shall have any obligation to fund any such Advance under this clause (iii) unless each of the conditions precedent stated therefor in Section 3.2 is satisfied after giving effect thereto.
(iv)If the additional amounts to be funded by Non-Delaying Purchaser Groups under clause (iii) above are not sufficient to provide the aggregate amount requested by the Issuer to be funded on any Borrowing Date, the Issuer may revoke or reduce the amount of the related Advance Notice (the “Original Advance Notice”) by written notice to the Administrative Agent and each Funding Agent (each such notice, a “Revocation or Reduction Notice”) and, subject to the satisfaction of the conditions precedent set forth in Section 3.2 hereof and such Original Advance Notice not being revoked, each Non-Delaying Purchaser Group shall purchase its share of the proposed Advance on (A) the requested Borrowing Date set forth in the applicable Original Advance Notice in the event such Non-Delaying Purchaser Group’s share of such
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Advance, following such reduction, is less than or equal to such Non-Delaying Purchaser Group’s share of such Advance under such Original Advance Notice prior to the delivery of a Delayed Funding Notice by any Note Purchaser or (B) the later of (I) two (2) Business Days following the delivery of the relevant Revocation or Reduction Notice and (II) one (1) Business Day following the requested Borrowing Date, in the event such Non-Delaying Purchaser Group’s share of such Advance, following such reduction, is greater than such Non-Delaying Purchaser Group’s share of such Advance under such Original Advance Notice prior to the delivery of a Delayed Funding Notice by any Note Purchaser.
(v)If the conditions to any Advance described in Section 3.2 are satisfied on the requested Borrowing Date, there shall be no conditions whatsoever to any Delaying Purchaser Group’s obligation to fund the requested amount on the related Delayed Funding Date. On each Delayed Funding Date, the Delaying Purchaser Groups shall fund an aggregate amount equal to the Delayed Amount for such Delayed Funding Date, and such amount shall be distributed (x) first, to each Non-Delaying Purchaser Group, pro rata based on the relative amounts advanced by such Non-Delaying Purchaser Group pursuant to clause (iii) or (iv), up to the amount advanced by each such Non-Delaying Purchaser Group, such that after giving effect to the funding and payments to take place on such Delayed Funding Date, the Aggregate Note Principal Balance for all Note Purchasers in each Purchaser Group as a percentage of the aggregate Note Principal Balance for all Note Purchasers is equal to the Maximum Purchase Amount of such Purchaser Group as a percentage of the Facility Limit, and (y) second, any excess shall be deposited to the Collection Account as an Advance. In the event that a Delaying Purchaser Group is prohibited by applicable law from funding its Delayed Amount on a Delayed Funding Date, then such Delaying Purchaser Group shall buy a participation from each Non-Delaying Purchaser Group in its Note, pro rata based on the relative amounts advanced by such Non-Delaying Purchaser Groups pursuant to clause (iii) or (iv) above, up to the amount advanced by each such Non-Delaying Purchaser Group, such that after giving effect to the purchase of such participation on such Delayed Funding Date, the Aggregate Note Principal Balance for all Note Purchasers is equal to the Maximum Purchase Amount of such Purchaser Group as a percentage of the Facility Limit.
(vi)Notwithstanding anything to the contrary contained in this Agreement or any other Basic Document, (a) the parties acknowledge and agree that a Note Purchaser that (A) has timely delivered a Delayed Funding Notice to the Issuer with respect to any Borrowing Date and (B) funds its full share of such Advance on or before the applicable Delayed Funding Date will not constitute a defaulting Note Purchaser (and the related Purchaser Group will not constitute a defaulting Purchaser Group) solely due to its failure to fund its share of such Advance on the requested Borrowing Date; provided that the Issuer shall have the right to replace any Note Purchaser which delivers more than two Delayed Funding Notices hereunder with another Note Purchaser designated by the Servicer without the consent of the Note Purchaser being replaced or any other Person (other than the consent of such new Note Purchaser and the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed)) so long as such assignment is otherwise in accordance with the assignment provisions set
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forth in Section 8.4; and (b) in the event additional amounts funded by Non-Delaying Purchaser Groups under clause (iii) or (iv) above are not sufficient to provide the aggregate amount requested by the Issuer in an Advance Notice or Revocation or Reduction Notice, as applicable (a “Delayed Funding Shortfall”), the Issuer shall not be required to pay the applicable Delaying Purchaser Group any Unused Facility Fee on the portion of the undrawn Commitments of the Committed Purchasers in such Delaying Purchaser Group equal to the amount of such Delayed Funding Shortfall.
2.2Interest, Fees, Expenses, Payments, Etc.
(a)The interest and fees (including the Unused Facility Fee) on the Notes shall be paid as provided in the Indenture (including Sections 2.7 and 8.2).
(b)The principal of, and interest and fees in respect of the Notes shall be paid as provided in Sections 2.7 and 8.2 of the Indenture. Monthly Interest and Fees for each Interest Period (including the last Interest Period) shall be due and payable on the Distribution Date immediately following such Interest Period. In the case of Notes held by a Funding Agent as nominee on behalf of a Note Purchaser in its Purchaser Group, such Funding Agent shall allocate to each Note Owner in its Purchaser Group each payment in respect of the Notes received by such Funding Agent in its capacity as Noteholder as provided herein. Payments in reduction of the portion of the Note Principal Balance evidenced by a Note shall be allocated and applied to the Note Owners of such Note pro rata based on their respective Percentage Interests of the Note Principal Balance of such Note, or in any such case in such other proportions as each affected Note Purchaser may agree upon in writing from time to time with such Funding Agent and the Issuer. Payments of interest in respect of the portion of the Note Principal Balance evidenced by a Note shall be allocated and applied to Note Owners of such Note pro rata based upon the respective amounts of interest due and payable to them, determined as provided above in this Section 2.2.
(c)[Reserved].
(d)Any fees and any interest thereon or other amounts due and payable hereunder (without regard to any limitations set forth herein on the sources from which such amount may be paid) which are not paid on the due date thereof (including interest payable pursuant to this clause (d)) shall accrue interest (after as well as before judgment) at 2% per annum above the Base Rate plus the Applicable Margin in effect on the date the payment was due from and including the due date thereof to but excluding the date such amount is actually paid.
(e)Unless otherwise specified in the Applicable Margin Fee Letter, interest calculated by reference to the Adjusted Eurodollar Rate shall be calculated on the basis of a 360- day year for the actual days elapsed. Periodic fees or other periodic amounts payable hereunder shall be calculated, unless otherwise specified in the Fee Letter, on the basis of a 360-day year and for the actual days elapsed.
(f)All payments to be made hereunder or under the Indenture, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and
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shall be made prior to 11:30 a.m., New York City time, on the due date thereof to the applicable Funding Agent, at its account specified in Section 8.2(b), in Dollars and in immediately available funds. Payments received by such Funding Agent after 11:30 a.m., New York City time, shall be deemed to have been made on the next Business Day, unless otherwise agreed to by such Funding Agent. Notwithstanding anything herein to the contrary, if any payment due hereunder becomes due and payable on a day other than a Business Day, the payment date thereof shall be extended to the next succeeding Business Day and interest shall accrue thereon at the applicable rate during such extension. To the extent that (i) the Issuer, the Indenture Trustee, the Transferor or the Servicer makes a payment to the Administrative Agent or a Funding Agent or Note Purchaser or (ii) the Administrative Agent or a Funding Agent or Note Purchaser receives or is deemed to have received any payment or proceeds for application to an obligation, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy or insolvency law, state or federal law, common law, or for equitable cause, then, to the extent such payment or proceeds are set aside, the obligation or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received or deemed received by the Administrative Agent, such Funding Agent or such Note Purchaser, as the case may be.
(g)Each Funding Agent shall notify the Indenture Trustee and the Servicer of the Cost of Funds Rate for each Note Purchaser on each Determination Date.
2.3Requirements of Law.
(a)In the event that any Note Purchaser, Participant or Affected Party, as applicable, shall have reasonably determined that any Regulatory Change shall impose, modify, hold or deem applicable any reserve, special deposit, liquidity coverage requirement, compulsory loan or similar requirement (including any such requirement imposed by the Board of Governors of the Federal Reserve System and any such establishment or interpretation of accounting principles) against assets of or 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, such Note Purchaser or Affected Party, as applicable, or shall impose on any Note Purchaser, Affected Party or the London interbank market any other condition affecting this Agreement, the Indenture or any Transfer and Servicing Agreement, the ownership, maintenance or financing of the Notes, the Trust Estate or payments of amounts due hereunder or its obligations to advance funds hereunder or under a Support Facility and the result of any of the foregoing is to increase the cost to such Note Purchaser or Affected Party, by an amount which such Note Purchaser or Affected Party in good faith deems to be material, of maintaining its Commitment (whether hereunder or under a Support Facility) or its interest in the Notes or to reduce any amount receivable in respect thereof, then, in any such case (but subject to the second sentence of Section 2.1(i)(ii)), after submission by such Note Purchaser or Affected Party to the Funding Agent for the related Purchaser Group of a written request therefor and the submission by such Funding Agent to the Issuer, the Transferor and the Servicer of such written request therefor, together with the certificate described in Section 2.3(d) below, the Issuer shall pay to such Funding Agent for the account of such Note Purchaser or Affected Party any additional amounts necessary to compensate such Note Purchaser or Affected Party for such increased cost or reduced amount receivable, to the extent not already reflected in the applicable interest rate
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(other than with respect to the applicable margin, but including, for the avoidance of doubt, the fifty basis points (0.50%) per annum above the Adjusted Eurodollar Rate referred to in clause (iii) of the definition of Base Rate, if applicable), together with interest on any such unpaid amount from the Distribution Date following receipt by the Issuer of such request for compensation under this Section 2.3(a), if such request is received by the Issuer at least five (5) Business Days prior to the Determination Date related to such Distribution Date, and otherwise from the following Distribution Date, until payment in full thereof (after as well as before judgment) at the Federal Funds Rate in effect from time to time.
(b)In the event that any Note Purchaser or Affected Party, as applicable, shall have reasonably determined that any Regulatory Change regarding capital adequacy or liquidity coverage or any change in the application of generally accepted accounting principles has the effect of reducing the rate of return on such Note Purchaser’s or Affected Party’s capital or on the capital of any Person controlling such Note Purchaser or Affected Party as a consequence of its obligations hereunder or with respect hereto or its maintenance of its Commitment (whether hereunder or under a Support Facility) or its interest in the Notes to a level below that which such Note Purchaser, Affected Party or such Person could have achieved but for such Regulatory Change (taking into consideration such Note Purchaser’s, Affected Party’s or Person’s policies with respect to capital adequacy or liquidity requirements) or such accounting change by an amount in good faith deemed by such Note Purchaser, Affected Party or Person to be material, then, from time to time, after submission by such Note Purchaser or Affected Party to the Funding Agent for the related Purchaser Group of a written request therefor and the submission by such Funding Agent to the Issuer, the Transferor and the Servicer of such written request therefor, together with the certificate described in Section 2.3(d) below, the Issuer shall pay to such Funding Agent for the account of such Note Purchaser or Affected Party such additional amount or amounts as will compensate such Note Purchaser, Affected Party or Person, as applicable, for such reduction, together with interest on any such unpaid amount from the Distribution Date following receipt by the Issuer of such request for compensation under this Section 2.3(b), if such request is received by the Issuer at least five (5) Business Days prior to the Determination Date related to such Distribution Date, and otherwise from the following Distribution Date, until payment in full thereof (after as well as before judgment) at the Federal Funds Rate in effect from time to time. Nothing in this Section 2.3(b) shall be deemed to require the Issuer or the Servicer to pay any amount to a Note Purchaser or Affected Party to the extent such Note Purchaser or Affected Party has been compensated therefor under another provision of this Agreement or to the extent such amount is already reflected in the applicable interest rate (other than with respect to the applicable margin, but including, for the avoidance of doubt, the fifty basis points (0.50%) per annum above the Adjusted Eurodollar Rate referred to in clause (iii) of the definition of Base Rate, if applicable).
(c)Each Note Purchaser and Affected Party agrees that it shall use its reasonable efforts to reduce or eliminate any claim for compensation pursuant to Sections 2.3(a) and 2.3(b), including but not limited to designating a different Investing Office for their Notes (or any interest therein) or delaying the funding of its share of an Advance pursuant to the procedures set forth in Section 2.1(i), if such efforts will avoid the need for, or reduce the amount of, any increased amounts referred to in Section 2.3(a) or 2.3(b) and will not, in the reasonable opinion of such Note Purchaser or Affected Party, as applicable, be unlawful or otherwise disadvantageous to such Note Purchaser or Affected Party or inconsistent with its policies or
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regulatory restrictions or result in any unreimbursed cost or expense to such Note Purchaser or Affected Party or in an increase in the aggregate amount payable under Sections 2.3(a) and 2.3(b).
(d)Each Note Purchaser or Affected Party claiming increased amounts described in Section 2.3(a) or 2.3(b) will furnish to the Funding Agent for the related Purchaser Group (together with its request for compensation) a certificate prepared in good faith setting forth the basis (which may include the use of estimates derived using commercially reasonable methods) and the calculation of the amount (in reasonable detail) of each request by such Note Purchaser or Affected Party for any such increased amounts referred to in Section 2.3(a) or 2.3(b). Any such certificate shall be conclusive absent manifest error, and such Funding Agent shall deliver a copy thereof to the Issuer, the Transferor and the Servicer. Failure on the part of any Note Purchaser or Affected Party to demand compensation for any amount pursuant to Section 2.3(a) or 2.3(b) with respect to any period shall not constitute a waiver of such Note Purchaser’s or Affected Party’s right to demand compensation with respect to such period; provided, however, that notwithstanding the foregoing provisions of this Section 2.3, a Note Purchaser or Affected Party, as applicable, shall not be compensated for any such amount relating to any period ending more than six months prior to the date that the related Funding Agent for such Note Purchaser or Affected Party notifies the Issuer, the Transferor and the Servicer in writing thereof or for any amounts resulting from a change by any Note Purchaser or Affected Party of its Investing Office (other than changes required by law or changes made pursuant to Section 2.3(c) or Section 2.4(d)). Amounts owing under this Section 2.3 by the Issuer shall be due and payable in accordance with Section 8.2 of the Indenture.
2.4Taxes.
(a)All payments made to a Note Purchaser, Affected Party, Participant, Assignee, or Funding Agent, or to the Administrative Agent under this Agreement and the Indenture (including all amounts payable with respect to the Notes) shall, to the extent allowed by law, be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp, excise, franchise or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority (collectively, “Taxes”), excluding, (i) income taxes (including branch profit taxes, minimum taxes and taxes computed under alternative methods, at least one of which is based on or measured by net income), franchise taxes (imposed in lieu of income taxes), or any other taxes based on or measured by the net income of the Administrative Agent or such Note Purchaser, Affected Party, Participant, Assignee or Funding Agent (as the case may be) or the gross receipts or income of the Administrative Agent or such Note Purchaser, Affected Party, Participant, Assignee or Funding Agent (as the case may be); (ii) any Taxes that would not have been imposed but for the failure of the Administrative Agent or such Note Purchaser, Affected Party, Participant, Assignee or Funding Agent, as applicable, to provide and keep current (to the extent legally able) any certification or other documentation required by this Agreement to be furnished by the Administrative Agent or such Note Purchaser, Affected Party, Participant, Assignee or Funding Agent, as applicable; (iii) any Taxes imposed as a result of a change by the Administrative Agent or any Note Purchaser, Affected Party, Participant, Assignee or Funding Agent of its Investing Office (other than changes made at the request of the Issuer pursuant to this Agreement); (iv) for clarity, U.S. federal withholding Taxes
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required to be withheld on amounts payable to a Person with respect to an applicable interest in a Note pursuant to a law in effect on the date on which such Person acquires such interest or such Person, as applicable, changes its Investing Office; and (v) any U.S. withholding Taxes imposed under FATCA (all such excluded taxes and amounts being hereinafter called “Excluded Taxes”). If, as a result of any change in law, treaty or regulation or in the interpretation or administration thereof by any governmental or regulatory agency or body charged with the administration or interpretation thereof, or the adoption of any law, treaty or regulation, any Taxes, other than Excluded Taxes, are required to be withheld from any amounts payable to the Administrative Agent or a Note Purchaser, Affected Party, Participant, Assignee or Funding Agent hereunder or under the Indenture, then after submission by any Note Purchaser, Affected Party, Participant or Assignee to the Funding Agent for the related Purchaser Group and by any Funding Agent or the Administrative Agent to the Issuer, the Transferor and the Servicer of a written request therefor, together with the certificate described in Section 2.4(b) below, the amounts so payable to the Administrative Agent or such Note Purchaser, Affected Party, Participant, Assignee or Funding Agent, as applicable, shall be increased by the Issuer, and the Servicer shall pay to the applicable Funding Agent for the account of such Note Purchaser, Participant, Assignee or Affected Party or for its own account or to the Administrative Agent, as applicable, the amount of such increase to the extent necessary to yield to the Administrative Agent or such Note Purchaser, Affected Party, Participant, Assignee or Funding Agent, as applicable (after payment of all such Taxes) interest or any such other amounts payable hereunder or thereunder at the rates or in the amounts specified in this Agreement and the Indenture; provided, however, that, for clarity, the amounts (including any related interest, penalties or additions to tax) so payable to the Administrative Agent or such Note Purchaser, Affected Party, Participant, Assignee or Funding Agent shall not be increased pursuant to this Section 2.4(a) if such requirement to withhold results from the failure of such Person to comply with Section 2.4(c). Whenever any Taxes are payable on or with respect to amounts distributed to the Administrative Agent or a Note Purchaser, Affected Party, Participant, Assignee or Funding Agent, then, as promptly as possible thereafter the Servicer shall send to the Funding Agent, on behalf of such Note Purchaser or Affected Party, Participant or Assignee, or to the Administrative Agent or such Funding Agent, as applicable, a certified copy of an original official receipt showing payment thereof. If either the Issuer or Servicer fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Funding Agent, on behalf of itself or such Note Purchaser, Affected Party, Participant or Assignee, or to the Administrative Agent or such Funding Agent, as applicable, such required receipts or other required documentary evidence, the Servicer and the Issuer shall pay, without duplication, to such Funding Agent on behalf of such Note Purchaser, Affected Party, Participant or Assignee or to the Administrative Agent or such Funding Agent for its own account, as applicable, any incremental taxes, interest or penalties (other than, for clarity, Excluded Taxes) that may become payable by the Administrative Agent or such Note Purchaser, Affected Party, Participant, Assignee or Funding Agent, as applicable, as a result of any such failure.
(b)A Note Purchaser, Affected Party, Participant or Assignee claiming increased amounts under Section 2.4(a) for Taxes paid or payable by such Note Purchaser, Affected Party, Participant or Assignee will furnish to the applicable Funding Agent a certificate prepared in good faith setting forth the basis (which may include the use of estimates derived using commercially reasonable methods) and amount of each request by such Note Purchaser, Affected Party, Participant or Assignee for such Taxes, and such Funding Agent shall deliver a copy thereof to the Issuer, the Transferor and the Servicer. The Administrative Agent or a
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Funding Agent, as the case may be, claiming increased amounts under Section 2.4(a) for its own account for Taxes paid or payable by the Administrative Agent or such Funding Agent, as applicable, will furnish to the Issuer, the Transferor and the Servicer a certificate prepared in good faith setting forth the basis (which may include the use of estimates derived using commercially reasonable methods) and amount of each request by the Administrative Agent or such Funding Agent for such Taxes. Any such certificate of the Administrative Agent or a Note Purchaser, Affected Party, Participant, Assignee or Funding Agent shall be conclusive absent manifest error. Failure on the part of the Administrative Agent or any Note Purchaser, Affected Party, Participant, Assignee or Funding Agent to demand additional amounts pursuant to Section 2.4(a) with respect to any period shall not constitute a waiver of the right of the Administrative Agent or such Note Purchaser, Affected Party, Participant, Assignee or Funding Agent, as the case may be, to demand compensation with respect to such period. All such amounts shall be due and payable to such Funding Agent on behalf of such Note Purchaser, Affected Party, Participant or Assignee or to the Administrative Agent or such Funding Agent, as the case may be, for its own account on the Distribution Date following receipt by the Issuer of such certificate, if such certificate is received by the Issuer at least five (5) Business Days prior to the Determination Date related to such Distribution Date and otherwise shall be due and payable on the following Distribution Date (or, if earlier, on the Final Scheduled Distribution Date).
(c)Each Note Purchaser, Affected Party, Participant, Assignee, and Funding Agent holding an interest in the Notes and the Administrative Agent agree that prior to the date on which the first interest or fee payment hereunder is due thereto, they will deliver to the Issuer, the Transferor, the Servicer, the Indenture Trustee, the applicable Funding Agent and the Administrative Agent (i) if such Note Purchaser, Affected Party, Participant, Assignee, Funding Agent or Administrative Agent is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for U.S. federal income tax purposes, two duly completed original copies of the U.S. Internal Revenue Service Form W-8ECI, Form W 8-BEN or Form W-8BEN-E (including for purposes of claiming treaty benefits) or in either case successor applicable forms (or as otherwise required pursuant to clause (iii) herein), (ii) if such Note Purchaser, Affected Party, Participant, Assignee or Funding Agent, or the Administrative Agent is a United States person (as such term is defined in Section 7701(a)(30) of the Code) for U.S. federal income tax purposes, a duly completed U.S. Internal Revenue Service Form W-9 or successor applicable or required forms, and (iii) such other forms and information as may be required (as reasonably determined by the Issuer or Servicer) to confirm the availability of any applicable exemption from United States federal, state or local withholding or backup withholding taxes. Each Note Purchaser, Affected Party, Participant, Assignee and Funding Agent holding an interest in Notes and the Administrative Agent also agree to deliver to the Issuer, the Transferor, the Servicer, the Indenture Trustee, the applicable Funding Agent and the Administrative Agent two further copies of such Form W-8ECI, Form W-8BEN, Form W-8BEN-E or Form W-9, or such successor applicable forms or other manner of certification, as the case may be, on or before the date that any such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it hereunder, and such extensions or renewals thereof as may reasonably be requested by the Servicer, the Issuer, the Transferor, a Funding Agent or the Administrative Agent, unless in any such case, solely as a result of a change in treaty, law or regulation occurring prior to the date on which any such delivery would otherwise be required, the Note Purchaser, Affected Party, Participant, Assignee, Funding Agent or the Administrative Agent as applicable, is no longer eligible to deliver the
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then-applicable form set forth above and so advises the Servicer, the Issuer, the Transferor and the applicable Funding Agent and the Administrative Agent.
In addition, if a payment made to the Administrative Agent or such Note Purchaser, Affected Party, Participant, Assignee or Funding Agent, as applicable, under this Agreement would be subject to U.S. federal withholding Tax imposed under FATCA if such Administrative Agent or Note Purchaser, Affected Party, Participant, Assignee or Funding Agent was to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Administrative Agent or such Note Purchaser, Affected Party, Participant, Assignee or Funding Agent shall if so requested by the Administrative Agent in its sole discretion deliver to the Issuer, the Transferor, the Servicer, the Indenture Trustee, the applicable Funding Agent and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Administrative Agent such documentation prescribed by applicable law to avoid the imposition of U.S. withholding Taxes on payments made hereunder
(d)Each Note Purchaser, Affected Party, Participant, Assignee and Funding Agent, and the Administrative Agent agree that they shall use reasonable efforts to reduce or eliminate any amount due under Section 2.3 or this Section 2.4, including but not limited to designating a different Investing Office for its Notes (or any interest therein) if such designation will eliminate or materially reduce any amount due under Section 2.3 or this Section 2.4 and will not, in the reasonable opinion of such Note Purchaser, Affected Party, Participant, Assignee and Funding Agent, and the Administrative Agent be unlawful or otherwise disadvantageous to such Note Purchaser, Affected Party, Participant, Assignee and Funding Agent, and the Administrative Agent or inconsistent with its policies or result in any unreimbursed cost or expense to such Note Purchaser, Affected Party, Participant, Assignee and Funding Agent, and the Administrative Agent or in an increase in the aggregate amount payable under Sections 2.3(a) and 2.3(b). If such amount is not eliminated by any such designation or no such designation is done and the Note Purchaser does not waive payment of such amount, such Note Purchaser and the Funding Agent for its Purchaser Group hereby severally agree to use reasonable efforts to procure a replacement purchaser not so affected and which is reasonably acceptable to the Transferor, such Funding Agent and the Administrative Agent (a “Replacement Purchaser”) to replace such affected Note Purchaser. The Transferor shall also have the right to procure a Replacement Purchaser, provided that such proposed Replacement Purchaser is reasonably acceptable to the Funding Agent for the affected Purchaser Group and the Administrative Agent. No replacement of a Note Purchaser shall be effected pursuant to this Section 2.4(d) if, after giving effect thereto, any amounts shall be owing to the replaced Note Purchaser hereunder. Each affected Note Purchaser hereby agrees to take all actions necessary to permit a Replacement Purchaser to succeed to its rights and obligations hereunder.
Notwithstanding the foregoing, (i) if the Note Purchaser being replaced pursuant to this subsection is a CPC Committed Purchaser, the Replacement Purchaser shall be acceptable to the related CP Conduit and (ii) if the Note Purchaser being replaced pursuant to this subsection is a CP Conduit, the Replacement Purchaser shall be acceptable to all related CPC Committed Purchasers; and it shall be a condition of such replacement that such Replacement Purchaser enter into substitute Support Facilities for those to which the Note Purchaser being replaced is a party on terms mutually acceptable to the parties thereto. In the event that a
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proposed Replacement Purchaser which has been approved by the Transferor, the applicable Funding Agent and the Administrative Agent as provided in this subsection is not acceptable to the applicable CP Conduit or the applicable Committed Purchasers, as applicable, or has not within a reasonable period entered into applicable Support Facilities, and another replacement Note Purchaser has not been promptly procured as provided in this subsection with the consent of all affected parties, then the Note Purchaser which failed to consent to such replacement or to enter into such Support Facilities may be replaced by a Replacement Purchaser and shall use reasonable efforts to procure a Replacement Purchaser, in each case as provided in this subsection. Amounts owing under this Section 2.4 by the Issuer shall be due and payable in accordance with Section 8.2 of the Indenture.
If such amount is not eliminated due to the failure to find an acceptable Replacement Purchaser (or such Replacement Purchaser not being acceptable to the related CP Conduit or CPC Committed Purchasers, as applicable), and the affected Note Purchaser does not waive payment of such amount, the Transferor shall have the right to procure a replacement purchaser for such Note Purchaser and any additional Note Purchaser in such Note Purchaser’s Purchaser Group (the “Exiting Note Purchaser Group”) and a replacement agent for the respective Funding Agent in the Exiting Note Purchaser Group (collectively, the “Replacement Purchaser Group”), provided that if the Exiting Note Purchaser Group contains a member that is the Administrative Agent, such proposed Replacement Purchaser Group is reasonably acceptable to the Administrative Agent. No replacement of an Exiting Note Purchaser Group shall be effected pursuant to this Section 2.4(d) if, after giving effect thereto, any amounts shall be owing to any replaced member of such Exiting Note Purchaser Group hereunder. Each member of the Exiting Note Purchaser Group hereby agrees to take all actions necessary to permit the members of the Replacement Note Purchaser Group to succeed to its rights and obligations hereunder.
2.5Indemnification
(a)The Issuer and ALS agree to jointly and severally indemnify and hold harmless the Administrative Agent, the Structuring Agent, each Funding Agent, each Note Purchaser and each Affected Party and any director, officer, employee or agent thereof (each such Person being an “Indemnitee”) from and against any and all claims, damages, losses, liabilities, costs or expenses (including reasonable fees and out-of-pocket expenses of counsel) whatsoever (including claims under federal or state securities laws), which the Indemnitee incurs (or which may be claimed against the Indemnitee) by reason of or in connection with (i) the failure of the offer and sale by or on behalf of the Issuer, the Transferor or any of their affiliates of the Notes in accordance with this Agreement and the other Basic Documents to comply with applicable law, (ii) the failure by the Issuer, the Transferor, ALS or the Servicer (if the Servicer is ALS or an Affiliate thereof) to comply with any covenant set forth in this Agreement or any other Basic Document (provided that ALS shall not be liable for any indemnity arising under this clause (ii) as a result of the Issuer’s failure to increase or replenish the Letter of Credit after the Restatement Date pursuant to Section 3.27 of the Indenture (or to post cash or alternative collateral pursuant to Section 3.27 of the Indenture)), (iii) reliance on any written false representation or warranty made (including reaffirmation) by the Issuer, the Transferor, ALS or the Servicer (if the Servicer is ALS or an Affiliate thereof) set forth in this Agreement or any other Basic Document, (iv) the failure to vest in the Indenture Trustee a first priority perfected security interest in the Trust Estate, (v) any failure of ALS, as Servicer or otherwise, to perform
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its duties or obligations in accordance with the provisions of this Agreement or any of the other Basic Documents, as applicable, (vi) third party claims arising from the commingling of collections by the Issuer, the Servicer (if the Servicer is ALS or an Affiliate thereof) or the Transferor at any time with its other funds or the funds of another Person, (vii) claims by third parties (including parties to the Basic Documents only at a time when a Rapid Amortization Event exists and at all times excluding claims arising among the Funding Agents, the Administrative Agent and the Note Purchasers) arising out of the servicing of the Loans, the use or ownership of the Equipment, or the repossession (other than losses related to a decline in value of the Equipment repossessed) or operation by the Servicer or any Affiliate thereof of any item of Equipment or collateral therefor, but only so long as and with respect to actions taken while ALS is the Servicer, (viii) any statement, omission or act in connection with the offering, issuance, sale or delivery of any of the Notes and (ix) claims by third parties relating to products liability, lender liability or any other claims by third parties (including parties to the Basic Documents only at a time when a Rapid Amortization Event exists and at all times excluding claims arising among the Funding Agents, the Administrative Agent and the Note Purchasers) arising from the transactions contemplated by this Agreement or any other Basic Document, except (A) to the extent that any such claim, damage, loss, liability, cost or expense shall be caused by the bad faith, willful misconduct or gross negligence of an Indemnitee within the same Purchaser Group as the Indemnitee making the claim in performing its obligations under this Agreement, (B) for recourse as a result of nonpayment by Obligors for credit reasons on the Loans, or (C) to the extent the same constitute consequential, special or punitive damages. Subject to the limitations set forth above, but without limiting the generality of the foregoing, the Issuer agrees to indemnify and hold harmless each Indemnitee 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 at any time following the payment of the obligations under this Agreement, including payment of the Aggregate Note Principal Balance) be imposed on, incurred by or asserted against such Indemnitee in any way relating to or arising out of this Agreement, or any documents contemplated by or referred to herein or the transactions contemplated hereby or any action taken or omitted by any Indemnitee under or in connection with any of the foregoing; provided that the Issuer shall not be liable under this sentence for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of an Indemnitee within the same Purchaser Group as the Indemnitee making the claim resulting from its own gross negligence or willful misconduct. Promptly after receipt by an Indemnitee of notice of the commencement of any action, such Indemnitee, as the case may be, will, if a claim in respect thereof is to be made under this Section 2.5(a), notify the Issuer and the Transferor in writing of the commencement thereof; provided, however, the omission to so notify the Issuer or the Transferor will not relieve the Issuer or the Transferor from any liability which it may have to such Indemnitee under this Section 2.5(a) except to the extent the Issuer or the Transferor was actually prejudiced by the failure to give such notices promptly. Amounts owing under this Section 2.5(a) by the Issuer shall be due and payable in accordance with Section 8.2 of the Indenture. This Section 2.5 shall not apply with respect to Taxes other than any Taxes that represent losses, claims and damages arising from any non-Tax claim.
(b)If any action or proceeding (including any governmental investigation) shall be brought or asserted against any Indemnitee in respect of which the indemnity provided above may be sought from ALS or the Issuer (the “Indemnifying Party”) each such Indemnitee
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shall promptly notify the Indemnifying Party in writing, and the Indemnifying Party may, within a reasonable time, irrevocably assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnitee and the payment of all expenses and reasonable legal fees; provided that failure to notify the Indemnifying Party shall not relieve it from any liability it may have to such Indemnitee except to the extent that it shall be actually prejudiced thereby; provided, further, that, the Indemnifying Party shall not be entitled to assume the defense of any such action or proceeding (i) unless the Indemnifying Party shall have acknowledged in writing to the Indemnitee that such action or proceeding is covered by the indemnification set forth in Section 2.5(a), (ii) if the proceeding is a governmental proceeding involving the possible imposition of any criminal liability or penalty, (iii) if the relief sought in such action or proceeding is the seeking of injunctive relief against the Indemnifying Party affecting property, assets or activity not related to this transaction, or (iv) in the reasonable opinion of the Indemnitee, such defense or compromise involves a conflict of interest between such Indemnitee and an Indemnifying Party. The Indemnitee shall have the right to employ separate counsel in any such action and to participate in the defense thereof at the expense of the Indemnitee; provided, however, that the fees and expenses of separate counsel to the Indemnitee in any such proceeding shall be at the expense of the Indemnifying Party if (i) the Indemnifying Party has agreed to pay such fees and expenses, (ii) the Indemnifying Party shall have failed to assume the defense of such action or proceeding or employ counsel reasonably satisfactory to the Indemnitee in any such action or proceeding within a reasonable time after the commencement of such action or (iii) the named parties to any such action or proceeding (including any impleaded parties) include both the Indemnitee and the Indemnifying Party, and the Indemnitee shall have been advised in writing by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Indemnifying Party which gives rise to a conflict of interest (in which case, if the Indemnitee notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense of such action or proceeding on behalf of such Indemnitee, it being understood, however, that the Indemnifying Party shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time for the Indemnitees, which firm shall be designated in writing by the Indemnitee and shall be reasonably acceptable to the Indemnitee). The Indemnifying Party shall not be liable for any settlement of any such action or proceeding effected without its written consent to the extent that any such settlement shall be prejudicial to the Indemnifying Party, but, if settled with its written consent, or if there is a final non- appealable judgment for the plaintiff in any such action or proceeding with respect to which the Indemnifying Party shall have received notice in accordance with this paragraph, the Indemnifying Party agrees to indemnify and hold the Indemnitees harmless from and against any loss or liability by reason of such settlement or judgment.
(c)Any Successor Servicer, by accepting its appointment pursuant to the Pooling and Servicing Agreement, (i) shall agree to be bound by the terms, covenants and conditions contained herein applicable to the Servicer and to be subject to the duties and obligations of the Servicer hereunder, (ii) as of the date of its acceptance, shall be deemed to have made with respect to itself only the representations and warranties made by the Servicer in Section 4.2 (with appropriate factual changes) and (iii) shall agree to indemnify and hold
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harmless any Indemnitee from and against any and all claims, damages, losses, liabilities, costs or expenses (including the fees and expenses of counsel) whatsoever which such Indemnitee may incur (or which may be claimed against such Indemnitee) by reason of the bad faith, negligence or willful misconduct of the Successor Servicer in exercising its powers and carrying out its obligations under this Agreement, the Pooling and Servicing Agreement or any Basic Document.
(d)In the event that for any reason, any Note Purchaser receives any repayment of its share of the Aggregate Note Principal Balance (A) other than on a Distribution Date or (B) on a Distribution Date if less than two (2) Business Days’ prior notice of such Distribution Date repayment is received (which notice must specify the amount of such repayment), then the Issuer agrees to indemnify and hold harmless each affected Note Purchaser against, and to promptly pay on demand directly to such Note Purchaser the amount equal to any loss, cost or expense incurred or suffered by such Note Purchaser as a result of such change, repayment or other action, including any hedge breakage costs and any loss, cost or reasonable out-of-pocket expense incurred or suffered by such Note Purchaser (other than loss of profit) by reason of any prepayment expense incurred or suffered by reason of the liquidation on redeployment of deposits or other funds prepaid, repaid or otherwise acquired by such Note Purchaser, in amounts which correspond to its share of the Aggregate Note Principal Balance. A statement setting forth in reasonable detail the calculations of any additional amounts payable pursuant to this Section 2.5 submitted by a Note Purchaser, a Funding Agent, or the Administrative Agent, as the case may be, to the Issuer, the Transferor and the Servicer shall be conclusive absent manifest error.
2.6Expenses, etc.
(a)The Transferor, ALS and the Issuer (with respect to the Issuer, in accordance with Section 8.2 of the Indenture) agree jointly and severally to pay on demand (i) to the Administrative Agent, each Funding Agent and the Note Purchasers all reasonable costs and expenses in connection with the preparation, execution, and delivery of this Agreement and the other documents to be delivered hereunder or in connection herewith, including the reasonable fees and out-of-pocket expenses of counsel with respect thereto (including all costs incurred with respect to the confirmation of a CP Conduit’s rating on its commercial paper in connection therewith), (ii) to the Administrative Agent and each Funding Agent and Note Purchaser, all reasonable costs and expenses (including reasonable fees and expenses of counsel) in connection with the preparation, negotiation, execution, delivery, distribution, review, amendment (including any requested waivers and consents) of this Agreement or the Basic Documents, and (iii) to the Administrative Agent and each Funding Agent and Note Purchaser, on demand, all reasonable costs and expenses (including reasonable fees and expenses of counsel), if any, in connection with the enforcement of this Agreement or any of the Basic Documents, and the other documents delivered thereunder or in connection therewith.
(b)The Servicer agrees to pay on demand any and all stamp, transfer and other similar taxes (other than Taxes covered by Section 2.4) and governmental fees payable in connection with the execution, delivery, filing and recording of any of the Basic Documents and each related Support Facility, and agrees to save the Administrative Agent and each Note Purchaser and Funding Agent harmless from and against any liabilities with respect to or resulting from any delay in paying or any omission to pay such taxes and fees.
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2.7Deliveries by Note Purchasers. For the purposes of Sections 2.3, 2.4, 2.5, and 2.6 above, all deliveries required to be made by a Note Purchaser to the Issuer, the Transferor or the Servicer shall be made to the Administrative Agent and to the Funding Agent for such Note Purchaser’s Purchaser Group, and one of such Funding Agents who in turn shall make such deliveries to the Issuer, the Transferor and/or the Servicer, as applicable. Such delivery by such Note Purchaser shall not be deemed made until such Funding Agent for such Purchaser Group makes delivery thereof to the Issuer, the Transferor and/or the Servicer, as applicable, as provided in Section 8.2 below.
2.8Non-Renewing Committed Purchasers.
(a)Provided no Event of Default or Rapid Amortization Event has occurred and is continuing, and subject to compliance with the terms of this Section 2.8, not more than ninety (90) days or less than sixty (60) days prior to the then current Scheduled Termination Date, the Issuer may request an extension thereof for an additional one-year period. Each Committed Purchaser will inform the Issuer at least thirty (30) days prior to the then current Scheduled Termination Date whether it consents to such extension (which election is in the sole discretion of each Committed Purchaser).
(b)(1) If, in accordance with Section 2.8(a), the Issuer requests that the Committed Purchasers renew their Commitments hereunder and some but less than all of such Committed Purchasers consent to such renewal by the date that is thirty (30) days prior to the then-current Scheduled Termination Date, the Issuer may arrange for an assignment of, and such non-renewing Committed Purchasers shall agree to assign, to one or more financial institutions acceptable to the Administrative Agent, all of the rights and obligations hereunder of each such non-consenting Committed Purchaser in accordance with Section 7.1. Any such assignment shall become effective on the then current Scheduled Termination Date. Each Committed Purchaser which does not so consent to any renewal shall cooperate fully with the Issuer in effectuating any such assignment.
(2)At any time following the delivery of a Change of Control Notice if the Noteholders that hold an aggregate pro rata share of equal to or greater than two-thirds of the aggregate principal balance of the Outstanding Notes, but less than all Noteholders, have provided their prior written consent to the related ALS Change of Control to the Administrative Agent and the Issuer, the Issuer may arrange for an assignment of, and any Dissenting Committed Purchaser shall agree to assign, to one or more financial institutions (which in the case of a CP Conduit that is the Dissenting Committed Purchaser, shall be a financial institution other than its related Support Parties) acceptable to the Administrative Agent all of the rights and obligations hereunder of such Dissenting Committed Purchaser in accordance with Section 7.1. Each Dissenting Committed Purchaser and the Administrative Agent shall cooperate fully with the Issuer in effectuating any such assignment.
(c)(1) If, (x) in accordance with Section 2.8(a), the Issuer requests that the Committed Purchasers extend the Scheduled Termination Date and some but less than all such
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Committed Purchasers consent to such extension within thirty (30) days after the Issuer’s request, and if none or less than all the Commitments of the non-renewing Committed Purchasers in any Purchaser Group are assigned as provided in Section 2.8(b) or (y) an ALS Change of Control occurs and the Noteholders that hold an aggregate pro rata share of equal to or greater than two-thirds of the aggregate principal balance of the Outstanding Notes, but less than all Noteholders, have provided their prior written consent to such ALS Change of Control to the Administrative Agent and the Issuer, then with respect to clause (x) above (without limiting the obligations of all the Committed Purchasers to make Advances prior to the then current Scheduled Termination Date in accordance with the terms hereof), any such non-renewing Committed Purchaser’s Commitments shall expire on the then current Scheduled Termination Date, and with respect to clause (y) above (without limiting the obligations of all the Committed Purchasers to make Advances prior to such four (4) month anniversary in accordance with the terms hereof), any Dissenting Committed Purchaser’s Commitments shall terminate on the four (4) month anniversary date of such ALS Change of Control. In each such case, either on or after the then Scheduled Termination Date (as to any non-renewing Committed Purchaser) or on or after the occurrence of the ALS Change of Control (as to any Dissenting Committed Purchaser), as applicable, the related CP Conduit may sell an interest in all, but not less than all, of its Percentage Interests hereunder for an aggregate purchase price equal to the lesser of (i) the maximum aggregate purchase price which would be payable if such CP Conduit assigned its entire interest in the applicable Notes at that time under Section 7.1(e) to any Support Party under the terms of the applicable Support Facility, and (ii) the aggregate available Commitments of the non-renewing Committed Purchasers or Dissenting Committed Purchasers, as applicable, in the applicable Purchaser Group, which purchase price shall be paid solely by the related non-renewing or Dissenting Committed Purchasers, as applicable, (or in the case of a CP Conduit that is the non-renewing Committed Purchaser or the Dissenting Committed Purchaser, by its related Support Parties), pro rata according to their respective Commitments. On the then Scheduled Termination Date or the date of the ALS Change of Control, as applicable, (i) if applicable, the extended Scheduled Termination Date shall be effective with respect to the renewing Committed Purchasers, (ii) the Facility Limit shall be automatically reduced pro rata in accordance with the reduction of the aggregate outstanding principal balance of the Notes of the non-renewing Committed Purchasers or the Dissenting Committed Purchasers, as applicable, as described in subsection (c)(2) below until such outstanding balance has been reduced to zero and each such facility limit is then equal to the aggregate of the Commitments of all renewing Committed Purchasers or consenting Committed Purchasers, as applicable, and (iii) this Agreement and the Commitments of the renewing Committed Purchasers or the consenting Committed Purchasers, as applicable, shall remain in effect in accordance with their terms notwithstanding the expiration of the Commitments of the non-renewing Committed Purchasers or the termination of the Commitments of the Dissenting Committed Purchasers, as applicable.
(2)Both prior to and after the Conversion Date, all amounts which, under Section 8.2 of the Indenture, are to be applied in reduction of the principal amount of the Notes up to the aggregate of the applicable Percentage Interests sold to the non-renewing Committed Purchasers or the Dissenting Committed Purchasers, as applicable, (or their Support Parties, as applicable) as described above in subsection (c)(1), shall be distributed ratably among the applicable Noteholders (both renewing and non-renewing or consenting and dissenting, as applicable) according to the
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aggregate of the applicable Percentage Interests held by them, in reduction of such Percentage Interests, but the non-renewing Committed Purchasers or Dissenting Committed Purchasers, as applicable, shall not be required to fund any future Advances. When (after the Scheduled Termination Date, as in effect prior to giving effect to the renewal or after the four (4) month anniversary of the ALS Change of Control, as applicable) the aggregate principal balances of the Notes of the non-renewing Committed Purchasers or the Dissenting Committed Purchasers, as applicable, described above in this subsection shall have been reduced to zero and all accrued interest allocable thereto and all other outstanding amounts owed in respect of principal of, interest on or fees or other indemnities owing to such Committed Purchasers shall have been paid to such Committed Purchasers in full, then such Committed Purchasers shall cease to be parties to this Agreement for any purpose.
2.9Optional Prepayments; Reduction and Termination of Commitments.
(a)Optional Prepayments. Prior to the Conversion Date, provided that no Event of Default, Rapid Amortization Event, or an occurrence that, with notice or the lapse of time or both, would become an Event of Default or Rapid Amortization Event, has occurred and is continuing, the Issuer (or the Servicer on its behalf) may instruct the Indenture Trustee to prepay on any Distribution Date any portion of the Aggregate Note Principal Balance in whole or in part, without penalty or premium; provided that the Servicer shall include notice of such prepayment in such Servicer’s Certificate delivered on the Determination Date immediately preceding such Distribution Date, which notice shall specify the amount of such prepayment; provided, further, that such prepayment shall be in a principal amount of at least $1,000,000 or, if less, the entire Aggregate Note Principal Balance. Each such notice of prepayment delivered in the Servicer’s Certificate shall be irrevocable and effective only upon receipt on the applicable Determination Date. Each prepayment of any portion of the Aggregate Note Principal Balance shall be paid by the Indenture Trustee pursuant to Section 8.2(c) of the Indenture.
(b)Optional Reduction or Termination of Commitments. Prior to the Conversion Date, provided that no Event of Default, Rapid Amortization Event, or an occurrence that, with notice or the lapse of time or both, would become an Event of Default or Rapid Amortization Event, has occurred and is continuing, the Issuer (or the Servicer on its behalf) shall have the right to terminate or reduce the unused amount of the Facility Limit on any Distribution Date; provided that the Servicer shall include notice of such termination or reduction in the Servicer’s Certificate delivered on the Determination Date immediately preceding such Distribution Date, which notice shall specify the amount of any such reduction or termination; provided, further, that (i) the amount of any such reduction of the Facility Limit shall be equal to at least $1,000,000 or an integral multiple of $100,000 in excess thereof or, if less, the remaining unused portion thereof, and (ii) no such reduction will reduce the Facility Limit below the Aggregate Note Principal Balance at such time. Such notice of termination or reduction delivered in the Servicer’s Certificate shall be irrevocable and effective only upon receipt on the applicable Determination Date and shall be applied pro rata to reduce the respective Commitments of each Committed Purchaser.
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(c)Effect of Termination or Reduction. The Commitments of the Committed Purchasers once terminated or reduced may not be reinstated. Each reduction of the Facility Limit pursuant to Section 2.9(b) shall be applied ratably among the Note Purchasers in accordance with their respective Commitments.
2.10Successor LIBOR.
(a)If the Administrative Agent determines (which determination shall be final and conclusive, absent manifest error) that either (a) (i) a Eurodollar Disruption Event has occurred and is unlikely to be temporary, or (ii) a Eurodollar Disruption Event has not occurred but the applicable supervisor or administrator (if any) of LIBOR or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying the specific date after which LIBOR shall no longer be used for determining interest rates for loans (either such date, a “LIBOR Termination Date”), or (b) a rate other than LIBOR has become a widely recognized benchmark rate for newly originated loans in Dollars in the U.S. market, then the Administrative Agent may (in consultation with the Servicer) choose a replacement index for LIBOR and make adjustments to applicable margins and related amendments to this Agreement and the other Basic Documents as referred to below such that, to the extent practicable, the all-in interest rate based on the replacement index will be substantially equivalent to the all-in LIBOR-based interest rate in effect prior to its replacement.
(b)The Administrative Agent and the Issuer shall enter into an amendment to this Agreement and the other Basic Documents to reflect the replacement index, the adjusted margins and such other related amendments as may be appropriate, in the discretion of the Administrative Agent, for the implementation and administration of the replacement index-based rate. Notwithstanding anything to the contrary in this Agreement or the other Basic Documents (including, without limitation, Section 8.1, such amendment shall become effective without any further action or consent of any other party to this Agreement at 5:00 p.m. New York City time on the tenth (10th) Business Day after the date a draft of the amendment is provided to the Note Purchasers and Funding Agents, unless the Administrative Agent receives, on or before such tenth (10th) Business Day, a written notice from the Required Note Purchasers stating that such Note Purchasers object to such amendment.
(c)Selection of the replacement index, adjustments to the applicable margins, and amendments to this Agreement and the other Basic Documents (i) will be determined with due consideration to the then-current market practices for determining and implementing a rate of interest for newly originated loans in the United States and loans converted from a LIBOR-based rate to a replacement index-based rate, and (ii) may also reflect adjustments to account for (x) the effects of the transition from LIBOR to the replacement index and (y) yield- or risk-based differences between LIBOR and the replacement index.
(d)Until an amendment reflecting a new replacement index in accordance with this Section 2.10 is effective, the Notes will continue to bear interest with reference to LIBOR; provided, however, that if the Administrative Agent determines (which determination shall be final and conclusive, absent manifest error) that a LIBOR Termination Date has occurred, then following the LIBOR Termination Date, all Notes shall automatically bear interest
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at the Base Rate until such time as an amendment reflecting a replacement index and related matters as described above is implemented.
(e)Notwithstanding anything to the contrary contained herein, if at any time the replacement index is less than zero, at such times, such index shall be deemed to be zero for purposes of this Agreement and the other Basic Documents.
ARTICLE 3 CONDITIONS PRECEDENT
3.1Conditions to Restatement Date. The following shall be conditions precedent to the Restatement Date:
(a)the representations and warranties of the Issuer, the Servicer and the Transferor set forth or referred to in Article 4, all representations and warranties of the Seller set forth in the Purchase Agreement shall be true and correct in all material respects on the Restatement Date as though made on and as of the Restatement Date (except for representations and warranties which relate to a specific date, which shall be true and correct as of such date), and no Rapid Amortization Event, Event of Default or Servicer Default, and no event that, after the giving of notice or the lapse of time (or both), would constitute a Rapid Amortization Event, Event of Default or Servicer Default, shall have occurred and be continuing on the Restatement Date;
(b)the Applicable Margin Fee Letter shall have been executed and delivered by the Issuer to each Funding Agent;
(c)the Notes shall have been duly issued in accordance with the Indenture;
(d)(i) the Transferor, the Servicer or the Issuer, as applicable, shall have paid all fees payable on the Restatement Date to the Administrative Agent and each Funding Agent, as applicable (for its own account or for the accounts of the Note Purchasers), described in the Applicable Margin Fee Letter and all reasonable and appropriately invoiced costs and expenses of the Administrative Agent and the Funding Agents and the Note Purchasers payable by the Transferor or the Issuer, as applicable, to the extent provided herein, or in connection with the transactions contemplated hereby and (ii) all fees payable on the Restatement Date described in the Fee Letter shall have been paid;
(e)the Administrative Agent and each Funding Agent on behalf of the Note Purchasers shall have received on the Restatement Date the following items, each of which shall be in form and substance satisfactory to each Funding Agent and the Administrative Agent:
(i)an Officer’s Certificate of the Servicer confirming the satisfaction of the conditions set forth in clause (a) (as to representations and warranties of the Servicer only) above;
(ii)an Officer’s Certificate of the Transferor confirming the satisfaction of the conditions set forth in clauses (a) (as to representations and warranties of the Transferor only) and (d) above;
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(iii)an Officer’s Certificate of the Issuer confirming the satisfaction of the conditions set forth in clauses (a) (as to representations and warranties of the Issuer only) and (c) above;
(iv)[reserved];
(v)a copy of (A) the certificate of formation and limited liability company agreement or trust agreement, as applicable, of, and an incumbency certificate with respect to its officers executing any of the Basic Documents on the Restatement Date on behalf of, each of the Issuer, the Transferor and the Servicer, certified by its authorized officer, (B) the Trust Agreement and an incumbency certificate with respect to officers of the Owner Trustee executing any of the Basic Documents on the Restatement Date on behalf of the Issuer and (C) resolutions of the Board of Managers (or an authorized committee thereof) of each of the Transferor and the Servicer with respect to the Basic Documents to which it is party, certified by its authorized officer;
(vi)a certificate issued no earlier than 30 days prior to the Restatement Date by an appropriate Governmental Authority evidencing the legal existence and good standing of each of the Servicer as a Delaware limited liability company, of Transferor as a Delaware limited liability company;
(vii)the favorable written opinions of counsel for the Issuer, the Owner Trustee, the Indenture Trustee, the Transferor and the Servicer, addressed to the Administrative Agent, each Funding Agent and each Note Purchaser, dated the Restatement Date, covering general corporate matters, no government consents or authorizations, no conflicts with organizational documents, any applicable law or other agreements, the due execution and delivery of, and the enforceability of, each of the Basic Documents to which the Issuer, the Owner Trustee, the Indenture Trustee, the Transferor and the Servicer is party, true sale/non-consolidation, Investment Company Act matters (including a “no covered fund” opinion), perfection and priority of security interest matters, for U.S. income tax purposes the Issuer will not be treated as an association (or publicly traded partnership) taxable as a corporation and the Notes will be characterized as indebtedness and such other matters as the Administrative Agent or its counsel may reasonably request;
(viii)evidence of the due execution and delivery by the Owner Trustee, on behalf of the Issuer, and the Indenture Trustee of the Basic Documents to which each is party;
(ix)an executed copy of each of the Transfer and Servicing Agreements, the Indenture, the Trust Agreement, the Administration Agreement, the Control Agreement and each of the other Basic Documents to be entered into on or prior to the Restatement Date;
(x)a certificate of the Indenture Trustee as to the establishment of certain accounts as provided in the Pooling and Servicing Agreement;
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(xi)the duly executed Notes registered in the name of each Funding Agent as nominee on behalf of the Note Owners in its Purchaser Group or, if requested by such Funding Agent, in the name of the relevant Primary Purchaser;
(xii)[Reserved];
(xiii)evidence satisfactory to the Administrative Agent that financing statements duly executed or otherwise authorized by ALS, the Seller, ALER and the Issuer or other, similar instruments or documents, as may be necessary or, in the opinion of the Administrative Agent, or any Funding Agent or Note Purchaser, desirable under the Uniform Commercial Code of all appropriate jurisdictions or any comparable law to perfect the transfers (including grants of security interests) under the Basic Documents have been delivered and, if appropriate, have been duly filed or recorded and that all filing fees, taxes or other amounts required to be paid in connection therewith have been paid;
(xiv)certified copies of requests for information or copies (or a similar search report certified by a party acceptable to the Administrative Agent), dated a date reasonably near to the Restatement Date, listing all effective financing statements which name ALS or the Seller (under its present name and any previous name) as debtor and which are filed in the jurisdictions in which the financing statements referred to in clause (xii) above were or are to be filed, together with copies of such financing statements (none of which, other than financing statements naming the party under the Basic Documents to which transfers (including grants of security interests) thereunder purport to have been made shall cover any of the property purported to be conveyed thereunder);
(xv)evidence satisfactory to each initial CP Conduit that its purchase of Notes and Advances hereunder (if any) will not result in a reduction or withdrawal of the rating of its Commercial Paper by the applicable Rating Agencies;
(xvi)satisfactory results of a due diligence review by the Administrative Agent of ALS’s collection, operating and reporting systems;
(xvii)a Servicer’s Certificate as of the then most recently completed Monthly Period; and
(xviii)such additional documents, instruments, certificates or letters as the Administrative Agent or any Funding Agent or Note Purchaser may reasonably request;
(f)no material adverse change in (i) business, condition or operation of the Seller, ALS, the Transferor, the Issuer or the Servicer or (ii) the collectability of the Loans taken as a whole shall have occurred; and
(g)the Weighted Average Life of the Eligible Loans in the Trust Estate as of the Restatement Date is not greater than 3.5 years.
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3.2Condition to Additional Purchases. The following shall be conditions precedent to the obligation of any Note Purchaser to purchase its share of any Advance on any Funding Date (including the Restatement Date):
(a)each Funding Agent shall have timely received a properly completed Advance Notice;
(b)all interest, fees, expenses and all other amounts then due and payable to the Administrative Agent or any Note Purchaser or Funding Agent hereunder shall have been paid;
(c)no Rapid Amortization Event, Event of Default or Servicer Default, and no event that, after the giving of notice or the lapse of time (or both), would constitute a Rapid Amortization Event, Event of Default or Servicer Default, shall have occurred and be continuing that has not been waived in writing by the Special Required Noteholders;
(d)all conditions to the issuance of the Notes set forth in the Indenture or any other Basic Document shall have been satisfied, and, in the case of any Borrowing Date, all conditions to the occurrence of the Advance to occur on such Borrowing Date set forth in the Indenture or any other Basic Document shall have been satisfied;
(e)after giving effect to the issuance of the Notes or the Advance, as applicable, all representations and warranties of the Transferor, the Issuer, the Seller and the Servicer contained herein or made or reaffirmed on the related Funding Date in the Basic Documents, or otherwise made in writing pursuant to any of the provisions hereof or thereof, shall be true and correct in all material respects with the same force and effect as though such representations and warranties had been made on and as of such date (other than representations and warranties which specifically relate to an earlier date, which shall be true and correct in all material respects as of such earlier date);
(f)after giving effect to the issuance of the Notes or the Advance to occur on such Funding Date, the Aggregate Note Principal Balance shall be equal to or less than the lesser of (i) the Facility Limit and (ii) the Borrowing Base as set forth in the related Advance Notice;
(g)[Reserved];
(h)(i) after giving effect to the issuance of Notes or the Advance to occur on such Funding Date, (x) the Weighted Average Life of the Eligible Loans in the Trust Estate shall not have been greater than 3.5 years for the period of three (3) consecutive calendar months ending on such Funding Date or (y) if the Weighted Average Life of the Eligible Loans in the Trust Estate shall be greater than 3.5 years on such Funding Date, the Weighted Average Life of the Eligible Loans in the Trust Estate after giving effect to such Advance shall be less than or equal to the Weighted Average Life of the Eligible Loans in the Trust Estate before giving effect to such Advance;
(i)after giving effect to the issuance of the Notes or the Advance to occur on such Funding Date, the Weighted Average Seasoning of the Eligible Loans in the Trust Estate is at least 15 months;
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(j)after giving effect to the issuance of the Notes or the Advance to occur on such Funding Date, the weighted average interest rate of all Loans with fixed interest rates in the Trust Estate that are not Discount Fixed Rate Loans is at least 6.00%;
(k)after giving effect to the issuance of the Notes or the Advance to occur on such Funding Date, the aggregate Loan Balance (net of security deposits) of all Loans with fixed interest rates in the Trust Estate shall not be greater than the amount set forth in the Cap Notional Schedule attached hereto as Annex D;
(l)both immediately before and after giving effect to such Advance, the amount on deposit in the Reserve Account (exclusive of RA Cash and LC Substitute Cash, but including any amounts therein constituting the Ineligible Cap Reserve at such time, if any) is then at least equal to the Reserve Account Required Amount (it being understood that the proceeds of a new Advance cannot be used to cure a shortfall in the Reserve Account Required Amount but such proceeds can be used to fund the corresponding increase in the Reserve Account Required Amount resulting from an increase in the Notes; provided that the proceeds of a new Advance can be used to cure a shortfall in the Reserve Account Required Amount once in every twelve (12) consecutive calendar months);
(m)both immediately before and after giving effect to the Advance (made on or after the first Distribution Date), the amount on deposit in the Yield Supplement Account is then at least equal to the Yield Supplement Required Amount;
(n)as of the Accounting Date immediately preceding the date of such Advance, the Excess Spread was at least equal to the Minimum Excess Spread and, to the best knowledge of the Transferor and the Servicer, after giving effect to such Advance, the current Excess Spread will continue to be at least equal the Minimum Excess Spread;
(o)the Note Purchasers shall have received all reports and other information theretofore required to be delivered by the Seller, ALS, the Issuer, the Transferor or the Servicer;
(p)in the case of each Borrowing Date, the Issuer shall have delivered to each Funding Agent an Officer’s Certificate dated such Borrowing Date, certifying that the applicable conditions described in Sections 3.2(a) through 3.2(o) have been satisfied; and
(q)the Conversion Date shall not have occurred.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
4.1Representations and Warranties of the Issuer. The Issuer represents and warrants to the Note Purchasers, the Funding Agents and the Administrative Agent that the representations and warranties of the Issuer set forth in the Transfer and Servicing Agreements, the Indenture and the other Basic Documents to which it is a party are true and correct as of the Restatement Date (except for representations or warranties which relate to a specific date, which shall be true and correct as of such date).
4.2Representations and Warranties of the Transferor and the Servicer. Each of the Transferor and the Servicer severally (each with respect to itself only) represents and warrants to
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the Note Purchasers, the Funding Agents and the Administrative Agent that its representations and warranties (as Transferor or Servicer, as applicable) set forth in the Pooling and Servicing Agreement and the other Basic Documents to which it is a party are true and correct as of the Restatement Date (except for representations or warranties which relate to a specific date, which shall be true and correct as of such date).
4.3Representations and Warranties of the Note Purchasers. Each of the Note Purchasers severally (each with respect to itself only) represents and warrants to, and agrees with, the Issuer, the Servicer and the Transferor that:
(a)Such Note Purchaser is duly authorized to enter into and perform this Agreement and its respective Investment Letter and has duly executed and delivered this Agreement and such Investment Letter;
(b)This Agreement constitutes the valid and binding obligation of such Note Purchaser, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, receivership and other laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies as the same may be applied in the event of the bankruptcy, insolvency, reorganization, receivership or liquidation or a similar event of such Note Purchaser or a moratorium applicable to such Note Purchaser and to general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity);
(c)No registration with, consent or approval of or other action by any federal, state, or other Governmental Authority having jurisdiction over such Note Purchaser is required in connection with the execution, delivery or performance by such Note Purchaser of this Agreement; and
(d)(i) It is not acquiring such Note with the assets of an “employee benefit
plan” subject to Title I of ERISA, a “plan” described in and subject to Section 4975 of the Code, an entity deemed to hold plan assets of any of the foregoing by reason of investment by an “employee benefit plan” or “plan” in such entity (each of the foregoing, a “Benefit Plan Investor”), or a governmental plan subject to applicable law that is substantially similar to the fiduciary responsibility and/or prohibited transaction provisions of ERISA or Section 4975 of the Code or (ii) (A) the acquisition and holding of such Note will not result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Code (or, in the case of a governmental plan, any substantially similar applicable law) and (B) if it is a Benefit Plan Investor, the decision to acquire such Notes has been made by a fiduciary that is an “independent fiduciary with financial expertise” as described in 29 C.F.R. Sec. 2510.3-21(c)(1).
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ARTICLE 5 COVENANTS
5.1Covenants. Each of the Issuer, the Transferor, the Seller and the Servicer severally covenants and agrees, in each case as to itself individually or in such respective capacities, each with respect to itself only, until termination of this Agreement as provided herein, unless the Required Noteholders shall otherwise consent in writing (it being understood that the waiver of a breach of any such covenant or agreement shall require the consent of the Special Required Noteholders if such breach constitutes an Event of Default under Section 5.1(d) of the Indenture or a Servicer Default under Section 9.01(b) of the Pooling and Servicing Agreement), that:
(a)Unless waived in writing by the Special Required Noteholders, each of the Issuer, the Transferor, the Seller and the Servicer, as applicable, shall perform in all material respects each of the respective agreements and warranties applicable to it under the Basic Documents to which it is a party and comply in all material respects with each of the respective terms and provisions applicable to it under the Basic Documents to which it is party, which agreements and warranties are hereby incorporated by reference into this Agreement as if set forth herein in full;
(b)The Transferor, the Issuer and the Servicer, as applicable, shall promptly furnish to each Funding Agent and the Administrative Agent (i) a copy of each certificate, report, statement, notice or other communication furnished by or on behalf of the Transferor, the Issuer or the Servicer, as applicable, to the holders of Notes concurrently therewith, and (ii) such other information, documents, records or reports respecting the Loans, the Issuer, the Transferor or the Servicer which is in the possession or under the control of the Issuer, the Transferor or the Servicer, as the case may be, as the Administrative Agent may from time to time reasonably request;
(c)Without limitation of the provisions of Section 5.1(b) above, the Servicer (with respect to clauses (i), (ii) and (iii) of this Section 5.1(c)) and the Issuer (with respect to clause (iv) of this Section 5.1(c)) shall furnish to each Funding Agent (i) with respect to each Distribution Date, a copy of the completed Servicer’s Certificate furnished to each Noteholder pursuant to Section 3.10 of the Pooling and Servicing Agreement, (ii) a copy of each annual certified public accountants’ reports received by the Indenture Trustee, the Owner Trustee and the Servicer pursuant to Section 5.02(a) of the Pooling and Servicing Agreement, (iii) a copy of each Officer’s Certificate of the Servicer furnished to the Indenture Trustee and the Owner Trustee pursuant to Section 5.01(a) of the Pooling and Servicing Agreement and (iv) a copy of each Opinion of Counsel delivered pursuant to Section 3.6 or Section 12.1 of the Indenture;
(d)Each of the Issuer, the Transferor, the Servicer and the Seller, as applicable, shall furnish to each Funding Agent promptly after known to such party, information with respect to any action, suit or proceeding involving such party or any of its Affiliates by or before any Governmental Authority which, if adversely determined, would be reasonably likely to result in a material and adverse effect on the transactions contemplated by, or such party’s ability to perform its obligations under, this Agreement or the Basic Documents;
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(e)From the date hereof until the termination date of this Agreement, unless waived by the Required Noteholders, each of the Issuer, the Transferor and the Servicer, as applicable, will comply with the provisions set forth in Section 5.03 of the Pooling and Servicing Agreement;
(f)The Transferor and Servicer shall furnish to each Funding Agent, promptly after the occurrence of any Rapid Amortization Event or Event of Default, a certificate of an appropriate officer of the Transferor setting forth the information provided in the certificate delivered pursuant to Section 4.1 of the Indenture;
(g)The Transferor, the Issuer and the Servicer, as applicable, shall comply with the provisions set forth in Section 9.2 of the Indenture;
(h)Each statement of the Servicer delivered in accordance with Section 12.1 of the Indenture shall be correct in all material respects and shall have been prepared, in all material respects, in accordance with the applicable provisions of the Basic Documents; and
(i)The Servicer and the Seller, as applicable, shall cause ALH to comply with each of the covenants set forth in Section 7 of the Credit Agreement (without giving effect to an amendment, modification, consent, supplement or other modification of Section 7 (directly or indirectly, including any defined terms therein) of the Credit Agreement after the Restatement Date unless such amendment is consented to in writing by the Administrative Agent and the Required Noteholders).
ARTICLE 6 THE NOTE AGENTS
6.1Authorization and Action of the Note Agents. (a) Each Note Purchaser hereby appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement, the Indenture, any Transfer and Servicing Agreement and any other Basic Documents as are delegated to the Administrative Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Each Note Purchaser in each Purchaser Group hereby appoints and authorizes the Funding Agent for such Purchaser Group as the agent of such Note Purchaser under this Agreement to take such action as agent on its behalf and to exercise such powers under this Agreement, the Indenture, the Pooling and Servicing Agreement and any other Basic Documents as are delegated to such Funding Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, neither any Administrative Agent nor any Funding Agent (the Administrative Agent and each Funding Agent being referred to in this Article as a “Note Agent”) shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Note Purchaser, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against any Note Agent. In furtherance, and without limiting the generality of the foregoing, each CP Conduit and each Committed Purchaser hereby appoints the Administrative Agent and the applicable Funding Agent as its agent to execute and deliver all further instruments and documents, and agrees to take all further action that the Administrative Agent or Funding Agent, as applicable, may deem necessary or appropriate or that a CP Conduit or a Committed Purchaser may reasonably request
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in order to perfect, protect or more fully evidence the interests transferred or to be transferred from time to time by the Transferor or the Issuer hereunder, or to enable any of them to exercise or enforce any of their respective rights hereunder. With respect to actions which are incidental to the actions specifically delegated to any Funding Agent hereunder, such Funding Agent shall not be required to take any such incidental action hereunder, but shall be required to act or to refrain from acting (and shall be fully protected in acting or refraining from acting) upon the direction of the Administrative Agent or upon the direction of the Note Purchaser in its Purchaser Group; provided, however, no Note Agent shall be required to take any action hereunder if the taking of such action, in the reasonable determination of such Note Agent, shall be in violation of any applicable law, rule or regulation or contrary to any provision of this Agreement or shall expose such Note Agent to liability hereunder or otherwise. Each Note Agent shall exercise such rights and powers vested in it by this Agreement, the Indenture, the Pooling and Servicing Agreement and any other Basic Documents, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
(b)No Note Agent shall be deemed to have knowledge or notice of the occurrence of any breach of this Agreement or the occurrence of any Rapid Amortization Event or Event of Default unless such Note Agent has received notice from the Issuer, the Transferor, the Servicer, the Indenture Trustee or any Note Purchaser, referring to this Agreement and describing such event. In the event that the Administrative Agent receives such a notice, it shall promptly give notice thereof to each Funding Agent, and in the event any Funding Agent receives such a notice, it shall promptly give notice thereof to the Note Purchasers in its Purchaser Group. The Administrative Agent and each Funding Agent shall take such action with respect to such event as shall be reasonably directed by the Required Noteholders; provided, that unless and until such Note Agent shall have received such directions, the Administrative Agent or such Funding Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such event as it shall deem advisable in the best interests of the Note Purchasers or of the Note Purchasers in its Purchaser Group, as applicable.
(c)The Administrative Agent shall promptly furnish to each Funding Agent a copy of each certificate, report, statement, notice or other communication furnished by or on behalf of the Transferor, the Issuer or the Servicer to the Administrative Agent in its capacity as Administrative Agent.
(d)The Administrative Agent shall not, without the prior written consent of each Funding Agent and each Note Purchaser, agree or consent to any amendment, modification or waiver of any provision of this Agreement, the Transfer and Servicing Agreements or the Indenture which would in any way (i) reduce, impair or change the timing of payments required to be made by the Transferor, the Issuer or the Servicer or the application of the proceeds of such payments, (ii) increase the Servicing Fee, (iii) release any material portion of the property subject to the liens provided by the Pooling and Servicing Agreement and the Indenture (other than as expressly contemplated herein or therein) or (iv) permit the appointment of any Person (other than the Back-up Servicer) as Successor Servicer. No Funding Agent shall agree to any amendment of this Agreement which increases the dollar amount of the commitment of its related Committed Purchaser without the prior consent of such Committed Purchaser. In addition, each Funding Agent agrees that it shall not agree to any amendment of this Agreement
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not specifically described in the two preceding sentences without the consent of the Committed Purchasers and the related CP Conduit (if any) in its Purchaser Group. In the event the Funding Agent requests a Person’s consent pursuant to the foregoing provisions and the Funding Agent does not receive a response to such request (either positive or negative) from such Person within ten (10) Business Days of such Person’s receipt of such request, then such Person (and its percentage interest hereunder) shall be disregarded in determining whether the Funding Agent shall have obtained sufficient consent hereunder.
(e)Each Note Agent may execute any of its duties under any of the Basic Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Note Agent shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
6.2Note Agent’s Reliance, Etc. Neither any Note Agent nor any of its directors, officers, agents or employees shall be liable to any CP Conduit or Committed Purchaser for any action taken or omitted to be taken by it or them as a Note Agent under or in connection with this Agreement, the Indenture, the Transfer and Servicing Agreements or any other Basic Document, except for its or their own gross negligence or willful misconduct. Without limiting the foregoing, each Note Agent: (i) may consult with legal counsel (including counsel for the Transferor, the Issuer or the Servicer), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any CP Conduit or any Committed Purchaser and shall not be responsible to any CP Conduit or any Committed Purchaser for any statements, warranties or representations made in or in connection with this Agreement; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement, the Indenture, any Transfer and Servicing Agreement or any other Basic Document on the part of the Transferor, the Issuer or the Servicer or to inspect the property (including the books and records) of the Transferor, the Issuer, or the Servicer; (iv) shall not be responsible to any CP Conduit or any Committed Purchaser for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, the Indenture, any Transfer and Servicing Agreement or any other Basic Document or any other instrument or document furnished pursuant hereto or thereto; and (v) shall incur no liability to any CP Conduit or Committed Purchaser under or in respect of this Agreement, the Indenture, any Transfer and Servicing Agreement or any other Basic Document by acting upon any notice (including notice by telephone), consent, certificate or other instrument or writing (which may be by telex) believed by it to be genuine and signed or sent by the proper party or parties. Each Note Agent shall be fully justified in failing or refusing to take any action under any of the Basic Documents unless it shall first receive such advice or concurrence of the Required Noteholders as it deems appropriate or it shall first be indemnified to its satisfaction by (A) in the case of the Administrative Agent, the Committed Purchasers or (B) in the case of a Funding Agent, the Committed Purchasers in its Purchaser Group, 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 Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under any of the Basic Documents in accordance with a request of the Required Noteholders (or their Funding Agents), and such request and any action taken or failure to act pursuant thereto shall be binding upon all present and future Note Purchasers. Each Funding Agent shall in all
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cases be fully protected in acting, or in refraining from acting, under any of the Basic Documents in accordance with a request of the Required Noteholders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all present and future Note Purchasers in such Purchaser Group.
6.3Credit Decision. Each CP Conduit and each Committed Purchaser acknowledges that it has, independently and without reliance upon the Administrative Agent, any of the Administrative Agent’s Affiliates, any Funding Agent, any other Committed Purchaser or any other CP Conduit and based upon such documents and information as it has deemed appropriate, made its own evaluation and decision to enter into this Agreement, the Indenture, any Transfer and Servicing Agreement and any other Basic Documents to which it is a party and, if it so determines, to accept the transfer to its related Funding Agent on its behalf of its interest in the Note hereunder. Each CP Conduit and each Committed Purchaser also acknowledges that it will, independently and without reliance upon the Administrative Agent, any of the Administrative Agent’s Affiliates, any Funding Agent, any other Committed Purchaser or any other CP Conduit and based on such documents and information as it shall deem appropriate at the time, continue to make its own decisions in taking or not taking action under this Agreement, the Indenture, any Transfer and Servicing Agreement and any other Basic Documents to which it is a party. Except, in the case of a Note Agent, for notices, reports and other documents received by such Note Agent under Section 5.1, no Note Agent shall have any duty or responsibility to provide any Note Purchaser with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Transferor, the Servicer, the Issuer, the Loans or the Indenture Trustee which may come into the possession of such Note Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
6.4Indemnification of each Note Agent. (i) The Committed Purchasers agree to indemnify the Administrative Agent in its capacity as such (without limiting the obligation (if any) of the Issuer, the Transferor and the Servicer to reimburse the Administrative Agent for any such amounts), ratably according to their respective Commitments (or, if the Commitments have terminated, Percentage Interests), and (ii) the Committed Purchasers in each Purchaser Group agree to indemnify the Funding Agent for such Purchaser Group in its capacity as such (without limiting the obligation (if any) of the Issuer, the Transferor and the Servicer to reimburse such Funding Agent for any such amounts), ratably according to their respective Commitments (or, if the Commitments have terminated, Percentage Interests), in each case from and against any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against such Note Agent (in its capacity as such) in any way relating to or arising out of this Agreement, the Indenture, the Transfer and Servicing Agreements and the other Basic Documents or such action taken or omitted by such Note Agent hereunder or thereunder, provided that such Committed Purchaser shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Note Agent’s gross negligence or willful misconduct. Without limitation of the foregoing, the Committed Purchasers agree to reimburse such Note Agent, ratably according to their Commitments (or, if the Commitments have terminated, Percentage Interests), promptly upon demand for any out-of-pocket expenses (including counsel fees) incurred by such Note Agent in connection with the administration, modification,
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amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, the Indenture, any Transfer and Servicing Agreement and any other Basic Documents, to the extent that such expenses are incurred in the interests of or otherwise in respect of the CP Conduits or the Committed Purchasers hereunder and/or thereunder and to the extent that such Note Agent is not reimbursed for such expenses by the Transferor, the Issuer or the Servicer. The agreements in this Section 6.4 shall survive the payment of the obligations under this Agreement, including the Aggregate Note Principal Balance.
6.5Note Agents in their Individual Capacity. Each Note Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Issuer, the Transferor or the Servicer as though such Note Agent were not an agent hereunder. In addition, the Note Purchasers acknowledge that one or more Persons which are Note Agents may act (i) as administrator, sponsor or agent for one or more CP Conduits and in such capacity act and may continue to act on behalf of each such CP Conduit in connection with its business, and (ii) as the agent for certain financial institutions under the liquidity and credit enhancement agreements relating to this Agreement to which any one or more CP Conduits is party and in various other capacities relating to the business of any such CP Conduit under various agreements. Any such Person, in its capacity as Note Agent, shall not, by virtue of its acting in any such other capacities, be deemed to have duties or responsibilities hereunder or be held to a standard of care in connection with the performance of its duties as a Note Agent other than as expressly provided in this Agreement. Any Person which is a Note Agent may act as a Note Agent without regard to and without additional duties or liabilities arising from its role as such administrator or agent or arising from its acting in any such other capacity.
6.6Successor Administrative Agent; Successor Funding Agent. The Administrative Agent may resign at any time, effective upon the appointment and acceptance of a successor Administrative Agent as provided below, by giving written notice thereof to each Funding Agent, each CP Conduit, each Committed Purchaser, the Indenture Trustee, the Issuer, the Transferor and the Servicer. If the Administrative Agent shall resign as Administrative Agent under this Agreement, then the Special Required Noteholders shall appoint from among the Committed Purchasers a successor administrative agent; provided that, in the case of any successor administrative agent that is not a “U.S. person” and a “financial institution” within the meaning of Treasury Regulations Section 1.1441-1, the Servicer shall have provided its prior written consent to such appointment (not to be unreasonably withheld or delayed). If no such successor Administrative Agent shall have been so appointed, and shall have accepted such appointment, within thirty (30) days after the retiring Administrative Agent’s giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Note Purchasers, appoint a successor Administrative Agent with the prior consent of the Funding Agents (which such consent will not be unreasonably withheld) and, unless an Event of Default or Rapid Amortization Event has occurred and is continuing, the Servicer (not to be unreasonably withheld or delayed). Any Funding Agent may resign at any time, effective upon the appointment and acceptance of a successor Funding Agent as provided below, by giving written notice thereof to the Note Purchasers in its Purchaser Group, the Administrative Agent and each other Funding Agent, the Indenture Trustee, the Issuer, the Transferor and the Servicer. If a Funding Agent shall resign as Funding Agent under this Agreement, then the Required Note Purchasers and the Required Note Owners, in each case for the applicable Purchaser Group, shall
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appoint from among the Committed Purchasers in such Purchaser Group a successor agent for such Purchaser Group. If no such successor Funding Agent shall have been so appointed, and shall have accepted such appointment, within thirty (30) days after the retiring Funding Agent’s giving of notice of resignation, then the retiring Funding Agent may, on behalf of the CP Conduits and the Committed Purchasers in such Purchaser Group, appoint a successor Funding Agent for such group. Upon the acceptance of any appointment as a Note Agent hereunder by a successor Note Agent, such successor Note Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the applicable retiring Note Agent accruing after the date of its appointment, and the retiring Note Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Note Agent’s resignation hereunder as Note Agent, the provisions of this Article 6 shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was such Note Agent under this Agreement.
6.7Payments by a Funding Agent. Unless specifically allocated to a CP Conduit or a Committed Purchaser pursuant to the terms of this Agreement, all amounts received by a Funding Agent on behalf of the related CP Conduit(s) or Committed Purchasers shall be paid by such Funding Agent to such CP Conduit(s) or Committed Purchaser(s), as applicable (at the account specified in writing to such Funding Agent) on the Business Day received by such Funding Agent, unless such amounts are received after 12:00 noon (New York time) on such Business Day, in which case such Funding Agent shall use its reasonable efforts to pay such amounts, on such Business Day, but, in any event, shall pay such amounts not later than 11:00 a.m. (New York time) the following Business Day.
ARTICLE 7 SECURITIES LAWS; TRANSFERS
7.1Transfers of Notes.
(a)Each Note Purchaser shall execute and deliver to the Issuer and the Transferor on or prior to the Restatement Date an Investment Letter substantially in the form attached as Exhibit D to the Indenture. Each Note Owner agrees that the interest in the Notes purchased by it will be acquired for investment only and not with a view to any public distribution thereof, and that such Note Owner will not offer to sell or otherwise dispose of any Note acquired by it (or any interest therein) in violation of any of the requirements of the Securities Act or any applicable state or other securities laws. Each Note Owner acknowledges that it has no right to require the Issuer or the Transferor to register, under the Securities Act, as amended, or any other securities law, the Notes (or any interest therein) acquired by it pursuant to this Agreement or any Transfer Supplement. Each Note Owner hereby confirms and agrees that in connection with any transfer or syndication by it of an interest in the Notes, such Note Owner has not engaged and will not engage in a general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
(b)Each initial purchaser of a Note or any interest therein and any Assignee thereof or Participant therein shall furnish to the Issuer, the Transferor, the Servicer, the Indenture Trustee, the Administrative Agent, the Funding Agent for its Purchaser Group, and to the Note Owner making the Transfer the applicable forms described in Section 2.4(c).
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(c)Any sale, transfer or other disposition (but not Participation, pledge or hypothecation) (any such non-excluded disposition being referred to herein as a “Transfer”) of a Note or any interest therein may be made only in accordance with this Section 7.1(c), Section 7.1(e) and the Indenture. Any partial Transfer of an interest in a Note, a Commitment or any Purchaser Percentage by a Committed Purchaser shall be in respect of at least $5,000,000 in the aggregate, which may be composed of (A) Note Principal Balance, or (B) to the extent in excess of the Note Principal Balance subject to such Transfer, Commitment hereunder. Any Transfer of an interest in a Note otherwise permitted by this Section 7.1 will be permitted only if it consists of a pro rata percentage interest in all payments made with respect to the Note Purchaser’s interest in such Note. It is expressly understood and agreed that any Transfer of an interest in a Commitment includes the commitment to make Advances until the Conversion Date. Unless the Transfer (x) occurs between members of the same Purchaser Group or (y) is to ALS, the Transferor or the Issuer, no Note or any interest therein may be Transferred to any Person (each, a “Transferee”) unless prior to the Transfer (i) the Transferee shall have executed and delivered to the Administrative Agent, the applicable Funding Agent, the Issuer, the Transferor and the Servicer an Investment Letter and (ii) the Noteholder making such Transfer or the Transferee shall have paid to the Administrative Agent a processing fee in the amount of $3,500.
Subject to compliance with Section 8.18, each of the Issuer, the Transferor and the Servicer authorizes each Note Purchaser to disclose to any Transferee and Support Party and to any prospective Transferee or Support Party which is a Permitted Transferee any and all confidential information in the Note Purchaser’s possession concerning this Agreement or the Basic Documents or concerning the Loans, or such party which has been delivered to any Funding Agent or such Note Purchaser pursuant to this Agreement or the Basic Documents (including information obtained pursuant to rights of inspection granted hereunder) or which has been delivered to such Note Purchaser by or on behalf of the Issuer, the Transferor or the Servicer in connection with such Note Purchaser’s credit evaluation of the Loans, the Issuer, the Transferor or the Servicer prior to becoming a party to, or purchasing an interest in this Agreement or the Notes.
(d)Each Note Purchaser may, in accordance with applicable law, at any time grant participations in all or part of its Commitment or its interest in the Notes, including the payments due to it under this Agreement and the Basic Documents (each, a “Participation”), to any Permitted Transferee (each such Permitted Transferee, a “Participant”); provided, however, that no Participation shall be granted to any Person (i) until such Person, unless such Person is a member of the same Purchaser Group, shall have executed and delivered to the Funding Agent, the Issuer, the Transferor and the Servicer an Investment Letter, (ii) unless and until the Funding Agent for such Note Purchaser’s Purchaser Group shall have consented thereto, and (iii) unless such Participation consists of a pro rata percentage interest in all payments made with respect to such Note Purchaser’s beneficial interest (if any) in the Notes. In connection with any such Participation, each Funding Agent for a Purchaser Group (acting as an agent of the Issuer) shall maintain a register of each Participant of members of its Purchaser Group which such register shall reflect the name and address of each such Participant and the principal amounts and stated interest of each Participant’s interest in the Notes and the other obligations pursuant to this Agreement. The entries in each such register shall be conclusive absent manifest error, and the applicable Funding Agent and Note Purchaser shall treat each such Person whose name is recorded in the applicable register as the owner of the applicable Participation for all purposes of
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this Agreement. Each Note Purchaser hereby acknowledges and agrees that (A) any such Participation will not alter or affect such Note Purchaser’s direct obligations hereunder, and (B) none of the Administrative Agent, the Indenture Trustee, the Transferor, the Issuer or the Servicer shall have any obligation to have any communication or relationship with any Participant. Each Note Purchaser and each Participant shall comply with the provisions of Section 2.4(c). No Participant shall be entitled to Transfer all or any portion of its Participation, without the prior written consent of the Funding Agent for its Purchaser Group and having complied with the requirements set forth in this Section 7.1(d). Each Participant shall be entitled to receive additional amounts and indemnification pursuant to Sections 2.3, 2.4 and 2.5 as if such Participant were a Note Purchaser, as applicable, and such Sections applied to its Participation; provided, in the case of Section 2.4, that such Participant has complied with the provisions of Section 2.4(c) as if it were a Note Purchaser, as applicable; provided, however, that a Participant shall not be entitled to receive any greater amounts pursuant to Sections 2.3, 2.4 or 2.5 than the applicable underlying Note Purchaser would have been entitled to receive with respect to the Note underlying the Participation sold to such Participant without the Issuer’s consent. Each Note Purchaser shall give the Funding Agent for its Purchaser Group notice of the consummation of any sale by it of a Participation. It shall be a further condition to the grant of any Participation that the Participant shall to the extent such Participant has not otherwise directly provided such forms to the Servicer and the Indenture Trustee, (i) prior to the date on which the first interest payment is due to such Participant, provide to the Servicer, the Transferor and Indenture Trustee, the forms described in Section 2.4(c) as though the Participant were a Note Purchaser and (ii) will provide subsequent forms as described in Section 2.4(c) with respect to such Participant as though it were a Note Purchaser.
(e)Each Note Purchaser may, with the consent of the Funding Agent for its Purchaser Group and in accordance with applicable law and the Indenture, sell or assign (each, an “Assignment”), to any Permitted Transferee (each, an “Assignee”) all or any part of its Commitment (if any) or its interest in the Notes and its rights and obligations under this Agreement and the Basic Documents pursuant to an agreement substantially in the form attached hereto as Exhibit A (a “Transfer Supplement”), executed by such Assignee and the Note Purchaser, and delivered to the Funding Agent for its Purchaser Group for its acceptance and consent or, in the case of an assignment, participation or pledge by a CP Conduit to a CPC Committed Purchaser within its Purchaser Group, pursuant to its Support Facility documentation; provided, however, that (i) no Assignment, other than to a member of the same Purchaser Group, shall be effective unless prior to the Assignment the Assignee shall have executed and delivered to the Administrative Agent, the Funding Agent, the Issuer, the Transferor and the Servicer an Investment Letter, (ii) no assignment or sale by a CPC Committed Purchaser shall be effective without the consent of the CP Conduit in its Purchaser Group and (iii) in no event shall the consent of a Funding Agent be required in the case of an assignment, participation or pledge by a CP Conduit of its interest in the Notes and its rights and obligations under this Agreement and the Basic Documents to any one or more of the CPC Committed Purchasers in its Purchaser Group. From and after the effective date determined pursuant to such Transfer Supplement, (x) the Assignee thereunder shall be a party hereto and, to the extent provided in such Transfer Supplement, have the rights and obligations of a Note Purchaser hereunder and under the Basic Documents as set forth therein and (y) the transferor Note Purchaser shall, to the extent provided in such Transfer Supplement, be released from its Commitment and other obligations under this Agreement; provided, however, that after giving
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effect to each such Assignment, the obligations released by any such Note Purchaser shall have been assumed by an Assignee or Assignees. Such Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Assignee and the resulting adjustment of Percentage Interests, Purchaser Percentages or Liquidity Percentages arising from the Assignment. Upon its receipt and acceptance of a duly executed Transfer Supplement, the Funding Agent for the applicable Purchaser Group (or, in the case of an Assignment by which a new Purchaser Group is added to this Agreement, the Administrative Agent) shall on the effective date determined pursuant thereto give notice of such acceptance to the Administrative Agent, the Issuer, the Transferor, the Servicer and the Indenture Trustee.
Upon instruction to register a transfer of a Note Purchaser’s interest in the Notes (or portion thereof) and surrender for registration of transfer of such Note Purchaser’s Notes (if applicable) and delivery to the Transferor, the Issuer, the Servicer and the Indenture Trustee of an Investment Letter, executed by the registered owner (and the beneficial owner if it is a Person other than the registered owner), and receipt by the Indenture Trustee of a copy of the duly executed related Transfer Supplement and such other documents as may be required under this Agreement, such interest in the Notes (or portion thereof) shall be transferred in the records of the Indenture Trustee and the applicable Funding Agent and, if requested by the Assignee, new Notes shall be issued to the Assignee and, if applicable, the transferor Note Purchaser in amounts reflecting such Transfer as provided in the Indenture. To the extent of any conflict between the provisions of this Section 7.1 and any provisions of Section 2.12 of the Indenture applicable to Transfers of Notes (or interests therein), the provisions of this Section 7.1 shall control. Successive registrations of Transfers as aforesaid may be made from time to time as desired, and each such registration of a transfer to a new registered owner shall be noted on (and, for clarity, shall not be effective until noted on) the Note Register.
(f)Notwithstanding any other provision of this Agreement to the contrary, each Note Purchaser may at any time pledge or grant a security interest in all or any portion of its rights or its interest in the Notes or under this Agreement as collateral to secure obligations of such Note Purchaser to any Federal Reserve Bank, without notice to or consent of the Issuer, the Administrative Agent or any other Person; provided that no such pledge or grant of a security interest shall release a Note Purchaser from any of its obligations hereunder, or substitute any such pledgee or grantee for such Note Purchaser as a party hereto.
(g)Any Note Purchaser shall have the option to change its Investing Office, provided that such Note Purchaser shall continue to be in compliance with the provisions of Sections 2.4(b) and 2.4(c).
(h)Each Affected Party shall be entitled to receive additional payments and indemnification pursuant to Sections 2.3, 2.4 and 2.5 as though it were a Note Purchaser and such Section applied to its interest in or commitment to acquire an interest in the Notes; provided that such Affected Party shall not be entitled to additional payments pursuant to (i) Section 2.3 by reason of Regulatory Changes which occurred prior to the date it became an Affected Party or (ii) Section 2.4 attributable to its failure to satisfy the requirements of Section 2.4(c) as if it were a Note Purchaser, and provided further, that unless such Affected Party is a Permitted Transferee or has been consented to by the Transferor, such Affected Party shall be entitled to receive
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additional amounts pursuant to Sections 2.3 or 2.4 only to the extent that its related CP Conduit or assigning Committed Purchaser would have been entitled to receive such amounts in the absence of the commitment and Support Advances from such Affected Party.
(i)Each Affected Party claiming increased amounts described in Sections 2.3 or 2.4 shall furnish, through its related CP Conduit, to the Issuer, the Transferor, the Servicer, the Indenture Trustee, the Administrative Agent and the Funding Agent for the applicable Purchaser Group a certificate setting forth the basis and amount of each request by such Affected Party for any such amounts referred to in Sections 2.3 or 2.4, such certificate to be conclusive with respect to the factual information set forth therein absent manifest error.
(j)In the event that a CPC Committed Purchaser is a Downgraded Purchaser, the related CP Conduit shall have the right to replace such Committed Purchaser with a replacement Committed Purchaser consented to by the Transferor (which consent shall not be unreasonably withheld), which “Replacement Purchaser” shall succeed to the rights of such Committed Purchaser under this Agreement in respect of its Commitment as a Committed Purchaser, and such Committed Purchaser shall assign such Commitment and its interest in the Notes, to such replacement Committed Purchaser in accordance with the provisions of this Section 7.1; provided, that (i) such Committed Purchaser shall not be replaced hereunder with a new investor until such Committed Purchaser has been paid in full its Percentage Interest of the Aggregate Note Principal Balance and all accrued and unpaid interest thereon by such new investor and all other amounts (including all amounts owing under Sections 2.3 and 2.4) owed to it and to all Participants with respect to such Committed Purchaser pursuant to this Agreement, and (ii) if the Committed Purchaser to be replaced is a Note Agent, a replacement agent shall have been appointed in accordance with Section 6.6, and the Note Agent to be replaced shall have been paid all amounts owing to it as agent pursuant to this Agreement. For purposes of this subsection, a Committed Purchaser shall be a “Downgraded Purchaser” if and so long as the credit rating assigned to its short-term obligations by Moody’s or S&P on the date on which it became a party to this Agreement shall have been reduced or withdrawn, or as may be otherwise agreed among the Issuer, such Committed Purchaser and the CP Conduit in its Purchaser Group.
Notwithstanding the foregoing or the provisions of Section 7.1(j), if the Note Purchaser being replaced pursuant to this subsection is a CPC Committed Purchaser, the Replacement Purchaser shall be acceptable to the CP Conduit in its Purchaser Group in its sole discretion, and it shall be a condition of such replacement that such Replacement Purchaser enter into substitute Support Facilities for those to which the Note Purchaser being replaced is a party on terms mutually acceptable to the parties thereto. In addition, if the Note Purchaser to be replaced is a Funding Agent or the Administrative Agent, or a CP Conduit which is administered or sponsored by a Funding Agent or the Administrative Agent, it shall be a condition of such replacement that a replacement Funding Agent or Administrative Agent shall have been appointed in accordance with Section 6.6, and the Funding Agent or Administrative Agent to be replaced shall have been paid all amounts owing to it as Funding Agent or Administrative Agent, as applicable pursuant to this Agreement.
(k)Without limiting the foregoing, each CP Conduit may, from time to time, with prior or concurrent notice to the Servicer, in one transaction or a series of transactions, assign all or a portion of its Percentage Interest in the Aggregate Note Principal Balance and its
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rights and obligations under this Agreement and any other Basic Document to which it is a party to a Conduit Assignee that is a Permitted Transferee. Upon and to the extent of such assignment by the CP Conduit to a Conduit Assignee, (i) such Conduit Assignee shall be the owner of the assigned portion of such Percentage Interest, (ii) the related administrator for such Conduit Assignee will act as the Funding Agent for such Conduit Assignee, with all corresponding rights and powers, express or implied, granted to the Funding Agent hereunder or under the other Basic Documents, (iii) such Conduit Assignee and its liquidity support provider(s) and credit support provider(s) and other related parties shall have the benefit of all the rights and protections provided to the CP Conduit and its Support Parties herein and in the other Basic Documents (including any limitation on recourse against such Conduit Assignee or related parties, any agreement not to file or join in the filing of a petition to commence an insolvency proceeding against such Conduit Assignee, and the right to assign to another Conduit Assignee as provided in this paragraph), (iv) such Conduit Assignee shall assume all (or the assigned or assumed portion) of the CP Conduit’s obligations, if any, hereunder or any other Basic Document, and the CP Conduit shall be released from such obligations, in each case to the extent of such assignment, and the obligations of the CP Conduit and such Conduit Assignee shall be several and not joint, (v) all distributions in respect of such Percentage Interest shall be made to the applicable agent or Funding Agent, on behalf of the CP Conduit and such Conduit Assignee on a pro rata basis according to their respective interests, (vi) the defined terms and other terms and provisions of this Agreement and the other Basic Documents shall be interpreted in accordance with the foregoing, and (vii) if requested by the applicable Funding Agent or the Administrative Agent with respect to the Conduit Assignee, the parties will execute and deliver such further agreements and documents and take such other actions as such Funding Agent or Administrator may reasonably request to evidence and give effect to the foregoing. No assignment by the CP Conduit to a Conduit Assignee of all or any portion of such Percentage Interest shall in any way diminish the related CPC Committed Purchaser’s obligations under Section 2.1(d) to purchase any Advance not funded by the CP Conduit or such Conduit Assignee or to acquire from the CP Conduit or such Conduit Assignee all or any portion of its Percentage Interest.
7.2Tax Characterization. It is the intention of the parties hereto that, for purposes of federal, state and local income and franchise tax and any other tax measured in whole or in part by income, the Issuer not be treated as an association (or publicly traded partnership) taxable as a corporation and the Notes be treated as indebtedness, and the parties hereto agree to so treat, and to take no action inconsistent with such treatment of the Issuer and Notes, except as required by law.
ARTICLE 8 MISCELLANEOUS
8.1Amendments and Waivers. This Agreement may not be amended, supplemented or modified nor may any provision hereof be waived except in accordance with the provisions of this Section 8.1. With the written consent of the Required Noteholders and the Administrative Agent, each Funding Agent, the Issuer, the Transferor, ALS and the Servicer may, from time to time, enter into written amendments, supplements, waivers or modifications hereto for the purpose of adding any provisions to this Agreement or changing in any manner the rights of any party hereto or waiving, on such terms and conditions as may be specified in such instrument, any of the requirements of this Agreement; provided, however, that no such amendment, supplement, waiver or modification shall (i) reduce the amount or extend the maturity of any
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Note or reduce the rate or extend the time of payment of interest thereon, or reduce or extend the timing of any other amount payable to any Note Purchaser hereunder or under the Indenture, in each case without the consent of the Note Purchaser affected thereby, (ii) amend, modify or waive any provision of this Section 8.1, or, if such amendment would have a material adverse effect on the Note Purchasers, or would alter the definition of “Note Principal Balance” or “Borrowing Base,” or reduce the percentage specified in the definition of “Required Note Owners” or “Required Note Purchasers,” in each case without the written consent of all Note Purchasers, (iii) amend, modify or waive any provision of Section 6.1 without the written consent of each Funding Agent affected by such amendment, modification or waiver, (iv) amend, modify or waive any of the provisions of Article 2, Section 6.6 or Section 7.1 without the written consent of each Committed Purchaser and each Primary Purchaser in each Purchaser Group or (v) amend, modify or waive any of Sections 2.1, 2.2 or Articles 3, 4 or 8 (other than Sections 8.12(a), 8.12(b) and 8.16) without the written consent of each Committed Purchaser and each Primary Purchaser in each Purchaser Group and of the Administrative Agent. Any waiver of any provision of this Agreement shall be limited to the provisions specifically set forth therein for the period of time set forth therein and shall not be construed to be a waiver of any other provision of this Agreement; provided, further, that the signature of the Transferor, the Issuer and shall not be required for the effectiveness of any amendment which modifies the representations, warranties, covenants or responsibilities of the Servicer at any time when the Servicer is not ALS or any Affiliate of ALS or a Successor Servicer is designated pursuant to Section 8.5.
A Funding Agent may cast any vote or give any consent or direction under the Indenture or other Basic Documents on behalf of the Note Purchasers in its Purchaser Group if it has been directed to do so by the Required Note Owners in such Purchaser Group.
8.2Notices.
(a)All notices, requests and demands to or upon the respective parties hereto and all consents required to be given hereunder to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or, in the case of notice by mail or by e-mail return receipt requested, when received, addressed as follows or, with respect to a Funding Agent or Note Purchaser, as set forth on Annex C or in its respective Transfer Supplement, or to such other address as may be hereafter notified by the respective parties hereto:
Issuer: Alliance Laundry Equipment Receivables Trust 2015-A
c/o Wilmington Trust, National Association
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
with a copy to: Alliance Laundry Equipment Receivables 2015 LLC
221 Shepard Street
Suite 200
Ripon, WI 54971-0990
Attention: Chief Financial Officer
Email: todd.rice@alliancels.com
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Telephone: (920) 748-1716
Servicer: Alliance Laundry Systems LLC
221 Shepard Street
P.O. Box 990
Ripon, WI 54971-0990
Attention: Chief Financial Officer
Email: todd.rice@alliancels.com
Telephone: (920) 748-1716
with a copy to: Alliance Laundry Systems LLC
221 Shepard Street
P.O. Box 990
Ripon, WI 54971-0990
Attention: General Counsel
Email: rob.macklin@alliancels.com
Telephone: (920) 748-7320
Transferor: Alliance Laundry Equipment Receivables 2015 LLC
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
with a copy to: Alliance Laundry Systems LLC
221 Shepard Street
P.O. Box 990
Ripon, WI 54971-0990
Attention: General Counsel
Email: rob.macklin@alliancels.com
Telephone: (920) 748-7320
with a copy to: Baker & McKenzie LLP
300 East Randolph St., Suite 5000
Chicago, IL 60601
Email: jai.khanna@bakermckenzie.com
Indenture Trustee: The Bank of New York Mellon
101 Barclay Street, 4 West
New York, NY 10286
Attn: Asset Backed Securities Group/Alliance Laundry
Equipment Receivables Series 2015-A
Tel: 212-815-8325
Fax: 212-815-2493
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Administrative PNC Bank, National Association, as Administrative Agent Agent: 300 Fifth Avenue
Pittsburgh, PA 15222
Attn: Robyn Reeher
Tel: 412-768-3090
Fax: 844-679-0703
Email: robyn.reeher@pnc.com / abfadmin@pnc.com
(b)All payments to be made to the Administrative Agent or any Funding Agent or Note Purchaser hereunder shall be made in United States dollars and in immediately available funds not later than 11:30 a.m., New York City time, on the date payment is due, and, unless otherwise specifically provided herein, shall be made to the Funding Agent, for the account of one or more of the Note Purchasers or for its own account, as the case may be. Unless otherwise directed by the applicable Purchaser Group, all payments to such Purchaser Group and the Administrative Agent shall be made by federal wire to the applicable account set forth on Annex C. Unless otherwise directed by a Funding Agent or Note Purchaser, all payments to it shall be made by federal wire to the account specified on the signature pages hereto or in the Transfer Supplement by which it became a party hereto (provided, in the case of an account specified in a Transfer Supplement, that the Administrative Agent, the Transferor, the Issuer, the Servicer or the Indenture Trustee, as the case may be, shall have received notice thereof).
8.3No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of any party hereto, any right, remedy, power or privilege under any of the Basic Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege under any of the Basic Documents preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges provided in the Basic Documents are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
8.4Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Issuer, the Transferor, ALS, the Servicer, the Administrative Agent, the Funding Agents, the Note Purchasers, any Transferee and their respective successors and permitted assigns, and, to the extent provided herein, to each Indemnitee, Participant and Support Party and their respective successors and assigns; provided that, except as provided in Section 8.5 or in Section 9.03 of the Pooling and Servicing Agreement, the Issuer, the Transferor and the Servicer may not assign or transfer any of their respective rights or obligations under this Agreement without the prior written consent of the Special Required Noteholders; provided, further, that (i) in connection with any such assignment the assignee shall expressly agree in writing to assume all the obligations of the Issuer, the Transferor or the Servicer, as applicable, hereunder and (ii) no such assignment made without the prior written consent of the Required Noteholders shall relieve the Issuer, the Transferor, ALS or the Servicer, as applicable, of any of its obligations hereunder and provided, further, that no assignment permitted hereunder shall relieve the Issuer, the Transferor, ALS or the Servicer, as applicable, from any obligations arising hereunder prior to such assignment (including obligations with respect to breaches of representations and warranties made herein).
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8.5Successors to Servicer. In the event that a transfer of servicing occurs under Section 9.03 of the Pooling and Servicing Agreement, (i) from and after the effective date of such transfer, the successor servicer (the “Successor Servicer”) shall be the successor in all respects to the Servicer and shall be responsible for the performance of all functions to be performed by the Servicer from and after such date, except as provided in the Pooling and Servicing Agreement, and shall be subject to all the responsibilities, duties and liabilities relating thereto placed on the Servicer by the terms and provisions hereof, and all references in this Agreement to the Servicer shall be deemed to refer to the Successor Servicer, and (ii) as of the date of such transfer, the Successor Servicer shall be deemed to have made with respect to itself the representations and warranties made in Section 4.2 (with appropriate factual changes); provided, however, that the references to the Servicer contained in Section 5.1 shall be deemed to refer to the Servicer with respect to responsibilities, duties and liabilities arising out of an act or acts, or omission, or an event or events giving rise to such responsibilities, duties and liabilities and occurring during such time that Servicer was Servicer under this Agreement and shall be deemed to refer to the Successor Servicer with respect to responsibilities, duties and liabilities arising out of an act or acts, or omission, or an event or events giving rise to such responsibilities, duties and liabilities and occurring during such time that the Successor Servicer acts as Servicer under this Agreement; provided, however, to the extent that an obligation to indemnify Indemnitees under Section 2.5 arises as a result of any act or failure to act of any Successor Servicer in the performance of servicing obligations under the Pooling and Servicing Agreement, such indemnification obligation shall be of the Successor Servicer and not its predecessor.
8.6Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Executed counterparts may be delivered electronically.
8.7Severability. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provisions in any other jurisdiction.
8.8Integration. This Agreement, the Applicable Margin Fee Letter, the Pooling and Servicing Agreement, the Indenture and the other Basic Documents represent the agreement of the Issuer, the Transferor, the Servicer, the Administrative Agent, the Funding Agents and the Note Purchasers with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by any party hereto relative to subject matter hereof not expressly set forth or referred to herein or therein or in the Basic Documents.
8.9Governing. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
8.10Jurisdiction; Consent to Service of Process. Each of the parties hereto hereby irrevocably and unconditionally (i) submits, for itself and its property, to the nonexclusive
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jurisdiction of any New York State court in New York County or federal court of the United States of America for the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment arising out of or relating to this Agreement; (ii) agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, federal court; (iii) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law; (iv) consents that any such action or proceeding may be brought in such courts and waives any objection it may now or hereafter have to the laying of venue of any such action or proceeding in any such court and any objection it may now or hereafter have that such action or proceeding was brought in an inconvenient court, and agrees not to plead or claim the same; (v) consents to service of process in the manner provided for notices in Section 8.2 (provided that, nothing in this Agreement shall affect the right of any such party to serve process in any other manner permitted by law); and (vi) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any such action or proceeding any special, exemplary, punitive or consequential damages.
8.11Termination. This Agreement shall remain in full force and effect until the date on which all Commitments have terminated and the Aggregate Note Principal Balance and all accrued interest thereon, and all Additional Amounts have been paid in full; provided that, the provisions of Sections 2.3, 2.4, 2.5, 6.7, 7.2, 8.10, 8.12, 8.15 and 8.16 shall survive termination of this Agreement and any amounts payable to the Administrative Agent, the Funding Agents, the Note Purchasers or any Affected Party thereunder shall remain payable thereto.
8.12Limited Recourse; No Proceedings.
(a)It is expressly understood and agreed by the parties hereto that (i) this Agreement is executed and delivered by Wilmington Trust, National Association, not individually or personally but solely as the Owner Trustee of the Issuer under the Trust Agreement, in the exercise of the powers and authority conferred and vested in it, (ii) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by Wilmington Trust, National Association but is made and intended for the purpose of binding only the Issuer, (iii) nothing herein contained shall be construed as creating any liability on Wilmington Trust, National Association, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under such parties, (iv) Wilmington Trust, National Association has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Agreement, and (v) under no circumstances shall Wilmington Trust, National Association be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Agreement or the other Basic Documents.
(b)Each of the Issuer, the Transferor, the Servicer, the Administrative Agent, each Funding Agent and each Note Purchaser hereby agrees that it shall not institute or join against any CP Conduit any bankruptcy, reorganization, arrangement, insolvency or liquidation
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proceeding, or other proceeding under any federal or state bankruptcy or similar law, for one year and a day after the latest maturing commercial paper note, medium term note or other debt security issued by such CP Conduit is paid.
(c)Each Funding Agent and each Note Purchaser hereby agrees that it shall not institute or join against the Issuer any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law, for one year and a day after the satisfaction of all Outstanding Obligations.
8.13Survival of Representations and Warranties. All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement, the purchase of the Notes hereunder and the termination of this Agreement.
8.14Effect of Regulatory Change. In the event of any Regulatory Change which results in either (i) a determination that any CP Conduit is required, under generally accepted accounting principles, to consolidate its financial statements with any other entity, or (ii) a cost under Section 2.3, the parties agree to negotiate in good faith to amend the Basic Documents in order to eliminate the consolidation requirement or effect of such Regulatory Change; provided, however that no party shall be obligated to take any action (or make any amendments) if in the reasonable opinion of such party any such amendment to the Basic Documents will be unlawful or otherwise disadvantageous or inconsistent with its policies or regulatory restrictions or result in any liability, unreimbursed cost or expense to such party.
8.15Waiver of Jury Trial. EACH OF THE ISSUER, THE TRANSFEROR, THE SERVICER, THE ADMINISTRATIVE AGENT, THE FUNDING AGENTS AND THE NOTE PURCHASERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENTS AND INSTRUMENTS EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE ISSUER, THE TRANSFEROR, THE SERVICER, THE ADMINISTRATIVE AGENT, THE FUNDING AGENTS AND THE NOTE PURCHASERS. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT AND FOR NOTE PURCHASERS PURCHASING AN INTEREST IN THE NOTES DESCRIBED HEREIN AND THE ADMINISTRATIVE AGENT AND EACH FUNDING AGENT AGREEING TO ACT AS SUCH HEREUNDER.
8.16Excess Funds. A CP Conduit shall be required to make payment of the amounts required to be paid pursuant hereto by such CP Conduit only if the applicable CP Conduit has Excess Funds (as defined below). If the applicable CP Conduit does not have Excess Funds, the excess of the amount due hereunder over the amount paid shall not constitute a “claim” (as defined in Section 101(5) of the Bankruptcy Code) against such CP Conduit until such time as such CP Conduit has Excess Funds. If a CP Conduit does not have sufficient Excess Funds to make any payment due hereunder, then such CP Conduit may pay a lesser amount and make additional payments that in the aggregate equal the amount of the deficiency as soon as possible
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thereafter. The term “Excess Funds” means, at any time, proceeds of commercial paper notes issued, and advances under a Support Facility made, to fund a payment to be made by a CP Conduit hereunder and which are available to make such payment in accordance with the program documents governing such CP Conduit’s commercial paper program; provided that in no event will Excess Funds be greater than the excess of (a) the aggregate projected value of the applicable CP Conduit’s assets and other property (including cash and cash equivalents), over (b) the sum of (i) the sum of all scheduled payments of principal, interest and other amounts payable on publicly or privately placed indebtedness of such CP Conduit for borrowed money, plus (ii) the sum of all other liabilities, indebtedness and other obligations of such CP Conduit for borrowed money or owed to any credit or liquidity provider, together with all unpaid interest then accrued thereon, plus (iii) all taxes payable by such CP Conduit to the Internal Revenue Service, plus (iv) all other indebtedness, liabilities and obligations of such CP Conduit then due and payable, but the amount of any liability, indebtedness or obligation of such CP Conduit shall not exceed the projected value of the assets to which recourse for such liability, indebtedness or obligation is limited.
8.17Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Basic Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Basic Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a)the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and
(b)the effects of any Bail-In Action on any such liability, including, if applicable:
(i)a reduction in full or in part or cancellation of any such liability;
(ii)a conversion of all, or a portion of, such liability into shares or
other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Basic Document; or
(iii)the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.
8.18Confidentiality.
(a)Each of the Issuer, the Servicer and the Transferor covenants and agrees to hold in confidence, and not disclose to any Person, the terms of the Basic Documents (including any fees payable in connection with the Basic Documents or the identity of the Administrative
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Agent or any other Note Purchaser or Funding Agent), except as the Administrative Agent and each Note Purchaser and Funding Agent may have consented to in writing prior to any proposed disclosure; provided, however, that it may disclose such information (i) to its Advisors and Representatives, (ii) to the extent such information has become available to the public other than as a result of a disclosure by or through the Issuer, the Servicer or the Transferor or their Advisors and Representatives, or (iii) to the extent it should be (A) required by applicable law, or in connection with any legal or regulatory proceeding or (B) requested by any Governmental Authority to disclose such information; provided, that, in the case of clause (iii) above, the Issuer, the Servicer and the Transferor will use reasonable efforts to maintain confidentiality and will (unless otherwise prohibited by applicable law) notify the Administrative Agent and the affected Note Purchaser or Funding Agent of its intention to make any such disclosure prior to making such disclosure. Each of the Issuer, the Servicer and the Transferor agrees to be responsible for any breach of this Section 8.18(a) by its Representatives and Advisors and agrees that its Representatives and Advisors will be advised by it of the confidential nature of such information and shall agree to comply with this Section 8.18(a). Notwithstanding the foregoing, it is expressly agreed that each of the Issuer, the Servicer and the Transferor and their respective Affiliates may publish a press release or otherwise publicly announce the existence and principal amount of the Commitments under this Agreement and the transactions contemplated hereby; provided that the Administrative Agent shall be provided a reasonable opportunity to review such press release or other public announcement prior to its release and provide comment thereon; provided, further, that no such press release shall name or otherwise identify the Administrative Agent, any other Funding Agent or Note Purchaser or any of their respective Affiliates without such Person’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed). Notwithstanding the foregoing, the Issuer, the Servicer and the Transferor consents to the publication by the Administrative Agent or any other Funding Agent or Note Purchaser of a tombstone or similar advertising material relating to the financing transactions contemplated by the Basic Documents.
(b)Each of the Administrative Agent and each other Funding Agent and Note Purchaser, severally and with respect to itself only, agrees to hold in confidence, and not disclose to any Person, any confidential and proprietary information concerning the Issuer, the Servicer, the Transferor, any Obligor (solely to the extent such information regarding such Obligor was provided in connection with the Basic Documents) and their respective Affiliates and their businesses or the terms of the Basic Documents (including any fees payable in connection with the Basic Documents), except as the Issuer, the Servicer or the Transferor may have consented to in writing prior to any proposed disclosure; provided, however, that it may disclose such information (i) to its Advisors and Representatives, (ii) to its assignees and participants and potential assignees and participants and their respective counsel if they agree in writing to hold it confidential, (iii) to the extent such information has become available to the public other than as a result of a disclosure by or through it or its Representatives or Advisors, (iv) at the request of a bank examiner or other regulatory authority or in connection with an examination of any of the Administrative Agent or any Note Purchaser or Funding Agent or their respective Affiliates, (v) to any of its related Support Parties, (vi) to any rating agency then rating the Commercial Paper of any CP Conduit, (vii) to any collateral trustee or security trustee under any Commercial Paper program maintained by a CP Conduit or (viii) to the extent it should be (A) required by applicable law, or in connection with any legal or regulatory proceeding or (B) requested by any Governmental Authority to disclose such information; provided, that, in the case of clause (viii)
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above, the Administrative Agent and each Funding Agent and Note Purchaser will use reasonable efforts to maintain confidentiality and will (unless otherwise prohibited by applicable law) notify the Issuer, the Servicer and the Transferor of its intention to make any such disclosure prior to making such disclosure. Each of the Administrative Agent and each Note Purchaser and Funding Agent, severally and with respect to itself only, agrees to be responsible for any breach of this Section 8.18(b) by its Representatives and Advisors and agrees that its Representatives and Advisors will be advised by it of the confidential nature of such information and shall agree to comply with this Section 8.18(b).
(c)As used in this Section 8.18, (i) “Advisors” means, with respect to any Person, such Person’s accountants, attorneys and other confidential advisors and (ii) “Representatives” means, with respect to any Person, such Person’s Affiliates, subsidiaries, directors, managers, officers, employees, members, investors, financing sources, insurers, professional advisors, representatives and agents; provided that such Persons shall not be deemed to be Representatives of a Person unless (and solely to the extent that) confidential information is furnished to such Person.
(d)Notwithstanding the foregoing, to the extent not inconsistent with applicable securities laws, each party hereto (and each of its employees, representatives or other agents) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure (as defined in Section 1.6011-4 of the Treasury Regulations) of the transactions contemplated by the Basic Documents and all materials of any kind (including opinions or other tax analyses) that are provided to such Person relating to such tax treatment and tax structure.
8.19Noteholder Direction. By its execution of this Agreement, the Administrative Agent and each Noteholder hereby direct and authorize the Indenture Trustee to permit the Issuer to close the Lockbox Accounts at Wells Fargo Bank, National Association, and to terminate the Lockbox Agreements related to such Lockbox Accounts, upon the Issuer’s request to terminate such Lockbox Accounts pursuant to Section 6.02(c) of the Pooling and Servicing Agreement and Section 8.3(c) of the Indenture.
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| -55- | Note Purchase Agreement |
IN WITNESS WHEREOF, the parties hereto have caused this Note Purchase Agreement to be duly executed by their respective officers as of the day and year first above written.
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| ALLIANCE LAUNDRY EQUIPMENT |
| RECEIVABLES TRUST 2015-A |
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| By: | Wilmington Trust, National Association, not in its individual capacity but solely as Owner Trustee |
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| By: /s/ Erwin M. Soriano |
| Name: | Erwin M. Soriano |
| Title: | Vice President |
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| ALLIANCE LAUNDRY SYSTEMS LLC,
as Servicer | |
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| By: | /s/ Todd M. Rice | |
| Name: Todd M. Rice | |
| Title: Vice President, Treasurer, and Assistant Secretary | |
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| ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC, as Transferor |
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| By: | /s/ Todd M. Rice |
| Name: Todd M. Rice |
| Title: President |
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| PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent |
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| By: | /s/ Roger Yuen |
| Name: Roger Yuen |
| Title: Senior Vice President |
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| PNC PURCHASER GROUP: |
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| PNC BANK, NATIONAL ASSOCIATION,
as Committed Purchaser and as Funding Agent |
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| By: | /s/ Roger Yuen |
| Name: Roger Yuen |
| Title: Senior Vice President |
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| FIFTH THIRD PURCHASER GROUP: |
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| FIFTH THIRD BANK, as a Committed Purchaser and as Funding Agent |
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| By: | /s/ Andrew D. Jones |
| Name: | Andrew D. Jones |
| Title: | Director |
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| BMO PURCHASER GROUP: | |
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| BMO CAPITAL MARKETS CORP.,
as Funding Agent | |
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| By: | /s/ Matthew Peters | |
| Name: | Matthew Peters | |
| Title: | Managing Director | |
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| BANK OF MONTREAL, as Committed Purchaser |
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| By: | /s/ Karen Louie |
| Name: | Karen Louie |
| Title: | Director |
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| FAIRWAY FINANCE COMPANY, LLC, as CP Conduit |
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| By: | /s/ Lori Gebron |
| Name: | Lori Gebron |
| Title: | Vice President |
Exhibit 10.4
Execution Version
ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES TRUST 2015-A
AMENDED AND RESTATED
INDENTURE
Dated as of June 8, 2018
The Bank of New York Mellon,
as Indenture Trustee
ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES TRUST NOTES
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| ARTICLE I | DEFINITIONS AND INCORPORATION BY REFERENCE | 4 |
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| SECTION 1.1 | Definitions | 4 |
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| ARTICLE II | THE NOTES | 4 |
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| SECTION 2.1 | Form | 4 |
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| SECTION 2.2 | Execution, Authentication and Delivery | 5 |
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| SECTION 2.3 | Advances and Repayments | 5 |
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| SECTION 2.4 | Registration; Registration of Transfer and Exchange of Notes | 5 |
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| SECTION 2.5 | Mutilated, Destroyed, Lost or Stolen Notes | 7 |
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| SECTION 2.6 | Persons Deemed Noteholders | 8 |
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| SECTION 2.7 | Payment of Principal, Interest and Certain Fees | 8 |
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| SECTION 2.8 | Cancellation of Notes | 9 |
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| SECTION 2.9 | Release of Trust Estate | 9 |
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| SECTION 2.10 | ALER as Noteholder | 10 |
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| SECTION 2.11 | Tax and ERISA Treatment | 10 |
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| SECTION 2.12 | Restrictions on Transfer | 10 |
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| SECTION 2.13 | Rule 144A | 11 |
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| ARTICLE III | COVENANTS | 12 |
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| SECTION 3.1 | Payment of Principal and Interest | 12 |
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| SECTION 3.2 | Maintenance of Agency Office | 12 |
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| SECTION 3.3 | Money for Payments To Be Held in Trust | 12 |
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| SECTION 3.4 | Existence | 13 |
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| SECTION 3.5 | Protection of Trust Estate; Acknowledgment of Pledge | 14 |
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| SECTION 3.6 | Opinions as to Trust Estate | 14 |
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| SECTION 3.7 | Performance of Obligations; Servicing of Loans; Consent to Amendments | 15 |
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| SECTION 3.8 | Negative Covenants. | 16 |
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| SECTION 3.9 | Annual Statement as to Compliance | 17 |
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| SECTION 3.10 | Consolidation, Merger, etc., of Issuer; Disposition of Trust Assets | 18 |
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| SECTION 3.11 | Successor or Transferee | 19 |
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| SECTION 3.12 | No Other Business | 19 |
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| SECTION 3.13 | No Borrowing | 20 |
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| SECTION 3.14 | Guarantees, Loans, Advances and Other Liabilities | 20 |
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| SECTION 3.15 | Servicer’s Obligations | 20 |
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| SECTION 3.16 | Capital Expenditures | 20 |
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| SECTION 3.17 | Removal of Administrator | 20 |
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| SECTION 3.18 | Restricted Payments | 20 |
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| SECTION 3.19 | Notice of Events of Default | 21 |
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| SECTION 3.20 | Further Instruments and Acts | 21 |
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| SECTION 3.21 | Indenture Trustee’s Assignment of Administrative Loans, Substituted Loans, Warranty Loans and Other Loans | 21 |
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| SECTION 3.22 | Representations and Warranties by the Issuer to the Indenture Trustee | 21 |
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| SECTION 3.23 | Compliance with Laws | 24 |
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| SECTION 3.24 | Indemnity for Liability Claims | 24 |
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| SECTION 3.25 | Use of Proceeds | 24 |
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| SECTION 3.26 | Borrowing Base Certificate | 24 |
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| SECTION 3.27 | Letters of Credit | 24 |
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| SECTION 3.28 | Non Consolidation of Issuer | 27 |
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| SECTION 3.29 | No Bankruptcy Petition | 27 |
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| SECTION 3.30 | Liens | 28 |
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| SECTION 3.31 | Investment Company Act | 28 |
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| SECTION 3.32 | Information Requests | 28 |
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| SECTION 3.33 | Change of Control | 28 |
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| SECTION 3.34 | Tax Status | 28 |
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| ARTICLE IV | RAPID AMORTIZATION EVENTS | 28 |
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| SECTION 4.1 | Rapid Amortization Events | 28 |
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| ARTICLE V | DEFAULT AND REMEDIES | 30 |
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| SECTION 5.1 | Events of Default | 30 |
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| SECTION 5.2 | Acceleration of Maturity; Rescission and Annulment | 32 |
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| SECTION 5.3 | Collection of Indebtedness and Suits for Enforcement by Indenture Trustee | 33 |
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| SECTION 5.4 | Remedies; Priorities | 35 |
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| SECTION 5.5 | Optional Preservation of the Trust Estate | 36 |
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| SECTION 5.6 | Limitation of Suits | 36 |
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| SECTION 5.7 | Unconditional Rights of Noteholders To Receive Principal and Interest | 37 |
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| SECTION 5.8 | Restoration of Rights and Remedies | 37 |
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| SECTION 5.9 | Rights and Remedies Cumulative | 38 |
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| SECTION 5.10 | Delay or Omission Not a Waiver | 38 |
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| SECTION 5.11 | [Reserved] | 38 |
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| SECTION 5.12 | Waiver of Past Defaults | 38 |
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| SECTION 5.13 | Undertaking for Costs | 38 |
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| SECTION 5.14 | Waiver of Stay or Extension of Laws | 39 |
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| SECTION 5.15 | Action on Notes | 39 |
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| SECTION 5.16 | Performance and Enforcement of Certain Obligations | 39 |
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| ARTICLE VI | THE INDENTURE TRUSTEE | 40 |
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| SECTION 6.1 | Duties of Indenture Trustee | 40 |
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| SECTION 6.2 | Rights of Indenture Trustee | 42 |
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| SECTION 6.3 | Indenture Trustee May Own Notes | 44 |
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| SECTION 6.4 | Indenture Trustee’s Disclaimer | 44 |
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| SECTION 6.5 | Notice of Defaults and Events of Default | 44 |
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| SECTION 6.6 | Reports by Indenture Trustee to Holders | 44 |
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| SECTION 6.7 | Compensation; Indemnity | 44 |
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| SECTION 6.8 | Replacement of Indenture Trustee | 45 |
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| SECTION 6.9 | Merger or Consolidation of Indenture Trustee | 46 |
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| SECTION 6.10 | Appointment of Co-Indenture Trustee or Separate Indenture Trustee | 47 |
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| SECTION 6.11 | Eligibility; Disqualification | 48 |
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| SECTION 6.12 | Foreign Account Tax Compliance Act | 48 |
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| SECTION 6.13 | Representations and Warranties of Indenture Trustee | 49 |
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| SECTION 6.14 | Indenture Trustee May Enforce Claims Without Possession of Notes | 49 |
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| SECTION 6.15 | Suit for Enforcement | 50 |
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| SECTION 6.16 | Rights of the Required Noteholders to Direct Indenture Trustee | 50 |
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| ARTICLE VII | NOTEHOLDERS’ LISTS AND REPORTS | 50 |
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| SECTION 7.1 | Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders | 50 |
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| SECTION 7.2 | Preservation of Information, Communications to Noteholders | 51 |
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| SECTION 7.3 | Reports by Indenture Trustee | 51 |
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| ARTICLE VIII | ACCOUNTS, DISBURSEMENTS AND RELEASES | 51 |
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| SECTION 8.1 | Collection of Money | 51 |
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| SECTION 8.2 | Designated Accounts; Payments | 51 |
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| SECTION 8.3 | General Provisions Regarding Accounts | 57 |
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| SECTION 8.4 | Release of Trust Estate | 58 |
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| SECTION 8.5 | Opinion of Counsel | 58 |
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| SECTION 8.6 | Additional Payments to Indenture Trustee | 58 |
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| ARTICLE IX | AMENDMENTS | 59 |
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| SECTION 9.1 | Amendments Without Consent of Noteholders | 59 |
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| SECTION 9.2 | Amendments With Consent of Noteholders; Waivers | 60 |
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| SECTION 9.3 | Execution of Amendments or Waivers | 62 |
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| SECTION 9.4 | Effect of Amendments or Waivers | 62 |
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| SECTION 9.5 | [Reserved] | 62 |
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| SECTION 9.6 | Reference in Notes to Amendments and Waivers | 62 |
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| ARTICLE X | REDEMPTION OF NOTES | 62 |
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| SECTION 10.1 | Redemption | 62 |
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| SECTION 10.2 | Form of Redemption Notice | 63 |
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| SECTION 10.3 | Notes Payable on Redemption Date | 63 |
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| ARTICLE XI | SATISFACTION AND DISCHARGE | 63 |
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| SECTION 11.1 | Satisfaction and Discharge of Indenture | 63 |
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| SECTION 11.2 | Application of Trust Money | 65 |
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| SECTION 11.3 | Repayment of Monies Held by Paying Agent | 65 |
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| SECTION 11.4 | Duration of Position of Indenture Trustee for Benefit of Registered Owners | 65 |
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| ARTICLE XII | MISCELLANEOUS | 65 |
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| SECTION 12.1 | Compliance Certificates and Opinions, etc | 65 |
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| SECTION 12.2 | Form of Documents Delivered to Indenture Trustee | 66 |
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| SECTION 12.3 | Acts of Noteholders | 67 |
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| SECTION 12.4 | Notices, etc., to Indenture Trustee and Issuer | 68 |
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| SECTION 12.5 | Notices to Noteholders; Waiver | 68 |
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| SECTION 12.6 | Alternate Payment and Notice Provisions | 68 |
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| SECTION 12.7 | [Reserved] | 68 |
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| SECTION 12.8 | Effect of Headings and Table of Contents | 69 |
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| SECTION 12.9 | Successors and Assigns | 69 |
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| SECTION 12.10 | Separability | 69 |
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| SECTION 12.11 | Benefits of Indenture | 69 |
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| SECTION 12.12 | Legal Holidays | 69 |
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| SECTION 12.13 | Governing Law | 69 |
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| SECTION 12.14 | Counterparts | 69 |
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| SECTION 12.15 | Recording of Indenture | 69 |
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| SECTION 12.16 | No Recourse | 70 |
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| SECTION 12.17 | No Petition | 70 |
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| SECTION 12.18 | Inspection | 70 |
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| SECTION 12.19 | Assignment | 71 |
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| SECTION 12.20 | Survival of Agreement | 71 |
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| SECTION 12.21 | Cooperation and Further Assurances | 71 |
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| SECTION 12.22 | Waiver of Jury Trial | 71 |
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| SECTION 12.23 | Consent to Jurisdiction | 72 |
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| SECTION 12.24 | No Recourse | 72 |
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| SECTION 12.25 | No Recourse as to Indenture Trustee | 73 |
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| SECTION 12.26 | Amendment and Restatement | 73 |
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Locations of Schedule of Loans
Exhibit C - [Reserved]
Exhibit D - Form of Investment Letter
SCHEDULES
Schedule 3.22 - Perfection Certificate – Issuer
This AMENDED AND RESTATED INDENTURE, dated as of June 8, 2018 (the “Indenture”), is made by and between ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES TRUST 2015-A, a Delaware statutory trust (together with its permitted successors and assigns, the “Issuer”), and THE BANK OF NEW YORK MELLON, a New York banking corporation, as trustee (the “Indenture Trustee”).
RECITALS
WHEREAS, the Issuer, the Servicer and the Transferor are parties to that certain Pooling and Servicing Agreement, dated as of June 12, 2015 (as amended, restated, supplemented or otherwise modified through the date hereof, the “Original Pooling and Servicing Agreement”), pursuant to which, among other things, the Transferor has assigned, transferred and conveyed, and has agreed to assign, transfer and convey, its right, title and interest in, to and under certain Loans to the Issuer, and the Servicer has agreed to service such Loans;
WHEREAS, the parties to the Original Pooling and Servicing Agreement have agreed to amend and restate the Original Pooling and Servicing Agreement on the Restatement Date;
WHEREAS, the Issuer and the Indenture Trustee are parties to that certain Indenture, dated as of June 12, 2015 (as amended, restated, supplemented or otherwise modified through the date hereof, the “Original Indenture”);
WHEREAS, pursuant to the Note Purchase Agreement, dated as of June 12, 2015 (as amended, restated, supplemented or otherwise modified through the date hereof, the “Original Note Purchase Agreement”), the Issuer has issued Equipment Asset Notes (as defined in the Original Note Purchase Agreement) pursuant to the Original Indenture;
WHEREAS, the parties to the Original Note Purchase Agreement have agreed to amend and restate the Original Note Purchase Agreement on the Restatement Date; and
WHEREAS, in connection with the amendment and restatement of the Original Pooling and Servicing Agreement and the Original Note Purchase Agreement, the parties to the Original Indenture have agreed to amend and restate the Original Indenture as set forth herein.
NOW, THEREFORE, each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Notes.
GRANTING CLAUSE
In order to secure (i) payment of the Notes and all other amounts payable by the Issuer under the terms of the Basic Documents and (ii) the performance by the Issuer of all of its covenants and agreements in this Indenture and the other Basic Documents to which it is a party, the Issuer hereby Grants to the Indenture Trustee, as trustee for the benefit of the Beneficiaries to secure the Issuer’s obligations under the Notes and the Basic Documents to which it is a party, all of the Issuer’s assets, whether now owned or hereafter acquired, including all of the Issuer’s right, title and interest in, to and under:
(a) the Loans, including any Substitute Loans and all documents and instruments evidencing or governing the Loans and all related Loan Files and all monies paid or payable thereon (including Liquidation Proceeds);
(b) the Equipment, including all security interests therein, granted by Obligors pursuant to the Loans and any other collateral securing the Loans;
(c) any Insurance Policies and Proceeds thereof, and all rights and benefits thereunder with respect to the Equipment and any other collateral securing the Loans;
(d) any Guaranties and all other Supporting Obligations with respect to each Loan, and Proceeds thereof;
(e) the Lockboxes and the Lockbox Accounts and all funds on deposit from time to time in the Lockboxes or in the Lockbox Accounts and all Proceeds thereof;
(f) the Pooling and Servicing Agreement and the other Basic Documents (including all of its rights under the Purchase Agreement, the Custodial Agreement and any Assignment, but excluding the Trust Agreement and the documents and certificates executed in connection therewith);
(g) the Interest Rate Cap Agreements;
(h) the Reserve Account and all proceeds thereof including all cash and other amounts, investments and investment property held from time to time in the Reserve Account (whether in the form of deposit accounts, Physical Property, book-entry securities, uncertificated securities or otherwise including any sub-accounts);
(i) the Yield Supplement Account and all proceeds thereof including all cash and other amounts, investments and investment property held from time to time in the Yield Supplement Account (whether in the form of deposit accounts, Physical Property, book-entry securities, uncertificated securities or otherwise including any sub-accounts);
(j) the Collection Account, including any sub-accounts and all the Proceeds thereof including all other amounts, investments and investment property held from time to time in the Collection Account (whether in the form of deposit accounts, Physical Property, book-entry securities, uncertificated securities or otherwise);
(k) any Warranty Payments and Administrative Purchase Payments;
(l) the Letters of Credit;
(m) all Accounts, all Contracts, all Deposit Accounts, all Security Entitlements, all Documents, all UCC Equipment, all Goods, all General Intangibles and Payment Intangibles, all Instruments, all Inventory, all Investment Property, all Chattel Paper, all Supporting Obligations, and all Letter-of-Credit Rights;
(n) prior to the IT Dissolution Date, the Equity Interests held by the Issuer in the Intermediate Transferor; and
(o) all present and future claims, contract rights, demands, causes and choses in action in respect of any or all of the foregoing and all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of the conversion, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, condemnation awards, rights to payment of any and every kind and other forms of obligations and loans, instruments and other property which at any time constitute all or part of or are included in the proceeds of any of the foregoing.
All of the Issuer’s right, title and interest in, to and under the items in (a) through (n) being referred to as the “Trust Estate.”
The foregoing Grant is made in trust to secure the payment of principal of, and interest on, and any other amounts owing in respect of the Notes in accordance with the priorities set forth herein and to secure compliance with the provisions of this Indenture, all as provided in this Indenture. This Indenture constitutes a security agreement under the UCC.
The foregoing Grant includes all rights, powers and options (but none of the obligations, if any) of the Issuer under any agreement or instrument included in the Trust Estate, including the immediate and continuing right to claim for, collect, receive and give receipt for payments in respect of the Loans included in the Trust Estate and all other monies payable under the Trust Estate, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the Issuer or otherwise and generally to do and receive anything that the Issuer is or may be entitled to do or receive under or with respect to the Trust Estate.
The Indenture Trustee, as trustee on behalf of the Beneficiaries, acknowledges such Grant, and accepts the trusts under this Indenture in accordance with the provisions of this Indenture.
The pledge of the Trust Estate by the Issuer pursuant to this Indenture does not constitute, and is not intended to result in, an assumption by the Indenture Trustee or any Beneficiary of any obligation of the Issuer, the Servicer, the Owner Trustee, or the Transferor to any Obligor or other Person in connection with the Equipment, the Loans, the Insurance Policies, the Guaranties, any document in the Loan Files, or any other part of the Trust Estate other than those obligations specifically assumed pursuant to the terms of the Basic Documents.
The Issuer hereby irrevocably authorizes the Indenture Trustee, at any time, and from time to time, to file in any filing office in any jurisdiction any initial financing statements and amendments thereto that (a) indicate the Trust Estate (including any such financing statements and amendments thereto that identify the Trust Estate as including all assets of the Issuer) as collateral, regardless of whether any particular asset comprised in the Trust Estate falls within the scope of Article 9 of the UCC, and (b) provide any other information required for the sufficiency or filing office acceptance of any financing statement or amendment. The Issuer
agrees to furnish any such information to the Indenture Trustee promptly upon the Indenture Trustee’s request. The Issuer also ratifies its authorization for the Indenture Trustee to have filed in any UCC jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof. The Indenture Trustee shall have no obligation to file any financing statement or continuation statement unless it is directed to do so by the Issuer, the Servicer or the Administrative Agent and it is provided with the financing statement in form for filing.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions. Certain capitalized terms used in this Indenture if not defined herein shall have the respective meanings assigned them in Part I of Appendix A to the Amended and Restated Pooling and Servicing Agreement of even date herewith among the Issuer, ALER and ALS (as it may be amended, supplemented or modified from time to time, the “Pooling and Servicing Agreement”) or, if not defined therein, in Section 1.1 of the Amended and Restated Note Purchase Agreement of even date herewith among the Issuer, the Servicer, the Transferor, the Note Purchasers and Funding Agents party thereto, PNC Bank, National Association, as Administrative Agent and PNC Capital Markets LLC, as structuring agent (the “Note Purchase Agreement”). All references herein to “the Indenture” or “this Indenture” are to this Indenture as it may be amended, supplemented or modified from time to time, the exhibits hereto and the capitalized terms used herein which are defined in such Appendix A to the Pooling and Servicing Agreement and such Section 1.1 of the Note Purchase Agreement. All references herein to Articles, Sections, subsections and exhibits are to Articles, Sections, subsections and exhibits contained in or attached to this Indenture unless otherwise specified. All terms defined in this Indenture shall have the defined meanings when used in any certificate, notice, note or other document made or delivered pursuant hereto unless otherwise defined therein. The rules of construction set forth in Part II of Appendix A to the Pooling and Servicing Agreement shall be applicable to this Indenture.
ARTICLE II
THE NOTES
SECTION 2.1 Form.
(a) Each of the Notes, with the Indenture Trustee’s certificate of authentication, shall be substantially in the form set forth in Exhibit A, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution of the Notes. Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note.
(b) The Notes shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved borders), all as determined by the officers executing such Notes, as evidenced by their execution of such Notes.
(c) Each Note shall be dated the date of its authentication. The terms of each Note, as provided for in Exhibit A, are part of the terms of this Indenture.
(d) The Notes in substantially the form set forth in Exhibit A shall represent the Notes which have been issued and sold to the Noteholders pursuant to the Note Purchase Agreement.
SECTION 2.2 Execution, Authentication and Delivery.
(a) [Reserved].
(b) The Notes shall be executed on behalf of the Issuer by any of its Authorized Officers. The signature of any such Authorized Officer on the Notes may be manual or electronic.
(c) Notes bearing the manual or electronic signature of individuals who were at any time Authorized Officers of the Issuer shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold such office prior to the authentication and delivery of such Notes or did not hold such office at the date of such Notes.
(d) The Indenture Trustee shall, upon receipt of an Issuer Order, authenticate and deliver to, or upon the order of, the Issuer, the Notes for original issue in an aggregate principal amount of up to $400,000,000. The aggregate principal amount of all unpaid Advances under all Notes Outstanding may not exceed $400,000,000 at any time.
(e) No Notes shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form set forth in Exhibit A, executed by the Indenture Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder.
(f) No additional series of Notes may be issued pursuant to this Indenture.
SECTION 2.3 Advances and Repayments. Prior to the Conversion Date each Note shall be a revolving note and Advances shall be made thereon at the times and in the amounts set forth in the Note Purchase Agreement. The Indenture Trustee shall maintain a record of all Advances and repayments made on the Notes, and absent manifest error, such records shall be conclusive. The Indenture Trustee shall forward requests for Advances to the Noteholders at the times set forth in the Note Purchase Agreement.
SECTION 2.4 Registration; Registration of Transfer and Exchange of Notes.
(a) The Issuer shall cause to be kept and maintained the Note Register, in which the Issuer shall provide for the registration of the Notes (which shall include the names and addresses of the owners of each such Note and the registration of both principal of and stated interest on each such Note) and the registration of transfers and exchanges of the Notes (and, for clarity, no transfer or exchange of a Note shall be effective until reflected in the Note Register). The entries in the Note Register shall be conclusive absent manifest error, and the parties shall treat each Person whose name is recorded on the Note Register pursuant to the terms hereof as the owner of the relevant Notes for all purposes of this Indenture. The Indenture Trustee shall initially be the Note Registrar for the purpose of registering the Notes and transfers of the Notes as herein provided. Upon any resignation of any Note Registrar, the Issuer shall promptly appoint a successor Note Registrar or, if it elects not to make such an appointment, assume the duties of the Note Registrar.
(b) If a Person other than the Indenture Trustee is appointed by the Issuer as Note Registrar, the Issuer will give the Indenture Trustee prompt written notice of the appointment of such Note Registrar and of the location, and any change in the location, of the Note Register. The Indenture Trustee shall have the right to inspect the Note Register at all reasonable times and to obtain copies thereof. The Indenture Trustee shall have the right to rely upon a certificate executed on behalf of the Note Registrar by an Executive Officer thereof as to the names and addresses of the Noteholders and the principal amounts and number of such Notes.
(c) Upon surrender for registration of transfer of any Note at the Corporate Trust Office of the Indenture Trustee or the Agency Office of the Issuer (and following the delivery, in the former case, of such Notes to the Issuer by the Indenture Trustee), the Issuer shall execute, the Indenture Trustee shall authenticate and the Noteholder shall obtain from the Indenture Trustee, in the name of the designated transferee or transferees, one or more new Notes in any authorized denominations, of a like aggregate principal amount.
(d) At the option of the Noteholder, Notes may be exchanged for other Notes in any authorized denominations, of a like aggregate principal amount, upon surrender of the Notes to be exchanged at the Corporate Trust Office of the Indenture Trustee or the Agency Office of the Issuer (and following the delivery, in the former case, of such Notes to the Issuer by the Indenture Trustee), the Issuer shall execute, and the Indenture Trustee shall authenticate and the Noteholder shall obtain from the Indenture Trustee, the Notes which the Noteholder making the exchange is entitled to receive.
(e) All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange.
(f) Every Note presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee and the Note Registrar, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by a commercial bank or trust company located, or having a correspondent located, in the City of
New York or the city in which the Corporate Trust Office of the Indenture Trustee is located, or by a member firm of a national securities exchange, and such other documents as the Indenture Trustee may require.
(g) No service charge shall be made to a Holder for any registration of transfer or exchange of Notes, but the Issuer or Indenture Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to this Section 2.4 or 9.6 not involving any transfer.
(h) The preceding provisions of this Section 2.4 notwithstanding, the Issuer shall not be required to transfer or make exchanges of Notes that: (i) if applicable, have been selected for redemption pursuant to Article X; or (ii) are due for repayment in full within fifteen (15) days of submission to the Corporate Trust Office or the Agency Office.
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes.
(a) If (i) any mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (ii) there is delivered to the Indenture Trustee such security or indemnity as may be required by it to hold the Issuer and the Indenture Trustee harmless, then, in the absence of notice to the Issuer, the Note Registrar or the Indenture Trustee that such Note has been acquired by a bona fide purchaser, the Issuer shall execute and upon receipt of an Issuer Order, the Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement Note of a like aggregate principal amount; provided, however, that if any such destroyed, lost or stolen Note, but not a mutilated Note, shall have become or within seven (7) days shall be due and payable in full, or shall have been called for redemption, instead of issuing a replacement Note, the Issuer may make payment to the Holder of such destroyed, lost or stolen Note when so due or payable or upon the Redemption Date, if applicable, without surrender thereof.
(b) If, after the delivery of a replacement Note or payment in respect of a destroyed, lost or stolen Note pursuant to subsection (a), any bona fide purchaser of the original Note in lieu of which such replacement Note was issued presents for payment such original Note, the Issuer and the Indenture Trustee shall be entitled to recover such replacement Note (or such payment) from (i) any Person to whom it was delivered, (ii) the Person taking such replacement Note from the Person to whom such replacement Note was delivered or (iii) any assignee of such Person, except any bona fide purchaser, and the Issuer and the Indenture Trustee shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in connection therewith.
(c) In connection with the issuance of any replacement Note under this Section 2.5, the Issuer may require the payment by the Holder of such Note of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including all fees and expenses of the Indenture Trustee) connected therewith.
(d) Any duplicate Note issued pursuant to this Section 2.5 in replacement for any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Note shall be found at any time or be enforced by any Person, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.
(e) The provisions of this Section 2.5 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 Persons Deemed Noteholders. Prior to due presentment for registration of transfer of any Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name any Note is registered (as of the day of determination) as the Noteholder for the purpose of receiving payments of principal of and interest on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and neither the Issuer, the Indenture Trustee nor any agent of the Issuer or the Indenture Trustee shall be affected by notice to the contrary.
SECTION 2.7 Payment of Principal, Interest and Certain Fees.
(a) On each Distribution Date, interest will be due and payable on each Note then Outstanding in an amount equal to the Note Interest Payment, and each such amount shall be paid from amounts on deposit in the Collection Account in accordance with the priority of payment provisions of Section 8.2. Each such interest payment shall be paid to the Person in whose name such Note is registered in the Note Register on the applicable Record Date, by wire transfer in immediately available funds to the account designated by the Noteholders.
(b) [Reserved].
(c) The principal of the Notes shall be due and payable in full on the Final Scheduled Distribution Date and, to the extent of funds available therefor, due and payable in installments on the Distribution Dates (if any) and/or Business Days preceding the Final Scheduled Distribution Date, in the amounts and in accordance with the priorities set forth in Sections 8.2(c) and (d), as applicable. All principal payments on the Notes shall be made pro rata to the Noteholders entitled thereto. Any installment of principal payable on any Note shall be punctually paid or duly provided for from amounts on deposit in the Collection Account for payment to Noteholders on such Distribution Date or Business Day and shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered in the Note Register on the applicable Record Date, by wire transfer in immediately available funds to the account designated by the Noteholder.
(d) In no event shall the interest charged with respect to a Note exceed the maximum amount permitted by Applicable Law. If at any time the interest rate charged with respect to the Notes exceeds the maximum rate permitted by Applicable Law, the rate of interest to accrue pursuant to this Indenture and such Note shall be limited to the maximum rate permitted by Applicable Law, but any subsequent reductions in the Adjusted Eurodollar Rate shall not reduce the interest to accrue on such Note below the maximum amount permitted by
Applicable Law until the total amount of interest accrued on such Note equals the amount of interest that would have accrued if a varying rate per annum equal to the maximum interest rate permitted by Applicable Law had at all times been in effect. If the total amount of interest paid or accrued on the Note under the foregoing provisions is less than the total amount of interest that would have accrued if the maximum interest rate permitted by Applicable Law had at all times been in effect, the Issuer agrees to pay to the Noteholders an amount equal to the difference between (a) the amount of interest that would have accrued if the maximum rate permitted by Applicable Law had at all times been in effect and (b) the amount of interest that would have accrued if the interest rate charged with respect to the Notes had at all times been in effect.
(e) On each Distribution Date prior to the Conversion Date to the extent funds are available therefor in accordance with the priority of payments in Section 8.2, the Issuer shall pay to each Purchaser Group a fee (the “Unused Facility Fee”), which shall be in an aggregate amount equal to the sum of the product for each day during the immediately preceding Interest Period of (x) the Unused Facility Fee Percentage on such day, (y) a fraction (expressed as percentage) the numerator of which is one and the denominator of which is equal to the actual number of days in the applicable year and (z) (A) 102% (or, if no Purchaser Group includes a CP Conduit as of such day, 100%) of the aggregate Commitments of the Committed Purchasers in such Purchaser Group on such day, minus (B) the then outstanding aggregate Note Principal Balances for all Notes for such Purchaser Group on such day. Such Unused Facility Fee shall be payable from amounts then on deposit in the Collection Account, in accordance with the priority of payments set forth in Section 8.2, and shall be allocated among the Noteholders pro rata in accordance with their respective shares of the Commitment on such date of determination.
SECTION 2.8 Cancellation of Notes. All Notes surrendered for payment, redemption, exchange or registration of transfer shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly canceled by the Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Issuer may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes canceled as provided in this Section 2.8, except as expressly permitted by this Indenture. All canceled Notes may be held or disposed of by the Indenture Trustee in accordance with its standard retention or disposal policy as in effect at the time unless the Issuer shall direct by an Issuer Order that they be returned to it; provided, however, that such Issuer Order is timely and the Notes have not been previously disposed of by the Indenture Trustee. The Indenture Trustee shall certify to the Issuer that surrendered Notes have been duly canceled and retained or destroyed, as the case may be.
SECTION 2.9 Release of Trust Estate. The Indenture Trustee shall release property from the Lien of this Indenture, other than as expressly permitted by Sections 3.21, 8.2, 8.4 and 10.1 of this Indenture and Section 6.09 of the Pooling and Servicing Agreement or pursuant to a transaction to effect the IT Dissolution Date as permitted under Section 3.8(a)(iii), only upon receipt of an Issuer Request accompanied by an Officer’s Certificate and with the Special Required Noteholders’ prior written consent.
SECTION 2.10 ALER as Noteholder. ALER in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not ALER (except as provided in the definition of Outstanding).
SECTION 2.11 Tax and ERISA Treatment.
(a) The Issuer in entering into this Indenture, and the Noteholders, by acquiring any Note, (i) express their intention that the Issuer not be treated as an association (or publicly traded partnership) taxable as a corporation and that the Notes be treated as indebtedness for U.S. federal income tax purposes secured by the Trust Estate, and (ii) unless otherwise required by law, agree that the Issuer not be treated as an association (or publicly traded partnership) taxable as a corporation and agree to treat the Notes as indebtedness secured by the Trust Estate for the purpose of U.S. federal income taxes, state and local income and franchise taxes, and any other taxes imposed upon, measured by or based upon gross or net income. All successors and assigns of the parties hereto shall be bound by the provisions hereof.
(b) Each Noteholder, by its acquisition of Notes, represents, warrants and covenants that (i) it is not acquiring such Note with the assets of an “employee benefit plan” subject to Title I of ERISA, a “plan” described in and subject to Section 4975 of the Code, an entity deemed to hold plan assets of any of the foregoing by reason of investment by an “employee benefit plan” or “plan” in such entity (each of the foregoing a “Benefit Plan Investor”), or a governmental plan subject to Applicable Law that is substantially similar to the fiduciary responsibility and/or prohibited transaction provisions of ERISA or Section 4975 of the Code or (ii) (A) the acquisition and holding of such Note will not result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Code (or, in the case of a governmental plan, any substantially similar Applicable Law) and (B) if it is a Benefit Plan Investor, the decision to acquire such Notes has been made by a fiduciary that is an “independent fiduciary with financial expertise” as described in 29 C.F.R. Sec. 2510.3-21(c)(1).
SECTION 2.12 Restrictions on Transfer. The Notes shall not be registered under the Securities Act or the securities or “Blue Sky” laws of any other jurisdiction. Consequently, the Notes shall not be transferable other than pursuant to any exemption from the registration requirements of the Securities Act and satisfaction of certain other provisions specified in this Section 2.12. No sale, pledge or other transfer of any Note (or interest therein) may be made by any Person unless (x) such sale, pledge or other transfer is made pursuant to an exemption available under the Securities Act and (y) such transfer complies with the transfer restrictions set forth in the Note Purchase Agreement. In the case of such sale, transfer or pledge or other transfer, other than transfers of the Notes by a Noteholder to its related Support Party or transfers to ALS, the Transferor or the Issuer, the Indenture Trustee shall require that the prospective transferee certify to the Indenture Trustee and the Transferor in writing the facts surrounding such transfer and the status of such transferee, which certification shall be substantially in the form of the certificate attached hereto as Exhibit D. None of the Transferor, the Servicer, the Issuer, the Owner Trustee or the Indenture Trustee shall be obligated to register any Notes under the Securities Act, qualify any Notes under the securities or “Blue Sky” laws of any state or provide registration rights to any purchaser or holder thereof.
By accepting and holding a Note, the Holder thereof shall be deemed to have represented and warranted and/or acknowledged and agreed as follows:
(1) Except for (i) transfers of the Notes in accordance with Section 7.1(c) and (e) of the Note Purchase Agreement and (ii) upon presentation of evidence satisfactory to the Transferor and the Indenture Trustee that the restrictions set forth in this Section 2.12 have been complied with, it acknowledges that the Indenture Trustee will not be required to accept for registration of transfer any Notes acquired by it.
(2) It acknowledges that the Transferor, the Originator, the Noteholders and others will rely on the truth and accuracy of the acknowledgments, representations and agreements set forth in this Section 2.12.
(3) That each Note will bear the following legends:
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR UNDER THE SECURITIES OR BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY PURSUANT TO AN EXEMPTION UNDER THE 1933 ACT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTIONS.
BY ACQUIRING THIS NOTE EACH PURCHASER AND TRANSFEREE WILL BE DEEMED TO REPRESENT, WARRANT AND COVENANT THAT EITHER (1) IT IS NOT ACQUIRING THIS NOTE WITH THE ASSETS OF AN “EMPLOYEE BENEFIT PLAN” SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), A “PLAN” DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), ANY ENTITY DEEMED TO HOLD “PLAN ASSETS” OF ANY OF THE FOREGOING BY REASON OF AN EMPLOYEE BENEFIT PLAN’S OR OTHER PLAN’S INVESTMENT IN SUCH ENTITY, OR A GOVERNMENTAL PLAN SUBJECT TO APPLICABLE LAW THAT IS SUBSTANTIALLY SIMILAR TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR SECTION 4975 OF THE CODE OR (2) THE ACQUISITION AND HOLDING OF THIS NOTE BY THE PURCHASER OR TRANSFEREE, THROUGHOUT THE PERIOD THAT IT HOLDS THIS NOTE, WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE (OR, IN THE CASE OF A GOVERNMENTAL PLAN, ANY SUBSTANTIALLY SIMILAR APPLICABLE LAW).
SECTION 2.13 Rule 144A. The Issuer shall furnish, if it shall have received such information from ALER, upon the request of any Noteholder, to such Noteholder and a prospective purchaser designated by such Noteholder the information required to be delivered under Rule 144A(d)(4) under the Securities Act if at the time of such request the Issuer is not a reporting company under Section 13 or Section 15(d) of the Exchange Act, and any of the Notes are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act at such time.
ARTICLE III
COVENANTS
SECTION 3.1 Payment of Principal and Interest. The Issuer shall duly and punctually pay the principal of, and interest on, the Notes in accordance with the terms of the Notes and this Indenture. On each Distribution Date and on the Redemption Date (if applicable), the Indenture Trustee shall distribute amounts on deposit in the Collection Account to the Noteholders in accordance with Section 8.2, less amounts properly withheld under the Code from a payment to any Noteholder of interest and/or principal. Any amounts so withheld shall be considered as having been paid by the Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.2 Maintenance of Agency Office. As long as any of the Notes remains outstanding, the Issuer shall maintain in the Borough of Manhattan, the City of New York, an office (the “Agency Office”), being an office or agency where Notes may be surrendered to the Issuer for registration of transfer or exchange, and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served. The Issuer hereby initially appoints The Bank of New York Mellon to serve as its agent for the foregoing purposes. The Issuer shall give prompt written notice to the Indenture Trustee of the location, and of any change in the location, of the Agency Office. If at any time the Issuer shall fail to maintain any such office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such surrenders, notices and demands may be made or served at the Corporate Trust Office of the Indenture Trustee, and the Issuer hereby appoints the Indenture Trustee as its agent to receive all such surrenders, notices and demands.
SECTION 3.3 Money for Payments To Be Held in Trust.
(a) As provided in Section 8.2, all payments of amounts due and payable with respect to any Notes that are to be made from amounts withdrawn from the Collection Account pursuant to Section 8.2 shall be made on behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts so withdrawn from the Collection Account for payments of Notes shall be paid over to the Issuer except as provided in Section 8.2 or this Section 3.3.
(b) The Issuer shall cause each Paying Agent other than the Indenture Trustee to execute and deliver to the Indenture Trustee and the Administrative Agent an instrument in which such Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of this Section 3.3, that such Paying Agent shall:
(i) hold all sums held by it for the payment of amounts due with respect to the Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by the Issuer (or any other obligor upon the Notes) of which it has actual knowledge in the making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon the written request of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the payment of Notes if at any time it ceases to meet the standards required to be met by a Paying Agent in effect at the time of determination;
(v) comply with all requirements of the Code with respect to the withholding from any payments made by it on any Notes of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith; and
(vi) (I) request from Persons entitled to payments with respect to the Notes such documentation prescribed by Applicable Law (including, if applicable, documentation prescribed by Section 1471(b)(3)(C)(i) of the Code) as may be necessary for the Paying Agent to comply with its obligations under FATCA in respect of the Notes; and (II) make any withholdings with respect to the Notes as required by FATCA.
(c) The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, by Issuer Order direct any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts as those upon which the sums were held by such Paying Agent; and upon such payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such money.
(d) The Indenture Trustee may adopt and employ, at the expense of the Issuer, any reasonable means of notification of the payment of any amount due with respect to any Note and remaining unclaimed for one (1) year after such amount has become due and payable (including, but not limited to (x) mailing notice of such payment to Holders whose Notes have been called but have not been surrendered for redemption or whose right to or interest in monies due and payable but not claimed is determinable from the records of the Indenture Trustee or of any Paying Agent, at the last address of record for each such Holder or (y) at the expense of the Issuer, causing to be published once, in the eastern edition of The Wall Street Journal, notice that such money remains unclaimed and that, after a date specified therein, which shall neither be less than thirty (30) days nor more than six (6) months from the date of such publication, the Issuer shall be entitled to all unclaimed funds and other assets which remain subject hereto).
SECTION 3.4 Existence. Except as otherwise permitted by Section 3.10, the Issuer shall keep in full effect its existence, rights and franchises as a statutory trust under the laws of the State of Delaware and shall obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the Notes, the Trust Estate and each other instrument or agreement included in the Trust Estate.
SECTION 3.5 Protection of Trust Estate; Acknowledgment of Pledge. The Issuer intends the security interest granted pursuant to this Indenture to be prior to all other liens in respect of the Trust Estate (except for Permitted Adverse Claims) and the Issuer shall take all actions necessary to obtain and maintain in favor of the Indenture Trustee for the benefit of the Beneficiaries a first lien on and a first priority perfected security interest in the Trust Estate (except for Permitted Adverse Claims and Exempt Collateral). The Issuer shall from time to time execute and deliver all such supplements and amendments hereto and all such financing statements, amendments thereto, continuation statements, assignments, certificates, instruments of further assurance and other instruments, and shall take such other action as the Administrative Agent (or its counsel) may deem necessary or advisable to:
(i) maintain or preserve the lien and security interest (and the priority thereof) in favor of the Indenture Trustee, for the benefit of the Beneficiaries, of this Indenture or carry out more effectively the purposes hereof including by making the necessary filings of financing statements or amendments thereto within thirty (30) days after the occurrence of any of the following: (A) any change in the Issuer’s name, (B) any change in the location of the Issuer’s principal place of business, (C) any change in the Issuer’s “location” (within the meaning of Section 9-307 of the UCC) and (D) any merger or consolidation or other change in the Issuer’s identity or organizational structure and by promptly notifying the Indenture Trustee of any such filings;
(ii) perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture;
(iii) enforce the rights of the Indenture Trustee, the Administrative Agent and the Noteholders in any of the Trust Estate;
(iv) preserve and defend title to the Trust Estate and the rights of the Indenture Trustee, the Administrative Agent and the Noteholders in such Trust Estate against the claims of all other Persons and parties; or
(v) grant more effectively to the Indenture Trustee the security interest in all or any portion of the Trust Estate,
and the Issuer hereby designates the Indenture Trustee its agent and attorney-in-fact to execute any financing statement, continuation statement or other instrument as delivered to the Indenture Trustee which may be necessary, desirable or required by the Indenture Trustee pursuant to this Section 3.5.
SECTION 3.6 Opinions as to Trust Estate.
(a) On the Restatement Date, the Issuer shall furnish to the Indenture Trustee and the Administrative Agent and the Noteholders an Opinion of Counsel, in form and substance reasonably acceptable to the Indenture Trustee and the Administrative Agent, either stating that, in the opinion of such counsel, such action has been taken with respect to the recording and filing of this Indenture, any amendments hereto and any other requisite documents, and with respect to the filing of any financing statements and continuation statements as are necessary to perfect and make effective the lien and security interest in favor of the Indenture Trustee for the benefit of
the Beneficiaries created by this Indenture covering such portions of the Trust Estate and such matters of law as are customary in similar transactions, or stating that, in the opinion of such counsel, no such action is necessary to make such lien and security interest effective.
(b) On or before April 15 in each calendar year, beginning April 15, 2019, the Issuer shall furnish to the Indenture Trustee, the Administrative Agent and the Noteholders an Opinion of Counsel, in form and substance reasonably acceptable to the Indenture Trustee and the Administrative Agent, either stating that, in the opinion of such counsel, such action has been taken with respect to the recording, filing, re-recording and refiling of this Indenture, any amendments hereto and any other requisite documents and with respect to the filing of any financing statements and continuation statements as is necessary to maintain the lien and security interest created by this Indenture and reciting the details of such action or stating that in the opinion of such counsel no such action is necessary to maintain the lien and security interest created by this Indenture, covering the matters covered by the opinion given pursuant to Section 3.6(a) above and such other matters of law (including changes in law dealing with perfection and priority of liens) as are customary in similar transactions. Such Opinion of Counsel shall also describe the recording, filing, re-recording and refiling of this Indenture, any amendments hereto and any other requisite documents and the filing of any financing statements and continuation statements with respect to the Trust Estate consistent with the opinion provided pursuant to Section 3.6(a) above and such other matters of law as are customary in similar transactions that will, in the opinion of such counsel, be required to maintain the lien and security interest of this Indenture until April 15 in the following calendar year.
SECTION 3.7 Performance of Obligations; Servicing of Loans; Consent to Amendments.
(a) The Issuer shall not take any action, and shall use its reasonable efforts not to permit any action to be taken by others, that would release any Person from any of such Person’s material covenants or obligations under any instrument or agreement included in the Trust Estate or that would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except as otherwise expressly provided in the Basic Documents.
(b) The Issuer may contract with other Persons, subject to the Required Noteholders’ consent, to assist it in performing its duties under this Indenture, and any performance of such duties by a Person shall be deemed to be action taken by the Issuer. Initially, the Issuer has contracted (with the consent of the Administrative Agent) with the Servicer and the Administrator to assist the Issuer in performing its duties under this Indenture.
(c) The Issuer shall punctually perform and observe all of its obligations and agreements contained in this Indenture, the Basic Documents and in the instruments and agreements included in the Trust Estate, including but not limited to filing or causing to be filed all UCC financing statements and continuation statements required to be filed under the terms of this Indenture, the Pooling and Servicing Agreement and the Purchase Agreement in accordance with and within the time periods provided for herein and therein.
(d) If the Issuer shall have knowledge of the occurrence of a Servicer Default, the Issuer shall promptly notify the Indenture Trustee and the Administrative Agent thereof, and
shall specify in such notice the response or action, if any, the Issuer has taken or is taking with respect of such Servicer Default. If a Servicer Default shall arise from the failure of the Servicer to perform any of its duties or obligations under the Pooling and Servicing Agreement with respect to the Loans, the Issuer shall take all reasonable steps available to it pursuant to the Pooling and Servicing Agreement to remedy such failure.
(e) Without derogating from the absolute nature of the assignment granted to the Indenture Trustee under this Indenture or the rights of the Indenture Trustee hereunder, the Issuer agrees that it shall not, without the prior written consent of the Required Noteholders, amend, modify, waive, supplement, terminate or surrender, or agree to any amendment, modification, supplement, termination, waiver or surrender of, any Basic Document or the terms thereof or any portion of the Trust Estate (other than the ability of the Servicer to amend, modify or waive provisions of the Loans that are specifically permitted under the Pooling and Servicing Agreement), or waive timely performance or observance by the Servicer or ALER under the Pooling and Servicing Agreement or the Purchase Agreement, the Administrator under the Administration Agreement or ALS under the Purchase Agreement; provided, however, that, notwithstanding the foregoing, no action specified in either proviso to Section 9.2 shall be taken except in compliance with Section 9.2. If any such amendment, supplement, termination, waiver or surrender shall be so consented to by the appropriate Persons as specified above, the Issuer agrees to execute and deliver, in its own name and at its own expense, such agreements, instruments, consents and other documents as the Administrative Agent or the Required Noteholders, as applicable, may deem necessary or appropriate.
(f) The Issuer shall ensure that, at all times during which any fixed rate Loan is outstanding, an Interest Rate Cap Agreement shall be in place and effective with an Eligible Cap Provider; provided, however, that if the latter ceases to be an Eligible Cap Provider by reason of a downgrade by the applicable Rating Agency and within thirty (30) days of such downgrade the amount of funds in the Reserve Account is greater than or equal to the Reserve Account Required Amount (including, for the avoidance of doubt, the Ineligible Cap Reserve), such Person shall, notwithstanding such ratings downgrade, be deemed to be an Eligible Cap Provider unless such Person is downgraded below “A”/“A2” by the applicable Rating Agency, in which case, the Issuer shall have (30) days after such downgrade to replace such Eligible Cap Provider.
SECTION 3.8 Negative Covenants. So long as any Notes are Outstanding, the Issuer shall not:
(a) except as directed by the Special Required Noteholders, sell, transfer, exchange or otherwise dispose of any of the properties or assets of the Issuer, except the Issuer may (i) collect, liquidate, sell or otherwise dispose of Warranty Loans, Administrative Loans and Defaulted Loans, (ii) make cash payments out of the Designated Accounts, (iii) dissolve and terminate the Intermediate Transferor on the IT Dissolution Date, and (iv) take other actions, in each case solely as expressly permitted by the Basic Documents;
(b) claim any credit on, or make any deduction from the principal or interest payable in respect of the Notes (other than amounts properly withheld from such payments under
the Code or applicable state law) or assert any claim against any present or former Noteholder by reason of the payment of the taxes levied or assessed upon any part of the Trust Estate;
(c) voluntarily commence any insolvency, readjustment of debt, marshaling of assets and liabilities or other Proceeding, or apply for an order by a court or agency or supervisory authority for the winding-up or liquidation of its affairs or any other event specified in Section 5.1(g);
(d) either (i) permit the validity or effectiveness of this Indenture to be impaired, or permit the Lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Notes under this Indenture, in each case, except as may be expressly permitted hereby, (ii) permit any lien, charge, excise, claim, security interest, mortgage or other encumbrance (other than the Lien of this Indenture and Permitted Adverse Claims) to be created on or extend to or otherwise arise upon or burden the Trust Estate or any part thereof or any interest therein or the proceeds thereof, (iii) permit the Lien of this Indenture not to constitute a valid first priority perfected security interest in the Trust Estate (except for Permitted Adverse Claims and Exempt Collateral) or (iv) amend or modify the provisions of the other Basic Documents without the consent of the Required Noteholders;
(e) permit or authorize any of its directors, officers or employees, to, directly or indirectly, use, lend, make payments of, contribute or otherwise make available, all or any part of the proceeds of any Advance or other transaction(s) contemplated by this Indenture or any other Basic Document to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law;
(f) prior to the IT Dissolution Date, permit or authorize the Intermediate Transferor to conduct any business, own any assets or properties, or incur any indebtedness; or
(g) permit the IT Dissolution Date to occur later than the 60th day following the Restatement Date or such later date agreed to in writing by the Administrative Agent.
SECTION 3.9 Annual Statement as to Compliance. The Issuer shall deliver to the Indenture Trustee, the Administrative Agent and the Noteholders, on or before April 15 of each year, beginning April 15, 2019, an Officer’s Certificate signed by an Authorized Officer with respect to the immediately preceding calendar year ending December 31, stating that:
(a) a review of the activities of the Issuer during such fiscal year and of performance under this Indenture has been made under such Authorized Officer’s supervision; and
(b) to the best of such Authorized Officer’s knowledge, based on such review, the Issuer has complied in all material respects with all conditions and covenants under this Indenture and has fulfilled in all material respects all of its obligations under this Indenture throughout such year, or, if there has been a default in such compliance of any such condition or covenant or in the fulfillment of any such obligation, specifying each such default known to such Authorized Officer and the nature and status thereof.
SECTION 3.10 Consolidation, Merger, etc., of Issuer; Disposition of Trust Assets.
(a) The Issuer shall not consolidate or merge with or into any other Person unless:
(i) the Person (if other than the Issuer) formed by, or surviving such, consolidation or merger shall be a Person organized and existing under the laws of the United States of America or any State and shall expressly assume, by an amendment hereto, executed and delivered to the Indenture Trustee and the Administrative Agent satisfactory to the Indenture Trustee and the Special Required Noteholders, the due and timely payment of the principal of and interest on all Notes and the performance or observance of every agreement and covenant of this Indenture on the part of the Issuer to be performed or observed, all as provided herein;
(ii) immediately after giving effect to such merger or consolidation, no Default, Event of Default or Rapid Amortization Event shall have occurred and be continuing;
(iii) any action as is necessary to maintain the lien and security interest created by this Indenture shall have been completed;
(iv) the Issuer shall have delivered to the Indenture Trustee and the Administrative Agent an Officer’s Certificate stating that such consolidation or merger and such amendment comply with this Section 3.10;
(v) the Issuer shall have delivered to the Indenture Trustee and the Administrative Agent an Opinion of Counsel stating that such consolidation or merger and such amendment will not (a) result in the Issuer being treated as an association (or publicly traded partnership) taxable as a corporation for U.S. federal income tax purposes, (b) cause the Notes to be characterized other than as indebtedness for U.S. income tax purposes or (c) cause the Noteholders or beneficial owners of Notes previously issued to be deemed to have sold or exchanged such Notes under Section 1001 of the Code; and
(vi) the Special Required Noteholders shall have, in their sole discretion, consented to such merger or consolidation.
(b) Except pursuant to Section 10.1 or as otherwise expressly permitted by this Indenture or the other Basic Documents, the Issuer shall not sell, convey, exchange, transfer or otherwise dispose of any of its properties or assets to any Person, unless:
(i) the Person that acquires such properties or assets of the Issuer (A) shall be a United States citizen or a Person organized and existing under the laws of the United States of America or any State and (B) by an amendment hereto, executed and delivered to the Indenture Trustee and the Administrative Agent, in form satisfactory to the Indenture Trustee and the Special Required Noteholders:
(1) expressly assumes the due and punctual payment of the principal of and interest on all Notes and the performance or observance of every agreement and covenant of this Indenture on the part of the Issuer to be performed or observed, all as provided herein;
(2) expressly agrees that all right, title and interest so sold, conveyed, exchanged, transferred or otherwise disposed of shall be subject and subordinate to the rights of the Noteholders; and
(3) unless otherwise provided in such amendment, expressly agrees to indemnify, defend and hold harmless the Issuer against and from any loss, liability or expense arising under or related to this Indenture and the Notes;
(ii) immediately after giving effect to such transaction, no Default, Event of Default or Rapid Amortization Event shall have occurred and be continuing;
(iii) any action as is necessary to maintain the lien and security interest created by this Indenture shall have been taken;
(iv) the Issuer shall have delivered to the Indenture Trustee and the Administrative Agent an Officer’s Certificate stating that such sale, conveyance, exchange, transfer or disposition and such amendment comply with this Section 3.10;
(v) the Issuer shall have delivered to the Indenture Trustee and the Administrative Agent an Opinion of Counsel stating that such sale, conveyance, exchange, transfer or disposition and such amendment have no material adverse tax consequence to the Issuer or to any Noteholders or Registered Owners; and
(vi) the Special Required Noteholders, in their sole discretion, shall have consented to such sale, conveyance, exchange, transfer or disposition.
SECTION 3.11 Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with Section 3.10(a), the Person formed by or surviving such consolidation or merger (if other than the Issuer) shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under this Indenture with the same effect as if such Person had been named as the Issuer herein.
(b) Upon a sale, conveyance, exchange, transfer or disposition of all the assets and properties of the Issuer pursuant to Section 3.10(b), the Issuer shall be released from every covenant and agreement of this Indenture to be observed or performed on the part of the Issuer with respect to the Securityholders immediately upon the delivery of written notice to the Indenture Trustee and the Administrative Agent from the Person acquiring such assets and properties stating that the Issuer is to be so released.
SECTION 3.12 No Other Business. The Issuer shall not engage in any business or activity other than acquiring, holding and managing the Trust Estate and the proceeds therefrom in the manner contemplated by the Basic Documents, issuing the Securities, making payments on
the Securities and such other activities that are necessary, suitable, desirable or convenient to accomplish the foregoing or are incidental thereto, as set forth in Section 2.3 of the Trust Agreement. For the avoidance of doubt, the Issuer shall at all times be permitted to receive capital contributions from its Registered Owners, the proceeds of which may be applied (subject to the limitations set forth in the immediately preceding sentence) as the Issuer elects.
SECTION 3.13 No Borrowing. The Issuer shall not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness for money borrowed other than the Notes.
SECTION 3.14 Guarantees, Loans, Advances and Other Liabilities. Except as contemplated by this Indenture or the other Basic Documents, the Issuer shall not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another’s payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person.
SECTION 3.15 Servicer’s Obligations. The Issuer shall use its best efforts to cause the Servicer to comply with the Servicer’s obligations under Sections 3.10, 5.01 and 5.02 of the Pooling and Servicing Agreement.
SECTION 3.16 Capital Expenditures. The Issuer shall not make any expenditure (whether by long-term or operating lease or otherwise) for capital assets (either real, personal or intangible property) other than the purchase of the Loans and other property and rights from ALER pursuant to the Pooling and Servicing Agreement.
SECTION 3.17 Removal of Administrator. So long as any Notes are Outstanding, the Issuer shall not remove the Administrator without cause unless the Required Noteholders shall have consented thereto.
SECTION 3.18 Restricted Payments. Except for payments of principal or interest on or redemption of the Notes as expressly permitted pursuant to this Indenture, so long as any Notes are Outstanding, the Issuer shall not, directly or indirectly:
(a) pay any dividend or make any distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, to the Owner Trustee or any owner of a beneficial interest in the Issuer or otherwise, in each case with respect to any ownership or equity interest or similar security in or of the Issuer or to the Servicer;
(b) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest or similar security; or
(c) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions to the Servicer, ALER, the Indenture Trustee, the Owner Trustee and the Registered Owners solely
(i) to the extent expressly permitted by, and to the extent of Advances as contemplated by Section 3.25, or (ii) to the extent funds are available for such purpose under Section 8.2. The Issuer shall not, directly or indirectly, make payments to or distributions from the Collection Account except in accordance with the Basic Documents.
SECTION 3.19 Notice of Events of Default. The Issuer agrees to give the Indenture Trustee and the Administrative Agent (with a copy to the Noteholders) prompt written notice, but in any event no later than within two (2) Business Days, of any Default, Event of Default, Rapid Amortization Event, Servicer Default and each default on the part of ALER or ALS of its respective obligations under the Pooling and Servicing Agreement and the Purchase Agreement, in each case, of which the Issuer has knowledge.
SECTION 3.20 Further Instruments and Acts. Upon request of the Indenture Trustee or the Administrative Agent, the Issuer shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.
SECTION 3.21 Indenture Trustee’s Assignment of Administrative Loans, Substituted Loans, Warranty Loans and Other Loans. Upon receipt of (a) the Administrative Purchase Payment or the Warranty Payment with respect to an Administrative Loan or Warranty Loan, (b) a Substitute Loan with respect to a Warranty Loan, provided all conditions to the Substitute Loans have been satisfied in full under the Basic Documents, (c) Full Prepayment on any Loan by an Obligor in accordance with Section 3.03 of the Pooling and Servicing Agreement or (d) the proceeds upon the sale or other disposition by the Servicer of any Defaulted Loan or the collateral securing such Defaulted Loan in accordance with Section 3.04 of the Pooling and Servicing Agreement, the Indenture Trustee shall assign, without recourse, representation or warranty to the Servicer, the Warranty Purchaser or the purchaser of such Defaulted Loan or the collateral securing such Defaulted Loan, as applicable, all of the Indenture Trustee’s right, title and interest in and to such repurchased, replaced, paid-in-full, or sold Loan, all monies due thereon, the security interest in the related Equipment and any accessions thereto, any Insurance Policies and any proceeds arising thereafter with respect to such Loan, any Guaranties and any proceeds arising thereafter with respect to such Loan and the interests of the Indenture Trustee in certain rebates of premiums and other amounts relating to the Insurance Policies and any documents relating thereto, such assignment being an assignment outright and not for security; and the Servicer, ALER, the Warranty Purchaser or other purchaser, as applicable, shall thereupon own such Loan, and all such security and documents, free of any further obligation to the Indenture Trustee or the Noteholders with respect thereto.
SECTION 3.22 Representations and Warranties by the Issuer to the Indenture Trustee. The Issuer hereby represents and warrants to the Indenture Trustee, the Administrative Agent and the Noteholders as of the Restatement Date with respect to clauses (a), (b), (c) and (d) below and on each Borrowing Date and each Substitution Date with respect to clauses (a), (b) and (d) below as follows:
(a) Good Title. No Loan has been sold, transferred, assigned or pledged by the Issuer to any Person other than the Indenture Trustee; immediately prior to the Grant pursuant to this Indenture, the Issuer had good and marketable title thereto, free of any Lien
(except for Permitted Adverse Claims); and, upon execution and delivery of this Indenture by the Issuer, the Indenture Trustee shall have all of the right, title and interest of the Issuer in, to and under the Trust Estate, free of any Lien (except for Permitted Adverse Claims).
(b) All Filings Made. The Loans and the Issuer’s rights related to the Loans constitute UCC Collateral. All filings and registrations necessary under the UCC or other Applicable Laws in any jurisdiction to give the Indenture Trustee a first priority perfected security interest in the Trust Estate (except for Permitted Adverse Claims and Exempt Collateral) have been made. Each Loan is secured by Equipment.
(c) UCC Information. The information set forth on Schedule 3.22 is true, correct and complete in all material respects.
(d) Security Interest Representations.
(1) This Indenture creates a valid and continuing security interest (as defined in the applicable UCC) in the Trust Estate in favor of the Indenture Trustee, which security interest is prior to all other Liens, claims or encumbrances of any Person (other than Permitted Adverse Claims), and is enforceable as such as against creditors of and purchasers from the Issuer;
(2) The Loans constitute “tangible chattel paper” within the meaning of the applicable UCC. The Equipment Notes constitute “instruments” within the meaning of the applicable UCC and the related Equipment constitutes “equipment” and not “fixtures” under the applicable UCC. Each Designated Account constitutes a “securities account” within the meaning of the applicable UCC. The rights to payment under the Letter of Credit constitute “letter-of-credit rights” within the meaning of the applicable UCC. The rights under the Purchase Agreement and the Pooling and Servicing Agreement each constitute “general intangibles” under the applicable UCC;
(3) The Issuer is the sole owner of the Trust Estate and owns and has good and marketable title to the Trust Estate, free and clear of any Lien of any Person (whether senior, junior or pari passu), except for Permitted Adverse Claims; provided, however, that the Issuer makes no representation regarding the availability of a willing buyer;
(4) The Issuer has caused the filing and registration of all appropriate financing statements and registrations in the proper filing office or registration office, as applicable, in the appropriate jurisdictions under Applicable Law in order to perfect the security interest in the Trust Estate granted to the Indenture Trustee. All financing statements filed against the Issuer in favor of the Indenture Trustee in connection herewith describing the Trust Estate contain a statement to the following effect: “A purchase or security interest in any collateral described in this financing statement except in favor of the Indenture Trustee will violate the rights of the Indenture Trustee”;
(5) Other than the security interest granted to the Indenture Trustee pursuant to this Indenture, the Issuer has not pledged, assigned, sold, granted a security interest in or otherwise conveyed any of the Trust Estate except as expressly permitted hereby. The Issuer has not authorized the filing of, and is not aware of, any financing statements or documents of similar import against the Issuer that include a description of collateral covering the Trust Estate other than any financing statement or document of similar import (i) relating to the security interest granted to the Indenture Trustee or (ii) that has been terminated. The Issuer is not aware of any judgment or tax lien filings against the Issuer;
(6) The Issuer or the Indenture Trustee has received a written acknowledgement from the Custodian that the Custodian is holding the only original executed counterpart of the Equipment Notes and the related security agreements on behalf of, and for the benefit of, the Indenture Trustee and is subject to the Custodian’s customary security and safekeeping procedures;
(7) None of the Equipment Notes or Loans have any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Indenture Trustee and other than any holder of a Lien to be released simultaneously with the purchase by the Transferor under the Purchase Agreement;
(8) The Indenture Trustee has been named the beneficiary of each Letter of Credit;
(9) The Issuer has received all necessary consents and approvals required by the terms of the Trust Estate to the pledge by the Issuer of its interest and rights in such Trust Estate hereunder;
(10) No creditor of the Issuer has in its possession any goods that constitute or evidence the Trust Estate;
(11) The Issuer has taken all steps necessary to cause The Bank of New York Mellon (in its capacity as securities intermediary) to identify in its records the Indenture Trustee as the Person having a security entitlement against the securities intermediary in each of the Designated Accounts; and
(12) No Designated Account is in the name of any Person other than the Indenture Trustee. The Issuer has not consented to The Bank of New York Mellon (as the securities intermediary of the Designated Accounts) to comply with entitlement orders of any Person other than the Indenture Trustee.
The representations and warranties set forth in this Section 3.22 shall survive until the Indenture is terminated in accordance with its terms. Any breaches of the representations and warranties set forth in this Section 3.22 may be waived with the prior written consent of the Required Noteholders unless such waiver would amount to a waiver of an Event of Default under Section 5.1(e), which, in such case, any such waiver shall require consent of the Special Required Noteholders.
SECTION 3.23 Compliance with Laws. The Issuer shall comply with the requirements of all Applicable Laws, the non-compliance with which would, individually or in the aggregate, materially adversely affect the ability of the Issuer to perform its obligations under the Notes, this Indenture or any other Basic Document.
SECTION 3.24 Indemnity for Liability Claims. The Issuer shall indemnify, defend and hold harmless the Indenture Trustee, the Noteholders and the Administrative Agent (which shall include any of their respective directors, employees, officers and agents) against and from any and all costs, expenses, losses, damages, claims and liabilities arising out of or resulting from the use, repossession or operation of the Equipment (other than a loss in value thereof) or imposed on or asserted against the Issuer or otherwise arising out of or based on the arrangements created by this Indenture to the extent not paid by the Servicer pursuant to Section 8.01 of the Pooling and Servicing Agreement and solely to the extent that funds are available for such purpose pursuant to Section 8.2 of this Indenture; provided that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer under this Section 3.24 and that any such indemnified party agrees that it shall not, prior to the date which is one (1) year and one (1) day after the termination of this Indenture with respect to the Issuer pursuant to Section 11.1, acquiesce, petition or otherwise invoke or cause the Issuer to invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against the Issuer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Issuer.
SECTION 3.25 Use of Proceeds. The Issuer shall use the proceeds from the sale of the Notes solely to fund the acquisition of the Loans, to fund the Reserve Account, to make equity distributions and to pay fees and expenses related to the transactions contemplated hereby.
SECTION 3.26 Borrowing Base Certificate. Except as otherwise agreed in writing by the Issuer and the Noteholders and subject to the last paragraph in Section 3.2 of the Note Purchase Agreement, the Issuer shall deliver, or cause the Servicer to deliver to the Indenture Trustee, to each Noteholder and the Administrative Agent a duly completed and executed Borrowing Base Certificate giving pro forma effect to any Advances to be made on any such Borrowing Date two (2) Business Days prior to each such Advance; provided that, once per calendar quarter, an Advance to be made on any such Borrowing Date shall only require the Issuer to deliver such Borrowing Base Certificate one (1) day prior to such Advance.
SECTION 3.27 Letters of Credit. Subject to clause (g) of this Section 3.27:
(a) The Issuer shall provide on or before the Restatement Date and maintain so long as any Note is Outstanding, one or more Eligible Letters of Credit (or post cash or alternative collateral acceptable to the Required Noteholders), in either case in an equivalent amount to the face amount of the Letters of Credit that the Issuer would otherwise be required to maintain, for the benefit of the Indenture Trustee on behalf of the Beneficiaries. Any cash collateral posted by the Issuer in substitution for one or more Eligible Letters of Credit shall be deposited in the Reserve Account, and disbursed for the payment of principal and interest on the Notes or to remedy a shortfall in accordance with the provisions of Section 8.2(e).
(b) On each Determination Date on which it is determined that no funds will be on deposit in the Reserve Account on the following Distribution Date (or will have been reduced to zero on such Distribution Date), the Indenture Trustee shall, upon written instructions from the Servicer, in accordance with the Servicer’s Certificate (or if a Servicer’s Certificate is not provided, in accordance with instructions from the Administrative Agent or the Required Noteholders), submit to each Letter of Credit Bank a completed Drawing Certificate in an amount equal to (x) the shortfall computed under Section 8.2(e) of this Indenture or (y) the remaining Available Drawing Amount in the case of an Event of Default (such draw, a “Letter of Credit Drawing”); provided, however, that in no event shall the amount of any Letter of Credit Drawing exceed the Available Drawing Amount under such Letter of Credit. The Indenture Trustee shall notify the Servicer and the Administrative Agent on the date on which it makes a Letter of Credit Drawing.
(c) The Indenture Trustee shall receive Letter of Credit Drawings as attorney-in-fact of each of the Beneficiaries and upon receipt thereof shall, subject to clauses (d) and (e) below, immediately deposit such Letter of Credit Drawings into the Collection Account to pay principal and interest on the Notes at the times and in the amounts specified in Section 8.2(e). The making of a Letter of Credit Drawing does not relieve the Issuer of any obligation under any Note, this Indenture or any other Basic Document.
(d) If at any time while the Notes are Outstanding the issuing bank with respect to a Letter of Credit required pursuant to this Indenture shall cease to be an Eligible Bank, the Issuer shall (unless the Required Noteholders shall otherwise consent) (x) replace the then existing Letter of Credit with a substitute Eligible Letter of Credit, (y) post cash or alternative collateral acceptable to the Required Noteholders or (z) take such other action reasonably acceptable to the Required Noteholders. The Issuer shall have thirty (30) Business Days from the date such Letter of Credit ceases to be an Eligible Letter of Credit to take any of the actions set forth in clauses (x), (y) and (z) above; provided that if the financial institution that issued or confirmed such Letter of Credit does not have a long-term credit rating of at least “BBB-” by S&P and “Baa3” by Moody’s, respectively, the Required Noteholders shall have the right to direct the Indenture Trustee to draw on the Letter of Credit immediately. If the Issuer shall fail to take any of the actions set forth in clauses (x), (y) and (z) above within such thirty (30) Business Day period, then the Indenture Trustee shall, upon written instructions from the Servicer, the Administrative Agent or the Required Noteholders, submit to the then existing Letter of Credit Bank a completed Drawing Certificate for the remaining Available Drawing Amount under such Letter of Credit. Any amounts received by the Indenture Trustee as the result of any such drawing shall be deposited into the Reserve Account, and disbursed for the payment of principal and interest on the Notes in accordance with the provisions of Section 8.2(e). Upon receipt by the Indenture Trustee of a replacement Eligible Letter of Credit in accordance with the provisions of this Section 3.27(d), the Indenture Trustee shall surrender the original of the replaced Letter of Credit to the issuer thereof, upon written request of the Servicer, with the consent of the Administrative Agent.
(e) If at any time while the Notes are Outstanding the issuer of an Eligible Letter of Credit shall have provided notice to the Indenture Trustee that such Letter of Credit shall not be renewed upon the expiration thereof, then the Indenture Trustee shall provide prompt written notice of same to the Administrative Agent and the Issuer shall (unless the Required
Noteholders shall otherwise consent), not less than ten (10) Business Days prior to the date on which the Letter of Credit shall expire, replace the then existing Letter of Credit with a substitute Eligible Letter of Credit, or post sufficient cash or alternative collateral acceptable to the Required Noteholders. If the Issuer shall fail to deliver a substitute Eligible Letter of Credit, cash or alternative collateral acceptable to the Required Noteholders within such ten (10) Business Day period, then the Indenture Trustee shall, upon written instructions from the Servicer, the Administrative Agent or the Required Noteholders, submit to the then existing Letter of Credit Bank a completed Drawing Certificate for the remaining Available Drawing Amount under such Letter of Credit. Any amounts received by the Indenture Trustee as the result of any such drawing shall be deposited into the Reserve Account, and disbursed for the payment of principal and interest on the Notes in accordance with the provisions of Section 8.2(e). Upon receipt by the Indenture Trustee of a replacement Eligible Letter of Credit in accordance with the provisions of this Section 3.27(e), the Indenture Trustee shall surrender the original of the replaced Letter of Credit to the issuer thereof, upon written request of the Servicer, the Administrative Agent or the Required Noteholders.
(f) Notwithstanding anything contained herein to the contrary, following the occurrence of the Conversion Date, an Event of Default or Rapid Amortization Event, if (x) as of any Determination Date, any anticipated payment of the Notes on the related Distribution Date will cause the Available Drawing Amount to be greater than or equal to the Recourse Limit at such time, or (y) the Servicer at any time provides notice to the Indenture Trustee and the Administrative Agent that the Servicer anticipates that the Available Drawing Amount will in the foreseeable future be greater than or equal to the Recourse Limit, then (i) the Indenture Trustee shall, within one (1) Business Day following such Determination Date (as to clause (x) above) or the date of such notice (as to clause (y) above) (in either case, the “LC Recourse Draw Determination Date”) submit to each Letter of Credit Bank a completed Drawing Certificate (unless the Required Noteholders shall have provided the Indenture Trustee and the Servicer with a written notice instructing the Indenture Trustee not to make such draw), in an amount equal to the greater of (I) the sum of (a) the amount by which the Available Drawing Amount (as calculated without giving effect to any such draw or any reduction in the Available Drawing Amount pursuant to clause (ii) below) is expected to exceed the Recourse Limit as of the LC Recourse Draw Determination Date, and (b) $500,000 and (II) the amount specified by the Servicer in the notice delivered pursuant to clause (y) above (or, if such amount is greater than the Available Drawing Amount at such time, the entire Available Drawing Amount); provided that if the Servicer delivering such notice pursuant to clause (y) above is not ALS, ALS shall have the right to approve the amount set forth in such notice, and (ii) the Available Drawing Amount shall be reduced by the amount of the drawing made pursuant to clause (i) above, effective immediately following the receipt by the Indenture Trustee of the proceeds of such drawing. The Indenture Trustee shall notify the Servicer, ALS (if ALS is not the Servicer) and the Administrative Agent on the date on which it makes a Letter of Credit Drawing pursuant to this Section 3.27(f). Any amounts received by the Indenture Trustee as the result of any such drawing shall be deposited into the Collection Account, and shall be distributed on the following Distribution Date to the Noteholders first in respect of interest on the Notes to the extent of any shortfalls thereon after giving effect to all allocations under Section 8.2 on such Distribution Date, and second as a payment of principal on the Notes, without regard to the priority of payments set forth in Section 8.2, in each case pro rata, to the Notes. The Servicer shall provide prompt notice to the Indenture Trustee and the Administrative Agent if it has knowledge that the
Available Drawing Amount is on any date, or is on any date expected to be, greater than or equal to the Recourse Limit at such time.
(g) Notwithstanding any of the foregoing requirements in this Section 3.27, the Issuer shall not be required to comply with this Section 3.27 at any time the Issuer has elected, pursuant to and in accordance with the definition of “Borrowing Base” in the Pooling and Servicing Agreement, to exclude the LC Amount from the calculation of the Borrowing Base.
SECTION 3.28 Non Consolidation of Issuer.
(a) The Issuer shall, consistent with the Basic Documents, be operated in such a manner that it shall not be substantively consolidated with the trust estate of any other Person in the event of the bankruptcy or insolvency of the Issuer or such other Person (other than, prior to the IT Dissolution Date, the Intermediate Transferor). Without limiting the foregoing the Issuer shall (1) conduct its business in its own name, (2) maintain its books, records and cash management accounts separate from those of any other Person, (3) maintain its bank accounts separate from those of any other Person, (4) maintain separate financial statements, showing its assets and liabilities separate and apart from those of any other Person (other than, prior to the IT Dissolution Date, the Intermediate Transferor), (5) pay its own liabilities and expenses only out of its own funds, (6) allocate fairly and reasonably any overhead expenses that are shared with an Affiliate, (7) hold itself out as a separate entity, (8) maintain adequate capital in light of its contemplated business operations and (9) observe all other appropriate trust and other organizational formalities including, inter alia, remaining in good standing and qualified as a foreign trust in each jurisdiction, obtaining all necessary licenses and approvals as required under Applicable Law.
(b) Notwithstanding any provision of law which otherwise empowers the Issuer, the Issuer shall not (1) hold itself out as being liable for the debts of any other Person, (2) act other than in its trust name and through its trustee or its duly authorized officers or agents, (3) engage in any joint activity or transaction of any kind with or for the benefit of any Affiliate including any loan to or from or guarantee of the indebtedness of any Affiliate, except payment of lawful distributions to its Registered Owners, (4) commingle its funds or other assets with those of any other Person, (5) create, incur, assume, guarantee or in any manner become liable in respect of any indebtedness (except pursuant to this Indenture) other than indemnities, trade payables and expense accruals incurred in the ordinary course of its business, (6) enter into a transaction with an Affiliate (other than distributions to its Registered Owners to the extent expressly permitted under the Basic Documents) unless such transaction is commercially reasonable and on the same terms as would be available in an arm’s length transaction with a Person or entity that is not an Affiliate, or (7) take any other action that would be inconsistent with maintaining the legal identity of the Issuer separate from that of any Person (other than, prior to the IT Dissolution Date, the Intermediate Transferor).
SECTION 3.29 No Bankruptcy Petition. The Issuer shall not (i) commence any Proceeding under Title 11 of the United States Code seeking to have an order for relief entered with respect to it, or seeking reorganization, arrangement, adjustment, wind-up, liquidation, dissolution, composition or other relief with respect to it or its debts, (ii) seek appointment of a
receiver, trustee, custodian or other similar official for it or any part of its assets, (iii) make a general assignment for the benefit of its creditors, or (iv) take any action in furtherance of, or consenting to or acquiescing in, any of the foregoing.
SECTION 3.30 Liens. The Issuer shall not contract for, create, incur, assume or suffer to exist any Lien upon any of its property or assets, whether now owned or hereafter acquired, except for the Lien created pursuant to the terms of this Indenture and other Permitted Adverse Claims.
SECTION 3.31 Investment Company Act. The Issuer shall conduct its operations, and shall cause the Administrator to conduct the Issuer’s operations, in a manner which will not subject it to registration as an “investment company” under the Investment Company Act. The Issuer represents and warrants that the Issuer is not (i) a “covered” fund under the Volcker Rule and (ii) an “investment company” within the meaning of the Investment Company Act. In determining that the Issuer is not an investment company, the Issuer is relying on the exemption from the definition of “investment company” set forth in either or both of Section 3(c)(5) or 3(c)(6) of the Investment Company Act.
SECTION 3.32 Information Requests. The Issuer shall prepare and deliver (or shall cause the Administrator to prepare and deliver) to the Indenture Trustee, the Administrative Agent and the Noteholders from time to time such information regarding the financial condition, operations or business of the Issuer as the Administrative Agent or the Required Noteholders may reasonably request.
SECTION 3.33 Change of Control. The Transferor shall at all times own 100% of the beneficial interests of the Issuer and, prior to the IT Dissolution Date, the Issuer shall at all times own 100% of the Equity Interests of the Intermediate Transferor (other than director’s qualifying shares or Equity Interests issued to foreign nationals, in each case, to the extent required by applicable law).
SECTION 3.34 Tax Status. The Issuer shall ensure that it remains a “disregarded entity” within the meaning of U.S. Treasury Regulation § 301.7701-3 for U.S. federal income tax purposes that is disregarded as separate from a United States Person (within the meaning of Section 7701(a)(30) of the Code), or otherwise not regarded as an entity subject to tax, and not be subject to withholding under Section 1446 of the Code. The Issuer shall not take any action, and shall not permit any action to be taken by others, that would cause the Issuer to become an association taxable as a corporation or a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes. The Issuer shall not become subject to any Tax in any jurisdiction outside the United States of America.
ARTICLE IV
RAPID AMORTIZATION EVENTS
SECTION 4.1 Rapid Amortization Events. For the purposes of this Indenture, “Rapid Amortization Event” means the occurrence, as and when declared by the Required Noteholders by written notice to the Administrative Agent and the Issuer, of any one of the following events
or conditions and the continuation of such condition beyond any applicable grace and/or cure period:
(a) the occurrence of a Borrowing Base Shortfall that remains unremedied by cash payments, contribution of Eligible Loans to the Issuer or by a draw on the Reserve Account (but not by a draw on the Letters of Credit or a draw on the Reserve Account of proceeds of any draw on a Letter of Credit) for three (3) or more Business Days;
(b) the occurrence of a draw on the Reserve Account; provided, however, if the amount on deposit in the Reserve Account on the immediately succeeding Distribution Date (after giving effect to the deposits to and distributions from the Reserve Account on such date) is equal to or greater than the Reserve Account Required Amount, then such draw on the Reserve Account shall not be considered a Rapid Amortization Event;
(c) prior to the Issuer’s election, pursuant to and in accordance with the definition of “Borrowing Base” in the Pooling and Servicing Agreement, to exclude the LC Amount from the calculation of the Borrowing Base, the Letter(s) of Credit:
(i) shall cease to be Eligible Letters of Credit unless (x) the Indenture Trustee receives a replacement Eligible Letter of Credit issued by an Eligible Bank, cash or alternate collateral acceptable to the Required Noteholders or the Issuer takes such other action reasonably acceptable to the Required Noteholders; provided that, if such Letter of Credit ceases to be an Eligible Letter of Credit solely because the financial institution that issued such Letter of Credit ceases to be an Eligible Bank, then any applicable grace and/or cure period provided in Section 3.27(d) shall apply or (y) the Letters of Credit have been drawn upon, in full, and the proceeds deposited into the Reserve Account pursuant to Section 3.27(d) (downgrade draw) or Section 3.27(e) (non-renewal draw); or
(ii) shall be drawn upon, other than pursuant to Section 3.27(d) (downgrade draw) or Section 3.27(e) (non-renewal draw);
(d) as of any Determination Date, the rolling three (3) month average of the Delinquency Ratio for the three most recent consecutive Monthly Periods exceeds 2.00%;
(e) as of any Determination Date, the rolling three (3) month average of the Default Ratio for the three most recent consecutive Monthly Periods exceeds 1.00%;
(f) the occurrence and continuance of either (x) an Event of Default or (y) a Servicer Default; or
(g) as of any Determination Date, the rolling three (3) month average Excess Spread for the three most recent consecutive Monthly Periods falls below the Minimum Excess Spread.
If a Rapid Amortization Event exists on any date, then, except as otherwise expressly provided herein, such Rapid Amortization Event shall be deemed to continue until the
Business Day on which the Indenture Trustee (acting at the direction of the Special Required Noteholders) waives, in writing, such Rapid Amortization Event.
The Issuer shall deliver to the Indenture Trustee, the Administrative Agent and the Noteholders, within three (3) Business Days but in any event prior to the immediately succeeding Purchase Date (as defined in the Purchase Agreement) after learning of the occurrence of any of the events or conditions that, if declared by the Required Noteholders, would constitute a Rapid Amortization Event, written notice of such event or condition, its status and whether the Required Noteholders have declared a Rapid Amortization Event.
ARTICLE V
DEFAULT AND REMEDIES
SECTION 5.1 Events of Default. For the purposes of this Indenture, “Event of Default” wherever used herein, means any one of the following events or conditions and the continuation of such condition beyond any applicable grace and/or cure period:
(a) failure to pay any interest on the Notes as and when the same becomes due and payable, regardless of whether funds are available to make such payments, and such failure shall continue unremedied for a period of three (3) Business Days; or
(b) except as set forth in Section 5.1(c), failure to pay any installment of the principal of any Note as and when the same becomes due and payable or the failure to make any distribution of the Available Amount on the Distribution Date if funds are available to make such distribution, and such failure shall continue unremedied for a period of three (3) Business Days; or
(c) failure to pay in full the outstanding principal balance of the Notes by the Final Scheduled Distribution Date; or
(d) default in the observance or performance in any material respect of any covenant or agreement of the Issuer, the Servicer, the Seller or the Transferor (other than a covenant or agreement, a default in the observance or performance of which is specifically dealt with elsewhere in this Section 5.1) in this Indenture, the Pooling and Servicing Agreement or the other Basic Documents which failure materially and adversely affects the rights of the Noteholders or the Administrative Agent and such default shall continue or not be cured for a period of thirty (30) days after the earlier of (x) the date on which written notice of such failure shall have been given to the Issuer, the Servicer, the Seller or the Transferor, as applicable, by the Indenture Trustee, the Administrative Agent or any Noteholder and (y) the date on which the Issuer or the Transferor, as applicable, has actual knowledge of such failure, or should, in the exercise of reasonable diligence, have become knowledgeable thereof; or
(e) any representation or warranty of the Issuer, the Servicer, the Seller or the Transferor made in this Indenture, the Pooling and Servicing Agreement or the other Basic Documents or any other writing delivered pursuant hereto or thereto or in connection herewith or therewith, proving to have been incorrect or misleading in any material respect as of the time when the same shall have been made, which failure materially and adversely affects the rights of
the Noteholders or the Administrative Agent and such breach shall continue or not be cured for a period of thirty (30) days after the earlier of (x) the date on which written notice of such breach shall have been given to the Issuer, the Servicer, the Seller or the Transferor, as applicable, by the Indenture Trustee, the Administrative Agent or any Noteholder and (y) the date on which the Issuer or the Transferor, as applicable, has actual knowledge of such failure, or should, in the exercise of reasonable diligence, have become knowledgeable thereof; or
(f) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Issuer, the Servicer, the Seller or the Transferor or any substantial part of the Trust Estate in an involuntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the appointing of a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer, the Servicer, the Seller or the Transferor or for any substantial part of the Trust Estate, or ordering the winding-up or liquidation of the Issuer’s, the Servicer’s, the Seller’s or the Transferor’s affairs, and such decree or order shall remain unstayed and in effect for a period of sixty (60) consecutive days; or
(g) the commencement by the Issuer, the Servicer, the Seller or the Transferor of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Issuer, the Servicer, the Seller or the Transferor to the entry of an order for relief in an involuntary case under any such law, or the consent by the Issuer, the Servicer, the Seller or the Transferor to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer, the Servicer, the Seller or the Transferor or for any substantial part of the Trust Estate, or the making by the Issuer, the Servicer, the Seller or the Transferor of any general assignment for the benefit of creditors, or the failure by the Issuer, the Servicer, the Seller or the Transferor generally to pay its debts as such debts become due, or the taking of action by the Issuer, the Servicer, the Seller or the Transferor in furtherance of any of the foregoing; or
(h) a circumstance in which the Issuer, the Servicer, the Seller or the Transferor becomes an investment company or is required to be registered under the Investment Company Act; or
(i) the termination or replacement of the Servicer pursuant to Section 8.02 of the Pooling and Servicing Agreement; or
(j) the failure of the Indenture Trustee to have a first priority perfected security interest in the Trust Estate (other than Permitted Adverse Claims and Exempt Collateral); or
(k) the failure of the Issuer (as assignee of the Originator) to have:
(1) a first priority perfected security interest against the Obligors in the Equipment securing the obligations of such Obligors under the Equipment Notes (subject to Permitted Adverse Claims); or
(2) a perfected security interest against the Obligors in the other items of equipment financed by the Originator that secure such Loan;
provided that, the failure of any Loans with an aggregate balance of less than $300,000 to satisfy the conditions set forth in this clause (k) shall not constitute an Event of Default hereunder;
(l) the rendering against the Issuer or the Transferor of a final judgment, decree or order for the payment of money in excess of $100,000 (or the Dollar Equivalent thereof) and the continuance of such judgment, decree or order unsatisfied, unbonded or uninsured for a period of sixty (60) consecutive days;
(m) a Change of Control with respect to the Issuer or the Transferor or, prior to the IT Dissolution Date, the Intermediate Transferor;
(n) failure to pay in full any Contingent Fees due and owing on any applicable Distribution Date, and such failure shall continue unremedied for a period of three (3) Business Days;
(o) if an ALS Change of Control shall have occurred, then the earlier to occur of (i) failure to pay in full all Outstanding Obligations by the six (6) month anniversary date of the occurrence of such ALS Change of Control or (ii) the Scheduled Termination Date, unless, in each case, the Noteholders that hold an aggregate pro rata share of equal to or greater than two-thirds of the aggregate principal balance of the Outstanding Notes have provided their written consent to the related ALS Change of Control to the Administrative Agent and the Issuer; or
(p) failure of the Originator to comply with Section 7.01(c)(v) of the Pooling and Servicing Agreement, failure of the Issuer, the Transferor, the Servicer or the Originator to comply with Section 7.09 of the Pooling and Servicing Agreement or failure of the Issuer to comply with Section 3.8(e), which failure in any case materially and adversely affects the Noteholders or the Administrative Agent.
The Issuer shall deliver to the Indenture Trustee and the Administrative Agent, within three (3) Business Days after learning of the occurrence thereof, written notice of any Default or Event of Default under Section 5.1(d) or Section 5.1(e), its status and what action the Issuer is taking or proposes to take with respect thereto.
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.
(a) Upon the occurrence of an Event of Default of the type described in Section 5.1(f) or 5.1(g), the unpaid principal amount for the Notes, together with accrued and unpaid interest thereon through the date of acceleration, shall become immediately due and payable. Except as set forth in the immediately preceding sentence, if an Event of Default should occur and be continuing, then and in every such case, unless the principal amount of the Notes shall have already become due and payable, the Indenture Trustee shall (at the written direction of the Required Noteholders) declare all the Notes to be immediately due and payable, by a notice in writing to the Issuer (with a copy to the Administrative Agent and the Noteholders) setting forth a description of the Event or Events of Default, and upon any such declaration the unpaid principal amount of the Notes, together with accrued and unpaid interest thereon through the date of acceleration, shall become immediately due and payable.
(b) At any time after such declaration of acceleration of maturity of the Notes has been made and before a sale of the Trust Estate or a judgment or decree for payment of the money due thereunder has been obtained by the Indenture Trustee as hereinafter provided in this Article V, the Required Noteholders, by written notice to the Issuer and the Indenture Trustee, may rescind and annul such declaration and its consequences with respect to the Notes; provided that no such rescission and annulment shall extend to or affect any subsequent or other Default or Event of Default or impair any right consequent thereto; and provided, further, that if the Indenture Trustee (acting at the direction of or with the consent of the Required Noteholders) shall have proceeded to enforce any right under this Indenture and such Proceedings shall have been discontinued or abandoned because of such rescission and annulment or for any other reason, or such Proceedings shall have been determined adversely to the Indenture Trustee, then and in every such case, the Indenture Trustee, the Issuer, the Administrative Agent and the Noteholders, as the case may be, shall be restored to their respective former positions and rights hereunder, and all rights, remedies and powers of the Indenture Trustee, the Issuer, the Administrative Agent and the Noteholders, as the case may be, shall continue as though no such Proceedings had been commenced.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.
(a) The Issuer covenants that if there shall occur an Event of Default under Section 5.1 which has not been waived pursuant to Section 5.12, in addition to the rights available under Section 5.4, the Issuer shall, upon demand of the Indenture Trustee (at the direction of the Required Noteholders) pay to the Indenture Trustee, for the benefit of the Noteholders and the Administrative Agent in accordance with their respective outstanding principal amounts or other amounts owed, whether at the Final Scheduled Distribution Date or otherwise, the entire amount then due and payable on the Notes for principal and interest, with interest through the date of such payment on the overdue principal amount of the Notes, at the rate applicable to the Notes, and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and the Administrative Agent and their respective agents and counsel.
(b) If the Issuer shall fail forthwith to pay such amounts upon such demand, the Indenture Trustee, in its own name and as trustee of an express trust shall (at the direction of the Administrative Agent or the Required Noteholders) institute a Proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and may enforce the same against the Issuer upon such Notes and collect in the manner provided by law out of the property of the Issuer upon such Notes, wherever situated, the monies adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture Trustee, as more particularly provided in Section 5.4 shall (at the direction of the Administrative Agent or the Required Noteholders) or may (with the consent of the Administrative Agent or the Required Noteholders) proceed to protect and enforce its rights and the rights of the Noteholders and the Administrative Agent, by such appropriate Proceedings as the Administrative Agent or the Required Noteholders deems most effective to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Indenture Trustee by this Indenture or by Applicable Law.
(d) If there shall be pending, relative to the Issuer or any other obligor upon the Notes or any Person having or claiming an ownership interest in the Trust Estate, Proceedings under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or other similar law, or if a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or its property or such other obligor or Person, or in case of any other comparable judicial Proceedings relative to the Issuer or other obligor upon the Notes, or to the creditors or property of the Issuer or such other obligor, the Indenture Trustee, irrespective of whether the principal of any Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section 5.3, shall be entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the entire amount of the unpaid principal and interest owing in respect of the Notes or otherwise owed hereunder and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee, the Administrative Agent (including any claim for reasonable compensation to the Indenture Trustee and each predecessor trustee, the Administrative Agent and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor trustee and the Administrative Agent, except as a result of gross negligence or bad faith) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by Applicable Law, to vote on behalf of the Holders of Notes and the Administrative Agent in any election of a trustee, a standby trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute all amounts received with respect to the claims of the Noteholders, the Administrative Agent and of the Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee, the Administrative Agent or the Holders of Notes allowed in any judicial proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by the Administrative Agent and each of such Noteholders to make payments to the Indenture Trustee, and, if the Indenture Trustee shall consent to the making of payments directly to the Administrative Agent or such Noteholders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each
predecessor trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor trustee, except as a result of gross negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of the Administrative Agent or any Noteholder any plan of reorganization, arrangement, adjustment or composition affecting the Administrative Agent, the Notes or the rights of any Holder thereof or to authorize the Indenture Trustee to vote in respect of the claim of the Administrative Agent or any Noteholder in any such Proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture, or under any of the Notes, may be enforced by the Indenture Trustee without the possession of any of the Notes or the production thereof in any trial or other Proceedings relative thereto, and any such Proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor trustee, the Administrative Agent and their respective agents and attorneys, shall be for the benefit of the Noteholders and the Administrative Agent in the order of priority set forth in Section 8.2 of this Indenture.
(g) In any Proceedings brought by the Indenture Trustee (and also any Proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent the Administrative Agent and all the Noteholders, and it shall not be necessary to make the Administrative Agent and any Noteholder a party to any such Proceedings.
SECTION 5.4 Remedies; Priorities.
(a) If an Event of Default shall have occurred and be continuing and the Notes have been accelerated under Section 5.2(a), the Indenture Trustee shall (at the direction of the Administrative Agent or the Required Noteholders) or may (with the consent of the Administrative Agent or the Required Noteholders) do one or more of the following (subject to Section 5.5):
(i) institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then due and payable on the Notes or under this Indenture with respect thereto, whether by declaration of acceleration or otherwise, enforce any judgment obtained, and collect from the Issuer and any other obligor upon such Notes monies adjudged due;
(ii) institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee, the Administrative Agent and the Noteholders; and
(iv) sell the Trust Estate or any portion thereof or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by law or elect to have the Issuer maintain possession of the Loans and continue to apply collections on such Loans as if there had been no declaration of acceleration; provided, however, that the Indenture Trustee may not sell or otherwise liquidate the Trust Estate following an Event of Default and acceleration of the Notes, unless (A) the Administrative Agent and the Holders of all of the aggregate Outstanding Amount of the Notes which are not Affiliates of the Issuer consent thereto or (B) the proceeds of such sale or liquidation distributable to the Noteholders are sufficient to discharge in full the principal of and the accrued interest on the Notes as of the date of such sale or liquidation or (C) (i) there has been an Event of Default under Section 5.1(a) or (c) or otherwise arising from a failure to make a required payment of principal on any Notes, (ii) the Indenture Trustee or the Required Noteholders determine that it is unlikely the Trust Estate will continue to provide sufficient funds for the payment of principal of and interest on the Notes as and when they would have become due if the Notes had not been declared due and payable, (iii) the Indenture Trustee obtains the consent of the Required Noteholders and (iv) the Trust Estate is sold in a commercially reasonable sale within the meaning of the UCC. In determining such sufficiency or insufficiency with respect to clauses (B) and (C), the Indenture Trustee or the Required Noteholders may, but need not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Trust Estate for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant to this Article V, it shall pay out or deposit such money or property in the following order:
FIRST: to the Indenture Trustee for amounts due under Section 6.7; and
SECOND: to the Collection Account, for distribution pursuant to Section 8.2 of this Indenture.
SECTION 5.5 Optional Preservation of the Trust Estate. If the Notes have been declared to be due and payable under Section 5.2(a) following an Event of Default and such declaration and its consequences have not been rescinded and annulled in accordance with Section 5.2(b), the Indenture Trustee shall (at the direction of the Administrative Agent or the Required Noteholders) take and maintain possession of the Trust Estate. In determining whether to take and maintain possession of the Trust Estate, each of the Indenture Trustee, the Administrative Agent or the Required Noteholders may, but need not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action (with costs so incurred reimbursable pursuant to Section 6.7 of this Indenture or the other Basic Documents).
SECTION 5.6 Limitation of Suits. No Noteholder shall have any right to institute any Proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(i) such Person has previously given written notice to the Indenture Trustee of a continuing Event of Default;
(ii) such Person has made written request to the Indenture Trustee to institute such Proceeding in respect of such Event of Default in its own name as Indenture Trustee hereunder;
(iii) such Person or Persons have offered to the Indenture Trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in complying with such request;
(iv) the Indenture Trustee fails to institute such Proceedings for sixty (60) days after its receipt of such notice, request and offer of indemnity; and
(v) no direction inconsistent with such written request has been given to the Indenture Trustee during such sixty (60) day period by the Administrative Agent or the Required Noteholders,
it being understood and intended that no Holder or Holders of Notes shall have any right in any manner whatsoever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of the Administrative Agent or any other Holders of Notes or to obtain or to seek to obtain priority or preference over any other Holders of Notes or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable (on the basis of the respective aggregate amount of principal and interest, respectively, due and unpaid on the Notes held by each Noteholder) and common benefit of all Noteholders. For the protection and enforcement of the provisions of this Section 5.6, each and every Noteholder and the Administrative Agent shall be entitled to such relief as can be given either at law or in equity.
If the Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Holders of Notes, neither being the Administrative Agent or the Required Noteholders, the Indenture Trustee in its sole discretion may determine what action, if any, shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal and Interest. Notwithstanding any other provisions in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to institute suit for the enforcement of any payment of the principal of and interest on such Note on or after the respective due dates thereof expressed in such Note or in this Indenture (or, in the case of redemption, if applicable, on or after the Redemption Date), and such right shall not be impaired without the consent of such Holder.
SECTION 5.8 Restoration of Rights and Remedies. If the Indenture Trustee, the Administrative Agent or any Noteholder has instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Indenture Trustee, the Administrative Agent or to such Noteholder, then and in every such case the Issuer, the Indenture Trustee, the Administrative Agent and the Noteholders shall, subject to any determination in such Proceeding, be restored severally to their respective former positions hereunder, and thereafter
all rights and remedies of the Indenture Trustee, the Administrative Agent and the Noteholders shall continue as though no such Proceeding had been instituted.
SECTION 5.9 Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Indenture Trustee, the Administrative Agent or to the Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of the Indenture Trustee, the Administrative Agent or any Holder of any Note to exercise any right or remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Default or Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Indenture Trustee, the Administrative Agent or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee, the Administrative Agent or by the Noteholders, as the case may be, subject, however, to the right of the Required Noteholders or the Administrative Agent, as specified herein, to control any such right and remedy.
SECTION 5.11 [Reserved].
SECTION 5.12 Waiver of Past Defaults.
(a) Prior to the declaration of the acceleration of the maturity of the Notes as provided in Section 5.2(a), the Special Required Noteholders may waive any past Default or Event of Default and its consequences except a Default or Event of Default (i) in the payment of principal of or interest on any of the Notes or (ii) unless such consent shall have been obtained, in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Note. In the case of any such waiver, the Issuer, the Indenture Trustee, the Administrative Agent and the Noteholders shall be restored to their respective former positions and rights hereunder; but no such waiver shall extend to or affect any subsequent or other Default or Event of Default or impair any right consequent thereto.
(b) Upon any such waiver, such Default or Event of Default shall cease to exist and be deemed to have been remedied, and any Event of Default arising from such Default shall cease to exist and be deemed to have been remedied, for every purpose of this Indenture and for purposes of Section 9.01(b) of the Pooling and Servicing Agreement; but no such waiver shall extend to or affect any subsequent or other Default or Event of Default or impair any right consequent thereto.
SECTION 5.13 Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Note by such Holder’s acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any Proceeding for the enforcement of any right or remedy under this Indenture, or in any Proceeding against the Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing by any party litigant in such
Proceeding of an undertaking to pay the costs of such Proceeding, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such Proceeding, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.13 shall not apply to:
(a) any Proceeding instituted by the Indenture Trustee, the Administrative Agent or the Required Noteholders;
(b) any Proceeding instituted by any Noteholder, or group of Noteholders, in each case holding in the aggregate more than 10% of the Outstanding Amount of the Notes; or
(c) any Proceeding instituted by any Noteholder for the enforcement of the payment of principal of or interest on any Note on or after the respective maturity dates expressed in such Note and in this Indenture (or, in the case of redemption, on or after the Redemption Date).
SECTION 5.14 Waiver of Stay or Extension of Laws. The Issuer covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, or plead or in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension of law wherever enacted, now or at any time hereafter in force, that may adversely affect the covenants or the performance of this Indenture. The Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not hinder, delay or impede the execution of any power herein granted to the Indenture Trustee, the Administrative Agent or the Noteholders, but shall suffer and permit the execution of every such power as though no such law had been enacted.
SECTION 5.15 Action on Notes. The Indenture Trustee’s, the Administrative Agent’s and the Required Noteholders’ right to seek and recover judgment on the Notes or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the Lien of this Indenture nor any rights or remedies of the Indenture Trustee, the Administrative Agent or the Noteholders shall be impaired by the recovery of any judgment by the Indenture Trustee or the Administrative Agent against the Issuer or by the levy of any execution under such judgment upon any portion of the Trust Estate or upon any of the assets of the Issuer. Any money or property so collected by the Indenture Trustee shall be applied in accordance with Section 5.4(b).
SECTION 5.16 Performance and Enforcement of Certain Obligations.
(a) Promptly following a written request from the Indenture Trustee, the Administrative Agent or the Required Noteholders to do so and at the Administrator’s expense, the Issuer agrees to take all such lawful action as the Indenture Trustee, the Administrative Agent or the Required Noteholders may request to compel or secure the performance and observance by the Administrator, ALER and the Servicer, as applicable, of their respective obligations to the Issuer under or in connection with the Basic Documents in accordance with the terms thereof, by ALS of its obligations under or in connection with the Purchase Agreement in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Basic Documents, to the extent and in the
manner directed by the Indenture Trustee, the Administrative Agent or the Required Noteholders, including the transmission of notices of default on the part of ALER, the Servicer or ALS thereunder and the institution of legal or administrative actions or Proceedings to compel or secure performance by ALER, the Servicer or ALS of each of their respective obligations under the Pooling and Servicing Agreement, the Purchase Agreement or the other Basic Documents, as applicable.
(b) If an Event of Default has occurred and is continuing, the Indenture Trustee shall (at the direction of the Administrative Agent or the Required Noteholders) exercise all rights, remedies, powers, privileges and claims of the Issuer against ALER or the Servicer under or in connection with the Basic Documents, including the right or power to take any action to compel or secure performance or observance by ALER or the Servicer of each of their respective obligations to the Issuer thereunder and to give any consent, request, notice, direction, approval, extension or waiver under the Basic Documents, and any right of the Issuer to take such action shall be suspended.
(c) [Reserved].
(d) If an Event of Default has occurred and is continuing, the Indenture Trustee shall (at the direction of the Administrative Agent) exercise all rights, remedies, powers, privileges and claims of ALER against ALS under or in connection with the Basic Documents, including the right or power to take any action to compel or secure performance or observance by ALS of each of its obligations to ALER thereunder and to give any consent, request, notice, direction, approval, extension or waiver under the Basic Documents, and any right of ALER to take such action shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1 Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the Indenture Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and the Pooling and Servicing Agreement and no implied covenants or obligations shall be read into this Indenture, the Pooling and Servicing Agreement or any other Basic Document against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture; provided, however, that the Indenture Trustee shall examine the certificates and opinions specifically contemplated herein, to determine whether or not they conform to any applicable requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).
(c) The Indenture Trustee shall not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:
(i) this Section 6.1(c) does not limit the effect of Section 6.1(b);
(ii) the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Indenture Trustee was negligent in ascertaining the pertinent facts;
(iii) the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.16; and
(iv) No provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayments of such funds or adequate indemnity satisfactory to it against such risk or liability is not reasonably assured to it.
(d) The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may agree in writing with the Issuer.
(e) Money held in trust by the Indenture Trustee need not be segregated from other funds except to the extent required by law or the terms of this Indenture or the Pooling and Servicing Agreement.
(f) [Reserved].
(g) Every provision of this Indenture relating to the Indenture Trustee shall be subject to the provisions of this Section 6.1.
(h) The Indenture Trustee shall promptly notify the Administrative Agent and the Noteholders upon obtaining actual knowledge or receipt of written notice by a Responsible Officer of the Indenture Trustee of (i) any proposed change herein or supplement hereto; (ii) the occurrence of any Default, Event of Default, Rapid Amortization Event or Servicer Default actually known to a Responsible Officer of the Indenture Trustee; (iii) any proposed change of the Indenture Trustee hereunder; (iv) any matter to be put to the Noteholders or the Administrative Agent for a vote hereunder; (v) any proposed exercise by the Noteholders or the Administrative Agent of any option, vote, right, power or the like hereunder; and (vi) any other matter, notice of which is required hereunder to be given to any of the Noteholders or the Administrative Agent by the Indenture Trustee.
(i) [Reserved].
(j) The Indenture Trustee shall forward a copy of any Advance Notice (as defined in the Note Purchase Agreement) received by it from the Issuer to each applicable Note Purchaser (as defined in the Note Purchase Agreement), by not later than 5:00 p.m. on the Business Day on which it receives such notice, as set forth in the Note Purchase Agreement.
SECTION 6.2 Rights of Indenture Trustee.
(a) The Indenture Trustee may conclusively rely on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Indenture Trustee need not investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may require an Officer’s Certificate from the Issuer or an Opinion of Counsel that such action or omission is required or permissible hereunder. The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or a custodian or nominee, and the Indenture Trustee shall not be responsible for any misconduct or negligence on the part of, or for the supervision of, any such agent, attorney, custodian or nominee appointed with due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers; provided, however, that the Indenture Trustee’s conduct does not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel of its own selection, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders or the Administrative Agent pursuant to this Indenture, unless the Indenture Trustee shall have security or indemnity reasonably satisfactory to the Indenture Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
(g) The Indenture Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Indenture Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and if the Indenture Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Issuer, personally or by agent or attorney at the sole cost of the Issuer and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.
(h) In acting as secured party under the Lockbox Agreement referred to in clause (b) of the definition thereof, the Indenture Trustee shall have all of the rights, protection and immunities granted to it under this Indenture.
(i) The Indenture Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Indenture Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Indenture Trustee at the Corporate Trust Office of the Indenture Trustee, and such notice references the Notes and this Indenture.
(j) The rights, privileges, protections, immunities and benefits given to the Indenture Trustee under the Basic Documents, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Indenture Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act under the Basic Documents.
(k) The Indenture Trustee may request that the Issuer deliver an Officer’s Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officer’s Certificate may be signed by any person authorized to sign an Officer’s Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.
(l) The Indenture Trustee shall have no duties other than as set forth in this Indenture.
(m) In no event shall the Indenture Trustee be responsible or liable for special, punitive, indirect or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Indenture Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
(n) In no event shall the Indenture Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Indenture Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
(o) Delivery of reports, information and documents to the Indenture Trustee under the Basic Documents is for informational purposes only and the Indenture Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s compliance with any of
its covenants hereunder (as to which the Indenture Trustee is entitled to rely exclusively on Officer’s Certificates).
(p) For the avoidance of doubt, all directions provided to the Indenture Trustee hereunder shall be in writing.
(q) The Issuer and Noteholders waive, to the extent permitted by law, any and all claims against the Indenture Trustee for, and agree not to initiate a suit against the Indenture Trustee in respect of, and agree that the Indenture Trustee shall not be liable for, any action that the Indenture Trustee takes, or abstains from taking, in either case at the direction of the Issuer or any other party as permitted by this Indenture in connection with the application of any Write-Down and Conversion Powers to any liability of an EEA Financial Institution arising under any Basic Document.
SECTION 6.3 Indenture Trustee May Own Notes. The Indenture Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer, the Servicer or any of their respective Affiliates with the same rights it would have if it were not the Indenture Trustee; provided, however, that the Indenture Trustee shall comply with Sections 6.10 and 6.11. Any Paying Agent, Note Registrar, co-registrar or co-paying agent may do the same with like rights.
SECTION 6.4 Indenture Trustee’s Disclaimer. The Indenture Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuer’s use of the proceeds from the Notes, and it shall not be responsible for any statement of the Issuer in the Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Indenture Trustee’s certificate of authentication.
SECTION 6.5 Notice of Defaults and Events of Default. If a Default or Event of Default occurs and is continuing and if it is known to a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall mail to each Noteholder and the Administrative Agent notice of the Default or Event of Default within three (3) Business Days after it occurs.
SECTION 6.6 Reports by Indenture Trustee to Holders. The Indenture Trustee shall deliver to each Noteholder and the Administrative Agent the information and documents set forth in Article VII, and, in addition, all such information with respect to the Notes as may be required, as requested in writing by the Servicer, to enable such Holder to prepare its federal and state income tax returns.
SECTION 6.7 Compensation; Indemnity.
(a) The Issuer shall pay, or shall cause the Servicer pursuant to the Pooling and Servicing Agreement to pay, to the Indenture Trustee from time to time such compensation for its services as shall be agreed upon from time to time in writing. The Indenture Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall reimburse, or shall cause the Servicer pursuant to the Pooling and Servicing Agreement to reimburse, the Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Indenture Trustee’s agents, counsel, accountants and experts. The Issuer shall indemnify, or shall cause the Servicer pursuant to the Pooling and Servicing Agreement to indemnify, the Indenture Trustee in accordance with Section 8.01 of the Pooling and Servicing Agreement.
(b) The Issuer’s obligations to the Indenture Trustee pursuant to this Section 6.7 shall survive the discharge of this Indenture and the resignation or removal of any Indenture Trustee. When the Indenture Trustee incurs expenses after the occurrence of a Default or Event of Default specified in Section 5.1(f) or (g) with respect to the Issuer, the expenses are intended to constitute expenses of administration under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or similar law.
SECTION 6.8 Replacement of Indenture Trustee.
(a) The Indenture Trustee may at any time give notice of its intent to resign by so notifying the Issuer and the Administrative Agent; provided, however, that no such resignation shall become effective and the Indenture Trustee shall not resign prior to the time set forth in Section 6.8(c). The Required Noteholders may remove the Indenture Trustee by so notifying the Indenture Trustee and may appoint a successor Indenture Trustee. Such resignation or removal shall become effective in accordance with Section 6.8(c). The Issuer shall (at the direction of the Required Noteholders) or may (with the consent of the Required Noteholders) remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of acting as Indenture Trustee under the Basic Documents.
(b) If the Indenture Trustee gives notice of its intent to resign or is removed or if a vacancy exists in the office of the Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture Trustee), the Issuer shall promptly appoint and designate a successor Indenture Trustee, which shall be acceptable to the Required Noteholders. If the Issuer fails to appoint a successor Indenture Trustee within thirty (30) days, the Required Noteholders may designate a successor Indenture Trustee which the Issuer shall appoint.
(c) A successor Indenture Trustee shall deliver a written acceptance of its appointment and designation to the retiring Indenture Trustee, the Administrative Agent and to the Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture Trustee shall have all the rights, powers and duties of the Indenture Trustee under this Indenture. The successor Indenture Trustee shall mail a notice of its
succession to the Noteholders and the Administrative Agent. The retiring Indenture Trustee shall promptly transfer all property held by it as Indenture Trustee to the successor Indenture Trustee.
(d) If a successor Indenture Trustee does not take office within sixty (60) days after the retiring Indenture Trustee gives notice of its intent to resign or is removed, the retiring Indenture Trustee, the Issuer, the Administrative Agent or the Required Noteholders at the expense of the Issuer may petition any court of competent jurisdiction for the appointment and designation of a successor Indenture Trustee; provided that any successor Indenture Trustee shall be acceptable to the Required Noteholders.
(e) If the Indenture Trustee fails to comply with Section 6.11, any Noteholder or the Administrative Agent may petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee; provided that any successor Indenture Trustee shall be acceptable to the Required Noteholders.
(f) Notwithstanding the replacement of the Indenture Trustee pursuant to this Section 6.8, the Issuer’s obligations under Section 6.7 and the Servicer’s corresponding obligations under the Pooling and Servicing Agreement shall continue for the benefit of the retiring Indenture Trustee.
(g) The Issuer shall (at the direction of the Required Noteholders) or may (with the consent of the Required Noteholders) remove the Indenture Trustee for (i) gross negligence, bad faith or willful misconduct or (ii) failure or unwillingness to perform its duties under the Indenture.
(h) Upon acceptance of appointment by a successor Indenture Trustee as provided in this Section 6.8, the Servicer shall mail notice of the succession of such Indenture Trustee hereunder to the Beneficiaries (with a copy to the Noteholders). If the Servicer fails to mail such notice within ten (10) days after acceptance of appointment by such successor Indenture Trustee, then the successor Indenture Trustee shall cause such notice to be mailed at the expense of the Servicer.
SECTION 6.9 Merger or Consolidation of Indenture Trustee.
(a) Any Person into which the Indenture Trustee may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Indenture Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Indenture Trustee, shall be the successor of the Indenture Trustee under this Indenture; provided, however, that such Person shall be eligible under the provisions of Section 6.11, without the execution or filing of any instrument or any further act on the part of any of the parties to this Indenture, anything in this Indenture to the contrary notwithstanding. Following such merger or consolidation, the successor Indenture Trustee shall mail a notice of such merger or consolidation to each of the Administrative Agent and the Noteholders.
(b) If at the time such successor or successors by merger or consolidation to the Indenture Trustee shall succeed to the trusts created by this Indenture, any of the Notes shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Indenture Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee. In all such cases such certificate of authentication shall have the same full force as is provided anywhere in the Notes or herein with respect to the certificate of authentication of the Indenture Trustee.
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the Trust Estate or any Equipment may at the time be located, the Indenture Trustee shall have the power to and shall (at the direction of the Required Noteholders) and may (with the consent of the Required Noteholders not to be unreasonably withheld) execute and deliver all instruments to appoint one or more Persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the Trust Estate, and to vest in such Person or Persons, in such capacity and for the benefit of the Noteholders and (only to the extent expressly provided herein) the Registered Owners, such title to the Trust Estate, or any part hereof, and, subject to the other provisions of this Section 6.10, such powers, duties, obligations, rights and trusts as the Indenture Trustee or the Required Noteholders may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 6.11 and no notice to Noteholders of the appointment of any co-trustee or separate trustee shall be required under Section 6.8. The appointment of any co-trustee or separate trustee shall not relieve the Indenture Trustee of any of its obligations hereunder.
(b) Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Indenture Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Estate or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Indenture and the conditions of this Article VI. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Indenture Trustee or separately, as may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection to, the Indenture Trustee. Every such instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the Indenture Trustee, its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Indenture on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Indenture Trustee, to the extent permitted by law, without the appointment of a new or successor trustee.
SECTION 6.11 Eligibility; Disqualification.
(a) The Indenture Trustee shall, at all times, be an Eligible Institution.
(b) In the case of the appointment hereunder of a successor Indenture Trustee with respect to the Notes, the Issuer, the retiring Indenture Trustee and the successor Indenture Trustee with respect to such Notes shall execute and deliver an amendment hereto wherein the successor Indenture Trustee shall accept such appointment and which shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, the successor Indenture Trustee all the rights, powers, trusts and duties of the retiring Indenture Trustee with respect to the Notes. Upon execution and delivery of such amendment the resignation or removal of the retiring Indenture Trustee shall become effective to the extent provided therein.
SECTION 6.12 Foreign Account Tax Compliance Act. In order to comply with FATCA, to which a foreign financial institution, issuer, trustee, paying agent, holder or other institution is or has agreed to be subject, in connection with this Indenture, the Issuer agrees (i) to provide to The Bank of New York Mellon sufficient information about holders or other applicable parties and/or transactions (including any modification to the terms of such transactions) so The Bank of New York Mellon can determine whether it has tax related obligations under FATCA, (ii) that The Bank of New York Mellon shall be entitled to make any withholding or deduction from payments under this Indenture to the extent necessary to comply with FATCA for which The Bank of New York Mellon shall not have any liability, and (iii) to hold harmless The Bank of New York Mellon for any losses it may suffer due to the actions it takes to comply with FATCA. The terms of this section shall survive the termination of this Indenture.
SECTION 6.13 Representations and Warranties of Indenture Trustee. The Indenture Trustee represents and warrants as of the Restatement Date that:
(a) the Indenture Trustee is a New York banking corporation duly organized, validly existing and in good standing under the laws of the State of New York, is duly authorized and licensed under Applicable Laws to conduct the business it is presently conducting and the eligibility requirements set forth in Section 6.11 are satisfied with respect to the Indenture Trustee;
(b) the Indenture Trustee has full power, authority and legal right to execute, deliver and perform this Indenture and any other Basic Document to which it is a party or by which it is bound, and has taken all necessary action to authorize the execution, delivery and performance by it of this Indenture;
(c) the execution, delivery and performance by the Indenture Trustee of this Indenture and the other Basic Documents to which it is a party or to which it is bound by (i) shall not violate any provision of any law or regulation governing the banking and trust powers of the Indenture Trustee or any order, writ, judgment or decree of any Governmental Authority applicable to the Indenture Trustee or any of its assets, (ii) shall not violate any provision of the corporate charter or by-laws of the Indenture Trustee or (iii) to the best of its knowledge without independent investigation, shall not violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any lien on any properties included in the Trust Estate pursuant to the provisions of any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or lien could reasonably be expected to have a materially adverse effect on the Indenture Trustee’s performance or ability to perform its duties under this Indenture or on the transactions contemplated in this Indenture;
(d) the execution, delivery and performance by the Indenture Trustee of this Indenture and any other Basic Document to which it is a party or by which it is bound shall not require the authorization, consent or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any Governmental Authority regulating the banking and corporate trust activities of the Indenture Trustee; and
(e) this Indenture and any other Basic Document to which the Indenture Trustee is a party have been duly executed and delivered by the Indenture Trustee and constitute the legal, valid and binding agreement of the Indenture Trustee, enforceable in accordance with their terms.
SECTION 6.14 Indenture Trustee May Enforce Claims Without Possession of Notes. All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Indenture Trustee without the possession of any of the Notes or the production thereof in any Proceeding relating thereto, and any such Proceeding instituted by the Indenture Trustee shall be brought in its own name as Indenture Trustee. Any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee, its agents and counsel, be for the ratable benefit of the
Administrative Agent, the Noteholders and (only to the extent expressly provided herein) the Registered Owners in respect of which such judgment has been obtained.
SECTION 6.15 Suit for Enforcement. If an Event of Default shall occur and be continuing, the Indenture Trustee shall (at the direction of the Administrative Agent or the Required Noteholders) or may (with the consent of the Administrative Agent or the Required Noteholders) in each case subject to the provisions of Section 6.1, proceed to protect and enforce its rights and the rights of the Noteholders under this Indenture by a Proceeding whether for the specific performance of any covenant or agreement contained in this Indenture or in aid of the execution of any power granted in this Indenture or for the enforcement of any other legal, equitable or other remedy as the Indenture Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Indenture Trustee, the Administrative Agent or the Noteholders.
SECTION 6.16 Rights of the Required Noteholders to Direct Indenture Trustee. Notwithstanding the grant of a security interest to secure the Outstanding Obligations for the benefit of the Beneficiaries, the Required Noteholders shall have the sole right to (i) direct in writing the time, method and place of conducting any Proceeding for any remedy available to the Indenture Trustee or exercising any trust or power conferred on the Indenture Trustee and (ii) direct all actions or exercise rights or remedies under this Indenture, the Basic Documents or the UCC and, by accepting the benefits of this Indenture, each Noteholder acknowledges such statement; provided, however, that subject to Section 6.1, the Indenture Trustee shall have the right to decline to follow any such direction if the Indenture Trustee being advised by counsel determines that the action so directed may not lawfully be taken, or if the Indenture Trustee in good faith shall, by a Responsible Officer, determine that the Proceedings so directed would be illegal or subject it to personal liability or be unduly prejudicial to the rights of Noteholders not parties to such direction; and provided, further, that nothing in this Indenture shall impair the right of the Indenture Trustee to take any action deemed proper by the Indenture Trustee and which is not inconsistent with such direction by the Required Noteholders (or the Administrative Agent on their behalf).
ARTICLE VII
NOTEHOLDERS’ LISTS AND REPORTS
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders. The Issuer shall furnish or cause to be furnished by the Servicer to the Indenture Trustee (a) not more than five (5) days before each Distribution Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the Holders of Notes as of the close of business on the Record Date, and (b) at such other times as the Indenture Trustee may request in writing, within fourteen (14) days after receipt by the Issuer of any such request, a list of similar form and content as of a date not more than ten (10) days prior to the time such list is furnished; provided, however, that so long as the Indenture Trustee is the Note Registrar, no such list shall be required to be furnished.
SECTION 7.2 Preservation of Information, Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Holders of Notes contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.1 and the names and addresses of Holders of Notes received by the Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy any list furnished to it as provided in such Section 7.1 upon receipt of a new list so furnished.
SECTION 7.3 Reports by Indenture Trustee. On each Distribution Date, the Indenture Trustee shall include with each payment to each Noteholder and the Administrative Agent a copy of the Servicer’s Certificate.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 Collection of Money. Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply all such money received by it as provided in this Indenture, the Pooling and Servicing Agreement and the other Basic Documents. Except as otherwise expressly provided in this Indenture or in Article III of the Pooling and Servicing Agreement, if any default occurs in the making of any payment or performance under any agreement or instrument that is part of the Trust Estate, the Indenture Trustee shall (at the direction of the Administrative Agent or the Required Noteholders) or may (with the consent of the Administrative Agent or the Required Noteholders) take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution of appropriate Proceedings. Any such action shall be without prejudice to any right to claim an Event of Default under this Indenture and any right to proceed thereafter as provided in Article V.
SECTION 8.2 Designated Accounts; Payments.
(a) On or prior to the Restatement Date, the Issuer shall cause the Servicer to establish and maintain, in the name of the Indenture Trustee, for the benefit of the Beneficiaries, the Designated Accounts and the Lockbox Accounts as provided in Article VI of the Pooling and Servicing Agreement.
(b) On or prior to each Determination Date, the Issuer shall cause the Servicer to make the calculations as provided in the Servicer’s Certificate.
(c) On each Distribution Date on which no Event of Default or Rapid Amortization Event is then continuing, the Indenture Trustee, based on the Servicer’s Certificate prepared by the Servicer (and if no Servicer’s Certificate is provided, at the direction of the Administrative Agent, unless objected to by the Required Noteholders), shall distribute the Available Amount from amounts on deposit in the Collection Account to the following Persons in the following order of priority:
(1) to the Servicer, the amount of any collections consisting of late fees, financing charges, documentation and origination fees, legal fees, payments with respect to value added taxes and similar charges on the Loans;
(2) to the Servicer, the Servicer Advance Reimbursement Amount (for Servicer Advances made in respect of the Loans) and any accrued but previously unreimbursed Servicer Advance Reimbursement Amount (for Servicer Advances made in respect of the Loans) from any previous Distribution Dates, but solely from Collections received from the Loans related to such Servicer Advances;
(3) (x) for so long as ALS is the Servicer, to ALS, the Servicing Fee and any accrued but previously unpaid Servicing Fee owing from any previous Distribution Dates and (y) if ALS is not the Servicer, to the Servicer for payment of the Servicing Fee, any accrued but previously unpaid Servicing Fee owing from any previous Distribution Dates and, in each case, any expenses with respect to which the Servicer is entitled to reimbursement pursuant to the Basic Documents;
(4) to the Indenture Trustee, the Indenture Trustee Fee (to the extent not previously paid by the Servicer) and any accrued but previously unpaid Indenture Trustee Fees owing from any previous Distribution Dates;
(5) to the Custodian, the Custodian Fee (to the extent not previously paid by the Servicer) and any accrued but previously unpaid Custodian Fees owing from any previous Distribution Dates;
(6) to the Backup Servicer, the Backup Servicer Fee (to the extent not previously paid by the Servicer) and any accrued but previously unpaid Backup Servicer Fees owing from any previous Distribution Dates;
(7) to the Owner Trustee, the Owner Trustee Fee (to the extent not previously paid by the Servicer) and any accrued but previously unpaid Owner Trustee Fees owing from any previous Distribution Dates;
(8) to the Manager, the Management Fee (to the extent not previously paid by the Servicer) and any accrued but previously unpaid Management Fees owing from any previous Distribution Dates;
(9) to the extent not paid by the Servicer, to the Indenture Trustee, the Backup Servicer, the Custodian, the Owner Trustee and the Manager, payment of unpaid reimbursable expenses and indemnities made pursuant to this Indenture at all times on and after the Restatement Date, for each such Person, in an aggregate amount not to exceed $50,000 for all such payments to such Person and, for all such Persons, in an aggregate amount not to exceed $250,000 for all such payments to all such Persons;
(10) to each Noteholder for payment, on a pro rata basis, of the Note Interest Payment in an amount not to exceed the Note Senior Interest Amount, and the Unused Facility Fee due and owing on such Distribution Date and the payment, on a pro rata basis, of any accrued but previously unpaid Note Interest Payment in an amount not to exceed the Note Senior Interest Amount or Unused Facility Fee from any previous Distribution Dates;
(11) to the Noteholders, for payment, on a pro rata basis, of the sum of (A) Principal Distributable Amount, plus (B) to the extent a Borrowing Base Shortfall exists after the application of such principal payment in clause (A), any amounts necessary to reduce the aggregate Pro Forma Principal Balance of the Notes to an amount equal to the Borrowing Base from the remaining Available Amount;
(12) to the Reserve Account and the Yield Supplement Account, on a pari passu basis, until the amount on deposit therein is equal to the Reserve Account Required Amount or the Yield Supplement Required Amount, as applicable;
(13) to each Noteholder for payment of any Contingent Fees relating to the Notes;
(14) if such Distribution Date is on or after the second anniversary of the Conversion Date, to each Noteholder for payment, on a pro rata basis, of such Noteholder’s then unpaid Pro Forma Principal Balance of the Notes until paid in full from the remaining Available Principal Amount;
(15) to each Noteholder for payment of all NPA Indemnified Amounts and other amounts due and owing to such Noteholder and any accrued but previously unpaid NPA Indemnified Amounts and other amounts due and owing to such Noteholder from any previous Distribution Dates;
(16) to each Noteholder for payment of any voluntary prepayment on such Distribution Date in accordance with Section 2.9(a) of the Note Purchase Agreement;
(17) to the Servicer, reimbursement of Servicer Advances and accrued but previously unreimbursed Servicer Advances from any previous Distribution Dates to the extent not paid pursuant to clause (2) above; and
(18) any remaining amounts shall be released to the Issuer or its designee.
(d) On each Distribution Date on which an Event of Default or Rapid Amortization Event is then continuing, after giving effect to Section 5.4(b), if applicable, the Indenture Trustee, based on the Servicer’s Certificate prepared by the Servicer (and if no Servicer’s Certificate is provided, at the direction of the Administrative Agent, unless objected to by the Required Noteholders), shall distribute the Available Amount from amounts on deposit in
the Collection Account (or other money or property received by the Indenture Trustee pursuant to Section 5.4(b)) to the following Persons in the following order of priority:
(1) to the Servicer, the amount of any collections consisting of late fees, financing charges, documentation and origination fees, legal fees, payments with respect to value added taxes and similar charges on the Loans;
(2) to the Servicer, the Servicer Advance Reimbursement Amount (for Servicer Advances made in respect of the Loans) and any accrued but previously unreimbursed Servicer Advance Reimbursement Amount (for Servicer Advances made in respect of the Loans) from any previous Distribution Dates but solely from collections received from the Loans related to such Servicer Advances;
(3) (x) for so long as ALS is the Servicer, to ALS, the Servicing Fee and any accrued but previously unpaid Servicing Fee owing from any previous Distribution Dates and (y) if ALS is not the Servicer, to the Servicer for payment on the Servicing Fee, any accrued but previously unpaid Servicing Fee owing from any previous Distribution Dates and, in each case, any expenses with respect to which the Servicer is entitled to reimbursement pursuant to the Basic Documents;
(4) to the Indenture Trustee, the Indenture Trustee Fee (to the extent not previously paid by the Servicer) and any accrued but previously unpaid Indenture Trustee Fees owing from any previous Distribution Dates;
(5) to the Custodian, the Custodian Fee (to the extent not previously paid by the Servicer) and any accrued but previously unpaid Custodian Fees owing from any previous Distribution Dates;
(6) to the Backup Servicer, the Backup Servicer Fee (to the extent not previously paid by the Servicer) and any accrued but previously unpaid Backup Servicer Fees owing from any previous Distribution Dates;
(7) to the Owner Trustee, the Owner Trustee Fee (to the extent not previously paid by the Servicer) and any accrued but previously unpaid Owner Trustee Fees owing from any previous Distribution Dates;
(8) to the Manager, the Management Fee (to the extent not previously paid by the Servicer) and any accrued but previously unpaid Management Fees owing from any previous Distribution Dates;
(9) to the extent not paid by the Servicer, to the Indenture Trustee, the Backup Servicer, the Custodian, the Owner Trustee and the Manager, payment of unpaid reimbursable expenses and indemnities made pursuant to this Indenture at all times on and after the Restatement Date, for each such Person, in an aggregate amount not to exceed $50,000 for all such payments to such Person,
and for all such Persons, in an aggregate amount not to exceed $250,000 for all such payments to all such Persons;
(10) to each Noteholder for payment, on a pro rata basis, of the Note Interest Payment due on such Distribution Date in an amount not to exceed the Note Senior Interest Amount, and the Unused Facility Fee and for the payment, on a pro rata basis, of any accrued but previously unpaid Note Interest Payment in an amount not to exceed the Note Senior Interest Amount and the Unused Facility Fee owing from previous Distribution Dates;
(11) to each Noteholder for payment, on a pro rata basis, of such Noteholder’s then unpaid Pro Forma Principal Balance of the Notes until paid in full;
(12) to each Noteholder for payment of any Contingent Fees relating to the Notes;
(13) to each Noteholder for payment of all NPA Indemnified Amounts and other amounts due and owing to such Noteholder and any accrued but previously unpaid NPA Indemnified Amounts and other amounts due and owing to such Noteholder from any previous Distribution Dates;
(14) [Reserved];
(15) to the Servicer, reimbursement of Servicer Advances and accrued but previously unreimbursed Servicer Advances from any previous Distribution Dates to the extent not paid pursuant to clause (2) above; and
(16) following payment in full of all Outstanding Obligations, any remaining amounts shall be released to the Issuer or its designee.
(e) If on any Distribution Date:
(1) the Available Amount is insufficient to make the entire distributions in respect of the Note Interest Payment;
(2) a Borrowing Base Shortfall would exist after giving effect to payments pursuant to clause (11) of Section 8.2(c);
(3) [Reserved];
(4) a Borrowing Base Shortfall would exist after giving effect to payments pursuant to clause (11) of Section 8.2(d); or
(5) if such Distribution Date is also the Final Scheduled Distribution Date and the Notes will not have been paid in full on such date;
then (x) solely in the case of any such Borrowing Base Shortfall, ALS (and, in turn, the Transferor) may, but shall have no obligation to, contribute additional Loans to the Issuer that are Eligible Loans to the extent available and necessary to remedy such Borrowing Base Shortfall and (y) to the extent such contribution set forth in clause (x) is insufficient to remedy such Borrowing Base Shortfall, or if ALS or the Transferor chooses not to exercise its option to contribute Loans under clause (x), or to the extent any event described in clauses (1) or (5) above occurs, the Indenture Trustee shall withdraw available funds from the Reserve Account (including any amounts therein constituting the Ineligible Cap Reserve at such time, if any) and the Yield Supplement Account (solely with respect to any interest payment on the Notes) to the extent available and necessary to make such payment of interest or principal or remedy such shortfalls and shall apply those funds to such payment of interest or principal or remedy such shortfalls. In addition, at any time following the occurrence and during the continuance of an Event of Default, the Indenture Trustee shall (as and when directed to do so by the Required Noteholders) withdraw such amount from the Reserve Account (including any amounts therein constituting the Ineligible Cap Reserve at such time, if any) and the Yield Supplement Account (solely with respect to any interest payment on the Notes) as the Required Noteholders shall direct and apply such funds to the payment of principal and interest as provided in this Section 8.2. Notwithstanding the foregoing, distributions under this Section 8.2(e) shall be withdrawn first, from the Yield Supplement Account to the extent available and necessary to remedy interest payment shortfalls, and second, from the Reserve Account to the extent available and necessary to remedy principal and interest shortfalls. In the case of any contribution of Loans pursuant to clause (x), the Servicer shall deliver to the Transferor, the Backup Servicer, the Administrative Agent and each Trustee an amendment to the Schedule of Loans to report the newly contributed Loans.
In the event that the available funds in the Reserve Account (including any amounts therein constituting the Ineligible Cap Reserve at such time, if any) and the Yield Supplement Account (solely with respect to any interest payment on the Notes) are insufficient to complete all such payments of interest or principal or remedy such shortfalls as the case may be, the Indenture Trustee will draw, in accordance with Section 3.27, on any Letters of Credit to the extent of such shortfall. In addition, at any time following the occurrence and during the continuance of an Event of Default, the Indenture Trustee, as and when directed to do so by the Required Noteholders, shall draw on any Letters of Credit to the extent of the remaining Available Drawing Amount and apply the funds drawn from such Letters of Credit to the payment of principal or interest.
(f) The Issuer hereby instructs the Indenture Trustee to make any payments owing to the Issuer directly to the Registered Owners of the Issuer unless and until the Indenture Trustee has received further instructions from the Administrator.
(g) Notwithstanding any of the foregoing in this Section 8.2, both prior to and after the Conversion Date, all amounts which, under this Section 8.2, are to be applied in reduction of the principal amount of the Notes up to the aggregate of the applicable Percentage Interests (as defined in the Note Purchase Agreement) sold to any non-renewing Committed Purchasers (as defined in the Note Purchase Agreement) or Dissenting Committed Purchasers, as applicable, (or their Support Parties (as defined in the Note Purchase Agreement), as applicable) as described in Section 2.8(c) of the Note Purchase Agreement, shall be distributed ratably
among the applicable Noteholders (both renewing and non-renewing or consenting and dissenting, as applicable) according to the aggregate of the applicable Percentage Interests held by them, in reduction of such Percentage Interests, but the non-renewing Committed Purchasers or Dissenting Committed Purchasers (as defined in the Note Purchase Agreement), as applicable, shall not be required to fund any future Advances. When (after the Scheduled Termination Date, as in effect prior to giving effect to the renewal thereof or after the four (4) month anniversary of the ALS Change of Control, as applicable) the aggregate principal balances of the Notes of the non-renewing Committed Purchasers or the Dissenting Committed Purchasers, as applicable, shall have been reduced to zero and all accrued interest allocable thereto and all other outstanding amounts owed in respect of principal of, interest on or fees or other indemnities owing to such Committed Purchasers shall have been paid to such Committed Purchasers in full, such Committed Purchasers shall then cease to have any rights under this Indenture for any purpose.
(h) If any distribution pursuant to this Section 8.2 in respect of the Pro Forma Principal Balance of any Note would result in the Note Principal Balance of such Note being less than zero, then such distribution shall not be made to the holder of such Note and instead shall be retained in the Collection Account for subsequent distribution on the first date on which the Note Principal Balance of such Note is a positive amount, contemporaneously with the application of funds pursuant to Section 2.1(i)(v) of the Note Purchase Agreement on such date.
SECTION 8.3 General Provisions Regarding Accounts.
(a) Subject to Section 6.1(c), the Indenture Trustee shall not in any way be held liable by reason of any insufficiency in any of the Designated Accounts resulting from any loss on any Eligible Investment included therein except for losses attributable to the Indenture Trustee’s failure to make payments on such Eligible Investments issued by the Indenture Trustee, in its commercial capacity as principal obligor and not as trustee, in accordance with their terms.
(b) If (i) the Servicer shall have failed to give investment directions for any funds on deposit in the Designated Accounts to the Indenture Trustee by 11:00 a.m. New York City time (or such other time as may be agreed by the Servicer and the Indenture Trustee) on any Business Day; or (ii) an Event of Default shall have occurred and be continuing with respect to the Notes but the Notes shall not have been declared due and payable pursuant to Section 5.2(a), or, if such Notes shall have been declared due and payable following an Event of Default but amounts collected or receivable from the Trust Estate are being applied in accordance with Section 5.5 as if there had not been such a declaration, then the Indenture Trustee shall invest and reinvest funds in the Designated Accounts in accordance with the last direction it received.
(c) The Indenture Trustee hereby agrees not to deliver any notice of termination with respect to the Control Agreement or any Lockbox Agreement unless the Indenture Trustee shall have received a direction from the Administrative Agent and the Required Noteholders authorizing the Indenture Trustee to deliver such notice. Notwithstanding the foregoing, (i) the Issuer may close the Lockbox Accounts at Wells Fargo Bank, National Association, and may terminate the Lockbox Agreements relating to such Lockbox Accounts, in each case, in accordance with Section 6.02(c) of the Pooling and Servicing Agreement, and (ii) pursuant to Section 8.19 of the Note Purchase Agreement, the Administrative Agent and the
Noteholders have directed and authorized the Indenture Trustee to permit the Issuer to close such Lockbox Accounts and to terminate such Lockbox Agreements in accordance with Section 6.02(c) of the Pooling and Servicing Agreement and this clause (c).
SECTION 8.4 Release of Trust Estate.
(a) Subject to the payment of its fees and expenses pursuant to Section 6.7, the Indenture Trustee shall (x) at the direction of the Required Noteholders and (y) when required by the provisions of this Indenture, execute instruments to release property in the Trust Estate from the Lien of this Indenture, or convey the Indenture Trustee’s interest in the same, solely in accordance with the express provisions of this Indenture. No party relying upon an instrument executed by the Indenture Trustee as provided in this Article VIII shall be bound to ascertain the Indenture Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no Notes Outstanding and all sums due to the Indenture Trustee pursuant to Section 6.7 have been paid, notify the Issuer thereof in writing and upon receipt of an Issuer Request, release any remaining portion of the Trust Estate that secured the Notes from the Lien of this Indenture and release to the Issuer or any other Person entitled thereto any funds then on deposit in the Designated Accounts.
SECTION 8.5 Opinion of Counsel. The Indenture Trustee shall receive at least seven (7) days’ notice when the Indenture Trustee is requested by the Issuer to take any action pursuant to Section 8.4(a), accompanied by copies of any instruments involved, and the Indenture Trustee shall also receive as a condition to such action, an Opinion of Counsel, in form and substance satisfactory to the Indenture Trustee, the Administrative Agent and the Required Noteholders, stating the legal effect of any such action, outlining the steps required to complete the same, and concluding that all conditions precedent to the taking of such action have been complied with and such action shall not materially and adversely impair the security for the Notes or the rights of the Administrative Agent or the Noteholders in contravention of the provisions of this Indenture or any of the other Basic Documents; provided, however, that such Opinion of Counsel shall not be required to express an opinion as to the fair value of the Trust Estate. Counsel rendering any such opinion may rely, without independent investigation, on the accuracy and validity of any instrument delivered to the Indenture Trustee in connection with any such action.
SECTION 8.6 Additional Payments to Indenture Trustee. The Issuer shall pay to the Indenture Trustee, solely from funds when, if and to the extent available for such purpose pursuant to Section 8.2, any amounts payable to such Person pursuant to Section 8.01 of the Pooling and Servicing Agreement and not so paid within forty-five (45) days of the date required.
ARTICLE IX
AMENDMENTS
SECTION 9.1 Amendments Without Consent of Noteholders.
(a) The Issuer and the Indenture Trustee, when authorized by an Issuer Order, may, without the consent of the Holders of any Notes but with the prior written consent of the Administrative Agent, at any time and from time to time, amend the Indenture, in form satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any time subject to the Lien of this Indenture, or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subjected to the Lien of this Indenture, or to subject additional property to the Lien of this Indenture;
(ii) to evidence the succession, in compliance with Section 3.10 and the applicable provisions hereof, of another Person to the Issuer, and the assumption by any such successor of the covenants of the Issuer contained herein and in the Notes;
(iii) to add to the covenants of the Issuer for the benefit of the Noteholders, or to surrender any right or power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee;
(v) to cure any ambiguity or to correct or supplement any provision herein or in any amendment which may be inconsistent with any other provision herein, in any amendment or in any other Basic Document;
(vi) to evidence and provide for the acceptance of the appointment in compliance with Article VI by a successor or additional Indenture Trustee with respect to the Notes and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the TIA, if applicable, or under any similar federal statute hereafter enacted to the extent required by the TIA, if applicable, or such statute and to add to this Indenture such other provisions as may be expressly required by the TIA, if applicable, or such statute, and the Indenture Trustee is hereby authorized to join in the execution of any such amendment and to make any further appropriate agreements and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer Order, may, also without the consent of any of the Noteholders but with prior written consent of the Administrative Agent, at any time and from time to time enter into one or more amendments or
supplements hereto or may waive any of the provisions hereof for the purpose of adding any provisions to, changing in any manner, or eliminating any of the provisions of, this Indenture or modifying in any manner the rights of the Noteholders under this Indenture; provided, however, that any such action shall not, as evidenced by an Officer’s Certificate from the Servicer, have the effect described in the proviso to Section 9.2(a).
SECTION 9.2 Amendments With Consent of Noteholders; Waivers.
(a) The Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may, with the prior written consent of the Required Noteholders, by Act of the Required Noteholders delivered to the Issuer and the Indenture Trustee, amend the Indenture or waive any of the provisions thereof for the purpose of adding any provisions to, changing in any manner, or eliminating any of the provisions of, this Indenture or modifying in any manner the rights of the Noteholders under this Indenture; provided, however, that without limiting any rights the Required Noteholders may have with respect thereto, no such amendment shall, without the consent of the Holder of each Outstanding Note affected thereby:
(i) change the due date of any installment of principal of or interest on any Note, or reduce the principal amount thereof or the interest rate applicable thereto (including by any amendment which affects the calculation of the amount of any payment of interest or principal due on any Note on any Distribution Date) or the Redemption Price with respect thereto, change any place of payment where, or the coin or currency in which, any Note or any interest thereon is payable, or impair the right to institute suit for the enforcement of the provisions of this Indenture requiring the application of funds available therefor, as provided in Article V, to the payment of any such amount due on the Notes on or after the respective due dates thereof (or, in the case of redemption, on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the Notes, the consent of the Holders of which is required for (a) any such amendment, (b) any waiver of compliance with certain provisions of this Indenture, certain defaults hereunder and their consequences as provided for in this Indenture or (c) any action described in Sections 3.7(e), 5.2, 5.6, 5.12(a), 6.8, or 6.16;
(iii) modify or alter the definition of the terms “Outstanding,” “Borrowing Base,” “Advance Rate” or any of the defined terms necessary (but only to the extent necessary) for the interpretation of such terms;
(iv) reduce the percentage of the Outstanding Amount of the Notes required to direct the Indenture Trustee to sell or liquidate the Trust Estate pursuant to Section 5.4 if the proceeds of such sale would be insufficient to pay the principal amount of and accrued but unpaid interest on the Outstanding Notes;
(v) modify any provision of this Section 9.2 to decrease the required minimum percentage necessary to approve any amendments to any provisions of this Indenture or any of the Basic Documents; or
(vi) permit the creation of any Lien ranking prior to or on a parity with the Lien of this Indenture with respect to any material part of the Trust Estate or, except as otherwise permitted or contemplated herein or in any other Basic Document, terminate the Lien of this Indenture on any material property at any time subject to the Lien of this Indenture or deprive the Holder of any Note of any material portion of the security afforded by the Lien of this Indenture to the extent such Noteholder consent is required under this Indenture;
provided, further, that without limiting any rights the Required Noteholders may have with respect to this Section 9.2(a), no such amendment shall, without the consent of the Special Required Noteholders:
(i) modify or alter the definition of the terms “Eligible Bank,” “Eligible Cap Provider,” “Eligible Loan,” “Eligible Letter of Credit,” “Excess Loan Concentration Amount,” “Interest Rate Cap Agreement” or any of the defined terms necessary (but only to the extent necessary) for the interpretation of such terms;
(ii) modify or alter the terms of the Financial Condition Covenant contained in Section 3.07(i) to the Pooling and Servicing Agreement; or
(iii) modify or alter any provision of (a) Section 4.1 or Article V of this Indenture, or Article IX of the Pooling and Servicing Agreement or (b) reduce the percentage of the Outstanding Amount of the Notes required to consent to any waiver or direct any action in connection therewith.
(b) It shall be sufficient as an Act of the Required Noteholders if the Required Noteholders approve the substance and the form of any proposed amendment.
(c) Promptly after the execution by the Issuer and the Indenture Trustee of any amendment or waiver in accordance with this Section 9.2, the Issuer shall mail to the Administrative Agent and the Noteholders to which such amendment relates a notice setting forth in general terms the substance of such amendment. Any failure of the Indenture Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment.
(d) The Special Required Noteholders may, by one or more instruments in writing to the Indenture Trustee, waive any Event of Default hereunder and its consequences, except a continuing Event of Default:
(i) in respect of the payment of the principal of or of interest on any Note (which may only be waived by the Holder of such Note), or
(ii) in respect of a covenant or provision hereof which under this Article IX cannot be modified or amended without the consent of the Holder of each Note outstanding affected (which only may be waived by the Holders of all Notes outstanding affected).
Upon any such waiver, such Event of Default shall cease to exist and shall be deemed to have been remedied, for every purpose of this Indenture but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereto.
SECTION 9.3 Execution of Amendments or Waivers. In executing, or permitting the additional trusts created by, any amendment or waiver permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Indenture Trustee and the Required Noteholders shall be entitled to receive, and subject to Sections 6.1 and 6.2 (with respect to the Indenture Trustee), shall be fully protected in relying upon, an Opinion of Counsel and Officer’s Certificate stating that the execution of such amendment is authorized or permitted by this Indenture and that all conditions precedent to such execution have been satisfied. The Indenture Trustee may, but shall not be obligated to, enter into any such amendment that affects the Indenture Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.4 Effect of Amendments or Waivers. Upon the execution of any amendment or waiver pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith with respect to the Notes affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Indenture Trustee, the Issuer, the Administrative Agent and the Noteholders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications, waivers and amendments, and all the terms and conditions of any such amendment shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
SECTION 9.5 [Reserved].
SECTION 9.6 Reference in Notes to Amendments and Waivers. Notes authenticated and delivered after the execution of any amendment pursuant to this Article IX may, and if required by the Indenture Trustee shall, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such amendment. If the Issuer or the Indenture Trustee shall so determine, new Notes so modified as to conform, in the opinion of the Indenture Trustee and the Issuer, to any such amendment may be prepared and executed by the Issuer and authenticated and delivered by the Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 Redemption.
(a) The Notes are subject to redemption upon the exercise by the Servicer of its option to purchase the Loans and Related Assets pursuant to Section 10.01 of the Pooling and Servicing Agreement. The purchase price for the Notes to be redeemed shall be equal to the applicable Redemption Price. The Issuer shall furnish the Noteholders notice of such redemption. If the Notes are to be redeemed pursuant to this Section 10.1(a), the Issuer shall furnish notice thereof to the Indenture Trustee not later than thirty (30) days prior to the
Redemption Date and the Issuer shall deposit into the Collection Account, at least one (1) Business Day before the Redemption Date, the aggregate Redemption Price of the Notes to be redeemed and all other amounts required to be paid pursuant to Section 10.01 of the Pooling and Servicing Agreement, whereupon all such Notes shall be due and payable on the Redemption Date.
(b) [Reserved].
(c) Within sixty (60) days after the redemption in full pursuant to this Section 10.1, the Indenture Trustee shall provide the Administrative Agent with written notice stating that all of such Notes have been redeemed.
SECTION 10.2 Form of Redemption Notice.
(a) Notice of redemption of the Notes under Section 10.1(a) shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than ten (10) days prior to the applicable Redemption Date to each Holder of the Notes of record, respectively, at such Noteholder’s address appearing in the Note Register, with a copy to the Administrative Agent.
(b) All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where Notes are to be surrendered for payment of the Redemption Price (which shall be the Agency Office of the Indenture Trustee to be maintained as provided in Section 3.2).
(c) Notice of redemption of the Notes shall be given by the Indenture Trustee at the direction of and in the name and at the expense of the Issuer. Failure to give notice of redemption, or any defect therein, to any Holder of any Note to be redeemed shall not impair or affect the validity of the redemption of any other Note to be redeemed.
SECTION 10.3 Notes Payable on Redemption Date. The Notes to be redeemed shall, following notice of redemption as required by Section 10.2, on the Redemption Date cease to be Outstanding for purposes of this Indenture and shall thereafter represent only the right to receive the applicable Redemption Price and (unless the Issuer shall default in the payment of such Redemption Price) no interest shall accrue on such Redemption Price for any period after the date to which accrued interest is calculated for purposes of calculating such Redemption Price.
ARTICLE XI
SATISFACTION AND DISCHARGE
SECTION 11.1 Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect with respect to the Notes except as to: (i) rights of registration of
transfer and exchange; (ii) substitution of mutilated, destroyed, lost or stolen Notes; (iii) rights of Noteholders to receive payments of principal thereof and interest thereon; (iv) Sections 3.2, 3.3, 3.4, 3.5, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, 3.14, 3.16, 3.19, 3.20, 3.21 and 3.24; (v) the rights, obligations and immunities of the Indenture Trustee and the Administrative Agent hereunder (including the rights of the Indenture Trustee under Section 6.7 and the obligations of the Indenture Trustee under Sections 11.2 and 11.4); and (vi) the rights of Noteholders and the Administrative Agent as beneficiaries hereof with respect to the property so deposited with the Indenture Trustee payable to all or any of them, and the Indenture Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Notes, if:
(a) either:
(1) all Notes theretofore authenticated and delivered (other than (A) Notes that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.5 and (B) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 3.3) have been delivered to the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee for cancellation:
(A) have become due and payable,
(B) will be due and payable on their respective Final Scheduled Distribution Dates within one (1) year, or
(C) are to be called for redemption within one (1) year under arrangements satisfactory to the Indenture Trustee for the giving of notice of redemption by the Indenture Trustee in the name, and at the expense, of the Issuer,
and the Issuer, in the case of (A), (B) or (C) of Section 11.1(a)(2) above, has irrevocably deposited or caused to be irrevocably deposited with the Indenture Trustee cash or direct obligations of or obligations guaranteed by the United States of America (which will mature prior to the date such amounts are due and payable), in trust for such purpose, in an amount sufficient to pay and discharge the entire unpaid principal of and accrued interest on such Notes not theretofore delivered to the Indenture Trustee for cancellation when due on the Final Scheduled Distribution Dates for such Notes or the Redemption Date for such Notes (if such Notes are to be called for redemption pursuant to Section 10.1(a)), as the case may be;
(b) the Issuer has paid or caused to be paid all other sums payable hereunder or under the other Basic Documents; and
(c) the Issuer has delivered to the Indenture Trustee an Officer’s Certificate of the Issuer and an Opinion of Counsel each meeting the applicable requirements of Section
12.1(a) and each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
SECTION 11.2 Application of Trust Money. All monies deposited with the Indenture Trustee pursuant to Sections 3.3 and 11.1 shall be held in trust and applied by it in accordance with the provisions of the Notes and this Indenture to the payment, either directly or through any Paying Agent, as the Indenture Trustee may determine, to the Holders of the particular Notes for the payment or redemption of which such monies have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal and interest or other amounts due and payable under the Basic Documents; but such monies need not be segregated from other funds except to the extent required herein or in the Pooling and Servicing Agreement or by Applicable Law.
SECTION 11.3 Repayment of Monies Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture with respect to the Notes, all monies then held by any Paying Agent other than the Indenture Trustee under the provisions of this Indenture with respect to the Notes shall, upon demand of the Issuer, be paid to the Indenture Trustee to be held and applied according to Section 3.3 and thereupon such Paying Agent shall be released from all further liability with respect to such monies.
SECTION 11.4 Duration of Position of Indenture Trustee for Benefit of Registered Owners. Notwithstanding (i) the earlier payment in full of all principal and interest due to the Noteholders under the terms of the Notes, (ii) the cancellation of such Notes pursuant to Section 2.8 and (iii) the discharge of the Indenture Trustee’s duties hereunder with respect to such Notes, the Indenture Trustee shall continue to act in the capacity as Indenture Trustee hereunder for the benefit of the Registered Owners, and the Indenture Trustee, for the benefit of the Registered Owners shall, at the option of the Issuer, comply with its obligations under Sections 6.01(a), 6.03(a), 6.05(a), 9.02 and 9.03 of the Pooling and Servicing Agreement, as appropriate, until such time as the Outstanding Obligations have been paid in full.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture, the Issuer shall furnish to the Indenture Trustee and the Administrative Agent: (i) an Officer’s Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and (ii) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(iii) a statement that, in the judgment of each such signatory, such signatory has made such examination or investigation as is necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such signatory, such condition or covenant has been complied with.
(b) (i) Other than with respect to the release of any property or securities pursuant to Sections 3.21, 8.2, 8.4 and 10.1 of this Indenture and Section 6.09 of the Pooling and Servicing Agreement, whenever any property or securities are to be released from the Lien of this Indenture, prior to the deposit with the Indenture Trustee of any of the Trust Estate or other property or securities that is to be made the basis for the release of any property or securities subject to the Lien of this Indenture, the Issuer shall deliver to the Indenture Trustee and the Administrative Agent an Independent Certificate as to the matters described in clause (a) above if the fair value to the Issuer of the property or securities, if any, to be so deposited and of all other such property or securities made on the basis of any such withdrawal or release since the commencement of the then current fiscal year of the Issuer, as set forth in the certificates delivered pursuant to this clause (b)(i), is 10% or more of the Outstanding Amount of the Notes, but such a certificate need not be furnished with respect to any property or securities so deposited if the fair value thereof to the Issuer as set forth in the related Officer’s Certificate is less than the greater of (x) $25,000 or (y) one percent of the Outstanding Amount of the Notes.
(ii) Notwithstanding Sections 2.9 and 8.4 or any other provision of this Section 12.1, the Issuer may (A) collect, liquidate, sell or otherwise dispose of Loans as and to the extent expressly permitted or required by the Basic Documents and (B) make cash payments out of the Designated Accounts as and to the extent expressly permitted or required by the Basic Documents.
SECTION 12.2 Form of Documents Delivered to Indenture Trustee.
(a) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
(b) Any certificate or opinion of an Authorized Officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by,
counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Servicer, ALER, the Issuer or the Administrator, stating that the information with respect to such factual matters is in the possession of the Servicer, ALER, the Issuer or the Administrator, unless such Authorized Officer or counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.
(c) Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
(d) Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee or the Administrative Agent, it is provided that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the Issuer’s compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee’s or any Beneficiary’s right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI.
SECTION 12.3 Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by the Administrative Agent or the Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such in person or by agents duly appointed in writing; and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee, and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Person or Persons signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.1) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this Section 12.3.
(b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner that the Indenture Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Notes (or any one or more Predecessor Notes) shall bind the
Holder of every Note issued upon the registration thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Note.
SECTION 12.4 Notices, etc., to Indenture Trustee and Issuer. Any request, demand, authorization, direction, notice, consent, waiver or Act of Noteholders or the Administrative Agent or other documents provided or permitted by this Indenture to be made upon, given or furnished to or filed with the Indenture Trustee, the Issuer, the Administrative Agent or the Noteholders under this Indenture shall be made upon, given or furnished to or filed with such party as specified in Appendix B to the Pooling and Servicing Agreement. Subject to Section 6.1(c), the Indenture Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Indenture Trustee’s reliance upon and compliance with e-mail or facsimile instructions (or instructions by a similar electronic method) to the extent such instructions conflict or are inconsistent with a subsequent written instruction. Subject to Section 6.1(c), the party providing electronic instructions agrees to assume all risks relating to the risk of the Indenture Trustee acting on unauthorized instructions and the risk of interception and misuse by third parties.
SECTION 12.5 Notices to Noteholders; Waiver.
(a) Where this Indenture provides for notice to Noteholders or the Administrative Agent of any condition or event, such notice shall be given as specified in Appendix B to the Pooling and Servicing Agreement.
(b) Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders or the Administrative Agent shall be filed with the Indenture Trustee but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver.
(c) In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice.
SECTION 12.6 Alternate Payment and Notice Provisions. Notwithstanding any provision of this Indenture or any of the Notes to the contrary, the Issuer may enter into any agreement with any Holder of a Note providing for a method of payment, or notice by the Indenture Trustee or any Paying Agent to such Holder, that is different from the methods provided for in this Indenture for such payments or notices. The Issuer shall furnish to the Indenture Trustee a copy of each such agreement and the Indenture Trustee shall cause payments to be made and notices to be given in accordance with such agreements.
SECTION 12.7 [Reserved].
SECTION 12.8 Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.
SECTION 12.9 Successors and Assigns.
(a) All covenants and agreements in this Indenture and the Notes by the Issuer shall bind its successors and assigns, whether so expressed or not.
(b) All covenants and agreements of the Indenture Trustee in this Indenture shall bind its successors and assigns, whether so expressed or not.
SECTION 12.10 Separability. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.11 Benefits of Indenture. Each of the Beneficiaries (subject to the procedures in Article V) and their successors and assigns shall be third party beneficiaries to the provisions of this Indenture, as it may be supplemented or amended, and shall be entitled to rely upon and directly to enforce such provisions of the Indenture. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Beneficiaries (subject to the procedures in Article V) and any other party secured hereunder and any other Person with an ownership interest in any part of the Trust Estate, any benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 12.12 Legal Holidays. If the date on which any payment is due shall not be a Business Day, then (notwithstanding any other provision of the Notes or this Indenture) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date on which nominally due, and no interest shall accrue for the period from and after any such nominal date.
SECTION 12.13 Governing Law. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS INDENTURE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 12.14 Counterparts. This Indenture may be executed in any number of counterparts (in manual or electronic form), each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
SECTION 12.15 Recording of Indenture. If this Indenture is subject to recording in any appropriate public recording offices, such recording is to be effected by the Issuer and at its expense accompanied by an Opinion of Counsel (which may be counsel to the Issuer or any other counsel reasonably acceptable to the Indenture Trustee and the Administrative Agent) to the effect that such recording is necessary either for the protection of the Noteholders or any other Person secured hereunder or for the enforcement of any right or remedy granted to the Indenture Trustee under this Indenture.
SECTION 12.16 No Recourse. No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against:
(i) the Indenture Trustee or the Owner Trustee in its individual capacity;
(ii) any owner of a beneficial interest in the Issuer; or
(iii) any partner, owner, beneficiary, agent, officer, director, employee or agent of the Indenture Trustee or the Owner Trustee in their individual capacities, any holder of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or assign of the Indenture Trustee or the Owner Trustee in their individual capacities (or any of their successors or assigns), except as any such Person may have expressly agreed in the Basic Documents (it being understood that the Indenture Trustee and the Owner Trustee have no such obligations in their individual capacities) and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by Applicable Law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. For all purposes of this Indenture, in the performance of any duties or obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to the benefits of, the terms and provisions of Articles VI, VII and VIII of the Trust Agreement.
SECTION 12.17 No Petition. The Indenture Trustee, by entering into this Indenture, the Administrative Agent, each Noteholder, by accepting a Note (or interest therein) issued hereunder, hereby covenant and agree that they shall not, prior to the date which is one (1) year and one (1) day after the Outstanding Obligations shall have been paid in full and the termination of this Indenture with respect to the Issuer pursuant to Section 11.1, acquiesce, petition or otherwise invoke or cause ALER or the Issuer to invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against ALER or the Issuer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of ALER or the Issuer or any substantial part of their respective property, or ordering the winding up or liquidation of the affairs of ALER or the Issuer. The covenants and agreements contained in this Section 12.17 shall survive the termination of this Indenture.
SECTION 12.18 Inspection. The Issuer agrees that, on reasonable prior notice, it shall permit any representative of the Indenture Trustee or the Administrative Agent during the Issuer’s normal business hours, to examine all the books of account, records, reports and other papers of the Issuer, to make copies and extracts therefrom, to cause such books to be audited by Independent certified public accountants, and to discuss the Issuer’s affairs, finances and accounts with the Issuer’s officers, employees and Independent certified public accountants, all at such reasonable times and as often as may be reasonably requested. The Indenture Trustee shall and shall cause its representatives to hold in confidence all such information except to the extent disclosure may be required by law (and all reasonable applications for confidential treatment are unavailing) and except to the extent that the Indenture Trustee may reasonably
determine that such disclosure is consistent with its obligations hereunder or as otherwise required in connection with the enforcement or administration of the transactions under the Basic Documents.
SECTION 12.19 Assignment. Notwithstanding anything to the contrary contained herein, this Indenture may not be assigned by the Issuer without the prior written consent of the Special Required Noteholders. The Issuer shall provide written notice of such assignment to the Administrative Agent and the Noteholders.
SECTION 12.20 Survival of Agreement. All covenants, agreements, representa-tions and warranties made herein and in the other documents delivered pursuant hereto shall survive the pledge of the Trust Estate and the issuance of the Notes and except as provided in Section 11.1, shall continue in full force and effect until payment in full of the Notes and all amounts owing to the Indenture Trustee and the Administrative Agent hereunder and under the Basic Documents, as applicable.
SECTION 12.21 Cooperation and Further Assurances.
(a) The Issuer hereby agrees that it will cooperate in good faith and use commercially reasonable efforts to assist the Administrative Agent in any sale or securitization of the Notes to take place after the Conversion Date; provided, however, that each of the parties hereto agrees that it shall not be obligated to take any action (including making any changes or amendments to any of the Basic Documents), or provide any consent if such party would thereby incur any material obligations or liabilities as a result thereof; provided, further, that the Administrative Agent shall, at the written request of the assisting party, offer such party indemnification reasonably satisfactory to such party against any costs, liabilities and expenses incurred in providing any requested assistance.
(b) In the event of any Regulatory Change (as defined in the Note Purchase Agreement) which results in either (i) a determination that any CP Conduit is required, under generally accepted accounting principles, to consolidate its financial statements with any other entity, or (ii) a cost arising under Section 2.3 of the Note Purchase Agreement, the parties hereto agree to negotiate in good faith to amend the Basic Documents in order to eliminate the consolidation requirement; provided, however, that no party shall be obligated to take any action (or make any amendments) if in the reasonable opinion of such party any such amendment to the Basic Documents will be unlawful or otherwise disadvantageous or inconsistent with its policies or regulatory restrictions or result in any liability, unreimbursed cost or expense to such party.
SECTION 12.22 Waiver of Jury Trial. EACH OF THE PARTIES HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS INDENTURE, THE BASIC DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREUNDER OR THEREUNDER. EACH OF THE PARTIES HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS INDENTURE AND THE OTHER BASIC DOCUMENTS TO WHICH IT IS A PARTY, BY AMONG OTHER THINGS, THIS WAIVER.
SECTION 12.23 Consent to Jurisdiction. THE ISSUER IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ANY COURT IN THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS INDENTURE, THE OTHER BASIC DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREUNDER OR THEREUNDER OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH SUIT OR ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS INDENTURE OR ANY OF THE OTHER BASIC DOCUMENTS OR THE SUBJECT MATTER HEREOF OR THEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS. THE ISSUER IRREVOCABLY APPOINTS AND DESIGNATES CT CORPORATION, WHOSE ADDRESS IS 111 EIGHTH AVENUE, NEW YORK, NEW YORK 10011, AS ITS TRUE AND LAWFUL ATTORNEY AND DULY AUTHORIZED AGENT FOR ACCEPTANCE OF SERVICE OF LEGAL PROCESS. THE ISSUER AGREES THAT SERVICE OF SUCH PROCESS UPON SUCH PERSON SHALL CONSTITUTE PERSONAL SERVICE OF SUCH PROCESS UPON IT. NOTHING CONTAINED IN THIS INDENTURE SHALL LIMIT OR AFFECT THE RIGHTS OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO START LEGAL PROCEEDINGS RELATED TO ANY OF THE BASIC DOCUMENTS AGAINST THE ISSUER OR ITS PROPERTY IN THE COURTS OF ANY JURISDICTION.
SECTION 12.24 No Recourse. It is expressly understood and agreed by the parties hereto that (a) this Indenture is executed and delivered by Wilmington Trust, National Association, not individually or personally but solely as trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust, National Association but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on Wilmington Trust, National Association, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) Wilmington Trust, National Association has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Indenture and (e) under no circumstances shall Wilmington Trust, National Association be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Indenture or any other related documents.
SECTION 12.25 No Recourse as to Indenture Trustee. It is expressly understood and agreed by the parties hereto that (a) this Indenture is executed and delivered by The Bank of New York Mellon, not individually or personally but solely as indenture trustee under the Indenture and the other Basic Documents, in the exercise of the powers and authority conferred and vested in it and (b) nothing herein contained shall be construed as creating any liability on The Bank of New York Mellon, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto.
SECTION 12.26 Amendment and Restatement. This Indenture amends and restates in its entirety the Original Indenture among the parties hereto. Upon the occurrence of the Restatement Date, (a) the terms and provisions of the Original Indenture shall be amended, superseded and restated in their entirety by the terms and provisions of this Indenture and, unless expressly stated to the contrary, each reference to the Original Indenture in any of the Basic Documents or any other document, instrument or agreement delivered in connection therewith shall mean and be a reference to this Indenture, (b) this Indenture is not intended to and shall not constitute a novation of the Original Indenture or the obligations and liabilities existing thereunder, (c) with respect to any date or time period occurring and ending prior to the Restatement Date, the rights and obligations of the parties to the Original Indenture shall be governed by the Original Indenture and the other Basic Documents (as defined in the Original Pooling and Servicing Agreement) and (d) with respect to any date or time period occurring and ending on or after the Restatement Date, the rights and obligations of the parties hereto shall be governed by this Indenture and the other Basic Documents (as defined herein). The liens, security interests and other interests in the Trust Estate granted under the Original Indenture are and shall remain legal, valid, binding and enforceable to the extent also constituting Trust Estate hereunder. Each of the parties hereto hereby acknowledges and confirms the continuing existence and effectiveness of such liens, security interests and other interests in such Trust Estate granted under the Original Indenture, and further agrees that the execution and delivery of this Indenture shall not in any way release, diminish, impair, reduce or otherwise affect such liens, security interests and other interests in such Trust Estate granted under the Original Indenture.
[Signature Pages Follow]
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this Indenture to be duly executed by their respective officers, thereunto duly authorized, all as of the day and year first above written.
ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES TRUST 2015-A
By: WILMINGTON TRUST, NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Owner Trustee
| | | | | | | | |
| By: /s/ Erwin M. Soriano | |
| Name: Erwin M. Soriano | |
| Title: Vice President | |
[Signatures Continue on the Following Page]
THE BANK OF NEW YORK MELLON,
not in its individual capacity but solely as
Indenture Trustee
| | | | | | | | |
| By: /s/ Esther Antoine | |
| Name: Esther Antoine | |
| Title: Vice President | |
Exhibit 10.5
Execution Version
OMNIBUS AMENDMENT AND ASSIGNMENT, ASSUMPTION AND RESIGNATION AGREEMENT
THIS OMNIBUS AMENDMENT AND ASSIGNMENT, ASSUMPTION AND RESIGNATION AGREEMENT, dated as of June 8, 2018 (this “Agreement”), is made by and among:
(1) ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES TRUST 2015-A, a Delaware statutory trust (the “Issuer”);
(2) ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company (“ALS”), individually and as the ALS servicer (the “ALS Servicer”);
(3) ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC, a Delaware limited liability company (“ALER”);
(4) NATIXIS, NEW YORK BRANCH (“Natixis”), as administrative agent for the Note Purchasers (in such capacity, the “Exiting Administrative Agent”) and as a funding agent;
(5) PNC BANK, NATIONAL ASSOCIATION (“PNC”), as an assuming note purchaser, as an assuming committed purchaser, as a funding agent, and as the successor administrative agent (in such capacity, the “Successor Administrative Agent”);
(6) VERSAILLES ASSETS LLC (“Versailles”), as an assigning note purchaser and as an assigning committed purchaser;
(7) FIFTH THIRD BANK (“Fifth Third”), as an assuming note purchaser, as an assuming committed purchaser and as a funding agent;
(8) BMO CAPITAL MARKETS CORP. (“BMO Corp.”), as a funding agent;
(9) FAIRWAY FINANCE COMPANY, LLC (“Fairway”), as an assuming note purchaser;
(10) BANK OF MONTREAL (“BMO”), as an assuming committed purchaser;
(11) THE BANK OF NOVA SCOTIA (“Scotia”), as an assigning committed purchaser and as a funding agent;
(12) LIBERTY STREET FUNDING LLC (“Liberty Street”), as an assigning note purchaser; and
(13) THE BANK OF NEW YORK MELLON, a New York banking corporation, as indenture trustee (the “Indenture Trustee”).
WHEREAS:
(A) ALER and ALS are party to that certain Purchase Agreement, dated June 12, 2015 (as amended, restated, supplemented or modified through the Effective Date, the “Purchase Agreement”);
(B) ALS, as originator, the ALS Servicer, ALER and the Issuer are party to that certain Pooling and Servicing Agreement, dated June 12, 2015 (as amended by that certain First Amendment to Pooling and Servicing Agreement, dated as of August 26, 2015, that certain Second Amendment to Pooling and Servicing Agreement, dated as of January 21, 2016 and that certain Second Omnibus Amendment, dated as of May 5, 2017, and as further amended, restated, supplemented or otherwise modified through the Effective Date, the “PSA”);
(C) The Issuer and the Indenture Trustee are party to that certain Indenture, dated June 12, 2015 (as amended by that certain Second Omnibus Amendment, dated as of May 5, 2017, and as further amended, restated, supplemented or otherwise modified through the Effective Date, the “Indenture”);
(D) The Issuer, the ALS Servicer, ALER, the Exiting Administrative Agent and the note purchasers and funding agents party thereto are party to that certain Note Purchase Agreement, dated June 12, 2015 (as amended by that certain Second Omnibus Amendment, dated as of May 5, 2017 and as further amended, restated, supplemented or otherwise modified through the Effective Date, the “NPA” and, together with the Purchase Agreement, the PSA and the Indenture, the “Transaction Documents”);
(E) The parties to the Transaction Documents wish to amend the Transaction Documents as set forth herein;
(F) The Issuer, ALER and ALS wish to exercise their respective rights to call the Receivables and redeem the Receivables Notes pursuant to the amendments set forth herein;
(G) Certain note purchasers and committed purchasers wish to transfer all of their respective rights and obligations under the Transaction Documents solely with respect to the Equipment Loans; and
(H) The Exiting Administrative Agent desires to resign as Administrative Agent under the Transaction Documents and the other Basic Documents and the parties hereto (other than the Exiting Parties) desire to appoint the Successor Administrative Agent as the successor Administrative Agent under the Transaction Documents and the other Basic Documents.
NOW IT IS HEREBY AGREED:
1. DEFINITIONS AND INTERPRETATION
Interpretation
In this Agreement and in the recitals hereto terms defined and references construed in this Agreement shall, unless otherwise defined in this Agreement, have the same meaning and construction as in Appendix A to the PSA.
For the avoidance of doubt, notwithstanding Section 7 and except as expressly stated herein, no Section of this Agreement shall become effective until the immediately preceding Section has become effective.
Definitions
In this Agreement:
“Assignors” means Natixis, Versailles, Scotia and Liberty Street, as Equipment Asset Note Purchasers and Committed Purchasers, as applicable.
“Assignees” means PNC, Fifth Third, BMO and Fairway, as Equipment Asset Note Purchasers and Committed Purchasers, as applicable.
“Exiting Parties” means Natixis, Versailles, Scotia and Liberty Street, as Equipment Asset Note Purchasers and Committed Purchasers, as applicable.
“PNC Funding Agent” means PNC.
2. OMNIBUS AMENDMENT TO THE PURCHASE AGREEMENT, THE PSA AND THE INDENTURE
2.1 Amendment to Purchase Agreement. Article IX of the Purchase Agreement is hereby amended by inserting a new Section 9.17 at the end thereof to read as follows:
“SECTION 9.17 Termination Call. Following the occurrence of the Receivables Termination Call (as defined in the Pooling and Servicing Agreement), the Seller may repurchase all (but not part) of the Receivables and Related Assets with respect thereto, for an amount equal to the fair market value of such Receivables.”.
2.2 Amendments to PSA. The PSA is hereby amended as follows:
(a) Article X of the PSA is hereby amended by inserting a new Section 10.03 at the end thereof to read as follows:
“SECTION 10.03 Termination Call. On the Receivables Call Date, the Transferor may repurchase all (but not part) of the Receivables and Related Assets with respect thereto, for an amount equal to the fair market value of such Receivables. The proceeds of the Receivables Termination Call shall not be less than the sum of the then unpaid principal balance of the then outstanding
Receivables, together with the accrued interest thereon and all other amounts required to be paid with respect thereto.”.
(b) The definition of “Distribution Date” in Appendix A to the PSA is hereby amended by inserting the following language at the end thereof: “, and the date of the distribution of the proceeds of any Receivable Termination Call”.
(c) The definition of “Receivables Available Amount” in Appendix A to the PSA is hereby amended by (i) replacing the text “and (6)” where it appears therein with the text “, (6)” in its place, and (ii) inserting the following language at the end thereof: “and (7) all proceeds from the exercise of a Receivables Termination Call made pursuant to Section 10.4 of the Indenture”.
(d) Appendix A to the PSA is hereby amended by adding the following definitions in the appropriate alphabetical sequence:
“Receivables Call Date: June 8, 2018.
Receivables Termination Call: The exercise by the Transferor of a call with respect to the Receivables made on the Receivables Call Date pursuant to Section 10.03.”.
2.3 Amendments to the Indenture. The Indenture is hereby amended as follows:
(a) Section 3.10(b) of the Indenture is hereby amended by replacing the text “Except pursuant to Section 10.1” where it appears therein with the text “Except pursuant to Section 10.1 or 10.4” in its place.
(b) The introduction to Section 8.2(e)(i) of the Indenture is hereby amended and restated in its entirety to read as follows:
“On each Business Day on which no Event of Default or Rapid Amortization Event is then continuing (other than the two Business Days immediately preceding the Receivables Call Date, if, on or prior to the Receivables Call Date, (x) the Transferor has given irrevocable notice to the Issuer that it will exercise the Receivables Termination Call on the Receivables Call Date and (y) the Seller has given irrevocable notice that, following the occurrence of the Receivables Termination Call, it will repurchase the Receivables and Related Assets from the Transferor on the Receivables Call Date pursuant to Section 9.17 of the Purchase Agreement), the Indenture Trustee shall distribute all amounts on deposit in the Receivables Collection Account (excluding the amounts consisting of the Carrying Cost Reserve pursuant to Section 6.04 of the Pooling and Servicing Agreement) to the following Persons in the following order of priority:”.
(c) Article X of the Indenture is hereby amended by inserting a new Section 10.4 at the end thereof to read as follows:
“SECTION 10.4 Termination Call. On the Receivables Call Date, the Transferor may, as provided in Section 10.03 of the Pooling and Servicing Agreement, repurchase all (but not part) of the Receivables and Related Assets, for an amount equal to the fair market value of such Receivables. Immediately upon receipt by the Issuer of the proceeds of the Receivable Termination Call, the Indenture Trustee, in accordance with a written direction and calculations prepared for such purpose by the Servicer, shall distribute such proceeds, together with all other amounts in the Designated Accounts, in accordance with the applicable provisions of Section 8.2(e), as if the date of such distribution were the Final Scheduled Distribution Date for the Receivables Notes.
(d) Section 12.1(b)(i) of the Indenture is hereby amended by replacing the text “property or securities pursuant to Sections 3.21, 8.2, 8.4 and 10.1 of this Indenture” where it appears therein with the text “property or securities pursuant to Sections 3.21, 8.2, 8.4, 10.1 and 10.4 of this Indenture” in its place.
2.4 Consents.
(a) By executing this Agreement, each of the Noteholders has consented to the amendments to the Transaction Documents set forth in this Section 2.
(b) Pursuant to Section 9.1(a) of the Purchase Agreement, Section 11.01 of the PSA and Section 9.2 of the Indenture, each of the parties hereto agrees, as to itself only, that all notices required to be delivered to it and all consents required to be given by it in connection with this Agreement have been provided, or in the alternative, have been waived, and each such party hereby consents to the terms of the amendments to the Transaction Documents contained in this Agreement.
2.5 Noteholder Direction. The Noteholders hereby direct the Indenture Trustee to execute this Agreement, a Notice of Amendment in the form attached hereto as Exhibit A (the “Notice of Amendment”) and, following the payment in full of the Receivables Notes and of all other amounts due and payable by the Issuer under the Indenture with respect to the Receivables as set forth on Exhibit B (collectively, the “Receivables Payoff Amount”) on the date hereof, a Collateral Release in the form attached hereto as Exhibit C (the “Collateral Release”).
2.6 Issuer Order. Pursuant to Section 9.2 of the Indenture, the Issuer hereby authorizes and directs the Indenture Trustee to execute this Agreement and, when the Receivables Notes and all other amounts due and payable by the Trust under the Indenture with respect to the Receivables have been paid in full, the Collateral Release.
2.7 Direction to Owner Trustee. ALER, as sole Registered Owner under the Trust Agreement, and the Successor Administrative Agent pursuant to Section 4.2(d) of the Trust Agreement, hereby (a) direct the Owner Trustee to execute this Agreement and (b) waive any right to receive prior notice under the Trust Agreement and the other Basic Documents of the amendments contemplated hereby.
3. NOTICE OF RECEIVABLES CALL
3.1 Pursuant to Section 10.03 of the PSA, ALER hereby gives the Issuer irrevocable notice that it will exercise the Receivables Termination Call on the Receivables Call Date.
3.2 ALS hereby gives ALER irrevocable notice that, following the occurrence of the Receivables Termination Call (as defined in the PSA), ALS will repurchase all of the Receivables and Related Assets from ALER on the Receivables Call Date (as defined in the PSA), in accordance with Section 9.17 of the Purchase Agreement.
4. AMENDMENTS TO NPA
Upon the exercise by ALER and ALS of the Receivables Termination Call on the Receivables Call Date as contemplated by Section 3, and the repurchase of the Receivables with respect thereto, the NPA shall be amended as follows:
4.1 The definition of “Equipment Asset Facility Limit” in Section 1.1 of the NPA shall be amended by replacing the text “$430,000,000” where it appears therein with the text “$400,000,000” in its place.
4.2 The Commitments and Maximum Purchase Amounts of the Equipment Asset Note Purchasers thereunder shall be reduced as set forth in the chart below:
| | | | | | | | | | | |
| Equipment Asset Note Purchaser | | Commitment & Maximum Purchase Amount |
| | | |
| Versailles Assets LLC | | $130,000,000 |
| Fifth Third Bank | | $90,000,000 |
| Fairway Finance Company, LLC | | $90,000,000 |
| The Bank of Nova Scotia | | $90,000,000 |
5. TRANSFER
5.1 At or before 2:00 p.m., New York time, on the Effective Date, each Assignee shall pay to each Assignor (other than any Assignor that is an Assignee), in immediately available funds, an amount equal to the purchase price, as agreed between such Assignor and such Assignee (the “Purchase Price”), of the portion of the outstanding Equipment Asset Note Principal Balance under the Equipment Asset Note owned by such Assignor (such Assignee’s “Assignment Percentage”) that is being assigned to such Assignee (which Purchase Price shall be set forth on Exhibit D). Effective upon receipt by each Assignor of the applicable Purchase Price from the applicable Assignee, such Assignor hereby irrevocably sells, assigns and transfers to the applicable Assignee, without recourse, representation or warranty (except as set forth in Section 5.8), and such Assignee hereby irrevocably purchases, takes and assumes from the applicable Assignor, such Assignee’s Assignment Percentage of (i) the presently outstanding Equipment Asset Note Principal Balance under the Equipment Asset Notes owned by such Assignor, together with all instruments, documents and collateral security pertaining thereto, and (ii) the Purchaser Percentage of such Assignor with respect to the Equipment Asset Facility Amount and the other rights and duties of such Assignor under the NPA. With respect to any Assignor or Assignee in its capacity as a Committed Purchaser, if applicable, effective upon the
Effective Date, each Assignor hereby irrevocably sells, assigns, and transfers to the applicable Assignee, without recourse, representation or warranty (except as set forth in Section 5.8), and each Assignee hereby irrevocably purchases, takes and assumes from the applicable Assignor, the Assignee’s Assignment Percentage of such Assignor’s Commitment, and other rights, duties and obligations of such Assignor under the NPA. The transfer under this Section 5 is intended by the parties hereto to effect a purchase by the Assignees and a sale by the Assignors of interests in the Equipment Asset Notes, and it is not to be construed as a loan or a commitment to make a loan by the Assignees to the Assignors. Unless otherwise paid pursuant to this Section 5.1 by the Assignees, the Issuer shall pay to each Assignor, in immediately available funds, all interest, fees and other amounts accrued and owing to such Assignor under the NPA or otherwise in respect of the Equipment Asset Notes as of the Effective Date.
5.2 Upon and after the Effective Date, the Purchaser Percentage and Commitment of, and the Equipment Asset Note Principal Balance under each Equipment Asset Note owned by, each Assignor and each Assignee shall be as set forth in Exhibit D.
5.3 Each Assignor has made arrangements with the applicable Assignee with respect to (i) the portion, if any, to be paid, and the date or dates for payment, by such Assignor to such Assignee of any fees heretofore received by such Assignor pursuant to the NPA prior to the Effective Date and (ii) the portion, if any, to be paid, and the date or dates for payment, by each Assignee to the applicable Assignor of fees or interest received such Assignee pursuant to the NPA or otherwise in respect of the Equipment Asset Notes from and after the Effective Date.
5.4 All principal payments that would otherwise be payable from and after the Effective Date to or for the account of the Assignors in respect of the Equipment Asset Notes shall, instead, be payable to or for the account of the applicable Assignors and Assignees in accordance with their respective interests as reflected in this Agreement.
5.5 All interest, fees and other amounts that would otherwise accrue for the account of the Assignors from and after the Effective Date pursuant to the NPA or in respect of the Equipment Asset Notes shall, instead, accrue for the account of, and be payable to or for the account of, the applicable Assignors and Assignees in accordance with their respective interests as reflected in this Agreement. In the event that any amount of interest, fees or other amounts accruing prior to the Effective Date was included in the Purchase Price paid by the Assignees, the Assignors and the Assignees will make appropriate arrangements for payment by the applicable Assignor to the applicable Assignee of such amount upon receipt thereof from the applicable Funding Agent.
5.6 Concurrently with the execution and delivery of this Agreement, each of PNC and BMO will deliver to the applicable Funding Agent of its Purchaser Group, ALER and the Issuer an executed Investment Letter in the form of Exhibit D to the Indenture and the forms, if any, required by Section 2.4(c) of the NPA.
5.7 Each of the Issuer, the Assignors and the Assignees agrees and acknowledges that (i) at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Agreement, and (ii) the Funding Agents
shall apply each payment made to it under the NPA, whether in its individual capacity or as a Funding Agent, in accordance with the provisions of the NPA, as appropriate.
5.8 By executing and delivering this Agreement, each Assignor and each Assignee confirm to and agree with each other, the Funding Agents and the other Equipment Asset Note Purchasers as follows: (i) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned hereby free and clear of any adverse claim, no Assignor makes any representation or warranty nor assumes any responsibility with respect to any statements, warranties or representations made in or in connection with the NPA or the Basic Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the NPA or any other instrument or document furnished pursuant thereto; (ii) no Assignor makes any representation or warranty nor assumes any responsibility with respect to the Issuer, the financial condition of the Equipment Assets, ALS, ALER or the Indenture Trustee, or the performance or observance by the Issuer, ALS, ALER or the Indenture Trustee of any of their respective obligations under the NPA or any Basic Document or any other instrument or document furnished pursuant hereto; (iii) each Assignee confirms that it has received a copy of such documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (iv) each Assignee will, independently and without reliance upon the Administrative Agent, any Funding Agent, any Assignor or any other Equipment Asset Note Purchaser and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the NPA or the Basic Documents; (v) each Assignee appoints and authorizes its Funding Agent and the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the NPA and the Basic Documents as are delegated to the Funding Agent or the Administrative Agent, as the case may be, by the terms thereof, together with such powers as are reasonably incidental thereto, all in accordance with Section 6.1 of the NPA; and (vi) each Assignee agrees (for the benefit of each Assignor, the Administrative Agent, the Funding Agents, the Equipment Asset Note Purchasers, the Indenture Trustee, the ALS Servicer, ALER and the Issuer) that it will perform in accordance with their terms all of the obligations which by the terms of the NPA are required to be performed by it as an Equipment Asset Note Purchaser, a Committed Purchaser and a Funding Agent, as applicable.
5.9 Exhibit D hereto sets forth the revised Purchaser Percentage and the revised Commitment of each Assignor and each Assignee.
5.10 On the Effective Date, after giving effect to Sections 2, 3 and 4, (i) PNC shall be an Equipment Asset Note Purchaser party to the NPA for all purposes thereof as an Equipment Asset Note Purchaser, as a Committed Purchaser and as a Funding Agent thereunder, (ii) BMO shall be an Equipment Asset Note Purchaser party to the NPA for all purposes thereof as an Equipment Asset Note Purchaser and as a Committed Purchaser and (iii) each Assignor shall, to the extent provided in this Agreement, relinquish its rights and be released from all of its obligations under the Basic Documents.
5.11 The parties hereto hereby agree that this Section 5 shall constitute a “Transfer Supplement” under and as defined in the NPA.
6. RESIGNATION
6.1 The Exiting Administrative Agent, with the consent of the parties hereto, hereby resigns as Administrative Agent under the NPA, effective as of the Effective Date.
6.2 Each Note Purchaser party hereto (other than the Exiting Parties) hereby appoints the Successor Administrative Agent as the Administrative Agent under the NPA (the “Appointment”), effective as of the Effective Date.
6.3 The Successor Administrative Agent hereby accepts its appointment as Administrative Agent under the NPA and accepts the rights, powers, duties and obligations of the Administrative Agent under the NPA and the Basic Documents, upon the terms and conditions set forth therein, with like effect as if originally named as the Administrative Agent under the NPA; provided, however, that the Successor Administrative Agent shall not be liable for any actions taken or omitted to be taken by the Exiting Administrative Agent or otherwise prior to the effectiveness of the Appointment on the Effective Date.
6.4 Each of the Issuer, ALER and ALS hereby voluntarily and knowingly releases and forever discharges the Exiting Administrative Agent and its predecessors, agents, directors, officers and employees, from all possible claims, demands, actions, causes of action, damages, costs, or expenses, and liabilities whatsoever existing or arising or with respect to the Basic Documents, known or unknown, anticipated or unanticipated, suspected or unsuspected, fixed, contingent, or conditional, at law or in equity, and irrespective of whether any such claims, demands, actions, causes of action, damages, costs, expenses or liabilities arise out of contract, tort, violation of law or regulations, or otherwise, including the exercise of any rights and remedies under the Basic Documents.
7. CONDITIONS TO EFFECTIVENESS
This Agreement shall be effective upon the date (the “Effective Date”) on which (a) the Issuer or ALS shall have paid to Mayer Brown, LLP, as counsel to the Exiting Administrative Agent, for all outstanding legal fees previously invoiced to the Issuer or ALS for professional services rendered to the Exiting Administrative Agent prior to the Effective Date, and (b) the Successor Administrative Agent shall have received:
7.1 executed counterparts of this Agreement executed by the parties hereto;
7.2 executed counterparts of the Notice of Amendment, delivered by the Indenture
Trustee to the Rating Agencies;
7.3 executed counterparts of the Officer’s Certificate and Opinion of Counsel relating to this Agreement, delivered by the Issuer to the Indenture Trustee;
7.4 executed counterparts of the Collateral Release;
7.5 executed counterparts of the Acknowledgement of Receivables Payoff, delivered by the Indenture Trustee to the Rating Agencies; and
7.6 executed counterparts of one or more Bills of Sale relating to the Receivables Termination Call, among the Issuer, ALER and ALS.
8. FURTHER ASSURANCES
For the period commencing on the Effective Date and ending on the one year anniversary of the Effective Date, the Exiting Administrative Agent shall from time to time at the reasonable request and sole expense of ALS, execute and deliver such additional documents, instruments and conveyances, and take such other actions and do such other things, as may be reasonably necessary or desirable to carry out the provisions of Section 6 and give effect to the resignation of the Exiting Administrative Agent hereunder.
9. COUNTERPARTS
This Agreement may be executed in any number of counterparts (in electronic or manual form), each of which when so executed shall be deemed to be an original, but all of such shall together constitute but one and the same agreement.
10. LIMITED RECOURSE; NO PROCEEDINGS
The provisions of Section 8.12 of the NPA shall apply to this Agreement, mutatis mutandis, as if the same were set out in full in this Agreement.
11. GOVERNING LAW AND JURISDICTION
(a) Choice of Law
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
(b) Consent to Jurisdiction
Each of the parties hereto hereby irrevocably and unconditionally (i) submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court in New York County or federal court of the United States of America for the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment arising out of or relating to this Agreement; (ii) agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, federal court; (iii) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law; (iv) consents that any such action or proceeding may be brought in such courts and waives any objection it may now or hereafter have to the laying of venue of any such action or proceeding in any such court and any objection it may now or hereafter have that such action or proceeding was brought in an inconvenient court, and agrees not to plead or claim the same; (v) consents to service of process in the manner provided for notices in Section 8.2 of the NPA (provided that, nothing in this Agreement shall affect the right of any such party to serve process in any other manner permitted by law); and (vi) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any such action or proceeding any special, exemplary, punitive or consequential damages.
(c) Waiver of Jury Trial
EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER DOCUMENTS AND INSTRUMENTS EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF SUCH PARTY.
12. INDENTURE TRUSTEE LIABILITY
The Indenture Trustee shall not be responsible for the validity or sufficiency of this Agreement. In acting hereunder, the Indenture Trustee shall have the benefit of all the rights, protections and immunities granted to it under the Indenture, all of which are incorporated herein mutatis mutandis.
[signature pages follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers or attorneys-in-fact as of the date first written above.
| | | | | | | | | | | | | | |
| ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES TRUST 2015-A |
| | | | |
| By: | Wilmington Trust, National Association,
not in its individual capacity but solely
as Owner Trustee |
| | | | |
| | | | |
| | | | |
| By: /s/ Erwin M. Soriano |
| Name: | Erwin M. Soriano |
| Title: | Vice President |
| | | | | | | | | | | |
| ALLIANCE LAUNDRY SYSTEMS LLC | |
| | | |
| | | |
| | | |
| | | |
| By: /s/ Todd M. Rice | |
| Name: Todd M. Rice | |
| Title: Vice President, Treasurer, and Assistant Secretary |
| | | | | | | | | | | |
| ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES 2015 LLC | |
| | | |
| | | |
| | | |
| | | |
| By: /s/ Todd M. Rice | |
| Name: Todd M. Rice | |
| Title: President | |
| | | | | | | | |
| NATIXIS, NEW YORK BRANCH |
| | |
| | |
| | |
| By: /s/ Terrence Gregersen |
| Name: Terrence Gregersen |
| Title: Executive Director |
| | |
| | |
| | |
| By: /s/ Chad Johnson |
| Name: Chad Johnson |
| Title: Managing Director |
| | | | | | | | | | | |
| VERSAILLES ASSETS LLC | |
| | | |
| | | |
| | | |
| By: /s/ Damian A Perez | |
| Name: Damian A Perez | |
| Title: Vice President | |
| | | | | | | | | | | | | | |
| FIFTH THIRD BANK |
| | | | |
| | | | |
| | | | |
| | | | |
| By: /s/ Andrew D. Jones |
| Name: | Andrew D. Jones |
| Title: | Director |
| | | | | | | | | | | | | | | | | |
| BMO CAPITAL MARKETS CORP. | |
| | | | | |
| | | | | |
| | | | | |
| By: /s/ Matthew Peters | | |
| Name: | Matthew Peters | | |
| Title: | Managing Director | | |
| | | | | | | | |
| THE BANK OF NOVA SCOTIA |
| | |
| | |
| | |
| By: /s/ Mauricio Saishio |
| Name: Mauricio Saishio |
| Title: Director |
| | | | | | | | |
| LIBERTY STREET FUNDING LLC |
| | |
| | |
| | |
| By: /s/ Kevin J. Corrigan |
| Name: Kevin J. Corrigan |
| Title: Vice President |
| | | | | | | | |
| PNC BANK, NATIONAL ASSOCIATION |
| | |
| | |
| | |
| By: /s/ Roger Yuen |
| Name: Roger Yuen |
| Title: Senior Vice President |
| | | | | | | | | | | |
| THE BANK OF NEW YORK MELLON, not in its individual capacity but solely as Indenture Trustee |
| | | |
| | | |
| | | |
| By: /s/ Esther Antoine |
| Name: | Esther Antoine |
| Title: | Vice President |
Exhibit 10.6
Execution Version
SECOND OMNIBUS AMENDMENT
THIS SECOND OMNIBUS AMENDMENT, dated as of October 12, 2018 (this “Amendment”), is entered into by and among ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company (“ALS”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC, a Delaware limited liability company (“ALER”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES TRUST 2015-A, a Delaware statutory trust (the “Issuer”), THE BANK OF NEW YORK MELLON, a New York banking corporation, as trustee under the Indenture (the “Indenture Trustee”), each of the NOTE PURCHASERS listed on the signature pages hereto (collectively, the “Note Purchasers”), each of the FUNDING AGENTS for the Purchaser Groups listed on the signature pages hereto (collectively, the “Funding Agents”) and PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the Note Purchasers (the “Administrative Agent”).
BACKGROUND:
1. ALS and ALER are parties to that certain Amended and Restated Purchase Agreement, dated as of June 8, 2018 (as amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Purchase Agreement”);
2. ALS, ALER and the Issuer are parties to that certain Amended and Restated Pooling and Servicing Agreement, dated as of June 8, 2018 (as amended by that certain First Omnibus Amendment, dated as of August 31, 2018, and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Pooling and Servicing Agreement”);
3. the Issuer and the Indenture Trustee are parties to that certain Amended and Restated Indenture, dated as of June 8, 2018 (as amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Indenture”);
4. ALS, ALER, the Issuer, the Note Purchasers, the Funding Agents and the Administrative Agent are parties to that certain Amended and Restated Note Purchase Agreement, dated as of June 8, 2018 (as amended by that certain First Omnibus Amendment, dated as of August 31, 2018, and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Note Purchase Agreement” and, together with the Purchase Agreement, the Pooling and Servicing Agreement and the Indenture, the “Agreements”);
5. the parties hereto desire to amend the Agreements as hereinafter set forth; and
6. the consent of each of the Noteholders is necessary for such amendments to be effective, and each of the Noteholders, by executing this Amendment, has consented to such amendments.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Certain Defined Terms. Capitalized terms used herein without definition shall have the meanings ascribed thereto in Part I of Appendix A to the Pooling and Servicing Agreement.
2. Amendments. As of the Effective Date (as defined below), the Agreements are hereby amended as follows:
(a) Purchase Agreement. The parties to the Purchase Agreement hereby agree that the Purchase Agreement is amended as set forth on the blackline attached as Annex A.
(b) Pooling and Servicing Agreement. The parties to the Pooling and Servicing Agreement hereby agree that the Pooling and Servicing Agreement is amended as set forth on the blackline attached as Annex B.
(c) Indenture. The parties to the Indenture hereby agree that the Indenture is amended as set forth on the blackline attached as Annex C.
(d) Note Purchase Agreement. The parties to the Note Purchase Agreement hereby agree that the Note Purchase Agreement is amended as follows:
(i) Section 5.1(b) of the Note Purchase Agreement is amended by inserting the following text immediately prior to the semi-colon at the end thereof: “, and the Issuer shall provide the Administrative Agent access to each electronic platform (including the eVault and the eOriginal System) on which any electronic chattel paper relating to the Loans is maintained”.
(ii) Exhibit B to the Note Purchase is hereby amended by replacing the text “By: Alliance Laundry Equipment Receivables 2015 LLC, not in its individual capacity but solely as Administrator of the Issuer” where it appears therein with the text “By: Alliance Laundry Systems LLC, not in its individual capacity but solely as Administrator of the Issuer” in its place.
3. Issuer Order, Noteholder Direction and Registered Owner Instruction.
(a) The Issuer hereby authorizes and directs the Indenture Trustee to execute this Amendment, the Custodial Agreement Amendment (as defined below) and the Electronic Collateral Control Agreement (as defined below).
(b) The Noteholders hereby direct the Indenture Trustee to execute this Amendment, the Custodial Agreement Amendment and the Electronic Collateral Control Agreement.
(c) ALER, as the sole Registered Owner, hereby instructs Wilmington Trust, National Association, not in its individual capacity but solely as Owner Trustee on behalf of the Issuer, to execute this Amendment, the Custodial Agreement Amendment and the Electronic Collateral Control Agreement.
4. Conditions to Effectiveness. This Amendment shall become effective upon the satisfaction of the following (the “Effective Date”):
(a) the Administrative Agent’s receipt of counterparts of this Amendment, duly executed by all of the parties hereto;
(b) the Administrative Agent’s receipt of counterparts of that certain Electronic Collateral Control Agreement, dated as of the date hereof, duly executed by the parties thereto (the “Electronic Collateral Control Agreement”);
(c) the Administrative Agent’s receipt of counterparts of that certain First Amendment to Amended and Restated Custodial Agreement, dated as of the date hereof, by and among the Issuer, the Servicer, the Indenture Trustee, the Administrative Agent and U.S. Bank National Association, as custodian (the “Custodial Agreement Amendment”), duly executed by the parties thereto;
(d) the favorable written opinions of counsel for the Issuer, the Transferor and the Servicer, addressed to the Administrative Agent, each Funding Agent and each Note Purchaser, dated as of the date hereof, covering general corporate matters, no government consents or authorizations, no conflicts with organizational documents, any applicable law or other agreements, the due execution and delivery of, and the enforceability of, this Amendment, the Purchase Agreement, the Pooling and Servicing Agreement, the Indenture, the Note Purchase Agreement, the Custodial Agreement Amendment, the Custodial Agreement and the Electronic Collateral Control Agreement, perfection and priority of security interest matters and such other matters as the Administrative Agent or its counsel may reasonably request; and
(e) the receipt by each Note Purchaser of an amendment fee (the “Amendment Fee”) in an amount equal to the product of (x) 1 basis point (0.01%) times (y) the Commitment of such Note Purchaser as of the date hereof; provided that the Amendment Fee payable to PNC Bank, National Association shall be paid to PNC Capital Markets, LLC, as Structuring Agent.
5. Effect of Amendment. Except as expressly amended and modified by this Amendment, all provisions of each Agreement shall remain in full force and effect. After this Amendment becomes effective, all references in any Agreement to “this Agreement”, “this Indenture”, “hereof”, “herein” or words of similar effect referring to the Agreement in which such reference is made shall be deemed to be references to such Agreement as amended by this Amendment. This Amendment shall not be deemed to expressly or impliedly waive, amend or supplement any provision of any Agreement other than as set forth herein.
6. Representations and Warranties.
(a) Each of the Issuer, ALER, ALS and the Note Purchasers makes each of its respective representations and warranties contained in Article 4 of the Note Purchase Agreement, Article VII of the Pooling and Servicing Agreement and Article III of the Purchase Agreement, as applicable (after giving effect to this Amendment).
(b) Each of the parties hereto represents and warrants that this Amendment has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation.
7. Consent. Pursuant to each Agreement, each of the parties hereto agrees, as to itself only, that all notices required to be delivered to it and all consents required to be given by it in connection with this Amendment have been provided, or in the alternative, have been waived, and each such party hereby consents to the terms of the amendments to the Agreements contained in this Amendment.
8. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, and each counterpart shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic mail shall be effective as delivery of a manually executed counterpart of this Amendment.
9. Governing Law. This Amendment shall be governed by, and construed in accordance with, the law of the State of New York; provided, however, that the duties and immunities of the Owner Trustee hereunder shall be governed by the laws of the State of Delaware.
10. Section Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or the Agreements or any provision hereof or thereof.
11. Indenture Trustee’s Responsibility. The Indenture Trustee shall have no responsibility for the validity or sufficiency of this Amendment, nor for the recitals herein.
12. Limitation of Owner Trustee Liability. It is expressly understood and agreed by the parties hereto that (a) this Amendment is executed and delivered by Wilmington Trust, National Association, not individually or personally but solely as trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by Wilmington Trust, National Association but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on Wilmington Trust, National Association, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) Wilmington Trust, National Association has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Amendment and (e) under no circumstances shall Wilmington Trust, National Association be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Amendment or any other related documents.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers as of the day and year first above written.
| | | | | | | | | | | | | | |
| ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES TRUST 2015-A |
| | | | |
| By: | Wilmington Trust, National Association,
not in its individual capacity but solely
as Owner Trustee |
| | | | |
| | | | |
| | | | |
| By: /s/ Erwin M. Soriano |
| Name: | Erwin M. Soriano |
| Title: | Vice President |
| | | | | | | | | | | |
| ALLIANCE LAUNDRY SYSTEMS LLC |
| | | |
| | | |
| | | |
| By: /s/ Todd Rice |
| Name: | Todd Rice |
| Title: | VP - Treasurer and Assistant Secretary |
| | | |
| | | |
| | | |
| | | |
| ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES 2015 LLC |
| | | |
| | | |
| | | |
| By: /s/ Todd Rice |
| Name: | Todd Rice |
| Title: | President |
| | | | | | | | | | | |
| THE BANK OF NEW YORK MELLON, not in its individual capacity but solely as Indenture Trustee |
| | | |
| | | |
| | | |
| By: /s/ Esther Antoine |
| Name: | Esther Antoine |
| Title: | Vice President |
| | | | | | | | |
| PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent |
| | |
| | |
| | |
| By: /s/ Roger Yuen |
| Name: Roger Yuen |
| Title: Senior Vice President |
| | | | | | | | |
| PNC PURCHASER GROUP: |
| | |
| PNC BANK, NATIONAL ASSOCIATION, as Committed Purchaser and as Funding Agent |
| | |
| | |
| | |
| By: /s/ Roger Yuen |
| Name: Roger Yuen |
| Title: Senior Vice President |
| | | | | | | | | | | |
| FIFTH THIRD PURCHASER GROUP | |
| | | |
| FIFTH THIRD BANK, as Committed Purchaser and as Funding Agent |
| | | |
| | | |
| | | |
| By: /s/ Patrick Berning | |
| Name: Patrick Berning | |
| Title: Principal | |
| | | | | | | | |
| BMO PURCHASER GROUP: |
| | |
| BMO CAPITAL MARKETS CORP., as Funding Agent |
| | |
| | |
| | |
| | |
| By: /s/ Jeffrey Merchant |
| Name: Jeffrey Merchant |
| Title: Director |
| | | | | | | | |
| BANK OF MONTREAL, as Committed Purchaser |
| | |
| | |
| | |
| | |
| By: /s/ Karen Louie |
| Name: Karen Louie |
| Title: Director |
| | | | | | | | |
| FAIRWAY FINANCE COMPANY, LLC, as CP
Conduit |
| | |
| | |
| | |
| | |
| By: /s/ Irina Khaimova |
| Name: Irina Khaimova |
| Title: Vice President |
Exhibit 10.7
Execution Version
THIRD OMNIBUS AMENDMENT
THIS THIRD OMNIBUS AMENDMENT, dated as of March 19, 2019 (this “Amendment”), is entered into by and among ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company (“ALS”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC, a Delaware limited liability company (“ALER”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES TRUST 2015-A, a Delaware statutory trust (the “Issuer”), THE BANK OF NEW YORK MELLON, a New York banking corporation, as trustee under the Indenture (the “Indenture Trustee”), each of the NOTE PURCHASERS listed on the signature pages hereto (collectively, the “Note Purchasers”), each of the FUNDING AGENTS for the Purchaser Groups listed on the signature pages hereto (collectively, the “Funding Agents”) and PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the Note Purchasers (the “Administrative Agent”).
BACKGROUND:
1. ALS and ALER are parties to that certain Amended and Restated Purchase Agreement, dated as of June 8, 2018 (as amended by that certain Second Omnibus Amendment, dated as of October 12, 2018 and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Purchase Agreement”);
2. ALS, ALER and the Issuer are parties to that certain Amended and Restated Pooling and Servicing Agreement, dated as of June 8, 2018 (as amended by that certain First Omnibus Amendment, dated as of August 31, 2018 and that certain Second Omnibus Amendment, dated as of October 12, 2018 and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Pooling and Servicing Agreement”);
3. ALS, ALER, the Issuer, the Note Purchasers, the Funding Agents and the Administrative Agent are parties to that certain Amended and Restated Note Purchase Agreement, dated as of June 8, 2018 (as amended by that certain First Omnibus Amendment, dated as of August 31, 2018 and that certain Second Omnibus Amendment, dated as of October 12, 2018 and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Note Purchase Agreement” and, together with the Purchase Agreement and the Pooling and Servicing Agreement, the “Agreements”);
4. the Issuer and the Indenture Trustee are parties to that certain Amended and Restated Indenture, dated as of June 8, 2018 (as amended by that certain Second Omnibus Amendment, dated as of October 12, 2018 and as further amended, restated, supplemented or otherwise modified through the date hereof);
5. the parties hereto desire to amend the Agreements as hereinafter set forth; and
6. the consent of each of the Noteholders is necessary for such amendments to be effective, and each of the Noteholders, by executing this Amendment, has consented to such amendments.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Certain Defined Terms. Capitalized terms used herein without definition shall have the meanings ascribed thereto in Part I of Appendix A to the Pooling and Servicing Agreement.
2. Amendments. As of the Effective Date (as defined below), the Agreements are hereby amended as follows:
(a) Purchase Agreement. The parties to the Purchase Agreement hereby agree that the definition of “Credit Agreement” in Part A of Appendix A to the Purchase Agreement is amended and restated to read as follows:
(i) “Credit Agreement: means that certain Amended and Restated Credit Agreement, dated as of February 28, 2019, among Alliance Laundry Systems LLC, Alliance Laundry Holdings LLC, the lenders from time to time party thereto, Bank of America, N.A., as administrative agent and swing line lender, Bank of Montreal, as an issuing lender, Compass Bank, JPMorgan Chase Bank, N.A. and Fifth Third Bank, as co-documentation agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BMO Capital Markets Corp., PNC Capital Markets LLC, Compass Bank and JPMorgan Chase Bank, N.A., as 2019 joint lead arrangers, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, BMO Capital Markets Corp. and PNC Capital Markets LLC, as joint bookrunners, as such agreement may be amended, restated, modified, supplemented, refinanced or replaced from time to time.”
(b) Pooling and Servicing Agreement. The parties to the Pooling and Servicing Agreement hereby agree that the Pooling and Servicing Agreement is amended as follows:
(i) Section 3.07(i) of the Pooling and Servicing Agreement is amended and restated in its entirety with the following:
“Financial Condition Covenant. For so long as any payments of principal or interest remain outstanding on the Notes or any other amounts are owed to any Beneficiary, the Issuer or the Indenture Trustee under the Basic Documents, the Servicer shall, so long as ALS, any Affiliate thereof or any successor thereto pursuant to Section 8.02 is the Servicer, maintain the following financial ratio (the “Financial Condition Covenant”) as specified in this Section 3.07(i). The Servicer shall not permit the Total Net Leverage Ratio as of the last day of any fiscal quarter to exceed the ratio for such fiscal quarter set forth in Section 7.01(a) of the Credit Agreement as in effect on the Third Omnibus Amendment Effective Date and as amended thereafter in accordance with its terms but, unless otherwise consented to in writing by the Administrative Agent (acting at
the direction of the Required Noteholders), without giving effect to any such amendment (or any other modification) of such Section 7.01(a) that would apply a ratio that permits a higher Total Net Leverage Ratio for such fiscal quarter than the applicable ratio in effect on the Third Omnibus Amendment Effective Date.”.
(ii) The following definitions in Part I of Appendix A to the Pooling and Servicing Agreement are amended and restated to read as follows:
“Credit Agreement: The Amended and Restated Credit Agreement, dated as of February 28, 2019, among Alliance Laundry Systems LLC, Alliance Laundry Holdings LLC, the lenders from time to time party thereto, Bank of America, N.A., as administrative agent and swing line lender, Bank of Montreal, as an issuing lender, Compass Bank, JPMorgan Chase Bank, N.A. and Fifth Third Bank, as co-documentation agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BMO Capital Markets Corp., PNC Capital Markets LLC, Compass Bank and JPMorgan Chase Bank, N.A., as 2019 joint lead arrangers, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, BMO Capital Markets Corp. and PNC Capital Markets LLC, as joint bookrunners, as such agreement may be amended, restated, modified, supplemented, refinanced or replaced from time to time. A copy of the Credit Agreement in effect as of the Third Omnibus Amendment Effective Date is set forth on Appendix C.”
“Total Net Leverage Ratio: As defined in the Credit Agreement as in effect on the Third Omnibus Amendment Effective Date and without giving effect to any subsequent amendments or modifications thereof unless otherwise consented to in writing by the Administrative Agent (acting at the direction of the Required Noteholders).”.
(iii) The following new definition is added to Part I of Appendix A to the Pooling and Servicing Agreement in the appropriate alphabetical sequence:
“Third Omnibus Amendment Effective Date: March 19, 2019.”.
(iv) Appendix C of the Pooling and Servicing Agreement is amended and restated in its entirety in the form of Annex A attached hereto.
(c) Note Purchase Agreement. The parties to the Note Purchase Agreement hereby agree that Section 5.1(i) of the Note Purchase Agreement is amended and restated to read as follows:
(i) “The Servicer and the Seller, as applicable, shall cause ALH to comply with each of the covenants set forth in Section 7 of the Credit Agreement (without giving effect to an amendment, modification, consent, supplement or other modification of Section 7 (directly or indirectly,
including any defined terms therein) of the Credit Agreement after the Third Omnibus Amendment Effective Date unless such amendment is consented to in writing by the Administrative Agent and the Required Noteholders).”
3. Issuer Order, Noteholder Direction and Registered Owner Instruction.
(a) The Issuer hereby authorizes and directs the Indenture Trustee to execute this Amendment.
(b) The Noteholders hereby direct the Indenture Trustee to execute this Amendment.
(c) ALER, as the sole Registered Owner, hereby instructs Wilmington Trust, National Association, not in its individual capacity but solely as Owner Trustee on behalf of the Issuer, to execute this Amendment.
4. Conditions to Effectiveness. This Amendment shall become effective (the “Effective Date”) upon the Administrative Agent’s receipt of counterparts of this Amendment, duly executed by all of the parties hereto.
5. Effect of Amendment. Except as expressly amended and modified by this Amendment, all provisions of each Agreement shall remain in full force and effect. After this Amendment becomes effective, all references in any Agreement to “this Agreement”, “hereof”, “herein” or words of similar effect referring to the Agreement in which such reference is made shall be deemed to be references to such Agreement as amended by this Amendment. This Amendment shall not be deemed to expressly or impliedly waive, amend or supplement any provision of any Agreement other than as set forth herein.
6. Representations and Warranties.
(a) Each of the Issuer, ALER, ALS and the Note Purchasers makes each of its respective representations and warranties contained in Article 4 of the Note Purchase Agreement, Article VII of the Pooling and Servicing Agreement and Article III of the Purchase Agreement, as applicable (after giving effect to this Amendment).
(b) Each of the parties hereto represents and warrants that this Amendment has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation.
7. Consent. Pursuant to each Agreement, each of the parties hereto agrees, as to itself only, that all notices required to be delivered to it and all consents required to be given by it in connection with this Amendment have been provided, or in the alternative, have been waived, and each such party hereby consents to the terms of the amendments to the Agreements contained in this Amendment.
8. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, and each counterpart shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic mail shall be effective as delivery of a manually executed counterpart of this Amendment.
9. Governing Law. This Amendment shall be governed by, and construed in accordance with, the law of the State of New York; provided, however, that the duties and immunities of the Owner Trustee hereunder shall be governed by the laws of the State of Delaware.
10. Section Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or the Agreements or any provision hereof or thereof.
11. Indenture Trustee’s Responsibility. The Indenture Trustee shall have no responsibility for the validity or sufficiency of this Amendment, nor for the recitals herein.
12. Limitation of Owner Trustee Liability. It is expressly understood and agreed by the parties hereto that (a) this Amendment is executed and delivered by Wilmington Trust, National Association, not individually or personally but solely as trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by Wilmington Trust, National Association but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on Wilmington Trust, National Association, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) Wilmington Trust, National Association has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Amendment and (e) under no circumstances shall Wilmington Trust, National Association be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Amendment or any other related documents.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers as of the day and year first above written.
| | | | | | | | | | | | | | |
| ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES TRUST 2015-A |
| | | | |
| By: | Wilmington Trust, National Association, not in its individual capacity but solely as Owner Trustee |
| | | | |
| | | | |
| | | | |
| By: /s/ Cynthia L. Major |
| Name: | Cynthia L. Major |
| Title: | Banking Officer |
| | | | | | | | | | | |
| ALLIANCE LAUNDRY SYSTEMS LLC |
| | | |
| | | |
| | | |
| By: /s/ Todd M. Rice |
| Name: | Todd M. Rice |
| Title: | VP, Treasurer and Assistant Secretary |
| | | |
| | | |
| | | |
| | | |
| ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC |
| | | |
| | | |
| | | |
| By: /s/ Todd M. Rice |
| Name: | Todd M. Rice |
| Title: | President |
| | | | | | | | | | | |
| THE BANK OF NEW YORK MELLON, not in its individual capacity but solely as Indenture Trustee |
| | | |
| | | |
| | | |
| By: /s/ Esther Antoine |
| Name: | Esther Antoine |
| Title: | Vice President |
| | | | | | | | |
| PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent |
| | |
| | |
| | |
| By: /s/ Roger Yuen |
| Name: Roger Yuen |
| Title: Senior Vice President |
| | | | | | | | |
| PNC PURCHASER GROUP: |
| | |
| PNC BANK, NATIONAL ASSOCIATION, as Committed Purchaser and as Funding Agent |
| | |
| | |
| | |
| By: /s/ Roger Yuen |
| Name: Roger Yuen |
| Title: Senior Vice President |
| | | | | | | | | | | |
| FIFTH THIRD PURCHASER GROUP | |
| | | |
| FIFTH THIRD BANK, as Committed Purchaser and as Funding Agent |
| | | |
| | | |
| | | |
| By: /s/ Patrick Berning | |
| Name: Patrick Berning | |
| Title: Assistant Vice President | |
| | | | | | | | |
| BMO PURCHASER GROUP: |
| | |
| BMO CAPITAL MARKETS CORP., as Funding Agent |
| | |
| | |
| | |
| By: /s/ Jeffrey Merchant |
| Name: Jeffrey Merchant |
| Title: Managing Director |
| | | | | | | | |
| BANK OF MONTREAL, as Committed Purchaser |
| | |
| | |
| | |
| | |
| By: /s/ Karen Louie |
| Name: Karen Louie |
| Title: Director |
| | | | | | | | |
| FAIRWAY FINANCE COMPANY, LLC, as CP Conduit |
| | |
| | |
| | |
| | |
| By: /s/ Irina Khaimova |
| Name: Irina Khaimova |
| Title: Vice President |
Exhibit 10.8
Execution Version
FOURTH OMNIBUS AMENDMENT
This FOURTH OMNIBUS AMENDMENT, dated as of February 21, 2020 (this “Amendment”), is entered into by and among ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company (“ALS”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC, a Delaware limited liability company (“ALER”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES TRUST 2015-A, a Delaware statutory trust (the “Issuer”), THE BANK OF NEW YORK MELLON, a New York banking corporation, as trustee under the Indenture (the “Indenture Trustee”), each of the NOTE PURCHASERS listed on the signature pages hereto (collectively, the “Note Purchasers”), each of the FUNDING AGENTS for the Purchaser Groups listed on the signature pages hereto (collectively, the “Funding Agents”) and PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the Note Purchasers (the “Administrative Agent”).
BACKGROUND:
1. ALS, ALER and the Issuer are parties to that certain Amended and Restated Pooling and Servicing Agreement, dated as of June 8, 2018 (as amended by that certain First Omnibus Amendment, dated as of August 31, 2018, that certain Second Omnibus Amendment, dated as of October 12, 2018, that certain Third Omnibus Amendment, dated as of March 19, 2019, and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Pooling and Servicing Agreement”);
2. ALS, ALER, the Issuer, the Note Purchasers, the Funding Agents and the Administrative Agent are parties to that certain Amended and Restated Note Purchase Agreement, dated as of June 8, 2018 (as amended by that certain First Omnibus Amendment, dated as of August 31, 2018, that certain Second Omnibus Amendment, dated as of October 12, 2018, that certain Third Omnibus Amendment, dated as of March 19, 2019, and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Note Purchase Agreement”);
3. the Issuer and the Indenture Trustee are parties to that certain Amended and Restated Indenture, dated as of June 8, 2018 (as amended by that certain Second Omnibus Amendment, dated as of October 12, 2018, and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Indenture” and, together with the Pooling and Servicing Agreement and the Note Purchase Agreement, the “Agreements”);
4. the parties hereto desire to amend the Agreements as hereinafter set forth; and
5. the consent of each of the Noteholders is necessary for such amendments to be effective, and each of the Noteholders, by executing this Amendment, has consented to such amendments.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Certain Defined Terms. Capitalized terms used herein without definition shall have the meanings ascribed thereto in Part I of Appendix A to the Pooling and Servicing Agreement.
2. Amendments. As of the Effective Date (as defined below), the Agreements are hereby amended as follows:
(a) Pooling and Servicing Agreement. The parties to the Pooling and Servicing Agreement hereby agree that the Pooling and Servicing Agreement is amended as follows:
(i) Article V is hereby amended by inserting a new Section 5.10 at the end thereof to read as follows:
“SECTION 5.10 Beneficial Ownership Certification. The Servicer shall promptly give notice to the Administrative Agent of any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified in parts (c) or (d) of such certification.”;
(ii) Section 7.01(d) is hereby amended by inserting a new clause (iii) at the end thereof to read as follows:
“(iii) As of the 2020 Amendment Date, the information included in the Beneficial Ownership Certification is true and correct in all respects.”;
(iii) The definition of “Note Commitment” in Part I of Appendix A is hereby deleted in its entirety.
(iv) The following definitions are hereby incorporated in Part I of Appendix A in the appropriate alphabetical sequence:
“2020 Amendment Date: February 21, 2020.
Beneficial Ownership Certification: A certification regarding beneficial ownership required by the Beneficial Ownership Regulation.
Beneficial Ownership Regulation: 31 C.F.R. § 1010.230.
Franchise Loan: A Loan originated by the Originator pursuant to and in accordance with the Speed Queen Franchise Disclosure Document, substantially in the form of Appendix D attached hereto.
Overnight Bank Funding Rate: For any day, the rate comprised of funding costs for both overnight federal funds and overnight eurocurrency borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the Federal Reserve Bank of New York (“NYFRB”), as set forth on its public website from time to
time, and as published on the next succeeding Business Day as the overnight bank funding rate by the NYFRB (or by such other recognized electronic source (such as Bloomberg) selected by the Administrative Agent for the purpose of displaying such rate); provided, that if such day is not a Business Day, the Overnight Bank Funding Rate for such day shall be such rate on the immediately preceding Business Day; provided, further, that if such rate shall at any time, for any reason, no longer exist, a comparable replacement rate determined by the Administrative Agent with the Servicer’s consent (such consent not to be unreasonably withheld; provided that the Servicer’s consent shall not be required if the replacement rate is the Federal Funds Rate) (which determination shall be conclusive absent manifest error). If the Overnight Bank Funding Rate determined as above would be less than zero, then such rate shall be deemed to be zero. The rate of interest charged shall be adjusted as of each Business Day based on changes in the Overnight Bank Funding Rate without notice to the Issuer.”;
(v) The definition of “Base Rate” in Part I of Appendix A is hereby amended by replacing the text “the Federal Funds Rate” where it appears therein with the text “the Overnight Bank Funding Rate” in its place;
(vi) Clause (z) of the definition of “Eligible Loan” in Part I of Appendix A is hereby amended by inserting the following text at the end thereof: “and, in the case of any Franchise Loan, such Loan is fully disbursed and construction with respect to the franchise locations to which such Franchise Loan relates is complete”;
(vii) Clause (a) of the definition of “Excess Loan Concentration Amount” in Part I of Appendix A is hereby amended by (x) replacing the percentage “15.0%” where it appears therein with the percentage “25.0%” in its place, and (y) replacing the percentage “10.0%” where it appears therein with the percentage “20.0%” in its place;
(viii) The definition of “Excess Loan Concentration Amount” in Part I of Appendix A is hereby amended by (i) replacing the period at the end of clause (s) thereof with “; plus” in its place, and (ii) inserting a new clause (t) immediately following clause (s) thereof to read as follows:
“(t) the amount by which (x) the sum of the Loan Balance for all Franchise Loans exceeds (y) an amount equal to 10.0% of the Aggregate Loan Balance.”;
(ix) The definition of “Weighted Average Required Percentage” in Part I of Appendix A is hereby amended and restated in its entirety to read as follows:
“Weighted Average Required Percentage: The percentage which, as of any date of determination, is equal to the sum of (a) the product of (i) 20% and (ii) the quotient of (A) the sum of the Loan Balances of all Eligible Loans that are Discount Fixed Rate Loans (other than Discount Fixed Rate Loans that are Franchise Loans) with an original term of 60 months or less as of such date of determination divided by (B) the sum of the Loan Balances of all Eligible Loans as of such date of determination, plus (b) the product of (i) 25% and (ii) the quotient of (A) the sum of the Loan Balances of all Eligible Loans that are Discount Fixed Rate Loans (other than Discount Fixed Rate Loans that are Franchise Loans) with an original term of greater than 60 months as of such date of determination divided by (B) the sum of the Loan Balances of all Eligible Loans as of such date of determination, plus (c) the product of (i) 27.5% and (ii) the quotient of (A) the sum of the Loan Balances of all Eligible Loans that are Franchise Loans (including, for the avoidance of doubt, any Discount Fixed Rate Loans that are Franchise Loans) divided by (B) the sum of the Loan Balances of all Eligible Loans as of such date of determination, plus (d) the product of (i) 12% and (ii) the quotient of (A) the sum of the Loan Balances of all Eligible Loans that are not Discount Fixed Rate Loans or Franchise Loans as of such date of determination divided by (B) the sum of the Loan Balances of all Eligible Loans as of such date of determination.”; and
(x) The Pooling and Servicing Agreement is hereby amended by inserting a new Appendix D immediately following Appendix C thereof, in the form of Annex A attached hereto.
(b) Note Purchase Agreement. The parties to the Note Purchase Agreement hereby agree that the Note Purchase Agreement is amended in its entirety in the form of Annex B attached hereto.
(c) Indenture. The parties to the Indenture hereby agree that the Indenture is amended as follows:
(i) Section 2.2(d) is hereby amended by replacing the amount “$400,000,000” in each instance it appears therein with the amount “$430,000,000 (as such amount may be terminated, reduced or increased from time to time in accordance with the Basic Documents)” in its place;
(ii) Section 3.22 is hereby amended by inserting a new clause (e) immediately prior to the last paragraph thereof to read as follows:
“(e) Beneficial Ownership Certification. As of the 2020 Amendment Date, the information included in the Beneficial Ownership Certification is true and correct in all respects.”; and
(iii) Section 3.32 is hereby amended by inserting the following sentence at the end thereof:
“The Issuer shall promptly give notice to the Administrative Agent of any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified in parts (c) or (d) of such certification.”.
3. Issuer Order, Noteholder Direction and Registered Owner Instruction.
(a) The Issuer hereby authorizes and directs the Indenture Trustee to execute this Amendment.
(b) The Noteholders hereby direct the Indenture Trustee to execute this Amendment.
(c) ALER, as the sole Registered Owner, hereby instructs Wilmington Trust, National Association, not in its individual capacity but solely as Owner Trustee on behalf of the Issuer, to execute (i) this Amendment, and (ii) a Note in the name of each of the following: (x) PNC Bank, National Association, (y) Bank of Montreal and (z) Fifth Third Bank, National Association.
4. Conditions to Effectiveness. This Amendment shall become effective (the “Effective Date”) upon:
(a) the Administrative Agent’s receipt of counterparts of this Amendment, duly executed by the parties hereto;
(b) the Administrative Agent’s and the Indenture Trustee’s receipt of an Issuer Order pursuant to which the Issuer shall authorize the Indenture Trustee to authenticate and deliver to the Issuer, Notes in an aggregate principal amount of up to $430,000,000;
(c) receipt of an upfront fee by (i) PNC Capital Markets LLC, in an amount equal to $30,000, (ii) BMO Capital Markets Corp., in an amount equal to $15,000 and (iii) Fifth Third Bank, National Association, in an amount equal to $15,000; and
(d) receipt of an amendment fee by (i) PNC Capital Markets LLC, in an amount equal to $100,000, (ii) BMO Capital Markets Corp., in an amount equal to $50,000 and (iii) Fifth Third Bank, National Association, in an amount equal to $50,000.
5. Effect of Amendment. Except as expressly amended and modified by this Amendment, all provisions of each Agreement shall remain in full force and effect. After this Amendment becomes effective, all references in any Agreement to “this Agreement”, “this Indenture”, “hereof”, “herein” or words of similar effect referring to the Agreement in which such reference is made shall be deemed to be references to such Agreement as amended by this Amendment. This Amendment shall not be deemed to expressly or impliedly waive, amend or supplement any provision of any Agreement other than as set forth herein.
6. Representations and Warranties.
(a) Each of the Issuer, ALER and ALS makes each of its respective representations and warranties contained in Article VII of the Pooling and Servicing Agreement, as applicable (after giving effect to this Amendment).
(b) Each of the parties hereto represents and warrants that this Amendment has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation.
7. Consent. Pursuant to each Agreement, each of the parties hereto agrees, as to itself only, that all notices required to be delivered to it and all consents required to be given by it in connection with this Amendment have been provided, or in the alternative, have been waived, and each such party hereby consents to the terms of the amendments to the Agreements contained in this Amendment.
8. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, and each counterpart shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic mail shall be effective as delivery of a manually executed counterpart of this Amendment.
9. Governing Law. This Amendment shall be governed by, and construed in accordance with, the law of the State of New York; provided, however, that the duties and immunities of the Owner Trustee hereunder shall be governed by the laws of the State of Delaware.
10. Section Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or the Agreements or any provision hereof or thereof.
11. Indenture Trustee’s Responsibility. The Indenture Trustee shall have no responsibility for the validity or sufficiency of this Amendment, nor for the recitals herein.
12. Limitation of Owner Trustee Liability. It is expressly understood and agreed by the parties hereto that (a) this Amendment is executed and delivered by Wilmington Trust, National Association, not individually or personally but solely as trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by Wilmington Trust, National Association but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on Wilmington Trust, National Association, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) Wilmington Trust, National Association has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Amendment and (e) under no circumstances shall
Wilmington Trust, National Association be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Amendment or any other related documents.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers as of the day and year first above written.
| | | | | | | | |
| ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES TRUST 2015-A |
| | |
| By: | Wilmington Trust, National Association,
not in its individual capacity but solely
as Owner Trustee |
| | |
| | |
| By:/s/ Cynthia L. Major |
| Name:
Title: | Cynthia L. Major
Banking Officer |
|
| | | | | | | | |
| ALLIANCE LAUNDRY SYSTEMS LLC |
| | |
| | |
| By:/s/ Todd M. Rice |
| Name: Todd M. Rice |
| Title: Vice President, Treasurer and Assistant Secretary |
| | |
| | |
| ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES 2015 LLC |
| | |
| | |
| By:/s/ Todd M. Rice |
| Name: Todd M. Rice |
| Title: President |
Alliance --Fourth Omnibus Amendment
| | | | | | | | |
| THE BANK OF NEW YORK MELLON, not in its
individual capacity but solely as Indenture Trustee |
| | |
| | |
| By:/s/ Esther Antoine |
| Name: Esther Antoine |
| Title: Vice President |
| | | | | | | | |
| PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent |
| | |
| | |
| By:/s/ Roger Yuen |
| Name: Roger Yuen |
| Title: Senior Vice President |
| | | | | | | | | | | |
| PNC PURCHASER GROUP: | |
| | | |
| PNC BANK, NATIONAL ASSOCIATION, as
Committed Purchaser and as Funding Agent | |
| | | |
| | | |
| By:/s/ Roger Yuen |
| Name: Roger Yuen | |
| Title: Senior Vice President | |
| | | | | | | | |
| FIFTH THIRD PURCHASER GROUP |
| | |
| FIFTH THIRD BANK, NATIONAL ASSOCIATION, as
Committed Purchaser and as Funding Agent |
| | |
| | |
| By:/s/ Andrew D. Jones |
| Name: Andrew D. Jones |
| Title: Director |
| | | | | | | | |
| BMO PURCHASER GROUP: |
| | |
| ВMO CAРITAL MARKETS CORP., as Funding Agent |
| | |
| | |
| By:/s/ John Pappano |
| Name: John Pappano |
| Title: Managing Director |
| | | | | | | | |
| BANK OF MONTREAL, as Committed Purchaser |
| | |
| | |
| | |
| By:/s/ Karen Louie |
| Name: Karen Louie |
| Title: Director |
| | | | | | | | |
| FAIRWAY FINANCE COMPANY, LLC, as CP
Conduit |
| | |
| | |
| | |
| By:/s/ Denise Veidt |
| Name: Denise Veidt |
| Title: Vice President |
Exhibit 10.9
Execution Version
FIFTH OMNIBUS AMENDMENT
This FIFTH OMNIBUS AMENDMENT, dated as of October 9, 2020 (this “Amendment”), is entered into by and among ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company (“ALS”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC, a Delaware limited liability company (“ALER”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES TRUST 2015-A, a Delaware statutory trust (the “Issuer”), THE BANK OF NEW YORK MELLON, a New York banking corporation, as trustee under the Indenture (the “Indenture Trustee”), each of the NOTE PURCHASERS listed on the signature pages hereto (collectively, the “Note Purchasers”), each of the FUNDING AGENTS for the Purchaser Groups listed on the signature pages hereto (collectively, the “Funding Agents”) and PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the Note Purchasers (the “Administrative Agent”).
BACKGROUND:
1. ALS and ALER are parties to that certain Amended and Restated Purchase Agreement, dated as of June 8, 2018 (as amended by that certain Second Omnibus Amendment, dated as of October 12, 2018, that certain Third Omnibus Amendment, dated as of March 19, 2019, and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Purchase Agreement”);
2. ALS, ALER and the Issuer are parties to that certain Amended and Restated Pooling and Servicing Agreement, dated as of June 8, 2018 (as amended by that certain First Omnibus Amendment, dated as of August 31, 2018, that certain Second Omnibus Amendment, dated as of October 12, 2018, that certain Third Omnibus Amendment, dated as of March 19, 2019, that certain Fourth Omnibus Amendment, dated as of February 21, 2020, that certain First Amendment to Pooling and Servicing Agreement, dated as of April 16, 2020, and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Pooling and Servicing Agreement”);
3. ALS, ALER, the Issuer, the Note Purchasers, the Funding Agents and the Administrative Agent are parties to that certain Amended and Restated Note Purchase Agreement, dated as of June 8, 2018 (as amended by that certain First Omnibus Amendment, dated as of August 31, 2018, that certain Second Omnibus Amendment, dated as of October 12, 2018, that certain Third Omnibus Amendment, dated as of March 19, 2019, that certain Fourth Omnibus Amendment, dated as of February 21, 2020, and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Note Purchase Agreement”)
4. the Issuer and the Indenture Trustee are parties to that certain Amended and Restated Indenture, dated as of June 8, 2018 (as amended by that certain Second Omnibus Amendment, dated as of October 12, 2018, that certain Fourth Omnibus Amendment, dated as of February 21, 2020, and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Indenture” and, together with the Purchase Agreement, the Pooling and Servicing Agreement and the Note Purchase Agreement, the “Agreements”);
5. the Administrative Agent and the Note Purchasers desire to waive certain provisions of the Note Purchase Agreement and amend the Agreements as hereinafter set forth; and
6. the consent of each of the Noteholders is necessary for such waivers and amendments to be effective, and each of the Noteholders, by executing this Amendment, has consented to such waiver and amendments.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1.Certain Defined Terms. Capitalized terms used herein without definition shall have the meanings ascribed thereto in Part I of Appendix A to the Pooling and Servicing Agreement.
2.Waiver by the Administrative Agent and the Note Purchasers.
(a)The Issuer recently became aware that the Issuer may not have been in compliance with Section 3.2(k) of the Note Purchase Agreement on certain Funding Dates that occurred prior to the date hereof.
(b)Each of the Administrative Agent and the Note Purchasers hereby agrees to waive any Rapid Amortization Event, Event of Default or Servicer Default or any event that, after the giving of notice or the lapse of time (or both), would constitute a Rapid Amortization Event, Event of Default or Servicer Default (the “Applicable Defaults”) under the Basic Documents arising solely as a result of the failure of the Issuer to satisfy Section 3.2(k) of the Note Purchase Agreement (the “Waiver”) on any Funding Date arising prior to the Effective Date and for the period commencing on the Effective Date and ending on the earlier of (x) the 30th day following the Effective Date (or such later date agreed to in writing by the Administrative Agent and the Note Purchasers) and (y) the first Funding Date following the Effective Date on which the Issuer is in compliance with Section 3.2(k) of the Note Purchase Agreement (the “Waiver Period”).
(c)Except for any waiver granted pursuant to clause 2(b) above, the Waiver shall not be construed to be a waiver of or in any way obligate the Administrative Agent or any Note Purchaser to waive any other Rapid Amortization Events, Event of Defaults or Servicer Defaults that may currently exist or occur hereafter. The Administrative Agent hereby expressly reserves, on behalf of itself and the Note Purchasers, all rights, powers and/or remedies, whether under and with respect to the Note Purchase Agreement, the Indenture and the other Basic Documents and/or applicable law, from and after the end of the Waiver Period with respect to the Applicable Defaults and otherwise, including, without limitation, the right to exercise any right or remedy arising on account of the continuance of an Applicable Default after the end of the Waiver Period.
3.Amendments. As of the Effective Date (as defined below), the Agreements are hereby amended as follows:
(a)Purchase Agreement. The parties to the Purchase Agreement hereby agree that the definition of “Credit Agreement” in Part A of Appendix A is amended and restated to read as follows:
““Credit Agreement” means that certain Credit Agreement, dated as of October 9, 2020, among Alliance Laundry Holdings LLC, as holdings, Alliance Laundry Systems LLC, as borrower, the lenders and issuing banks from time to time party thereto, UBS AG, Stamford Branch, as administrative agent, UBS Securities LLC, BofA Securities, Inc., BMO Capital Markets Corp. and Citigroup Global Markets Inc., as joint lead arrangers and joint bookrunners, as such agreement may be amended, restated, modified, supplemented, refinanced or replaced from time to time.”.
(b)Pooling and Servicing Agreement. The parties to the Pooling and Servicing Agreement hereby agree that the Pooling and Servicing Agreement is amended as follows:
(i)Section 3.07(i) is amended and restated in its entirety with the following:
“(i) Financial Condition Covenant: For so long as any payments of principal or interest remain outstanding on the Notes or any other amounts are owed to any Beneficiary, the Issuer or the Indenture Trustee under the Basic Documents, the Servicer shall, so long as ALS, any Affiliate thereof or any successor thereto pursuant to Section 8.02 is the Servicer, maintain the following financial ratio (the “Financial Condition Covenant”) as specified in this Section 3.07(i). The Servicer shall not permit the Net First Lien Leverage Ratio as of the last day of any fiscal quarter (beginning with the end of the second full fiscal quarter ending after the Fifth Omnibus Amendment Effective Date), solely to the extent that on such date the Testing Condition is satisfied, to exceed the ratio for such fiscal quarter set forth in Section 6.11 of the Credit Agreement as in effect on the Fifth Omnibus Amendment Effective Date and as amended thereafter in accordance with its terms but, unless otherwise consented to in writing by the Administrative Agent (acting at the direction of the Required Noteholders), without giving effect to any such amendment (or any other modification) of such Section 6.11 that would apply a ratio that permits a higher Net First Lien Leverage Ratio for such fiscal quarter than the applicable ratio in effect on the Fifth Omnibus Amendment Effective Date.”.
(ii)The definition of “Adjusted Eurodollar Rate” in Part I of Appendix A is hereby amended by replacing the text “fifty (50) basis points (0.50%)” where it appears therein with the text “fifteen (15) basis points (0.15%)” in its place.
(iii)The definition of “Applicable Margin Fee Letter” in Part I of Appendix A is hereby amended by replacing the date “Restatement Date” where it
appears therein with the date “Fifth Omnibus Amendment Effective Date” in its place.
(iv)The definition of “Credit Agreement” in Part I of Appendix A is amended and restated to read as follows:
“Credit Agreement: The Credit Agreement, dated as of October 9, 2020, among Alliance Laundry Holdings LLC, as holdings, Alliance Laundry Systems LLC, as borrower, the lenders and issuing banks from time to time party thereto, UBS AG, Stamford Branch, as administrative agent, UBS Securities LLC, BofA Securities, Inc., BMO Capital Markets Corp. and Citigroup Global Markets Inc., as joint lead arrangers and joint bookrunners, as such agreement may be amended, restated, modified, supplemented, refinanced or replaced from time to time. A copy of the Credit Agreement in effect as of the Fifth Omnibus Amendment Effective Date is set forth on Appendix C.”.
(v)The definition of “Cost of Funds Rate” in Part I of Appendix A is amended and restated to read as follows:
“Cost of Funds Rate: With respect to any Advance, the Adjusted Eurodollar Rate (or the Base Rate, if applicable, determined without the inclusion of the fifty basis points (0.50%) per annum above the Adjusted Eurodollar Rate referred to in clause (iii) of the definition of Base Rate).”.
(vi)The definition of “CP Rate” in Part I of Appendix A is hereby deleted in its entirety.
(vii)The definition of “Excess Loan Concentration Amount” in Part I of Appendix A is amended as follows:
(1) Clause (b)(i) is hereby amended by replacing the percentage “25.0%” where it appears therein with the text “the Maximum Interest Only Loan Percentage” in its place.
(2) Clause (o)(i) is hereby amended by replacing the percentage “17.0%” where it appears therein with the text “the Maximum Fixed Rate Loan Percentage” in its place.
(3) Clause (p) is hereby amended by replacing the percentage “10.0%” where it appears therein with the text “the Maximum Payment Deferral Loan Percentage” in its place.
(4) Clause (k) is hereby amended by replacing the text “Pennsylvania” where it appears therein with the text “Georgia” in its place.
(5) Clause (s) is hereby amended by replacing the text “Pennsylvania” where it appears therein with the text “Georgia” in its place.
(viii)The definition of “Interest Period” in Part I of Appendix A is amended by deleting the proviso at the end of the definition thereof in its entirety.
(ix)The definition of “Note Senior Interest Amount” in Part I of Appendix A is amended and restated in its entirety with the following:
“Note Senior Interest Amount: For each Distribution Date and each Noteholder, an amount equal to the sum, for each day during the related Interest Period, of an amount equal to the aggregate, for all Advances under the Notes then outstanding, equal to the product of (i) the principal amount of such Advance (or a portion thereof), (ii) (A) for each date prior to the Conversion Date, a rate equal to the one-month LIBOR plus 175 basis points (1.75%) or (B) for each date on or after the Conversion Date, two hundred twenty-five basis points (2.25%) and (iii) 1/360.”.
(x)The definition of “Scheduled Termination Date” in Part I of Appendix A is hereby amended by replacing the text “June 8, 2021” where it appears therein with the text “December 8, 2022” in its place.
(xi)The definition of “Third Omnibus Amendment Effective Date” in Part I of Appendix A is hereby deleted in its entirety.
(xii)The definition of “Total Net Leverage Ratio” in Part I of Appendix A is hereby deleted in its entirety.
(xiii)The definition of “Weighted Average Required Percentage” in Part I of Appendix A is amended and restated in its entirety to read as follows:
Weighted Average Required Percentage: The percentage which, as of any date of determination, is equal to the sum of (a) the product of (i) 20% and (ii) the quotient of (A) the sum of the Loan Balances of all Eligible Loans that are Discount Fixed Rate Loans (other than Discount Fixed Rate Loans that are Franchise Loans) with an original term of 60 months or less as of such date of determination divided by (B) the sum of the Loan Balances of all Eligible Loans as of such date of determination, plus (b) the product of (i) 25% and (ii) the quotient of (A) the sum of the Loan Balances of all Eligible Loans that are Discount Fixed Rate Loans (other than Discount Fixed Rate Loans that are Franchise Loans) with an original term of greater than 60 months as of such date of determination divided by (B) the sum of the Loan Balances of all Eligible Loans as of such date of determination, plus (c) the product of (i) 27.5% and (ii) the quotient of (A) the sum of the Loan Balances of all Eligible Loans that are Franchise Loans (including, for the avoidance of doubt, any Discount Fixed Rate Loans that are Franchise Loans) divided by (B) the sum of the Loan Balances of all Eligible Loans as of such date of determination, plus (d) the product of (i) 12% and (ii) the quotient of (A) the sum of the Loan Balances of all Eligible Loans that are not Discount Fixed Rate Loans or
Franchise Loans as of such date of determination divided by (B) the sum of the Loan Balances of all Eligible Loans as of such date of determination; provided that:
(x) at any time the Maximum Interest Only Loan Percentage is 30%, the percentages set forth in clauses (a)(i), (b)(i), (c)(i) and (d)(i) shall each be increased by an additional 0.25%;
(y) at any time the Maximum Fixed Rate Loan Percentage is 25%, the percentages set forth in clauses (a)(i), (b)(i), (c)(i) and (d)(i) shall each be increased by an additional 0.75%; and
(z) at any time the Maximum Payment Deferral Loan Percentage is 15%, the percentages set forth in clauses (a)(i), (b)(i), (c)(i) and (d)(i) shall each be increased by an additional 0.50%.”.
(xiv)The definition of “Yield Supplement” in Part I of Appendix A is hereby amended by replacing the text “1.85%” where it appears therein with the text “2.25%” in its place.
(xv)The following new definitions are added to Part I of Appendix A in the appropriate alphabetical sequence:
Fifth Omnibus Amendment Effective Date: October 9, 2020.
Maximum Fixed Rate Loan Percentage: For any date of determination, 17%; provided that, if the Issuer (or the Servicer on behalf of the Issuer) provides three (3) Business Days’ prior written notice to the Administrative Agent of its desire to increase the Maximum Fixed Rate Loan Percentage on such date, the “Maximum Fixed Rate Loan Percentage” shall be 25% on such date and each date of determination thereafter; provided, further, that the Issuer (or the Servicer on behalf of the Issuer) may revoke any written notice provided pursuant to this definition by providing the Administrative Agent three (3) Business Days’ prior written notice of such revocation.
Maximum Interest Only Loan Percentage: For any date of determination, 25%; provided that, if the Issuer (or the Servicer on behalf of the Issuer) provides three (3) Business Days’ prior written notice to the Administrative Agent of its desire to increase the Maximum Interest Only Loan Percentage on such date, the “Maximum Interest Only Loan Percentage” shall be 30% on such date and each date of determination thereafter; provided, further, that the Issuer (or the Servicer on behalf of the Issuer) may revoke any written notice provided pursuant to this definition by providing the Administrative Agent three (3) Business Days’ prior written notice of such revocation.
“Maximum Payment Deferral Loan Percentage: For any date of determination, 10%; provided that, if the Issuer (or the Servicer on behalf of the Issuer) provides three (3) Business Days’ prior written notice to the Administrative Agent of its desire to increase the Maximum Payment Deferral Loan Percentage on such date, the “Maximum Payment Deferral Loan Percentage” shall be 15% on such date and each date of determination thereafter; provided, further, that the Issuer (or the Servicer on behalf of the Issuer) may revoke any written notice provided pursuant to this definition by providing the Administrative Agent three (3) Business Days’ prior written notice of such revocation.
Net First Lien Leverage Ratio: As defined in the Credit Agreement as in effect on the Fifth Omnibus Amendment Effective Date and without giving effect to any subsequent amendments or modifications thereof unless otherwise consented to in writing by the Administrative Agent (acting at the direction of the Required Noteholders).
Special Unused Facility Fee Percentage: As defined in the Applicable Margin Fee Letter.
Testing Condition: As defined in the Credit Agreement as in effect on the Fifth Omnibus Amendment Effective Date and without giving effect to any subsequent amendments or modifications thereof unless otherwise consented to in writing by the Administrative Agent (acting at the direction of the Required Noteholders).
(xvi)Appendix C is amended and restated in its entirety in the form of Annex A attached hereto.
(c)Note Purchase Agreement. The parties to the Note Purchase Agreement hereby agree that the Note Purchase Agreement is amended as follows:
(i)The following definition of “Minimum Funding Threshold” is hereby added to Section 1.1 in the appropriate alphabetical sequence:
““Minimum Funding Threshold” means, on any day, an amount equal to the lesser of (a) the product of (i) 50% times (ii) the Facility Limit at such time and (b) the Borrowing Base at such time.”.
(ii)Section 2.11(a)(iv) is hereby amended and restated in its entirety with the following:
“(iv) the Issuer shall have paid a facility limit increase fee to each Committed Purchaser that has agreed to increase its Commitment in an amount to be mutually agreed upon by the Issuer and the Committed Purchasers that have agreed to increase their respective Commitments;”.
(iii)Section 3.2(j) is hereby amended by replacing the percentage “6.00%” where it appears therein with the percentage “5.00%” in its place.
(iv)Section 3.2(k) is hereby amended and restated in its entirety with the following:
“(k) after giving effect to the issuance of the Notes or the Advance to occur on such Funding Date, the aggregate Loan Balance (net of security deposits) of all Loans with fixed interest rates in the Trust Estate shall not be greater than the amount set forth in the Cap Notional Schedule attached hereto as Annex D (as Annex D may be updated from time to time with the consent of the Issuer and the Administrative Agent to reflect any amendments to any Interest Rate Cap Agreement or any replacement Interest Rate Cap Agreement);”.
(v)Section 5.1(h) is hereby amended by deleting the word “and” at the end thereof.
(vi)Section 5.1(i) is hereby amended by replacing (x) the text “Section 7” where it appears therein with the text “Article VIA” in its place and (y) the text “Third Omnibus Amendment Effective Date” where it appears therein with the text “Fifth Omnibus Amendment Effective Date” in its place.
(d)Indenture. The parties to the Indenture hereby agree that Section 2.7(e) of the Indenture is hereby amended and restated in its entirety with the following:
“On each Distribution Date prior to the Conversion Date to the extent funds are available therefor in accordance with the priority of payments in Section 8.2, the Issuer shall pay to each Purchaser Group a fee (the “Unused Facility Fee”), which shall be in an aggregate amount equal to the sum of (I) the product for each day during the immediately preceding Interest Period of (x) the Unused Facility Fee Percentage on such day, (y) a fraction (expressed as percentage) the numerator of which is one and the denominator of which is equal to the actual number of days in the applicable year and (z) (A) 102% (or, if no Purchaser Group includes a CP Conduit as of such day, 100%) of the aggregate Commitments of the Committed Purchasers in such Purchaser Group on such day, minus (B) the greater of (i) such Purchaser Group’s pro rata share of the Minimum Funding Threshold (calculated based on its Percentage Interests of the Aggregate Note Principal Balance) on such day and (ii) the then outstanding aggregate Note Principal Balances for all Notes for such Purchaser Group on such day plus (II) the product for each day during the immediately preceding Interest Period on which the Minimum Funding Threshold on such day exceeded the Aggregate Note Principal Balances on such day of (x) the Special Unused Facility Fee Percentage on such day, (y) a fraction (expressed as percentage) the numerator of which is one and the denominator of which is equal to the actual number of days in the applicable year and (z) (A) such Purchaser Group’s pro rata share of the Minimum Funding Threshold (calculated based on its Percentage Interests of the Aggregate Note Principal Balance) on
such day, minus (B) the then outstanding aggregate Note Principal Balances for all Notes for such Purchaser Group on such day. Such Unused Facility Fee shall be payable from amounts then on deposit in the Collection Account, in accordance with the priority of payments set forth in Section 8.2, and shall be allocated among the Noteholders pro rata in accordance with their respective shares of the Commitment on such date of determination.”.
4.Issuer Order, Noteholder Direction and Registered Owner Instruction.
(a)The Issuer hereby authorizes and directs the Indenture Trustee to execute this Amendment and the Applicable Margin Fee Letter.
(b)The Noteholders hereby direct the Indenture Trustee to execute this Amendment and the Applicable Margin Fee Letter.
(c)ALER, as the sole Registered Owner, hereby instructs Wilmington Trust, National Association, not in its individual capacity but solely as Owner Trustee on behalf of the Issuer, to execute this Amendment and the Applicable Margin Fee Letter.
5.Conditions to Effectiveness. This Amendment shall become effective (the “Effective Date”) upon:
(a)the Administrative Agent’s receipt of counterparts of this Amendment and the Applicable Margin Fee Letter, duly executed by the parties hereto;
(b)the favorable written opinions of counsel for the Issuer, the Transferor and the Servicer, addressed to the Administrative Agent, each Funding Agent, each Note Purchaser and the Indenture Trustee, dated the date hereof, covering general corporate matters, no government consents or authorizations, no conflicts with organizational documents, any applicable law or other agreements and the due execution and delivery of, and the enforceability of, each of the Agreements and the Applicable Margin Fee Letter;
(c)receipt of an upfront fee by (i) PNC Capital Markets LLC, in an amount equal to $806,250.00, (ii) BMO Capital Markets Corp., in an amount equal to $403,125.00 and (iii) Fifth Third Bank, National Association, in an amount equal to $403,125.00;
(d)receipt of a lender fee by (i) PNC Capital Markets LLC, in an amount equal to $483,750.00, (ii) BMO Capital Markets Corp., in an amount equal to $241,875.00 and (iii) Fifth Third Bank, National Association, in an amount equal to $241,875.00; and
(e)the Issuer shall have paid all fees and other amounts due and payable on or prior to the date hereof pursuant to the Basic Documents, to the extent invoiced, including the fees and disbursements invoiced through the date hereof of the Administrative Agent’s special counsel, Mayer Brown LLP.
6.Effect of Amendment. Except as expressly amended, waived and modified by this Amendment, all provisions of each Agreement shall remain in full force and effect. After this Amendment becomes effective, all references in any Agreement to “this Agreement”, “this Indenture”, “hereof”, “herein” or words of similar effect referring to the Agreement in which such reference is made shall be deemed to be references to such Agreement as amended or waived by this Amendment. This Amendment shall not be deemed to expressly or impliedly waive, amend or supplement any provision of any Agreement other than as set forth herein.
7.Representations and Warranties.
(a)Each of the Issuer, ALER and ALS makes each of its respective representations and warranties contained in Article VII of the Pooling and Servicing Agreement, as applicable (after giving effect to this Amendment).
(b)Each of the parties hereto represents and warrants that this Amendment has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation.
8.Consent. Pursuant to each Agreement, each of the Administrative Agent and each Note Purchaser agrees, as to itself only, that all notices required to be delivered to it and all consents required to be given by it in connection with this Amendment have been provided, or in the alternative, have been waived, and each such party hereby consents to the terms of the amendments to the Agreements contained in this Amendment.
9.Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, and each counterpart shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic mail shall be effective as delivery of a manually executed counterpart of this Amendment.
10.Governing Law. This Amendment shall be governed by, and construed in accordance with, the law of the State of New York; provided, however, that the duties and immunities of the Owner Trustee hereunder shall be governed by the laws of the State of Delaware.
11.Section Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or the Agreements or any provision hereof or thereof.
12.Indenture Trustee’s Responsibility. The Indenture Trustee shall have no responsibility for the validity or sufficiency of this Amendment, nor for the recitals herein.
13.Limitation of Owner Trustee Liability. It is expressly understood and agreed by the parties hereto that (a) this Amendment is executed and delivered by Wilmington Trust, National Association, not individually or personally but solely as trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as
personal representations, undertakings and agreements by Wilmington Trust, National Association but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on Wilmington Trust, National Association, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) Wilmington Trust, National Association has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Amendment and (e) under no circumstances shall Wilmington Trust, National Association be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Amendment or any other related documents.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers as of the day and year first above written.
| | | | | |
ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES TRUST 2015-A |
| |
| By: | Wilmington Trust, National Association,
not in its individual capacity but solely
as Owner Trustee |
| |
| |
By:/s/ Cynthia L. Major |
Name:
Title: | Cynthia L. Major Banking Officer |
|
| | | | | | | | |
| ALLIANCE LAUNDRY SYSTEMS LLC |
| | |
| | |
| By:/s/ Todd M. Rice |
| Name: Todd M. Rice |
| Title: Vice President, Treasurer and Assistant
Secretary |
| | |
| | |
| ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES 2015 LLC |
| | |
| | |
| By:/s/ Todd M. Rice |
| Name: Todd M. Rice |
| Title: President |
| | | | | | | | |
| Solely with respect to Sections 3(b) and 3(d) hereof: |
| | |
| THE BANK OF NEW YORK MELLON, not in its
individual capacity but solely as Indenture Trustee |
| | |
| | |
| By:/s/ Esther Antoine |
| Name: Title: | Esther Antoine
Vice President |
| |
| | | | | | | | |
| PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent |
| | |
| | |
| | |
| By:/s/ Roger Yuen |
| Name: Roger Yuen |
| Title: Senior Vice President |
| | |
| | |
| PNC CAPITAL MARKETS LLC, |
| | |
| | |
| | |
| By:/s/ Roger Yuen |
| Name: Roger Yuen |
| Title: Managing Director |
| | | | | | | | | | | |
| PNC PURCHASER GROUP: | |
| | | |
| PNC BANK, NATIONAL ASSOCIATION, as
Committed Purchaser and as Funding Agent | |
| | | |
| | | |
| By:/s/ Roger Yuen |
| Name: Roger Yuen | |
| Title: Senior Vice President | |
| | | | | | | | |
| FIFTH THIRD PURCHASER GROUP |
| | |
| FIFTH THIRD BANK, NATIONAL
ASSOCIATION, as Committed Purchaser and as
Funding Agent |
| | |
| | |
| By:/s/ Andrew Cantillon |
| Name: Andrew Cantillon |
| Title: Senior Associate, Officer |
| | | | | | | | |
| BMO PURCHASER GROUP: |
| | |
| ВMO CAРITAL MARKETS CORP., as Funding Agent |
| | |
| | |
| By:/s/ John Pappano |
| Name: John Pappano |
| Title: Managing Director |
| | | | | | | | |
| BANK OF MONTREAL, as Committed Purchaser |
| | |
| | |
| | |
| By:/s/ Karen Louie |
| Name: Karen Louie |
| Title: Director |
| | | | | | | | |
| FAIRWAY FINANCE COMPANY, LLC,
as CP Conduit |
| | |
| | |
| | |
| By:/s/ Irina Khaimova |
| Name: Irina Khaimova |
| Title: Vice President |
Exhibit 10.10
Execution Version
SIXTH OMNIBUS AMENDMENT
This SIXTH OMNIBUS AMENDMENT, dated as of July 27, 2021 (this “Amendment”), is entered into by and among ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company (“ALS”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC, a Delaware limited liability company (“ALER”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES TRUST 2015-A, a Delaware statutory trust (the “Issuer”), THE BANK OF NEW YORK MELLON, a New York banking corporation, as trustee under the Indenture (the “Indenture Trustee”), each of the NOTE PURCHASERS listed on the signature pages hereto (collectively, the “Note Purchasers”), each of the FUNDING AGENTS for the Purchaser Groups listed on the signature pages hereto (collectively, the “Funding Agents”) and PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the Note Purchasers (the “Administrative Agent”).
BACKGROUND:
1. ALS, ALER and the Issuer are parties to that certain Amended and Restated Pooling and Servicing Agreement, dated as of June 8, 2018 (as amended by that certain First Omnibus Amendment, dated as of August 31, 2018, that certain Second Omnibus Amendment, dated as of October 12, 2018, that certain Third Omnibus Amendment, dated as of March 19, 2019, that certain Fourth Omnibus Amendment, dated as of February 21, 2020, that certain First Amendment to Pooling and Servicing Agreement, dated as of April 16, 2020, that certain Fifth Omnibus Amendment, dated as of October 9, 2020 and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Pooling and Servicing Agreement”);
2. ALS, ALER, the Issuer, the Note Purchasers, the Funding Agents and the Administrative Agent are parties to that certain Amended and Restated Note Purchase Agreement, dated as of June 8, 2018 (as amended by that certain First Omnibus Amendment, dated as of August 31, 2018, that certain Second Omnibus Amendment, dated as of October 12, 2018, that certain Third Omnibus Amendment, dated as of March 19, 2019, that certain Fourth Omnibus Amendment, dated as of February 21, 2020, that certain Fifth Omnibus Amendment, dated as of October 9, 2020 and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Note Purchase Agreement”);
3. The Issuer and the Indenture Trustee are parties to that certain Amended and Restated Indenture, dated as of June 8, 2018 (as amended by that certain Second Omnibus Amendment, dated as of October 12, 2018, that certain Fourth Omnibus Amendment, dated as of February 21, 2020, that certain Fifth Omnibus Amendment, dated as of October 9, 2020 and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Indenture” and, together with the Pooling and Servicing Agreement and the Note Purchase Agreement, the “Agreements”);
4. ALS, ALER, the Issuer, the Administrative Agent, the Funding Agents and the Note Purchasers desire to amend the Agreements as hereinafter set forth; and
5. The consent of each of the Noteholders is necessary for such amendments to be effective, and each of the Noteholders, by executing this Amendment, has consented to such amendments.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Certain Defined Terms. Capitalized terms used herein without definition shall have the meanings ascribed thereto in Part I of Appendix A to the Pooling and Servicing Agreement.
2. Amendments. As of the Effective Date (as defined below), the Agreements are hereby amended as follows:
(a) Pooling and Servicing Agreement. The parties to the Pooling and Servicing Agreement hereby agree that the Pooling and Servicing Agreement is amended as set forth in the “changed pages” attached hereto as Annex 1.
(b) Note Purchase Agreement. The parties to the Note Purchase Agreement hereby agree that the Note Purchase Agreement is amended as set forth in the “changed pages” attached hereto as Annex 2.
(c) Indenture. The parties to the Indenture hereby agree that the Indenture is amended as set forth in the “changed pages” attached hereto as Annex 3.
(d) Each of the parties hereto agrees that, effective as of the date hereof, the Pooling and Servicing Agreement, the Note Purchase Agreement and the Indenture shall be amended to delete the stricken text in red (indicated textually in the same manner as the following example: stricken text), to add the double-underlined text in blue (indicated textually in the same manner as the following example: double-underlined text), to move from its location the stricken text in green (indicated textually in the same manner as the following example: moved from text) and to move into its new location the double-underlined text in green (indicated textually in the same manner as the following example: move to text) as set forth in Annex 1, Annex 2 and Annex 3 attached hereto.
3. Issuer Order, Noteholder Direction and Registered Owner Instruction.
(a) The Issuer hereby authorizes and directs the Indenture Trustee to execute this Amendment.
(b) The Noteholders hereby direct the Indenture Trustee to execute this Amendment.
(c) ALER, as the sole Registered Owner, hereby instructs Wilmington Trust, National Association, not in its individual capacity but solely as Owner Trustee on behalf of the Issuer, to execute this Amendment.
4. Conditions to Effectiveness. This Amendment shall become effective (the “Effective Date”) upon:
(a) the Administrative Agent’s receipt of counterparts of this Amendment, duly executed by the parties hereto; and
(b) the Issuer shall have paid all fees and other amounts due and payable on or prior to the date hereof pursuant to the Basic Documents, to the extent invoiced, including the fees and disbursements invoiced through the date hereof of the Administrative Agent’s special counsel, Mayer Brown LLP.
5. Effect of Amendment. Except as expressly amended and modified by this Amendment, all provisions of each Agreement shall remain in full force and effect. After this Amendment becomes effective, all references in any Agreement to “this Agreement”, “this Indenture”, “hereof”, “herein” or words of similar effect referring to the Agreement in which such reference is made shall be deemed to be references to such Agreement as amended by this Amendment. This Amendment shall not be deemed to expressly or impliedly amend or supplement any provision of any Agreement other than as set forth herein.
6. Representations and Warranties.
(a) Each of the Issuer, ALER and ALS makes each of its respective representations and warranties contained in Article VII of the Pooling and Servicing Agreement, as applicable (after giving effect to this Amendment).
(b) Each of the parties hereto represents and warrants that this Amendment has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation.
7. Consent. Pursuant to each Agreement, each of the Administrative Agent and each Note Purchaser agrees, as to itself only, that all notices required to be delivered to it and all consents required to be given by it in connection with this Amendment have been provided, and each such party hereby consents to the terms of the amendments to the Agreements contained in this Amendment.
8. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, and each counterpart shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic mail shall be effective as delivery of a manually executed counterpart of this Amendment.
9. Governing Law. This Amendment shall be governed by, and construed in accordance with, the law of the State of New York; provided, however, that the duties and immunities of the Owner Trustee hereunder shall be governed by the laws of the State of Delaware.
10. Section Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or the Agreements or any provision hereof or thereof.
11. Indenture Trustee’s Responsibility. The Indenture Trustee shall have no responsibility for the validity or sufficiency of this Amendment, nor for the recitals herein.
12. Limitation of Owner Trustee Liability. It is expressly understood and agreed by the parties hereto that (a) this Amendment is executed and delivered by Wilmington Trust, National Association, not individually or personally but solely as trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by Wilmington Trust, National Association but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on Wilmington Trust, National Association, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) Wilmington Trust, National Association has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Amendment and (e) under no circumstances shall Wilmington Trust, National Association be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Amendment or any other related documents.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers as of the day and year first above written.
| | | | | | | | |
| ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES TRUST 2015-A |
| | |
| By: | Wilmington Trust, National Association,
not in its individual capacity but solely
as Owner Trustee |
| | |
| | |
| By:/s/ Brandt McCammon |
| Name: | |
| Title: | Brandt McCammon Assistant Vice President |
| |
| | | | | | | | |
| ALLIANCE LAUNDRY SYSTEMS LLC |
| | |
| | |
| By:/s/ Stephen Bodmann |
| Name: Stephen Bodmann |
| Title: Vice President, Treasurer |
| | |
| | |
| | |
| ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES 2015 LLC |
| | |
| | |
| By:/s/ Stephen Bodmann |
| Name: Stephen Bodmann |
| Title: Vice President, Treasurer |
| | | | | | | | |
| Solely with respect to Sections 2(a) and 2(c) hereof: |
| | |
| THE BANK OF NEW YORK MELLON, not in its
individual capacity but solely as Indenture Trustee |
| | |
| | |
| By:/s/ Esther Antoine |
| Name: | |
| Esther Antoine |
| Title: VICE PRESIDENT |
| | | | | | | | |
| PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent |
| | |
| | |
| | |
| By:/s/ Roger Yuen |
| Name: Roger Yuen |
| Title: Senior Vice President |
| | |
| | |
| PNC CAPITAL MARKETS LLC, |
| | |
| | |
| | |
| By:/s/ Roger Yuen |
| Name: Roger Yuen |
| Title: Managing Director |
| | | | | | | | | | | |
| PNC PURCHASER GROUP: | |
| | | |
| PNC BANK, NATIONAL ASSOCIATION, as
Committed Purchaser and as Funding Agent | |
| | | |
| | | |
| By:/s/ Roger Yuen |
| Name: Roger Yuen | |
| Title: Senior Vice President | |
| | | | | | | | |
| FIFTH THIRD PURCHASER GROUP: |
| | |
| FIFTH THIRD BANK, NATIONAL ASSOCIATION, as
Committed Purchaser and as Funding Agent |
| | |
| | |
| By:/s/ Dylan James |
| Name: Dylan James |
| Title: Officer |
| | | | | | | | |
| BMO PURCHASER GROUP: |
| | |
| ВMO CAРITAL MARKETS CORP., as Funding Agent |
| | |
| | |
| By:/s/ John Pappano |
| Name: John Pappano |
| Title: Managing Director |
| | | | | | | | |
| BANK OF MONTREAL, as Committed Purchaser |
| | |
| | |
| | |
| By:/s/ Karen Louie |
| Name: Karen Louie |
| Title: Director |
| | | | | | | | |
| FAIRWAY FINANCE COMPANY, LLC, as CP
Conduit |
| | |
| | |
| | |
| By:/s/ Denise Veidt |
| Name: | |
| Denise Veidt |
| Title: | Vice President |
Exhibit 10.11
Execution Version
SEVENTH OMNIBUS AMENDMENT
This SEVENTH OMNIBUS AMENDMENT, dated as of June 30, 2022 (this “Amendment”), is entered into by and among ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company (“ALS”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC, a Delaware limited liability company (“ALER”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES TRUST 2015-A, a Delaware statutory trust (the “Issuer”), THE BANK OF NEW YORK MELLON, a New York banking corporation, as trustee under the Indenture (the “Indenture Trustee”), each of the NOTE PURCHASERS listed on the signature pages hereto (collectively, the “Note Purchasers”), each of the FUNDING AGENTS for the Purchaser Groups listed on the signature pages hereto (collectively, the “Funding Agents”) and PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the Note Purchasers (the “Administrative Agent”).
BACKGROUND:
1. ALS, ALER and the Issuer are parties to that certain Amended and Restated Pooling and Servicing Agreement, dated as of June 8, 2018 (as amended by that certain First Omnibus Amendment, dated as of August 31, 2018, that certain Second Omnibus Amendment, dated as of October 12, 2018, that certain Third Omnibus Amendment, dated as of March 19, 2019, that certain Fourth Omnibus Amendment, dated as of February 21, 2020, that certain First Amendment to Pooling and Servicing Agreement, dated as of April 16, 2020, that certain Fifth Omnibus Amendment, dated as of October 9, 2020, that certain Sixth Omnibus Amendment, dated as of July 27, 2021, and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Pooling and Servicing Agreement”);
2. ALS, ALER, the Issuer, the Note Purchasers, the Funding Agents and the Administrative Agent are parties to that certain Amended and Restated Note Purchase Agreement, dated as of June 8, 2018 (as amended by that certain First Omnibus Amendment, dated as of August 31, 2018, that certain Second Omnibus Amendment, dated as of October 12, 2018, that certain Third Omnibus Amendment, dated as of March 19, 2019, that certain Fourth Omnibus Amendment, dated as of February 21, 2020, that certain Fifth Omnibus Amendment, dated as of October 9, 2020, that certain Sixth Omnibus Amendment, dated as of July 27, 2021, and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Note Purchase Agreement”);
3. The Issuer and the Indenture Trustee are parties to that certain Amended and Restated Indenture, dated as of June 8, 2018 (as amended by that certain Second Omnibus Amendment, dated as of October 12, 2018, that certain Fourth Omnibus Amendment, dated as of February 21, 2020, that certain Fifth Omnibus Amendment, dated as of October 9, 2020, that certain Sixth Omnibus Amendment, dated as of July 27, 2021, and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Indenture” and, together with the Pooling and Servicing Agreement and the Note Purchase Agreement, the “Agreements”);
4. ALS, ALER, the Issuer, the Administrative Agent, the Funding Agents and the Note Purchasers desire to amend the Agreements as hereinafter set forth; and
5. The consent of each of the Noteholders is necessary for such amendments to be effective, and each of the Noteholders, by executing this Amendment, has consented to such amendments.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Certain Defined Terms. Capitalized terms used herein without definition shall have the meanings ascribed thereto in Part I of Appendix A to the Pooling and Servicing Agreement.
2. Amendments. As of the Effective Date (as defined below), the Agreements are hereby amended as follows:
(a) Pooling and Servicing Agreement. The parties to the Pooling and Servicing Agreement hereby agree that the Pooling and Servicing Agreement is amended in its entirety in the form of Annex 1 attached hereto.
(b) Note Purchase Agreement. The parties to the Note Purchase Agreement hereby agree that the Note Purchase Agreement is amended in its entirety in the form of Annex 2 attached hereto.
(c) Indenture. The parties to the Indenture hereby agree that the Indenture is amended as follows:
(i) Section 2.7(d) is amended by replacing the text “the Adjusted Eurodollar Rate” where it appears therein with the text “Interest Rate” in its place.
(ii) Section 3.8(e) is hereby amended in its entirety to read as follows: “[reserved];”.
(iii) Section 3.22(f) is hereby amended in its entirety to read as follows:
“(f) Sanctions and other Anti-Terrorism Laws. No: (i) Covered Entity, nor to the Issuer’s knowledge any employees, officers, directors, affiliates, consultants, brokers, or agents acting on a Covered Entity’s behalf in connection with this Indenture or the other Basic Documents: (A) is a Sanctioned Person, (B) directly, or indirectly through any third party, is engaged in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction, or any transactions or other dealings that otherwise are prohibited by any Anti-Terrorism Laws; and (ii) Collateral is Embargoed Property.”.
(iv) Section 3.22(g) is hereby amended by (A) replacing the text “Issuer” where it appears therein with “Each Covered Entity” in its place, and (B)
replacing the text “such Laws” where it appears therein with the text “such Applicable Laws” in its place.
(v) Section 3.36 is hereby amended in its entirety to read as follows:
“Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws. Issuer covenants and agrees that:
(a) it shall promptly notify the Noteholders and the Administrative Agent in writing upon the occurrence of a Reportable Compliance Event;
(b) if, at any time, any Collateral becomes Embargoed Property, then in addition to all other rights and remedies available to any Noteholder or the Administrative Agent, upon request by any Noteholder or the Administrative Agent, Issuer shall provide or shall cause to be provided substitute Collateral acceptable to the Administrative Agent that is not Embargoed Property;
(c) it shall, and shall require each other Covered Entity to, conduct its business in compliance with all Anti-Corruption Laws and maintain policies and procedures designed to ensure compliance with such Applicable Laws;
(d) it will not: (i) become a Sanctioned Person or consent to, or approve of, any employees, officers, directors, affiliates, consultants, brokers, or agents acting on its behalf in connection with this Agreement or any other Basic Document becoming a Sanctioned Person; (ii) directly, or indirectly through a third party, engage in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction, including the use of the proceeds of the Advances to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Person or Sanctioned Jurisdiction; (iii) pay or repay any Outstanding Obligations with Embargoed Property or funds derived from any unlawful activity; (iv) consent to, or approve of, any Collateral becoming Embargoed Property; or (vi) cause any Noteholder or the Administrative Agent to violate any Anti-Terrorism Law; and
(e) it will not, directly or indirectly, use the Advances or any proceeds thereof for any purpose which would breach any Anti-Corruption Laws in any jurisdiction in which any Covered Entity conducts business.”
(vi) Section 6.2(r) is hereby amended in its entirety to read as follows:
“(r) The Indenture Trustee will be under no obligation (i) to monitor, determine or verify the unavailability or cessation of Daily Simple SOFR (or any other Benchmark), or whether or when there has occurred, or to give notice to any other Person of the occurrence of, any Benchmark Transition Event or related Benchmark Replacement Date, (ii) to select, determine or designate any Benchmark Replacement, or other successor or replacement benchmark index, or to determine whether any conditions to the designation of such a rate or index have been satisfied, (iii) to select, determine or designate any Benchmark Replacement Adjustment, or other modifier to any replacement or successor index, or (iv) to determine whether or what Conforming Changes are appropriate in connection with any of the foregoing, including, but not limited to, as to any spread adjustment thereon, the business day convention, interest determination dates or any other relevant methodology applicable to such substitute or successor benchmark. In connection with the foregoing, the Indenture Trustee will be entitled to conclusively rely on any determinations made by the Administrative Agent or the Required Noteholders, as applicable, without independent investigation, and none will have any liability for actions taken at the Administrative Agent’s or the Required Noteholders’, as applicable, direction in connection therewith.”.
(vii) Section 6.2 is hereby amended by inserting a new clause (s) at the end thereof to read as follows:
“(s) The Indenture Trustee will not be liable for any inability, failure or delay on its part to perform any of its duties set forth in the Basic Documents as a result of the unavailability of Daily Simple SOFR or any applicable Benchmark Replacement, including as a result of any failure, inability, delay, error or inaccuracy on the part of any other Person in providing any direction, instruction, notice or information required or contemplated by the terms of the Basic Documents and reasonably required for the performance of such duties. The Indenture Trustee will not be responsible or liable for the actions or omissions of the Administrative Agent or the Required Noteholders, or for any failure or delay in the performance by the Administrative Agent or the Required Noteholders, nor shall the Indenture Trustee be under any obligation to oversee or monitor the performance of the Administrative Agent or the Required Noteholders.”
3. Issuer Order, Noteholder Direction and Registered Owner Instruction.
(a) The Issuer hereby authorizes and directs the Indenture Trustee to execute this Amendment and to cancel the Alliance Laundry Equipment Receivables Trust 2015-A Notes registered in the name of Bank of Montreal.
(b) The Noteholders hereby direct the Indenture Trustee to execute this Amendment and the Applicable Margin Fee Letter.
(c) ALER, as the sole Registered Owner, hereby instructs Wilmington Trust, National Association, not in its individual capacity but solely as Owner Trustee on behalf of the Issuer, to execute this Amendment and the Applicable Margin Fee Letter.
4. Conditions to Effectiveness. This Amendment shall become effective (the “Effective Date”) upon:
(a) the Administrative Agent’s receipt of counterparts of (i) this Amendment, duly executed by the parties hereto, (ii) the Applicable Margin Fee Letter, (iii) that certain Upfront Fee Letter Agreement, dated as of the date hereof, executed by parties thereto, and (iv) each other document, certificate and legal opinion set forth on the closing checklist attached hereto as Annex 3; and
(b) the Issuer shall have paid all fees and other amounts due and payable on or prior to the date hereof pursuant to the Basic Documents, to the extent invoiced, including the fees and disbursements invoiced through the date hereof of the Administrative Agent’s special counsel, Mayer Brown LLP.
5. Effect of Amendment. Except as expressly amended and modified by this Amendment, all provisions of each Agreement shall remain in full force and effect. After this Amendment becomes effective, all references in any Agreement to “this Agreement”, “this Indenture”, “hereof”, “herein” or words of similar effect referring to the Agreement in which such reference is made shall be deemed to be references to such Agreement as amended by this Amendment. This Amendment shall not be deemed to expressly or impliedly amend or supplement any provision of any Agreement other than as set forth herein.
6. Representations and Warranties.
(a) Each of the Issuer, ALER and ALS makes each of its respective representations and warranties contained in Article VII of the Pooling and Servicing Agreement, as applicable (after giving effect to this Amendment).
(b) Each of the parties hereto represents and warrants that this Amendment has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation.
7. Consent. Pursuant to each Agreement, each of the Administrative Agent and each Note Purchaser agrees, as to itself only, that all notices required to be delivered to it and all consents required to be given by it in connection with this Amendment have been provided, and each such party hereby consents to the terms of the amendments to the Agreements contained in this Amendment.
8. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, and each counterpart shall be deemed to be an
original, and all such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic mail shall be effective as delivery of a manually executed counterpart of this Amendment.
9. Governing Law. This Amendment shall be governed by, and construed in accordance with, the law of the State of New York; provided, however, that the duties and immunities of the Owner Trustee hereunder shall be governed by the laws of the State of Delaware.
10. Section Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or the Agreements or any provision hereof or thereof.
11. Indenture Trustee’s Responsibility. The Indenture Trustee shall have no responsibility for the validity or sufficiency of this Amendment, nor for the recitals herein.
12. Limitation of Owner Trustee Liability. It is expressly understood and agreed by the parties hereto that (a) this Amendment is executed and delivered by Wilmington Trust, National Association, not individually or personally but solely as trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by Wilmington Trust, National Association but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on Wilmington Trust, National Association, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) Wilmington Trust, National Association has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Amendment and (e) under no circumstances shall Wilmington Trust, National Association be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Amendment or any other related documents.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers as of the day and year first above written.
| | | | | | | | |
| ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES TRUST 2015-A |
| | |
| By: | Wilmington Trust, National Association,
not in its individual capacity but solely
as Owner Trustee |
| | | | | | | | |
| By: | /s/ Cynthia L. Major |
| Name: Cynthia L Major |
| Title: Vice President |
Seventh Omnibus Amendment
| | | | | | | | | | | | | | |
| ALLIANCE LAUNDRY SYSTEMS LLC |
| | | | |
| | | | |
| By: | | /s/ Stephen Bodmann | |
| Name: Stephen Bodmann | |
| Title: Vice President and Treasurer | |
| | | | |
| ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC |
| | | | |
| | | | |
| By: | | /s/ Stephen Bodmann | |
| Name: Stephen Bodmann | |
| Title: Vice President and Treasurer | |
Seventh Omnibus Amendment
| | | | | | | | |
| Solely with respect to Sections 2(a) and 2(c) hereof: |
| | |
| THE BANK OF NEW YORK MELLON, not in its individual capacity but solely as Indenture Trustee |
| | |
| | |
| By: | /s/ Esther Antoine |
| Name: Esther Antoine |
| Title: VICE PRESIDENT |
Seventh Omnibus Amendment
| | | | | | | | |
| PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent |
| | |
| | |
| By: | /s/ Roger Yuen |
| Name: Roger Yuen |
| Title: Senior Vice President |
| | |
| | |
| | |
| PNC CAPITAL MARKETS LLC, |
| | |
| | |
| By: | /s/ Roger Yuen |
| Name: Roger Yuen |
| Title: Senior Vice President |
| By: | |
| Name: Roger Yuen Title: Managing Director |
Seventh Omnibus Amendment
| | | | | | | | |
| PNC PURCHASER GROUP: |
| | |
| PNC BANK, NATIONAL ASSOCIATION, as
Committed Purchaser and as Funding Agent |
| | |
| | |
| By: | /s/ Roger Yuen |
| Name: Roger Yuen |
| Title: Senior Vice President |
Seventh Omnibus Amendment
| | | | | | | | |
| FIFTH THIRD PURCHASER GROUP: |
| | |
| FIFTH THIRD BANK, NATIONAL ASSOCIATION, as Committed Purchaser and as Funding Agent |
| | |
| | |
| By: | /s/ Andrew D. Jones |
| Name: Andrew D. Jones |
| Title: Managing Director |
Seventh Omnibus Agreement
Exhibit 10.12
Execution Version
EIGHTH OMNIBUS AMENDMENT
This EIGHTH OMNIBUS AMENDMENT, dated as of August 19, 2024 (this “ Amendment”), is entered into by and among ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company (“ALS”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC, a Delaware limited liability company (“ALER”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES TRUST 2015-A, a Delaware statutory trust (the “Issuer”), THE BANK OF NEW YORK MELLON, a New York banking corporation, as trustee under the Indenture (the “Indenture Trustee”), each of the NOTE PURCHASERS listed on the signature pages hereto (collectively, the “ Note Purchasers.”), each of the FUNDING AGENTS for the Purchaser Groups listed on the signature pages hereto (collectively, the “Funding Agents ”) and PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the Note Purchasers (the “Administrative Agent
BACKGROUND:
1. ALS and ALER are parties to that certain Amended and Restated Purchase Agreement, dated as of June 8, 2018 (as amended by that certain Second Omnibus Amendment, dated as of October 12, 2018, that certain Third Omnibus Amendment, dated as of March 19, 2019, that certain Fifth Omnibus Amendment, dated as of October 9, 2020, and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Purchase Agreement”);
2. ALS, ALER and the Issuer are parties to that certain Amended and Restated Pooling and Servicing Agreement, dated as of June 8, 2018 (as amended by that certain First Omnibus Amendment, dated as of August 31, 2018, that certain Second Omnibus Amendment, dated as of October 12, 2018, that certain Third Omnibus Amendment, dated as of March 19, 2019, that certain Fourth Omnibus Amendment, dated as of February 21, 2020, that certain First Amendment to Pooling and Servicing Agreement, dated as of April 16, 2020, that certain Fifth Omnibus Amendment, dated as of October 9, 2020, that certain Sixth Omnibus Amendment, dated as of July 27, 2021, that certain Seventh Omnibus Amendment, dated as of June 30, 2022, that certain Second Amendment to Pooling and Servicing Agreement, dated as of July 13, 2023, and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Pooling and Servicing Agreement”);
3. ALS, ALER, the Issuer, the Note Purchasers, the Funding Agents and the Administrative Agent are parties to that certain Amended and Restated Note Purchase Agreement, dated as of June 8, 2018 (as amended by that certain First Omnibus Amendment, dated as of August 31, 2018, that certain Second Omnibus Amendment, dated as of October 12, 2018, that certain Third Omnibus Amendment, dated as of March 19, 2019, that certain Fourth Omnibus Amendment, dated as of February 21, 2020, that certain Fifth Omnibus Amendment, dated as of October 9, 2020, that certain Sixth Omnibus Amendment, dated as of July 27, 2021, that certain Seventh Omnibus Amendment, dated as of June 30, 2022, each Facility Limit Increase Agreement with respect to each Note Purchaser, dated as of June 25, 2024, and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Note Purchase Agreement”);
4. the Issuer and the Indenture Trustee are parties to that certain Amended and Restated Indenture, dated as of June 8, 2018 (as amended by that certain Second Omnibus Amendment, dated as of October 12, 2018, that certain Fourth Omnibus Amendment, dated as of February 21, 2020, that certain Fifth Omnibus Amendment, dated as of October 9, 2020, that certain Sixth Omnibus Amendment, dated as of July 27, 2021, that certain Seventh Omnibus Amendment, dated as of June 30, 2022, and as further amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Indenture” and, together with the Purchase Agreement, the Pooling and Servicing Agreement and the Note Purchase Agreement, the “Agreements”);
5. ALS, ALER, the Issuer, the Administrative Agent, the Funding Agents and the Note Purchasers desire to amend the Agreements as hereinafter set forth; and
6. the consent of each of the Noteholders is necessary for such amendments to be effective, and each of the Noteholders, by executing this Amendment, has consented to such amendments.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Certain Defined Terms. Capitalized terms used herein without definition shall have the meanings ascribed thereto in Part I of Appendix A to the Pooling and Servicing Agreement.
2. [Reserved].
3. Amendments. As of the Effective Date (as defined below), the Agreements are hereby amended as follows:
(a) Purchase Agreement. The parties to the Purchase Agreement hereby agree that the definition of “Credit Agreement” in Part A of Appendix A is amended and restated to read as follows:
““Credit Agreement” means that certain Credit Agreement, dated as of August 19, 2024, by and among Alliance Laundry Holdings LLC, as holdings, Alliance Laundry Systems LLC, as borrower, Alliance Laundry (Thailand) Company Limited, as Thai borrower, the lenders and issuing banks from time to time party thereto, Citibank, N.A., as administrative agent, and the other parties thereto from time to time, as such agreement may be amended, restated, modified, supplemented, refinanced or replaced from time to time
(b) Pooling and Servicing Agreement. The parties to the Pooling and Servicing Agreement hereby agree that the Pooling and Servicing Agreement is amended as follows:
(i) Section 3.07(i) is amended and restated in its entirety with the following:
“(i) Financial Condition Covenant: For so long as any payments of principal or interest remain outstanding on the Notes or any other amounts
are owed to any Beneficiary, the Issuer, the Owner Trustee or the Indenture Trustee under the Basic Documents, the Servicer shall, so long as ALS, any Affiliate thereof or any successor thereto pursuant to Section 8.02 is the Servicer, maintain the following financial ratio (the “Financial Condition Covenant”) as specified in this Section 3.07(i). The Servicer shall not permit the Net First Lien Leverage Ratio as of the last day of any fiscal quarter (beginning with the end of the second full fiscal quarter ending after the Eighth Omnibus Amendment Effective Date), solely to the extent that on such date the Testing Condition is satisfied, to exceed the ratio for such fiscal quarter set forth in Section 6.11 of the Credit Agreement as in effect on the Eighth Omnibus Amendment Effective Date and as amended thereafter in accordance with its terms but, unless otherwise consented to in writing by the Administrative Agent (acting at the direction of the Required Noteholders), without giving effect to any such amendment (or any other modification) of such Section 6.11 that would apply a ratio that permits a higher Net First Lien Leverage Ratio for such fiscal quarter than the applicable ratio in effect on the Eighth Omnibus Amendment Effective Date
(ii) Section 7.09(d) and (e) are amended and restated in their entirety with the following:
“(d) It and its Subsidiaries will not: (i) become a Sanctioned Person or consent to, or approve of, any employees, officers, directors, affiliates, consultants, brokers, or agents acting on its behalf in connection with this Agreement and the other Basic Documents becoming a Sanctioned Person; (ii) directly, or indirectly through a third party, engage in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction; provided that, with the prior written consent of each Noteholder (in its sole discretion), the Issuer, the Transferor, the Servicer or the Originator, as applicable, may engage in such transactions or other dealings if they would not be in violation of any applicable Anti-Terrorism Law or International Trade Law; (iii) directly or indirectly use of the proceeds of the Advances (1) to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Person or Sanctioned Jurisdiction or (2) in any manner that could result (x) in a violation by any Person of Anti-Corruption Laws (including any Covered Entity, underwriter, advisor, investor or otherwise) or (y) in a violation of any Applicable Law, including, without limitation, any applicable Anti-Corruption Law; (iv) pay or repay any Outstanding Obligations with Embargoed Property or funds derived from any unlawful activity; (v) consent to, or approve of, any Collateral becoming Embargoed Property; or (vi) cause any Noteholder or the Administrative Agent to violate any Anti-Terrorism Law; and
(e) It will not, and will not permit any of its Subsidiaries to, directly or indirectly, use the Advances or any proceeds thereof (i) for any purpose
which would breach any Anti-Corruption Laws in any jurisdiction in which any Covered Entity conducts business or (ii) in any manner that could result (x) in a violation by any Person of Anti-Corruption Law (including any Covered Entity, underwriter, advisor, investor or otherwise) or (y) in a violation of any Applicable Law, including, without limitation, any applicable Anti-Corruption Law
(iii) The definition of “ALS Change of Control” in Part I of Appendix A is amended and restated to read as follows:
“ ALS Change of Control: (a) At any time prior to the effectiveness of an initial registered public offering of common stock by ALH Holding Inc., (i) the Permitted Investors shall cease to have the power to vote or direct the voting of securities having at least 51% of the voting power for the election of directors of ALH Holding Inc. (determined on a fully diluted basis), or (ii) the board of directors of ALH Holding Inc. shall cease to consist of a majority of directors appointed by the Permitted Investors; (b) at any time after the effectiveness of an initial registered public offering of common stock by ALH Holding Inc., (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act as in effect on the Eighth Omnibus Amendment Effective Date), excluding the Permitted Investors, shall (A) directly or indirectly become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act) of more than 45% of the total voting power of all outstanding voting securities of ALH Holding Inc. in the election of directors or (B) either (x) become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act as in effect on the Eighth Omnibus Amendment Effective Date), directly or indirectly, of a greater percentage of the outstanding common stock of ALH Holding Inc. than the percentage of such common stock then owned by the Permitted Investors or (y) have the power to vote or direct the voting of a greater percentage of the securities having the voting power for the election of directors of ALH Holding Inc. (determined on a fully diluted basis) than the percentage of such securities then owned by the Permitted Investors; or (c) (i) ALH Holding Inc. shall cease to own and control, of record and beneficially, directly or indirectly, 100% of the outstanding Equity Interests of ALH free and clear of all Liens or (ii) ALH shall cease to own and control, of record and beneficially, directly or indirectly, 100% of the outstanding Equity Interests of ALS free and clear of all Liens (except Liens securing the obligations under the Credit Agreement)
(iv) The definition of “Anti-Corruption Laws” in Part I of Appendix A is amended and restated to read as follows:
“ Anti-Corruption Laws: (a) The U.S. Foreign Corrupt Practices Act of 1977, as amended; (b) the U.K. Bribery Act 2010, as amended; and (c) any other applicable Law relating to anti-bribery or anti-corruption in any jurisdiction in which the Issuer, the Transferor, the Originator, the Servicer or any of their respective Subsidiaries is located or doing business
(v) The definition of “Credit Agreement” in Part I of Appendix A is amended and restated to read as follows:
“Credit Agreement: The Credit Agreement, dated as of August 19, 2024, by and among Alliance Laundry Holdings LLC, as holdings, Alliance Laundry Systems LLC, as borrower, Alliance Laundry (Thailand) Company Limited, as Thai borrower, the lenders and issuing banks from time to time party thereto, Citibank, N.A., as administrative agent, and the other parties thereto from time to time, as such agreement may be amended, restated, modified, supplemented, refinanced or replaced from time to time. A copy of the Credit Agreement in effect as of the Eighth Omnibus Amendment Effective Date is set forth on Appendix C
(vi) The definition of “Embargoed Property” in Part I of Appendix A is amended and restated to read as follows:
“Embargoed Property: Any property (a) owned, directly or indirectly, by a Sanctioned Person; (b) due to or from a Sanctioned Person; (c) in which a Sanctioned Person otherwise holds any interest; (d) located in a Sanctioned Jurisdiction; or (e) that otherwise would cause any actual or possible violation by any Noteholder or the Administrative Agent of any applicable International Trade Law if the Noteholders or the Administrative Agent were to obtain an encumbrance on, lien on, pledge of, or security interest in such property, or provide services in consideration of such property.”.
(vii) The definition of “Reportable Compliance Event” in Part I of Appendix A is amended and restated to read as follows:
“Reportable Compliance Event: (a) Any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint, or similar charging instrument, arraigned, custodially detained, penalized or the subject of an assessment for a penalty, or enters into a settlement with a Governmental Authority in connection with any economic sanctions or other Anti-Terrorism Law or Anti-Corruption Law, or any predicate crime to any Anti-Terrorism Law or Anti-Corruption Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations represents a violation of any Anti-Terrorism Law or Anti-Corruption Law; (b) any Covered Entity engages in a transaction that has caused or may cause the Noteholders or the Administrative Agent to be in violation of any Anti-Terrorism Laws or Anti-Corruption Laws, including a Covered Entity’s use of any proceeds of the Advances to fund any
operations in, finance any investments or activities in, or, make any payments to, directly or indirectly, a Sanctioned Person or Sanctioned Jurisdiction; or (c) any Collateral becomes Embargoed Property.”.
(viii) The following new definitions are added to Part I of Appendix A in the appropriate alphabetical sequence:
Eighth Omnibus Amendment Effective Date: August 19, 2024.
International Trade Laws: All Applicable Laws relating to economic and financial sanctions, trade embargoes, export controls, customs and anti-boycott measures.
Net First Lien Leverage Ratio: As defined in the Credit Agreement as in effect on the Eighth Omnibus Amendment Effective Date and without giving effect to any subsequent amendments or modifications thereof unless otherwise consented to in writing by the Administrative Agent (acting at the direction of the Required Noteholders).
Testing Condition: As defined in the Credit Agreement as in effect on the Eighth Omnibus Amendment Effective Date and without giving effect to any subsequent amendments or modifications thereof unless otherwise consented to in writing by the Administrative Agent (acting at the direction of the Required Noteholders).
(ix) Appendix C is amended and restated in its entirety in the form of Annex A attached hereto.
(c) Note Purchase Agreement. The parties to the Note Purchase Agreement hereby agree that Section 5.1(i) of the Note Purchase Agreement is hereby amended by replacing the text “Fifth Omnibus Amendment Effective Date” where it appears therein with the text “Eighth Omnibus Amendment Effective Date” in its place.
(d) Indenture. The parties to the Indenture hereby agree that Sections 3.36(d) and (e) of the Indenture are amended and restated in their entirety to read as follows:
“(d) it will not: (i) become a Sanctioned Person or consent to, or approve of, any employees, officers, directors, affiliates, consultants, brokers, or agents acting on its behalf in connection with this Agreement or any other Basic Document becoming a Sanctioned Person; (ii) directly, or indirectly through a third party, engage in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction; provided that, with the prior written consent of each Noteholder (in its sole discretion), the Issuer may engage in such transactions or other dealings if they would not be in violation of any applicable Anti-Terrorism Law or International Trade Law; (iii) directly or indirectly use of the proceeds of the Advances (1) to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or Sanctioned
Jurisdiction or (2) in any manner that could result (x) in a violation by any Person of Anti-Corruption Law (including any Covered Entity, underwriter, advisor, investor or otherwise) or (y) in a violation of any Applicable Law, including, without limitation, any applicable Anti-Corruption Law; (iv) pay or repay any Outstanding Obligations with Embargoed Property or funds derived from any unlawful activity; (v) consent to, or approve of, any Collateral becoming Embargoed Property; or (vi) cause any Noteholder or the Administrative Agent to violate any Anti-Terrorism Law; and
(e) it will not, directly or indirectly, use the Advances or any proceeds thereof (i) for any purpose which would breach any Anti-Corruption Laws in any jurisdiction in which any Covered Entity conducts business or (ii) in any manner that could result (x) in a violation by any Person of Anti-Corruption Law (including any Covered Entity, underwriter, advisor, investor or otherwise) or (y) in a violation of any Applicable Law, including, without limitation, any applicable Anti-Corruption Law.”.
4. Issuer Order, Noteholder Direction and Registered Owner Instruction.
(a) The Issuer hereby authorizes and directs the Indenture Trustee to execute this Amendment.
(b) The Noteholders hereby direct the Indenture Trustee to execute this Amendment.
(c) ALER, as the sole Registered Owner, hereby instructs Wilmington Trust, National Association, not in its individual capacity but solely as Owner Trustee on behalf of the Issuer, to execute this Amendment.
5. Conditions to Effectiveness. This Amendment shall become effective on the date hereof (the “Effective Date ”) upon satisfaction (or waiver in accordance with the Agreements) of the following conditions:
(a) the Administrative Agent’s receipt of counterparts of this Amendment, duly executed by the parties hereto;
(b) the Administrative Agent’s receipt of counterparts of that certain Upfront Fee Letter Agreement, dated as of the date hereof, duly executed by the parties thereto, and the payment by the Issuer of the fees set forth therein in accordance with the terms thereof;
(c) the Administrative Agent’s receipt ofthe favorable written opinions of counsel for the Issuer, the Transferor and the Servicer, addressed to the Administrative Agent, each Funding Agent, each Note Purchaser and the Indenture Trustee, dated the date hereof, covering general corporate matters, no government consents or authorizations, no conflicts with organizational documents, any applicable law or other agreements and the due execution and delivery of, and the enforceability of, each of the Agreements;
(d) the Administrative Agent’s receipt of counterparts of that certain No Interest and Lien Release Acknowledgement Letter, dated as of the date hereof, duly executed by the parties thereto; and
(e) the Issuer shall have paid all fees and other amounts due and payable on or prior to the date hereof pursuant to the Basic Documents, to the extent invoiced, including the fees and disbursements invoiced through the date hereof of the Administrative Agent’s special counsel, Mayer Brown LLP.
6. Effect of Amendment. Except as expressly amended and modified by this Amendment, all provisions of each Agreement shall remain in full force and effect. After this Amendment becomes effective, all references in any Agreement to “this Agreement”, “this Indenture”, “hereof’, “herein” or words of similar effect referring to the Agreement in which such reference is made shall be deemed to be references to such Agreement as amended by this Amendment. This Amendment shall not be deemed to expressly or impliedly amend or supplement any provision of any Agreement other than as set forth herein.
7. Representations and Warranties.
(a) Each of the Issuer, ALER and ALS makes each of its respective representations and warranties contained in Article VII of the Pooling and Servicing Agreement, as applicable (after giving effect to this Amendment).
(b) Each of the parties hereto represents and warrants that this Amendment has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation.
8. Consent. Pursuant to each Agreement, each of the Administrative Agent and each Note Purchaser agrees, as to itself only, that all notices required to be delivered to it and all consents required to be given by it in connection with this Amendment have been provided, and each such party hereby consents to the terms of the amendments to the Agreements contained in this Amendment.
9. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, and each counterpart shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic mail shall be effective as delivery of a manually executed counterpart of this Amendment.
10. Governing Law. This Amendment shall be governed by, and construed in accordance with, the law of the State of New York; provided, however, that the duties and immunities of the Owner Trustee hereunder shall be governed by the laws of the State of Delaware.
11. Section Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or the Agreements or any provision hereof or thereof.
12. Indenture Trustee’s Responsibility. The Indenture Trustee shall have no responsibility for the validity or sufficiency of this Amendment, nor for the recitals herein.
13. Limitation of Owner Trustee Liability. It is expressly understood and agreed by the parties hereto that (a) this Amendment is executed and delivered by Wilmington Trust, National Association, not individually or personally but solely as trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by Wilmington Trust, National Association but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on Wilmington Trust, National Association, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) Wilmington Trust, National Association has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Amendment and (e) under no circumstances shall Wilmington Trust, National Association be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Amendment or any other related documents.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers as of the day and year first above written.
| | | | | | | | |
| ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES TRUST 2015-A |
| | |
| By: | Wilmington Trust, National Association,
not in its individual capacity but solely
as Owner Trustee |
| | | | | | | | |
| By: | /s/ Julia Linian |
| Name: Julia Linian |
| Title: Vice President |
Alliance – Eighth Omnibus Amendment
| | | | | | | | | | | |
| ALLIANCE LAUNDRY SYSTEMS LLC |
| | | |
| | | |
| By: | /s/ Stephen Bodmann | |
| Name: Stephen Bodmann | |
| Title: Vice President and Treasurer | |
| | | |
| | | |
| | | |
| ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC |
| | | |
| | | |
| By: | /s/ Samantha Hannan | |
| Name: Samantha Hannan | |
| Title: Chief Legal Officer | |
Alliance – Eighth Omnibus Amendment
| | | | | | | | | | | |
| ALLIANCE LAUNDRY SYSTEMS LLC |
| | | |
| | | |
| By: | | |
| Name: Stephen Bodmann | |
| Title: Vice President and Treasurer | |
| | | |
| | | |
| | | |
| ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC |
| | | |
| | | |
| By: | /s/ Samantha Hannan | |
| Name: Samantha Hannan | |
| Title: Chief Legal Officer | |
Alliance – Eighth Omnibus Amendment
| | | | | | | | |
| Solely with respect to Sections 2(a) and 2(c) hereof: |
| | |
| THE BANK OF NEW YORK MELLON, not in its individual capacity but solely as Indenture Trustee |
| | |
| | |
| By: | /s/ Esther Antoine |
| Name: Esther Antoine |
| Title: Vice President |
Alliance – Eighth Omnibus Amendment
| | | | | | | | |
| PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent |
| | |
| | |
| By: | /s/ Nina Austin |
| Name: Nina Austin |
| Title: Senior Vice President |
Alliance – Eighth Omnibus Amendment
| | | | | | | | |
| PNC PURCHASER GROUP: |
| | |
| PNC BANK, NATIONAL ASSOCIATION, as
Committed Purchaser and as Funding Agent |
| | |
| | |
| By: | /s/ Nina Austin |
| Name: Nina Austin |
| Title: Senior Vice President |
Alliance – Eighth Omnibus Amendment
| | | | | | | | |
| FIFTH THIRD PURCHASER GROUP: |
| | |
| FIFTH THIRD BANK, NATIONAL ASSOCIATION, as Committed Purchaser and as Funding Agent |
| | |
| | |
| By: | /s/ Pawan Churiwal |
| Name: Pawan Churiwal |
| Title: Executive Director |
Alliance – Eighth Omnibus Amendment
Exhibit 10.13
Execution Version
NINTH OMNIBUS AMENDMENT
This NINTH OMNIBUS AMENDMENT, dated as of May 1, 2025 (this “Amendment”), is entered into by and among ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company (“ALS”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC, a Delaware limited liability company (“ALER”), ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES TRUST 2015-A, a Delaware statutory trust (the “Issuer”), THE BANK OF NEW YORK MELLON, a New York banking corporation, as trustee under the Indenture (the “Indenture Trustee”), each of the NOTE PURCHASERS listed on the signature pages hereto (collectively, the “Note Purchasers”), each of the FUNDING AGENTS for the Purchaser Groups listed on the signature pages hereto (collectively, the “Funding Agents”) and PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the Note Purchasers (the “Administrative Agent”).
BACKGROUND:
1. ALS, ALER and the Issuer are parties to that certain Amended and Restated Pooling and Servicing Agreement, dated as of June 8, 2018 (as amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Pooling and Servicing Agreement”);
2. ALS, ALER, the Issuer, the Note Purchasers, the Funding Agents and the Administrative Agent are parties to that certain Amended and Restated Note Purchase Agreement, dated as of June 8, 2018 (as amended, restated, supplemented or otherwise modified through the date hereof, together with all exhibits and schedules thereto, the “Note Purchase Agreement” and, together with the Pooling and Servicing Agreement, the “Agreements”);
3. ALS, ALER, the Issuer, the Administrative Agent, the Funding Agents and the Note Purchasers desire to amend the Agreements as hereinafter set forth; and
4. the consent of each of the Noteholders is necessary for such amendments to be effective, and each of the Noteholders, by executing this Amendment, has consented to such amendments.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Certain Defined Terms. Capitalized terms used herein without definition shall have the meanings ascribed thereto in Part I of Appendix A to the Pooling and Servicing Agreement.
2. Amendments. As of the Effective Date (as defined below), the Agreements are hereby amended as follows:
(a) Pooling and Servicing Agreement. The parties to the Pooling and Servicing Agreement hereby agree that the Pooling and Servicing Agreement is amended as follows:
(i) Clause (q) of the definition of “Eligible Loan” in Part I of Appendix A is hereby amended by replacing the amount “$25,000” in each instance it appears therein with the amount “$50,000” in its place.
(ii) Clause (a) of the definition of “Excess Loan Concentration Amount” in Part I of Appendix A is hereby amended by (i) replacing the percentage “25.0%” where it appears therein with the percentage “30.0%” in its place and (ii) replacing the percentage “20.0%” where it appears therein with the percentage “25.0%” in its place.
(iii) Clause (w) of the definition of “Excess Loan Concentration Amount” in Part I of Appendix A is hereby amended by replacing the amount “$25,000” in each instance it appears therein with the amount “$50,000” in its place.
(iv) The definition of “Scheduled Termination Date” in Part I of Appendix A is hereby amended by replacing the date “June 30, 2025” where it appears therein with the date “May 1, 2028” in its place.
(v) The Pooling and Servicing Agreement is hereby amended by (x) replacing the text “Brian Stanley, Managing Director” or “Brian Stanley” in each instance it appears therein with the text “Tony Stahley” in its place, (y) replacing the email address “brian.stanley@pnc.com” in each instance it appears therein with the email address “tony.stahley@pnc.com” in its place, and (z) replacing the telephone number “(412) 768-2001” in each instance it appears therein with the telephone number “(412) 768-2266” in its place.
(b) Note Purchase Agreement. The parties to the Note Purchase Agreement hereby agree that Section 5.1(i) of the Note Purchase Agreement is hereby amended as follows:
(i) The definition of “Facility Limit” in Section 1.1 is hereby amended by replacing the amount “$460,000,000” where it appears therein with the amount “$500,000,000” in its place.
(ii) The definition of “SOFR Adjustment” in Section 1.1 is hereby amended by replacing the amount “ten basis points (0.10%)” where it appears therein with the amount “zero basis points (0.00%)” in its place.
(iii) Section 2.11(a) is hereby amended by replacing the amount “$460,000,000” in each instance it appears therein with the amount “$530,000,000” in its place.
(iv) Section 3.2(h) is hereby amended by replacing the text “3.5 years” in each instance it appears therein with the text “3.75 years” in its place.
(v) Section 8.18(d) is hereby amended by inserting the following sentence at the end thereof: “For the avoidance of doubt, nothing in this Section 8.18 shall prohibit any Person from voluntarily communicating, disclosing or
providing information within the scope of the confidentiality provisions of this Section 8.18 regarding suspected violations of laws, rules or regulations to a governmental, regulatory or self-regulatory organization without any notification to any Person.”.
(vi) The chart set forth in Annex B is hereby amended in its entirety to read as follows:
| | | | | |
| Committed Purchaser | Purchaser Commitment |
| PNC Bank, National Association | $350,000,000 |
| Fifth Third Bank, National Association | $150,000,000 |
| Total: | $500,000,000 |
(i) The Note Purchase Agreement is hereby amended by (x) replacing the text “Brian Stanley, Managing Director” or “Brian Stanley” in each instance it appears therein with the text “Tony Stahley” in its place, (y) replacing the email address “brian.stanley@pnc.com” in each instance it appears therein with the email address “tony.stahley@pnc.com” in its place, and (z) replacing the telephone number “412-768-2001” in each instance it appears therein with the telephone number “412-768-2266” in its place.
3. Issuer Order, Noteholder Direction and Registered Owner Instruction.
(a) The Issuer hereby authorizes and directs the Indenture Trustee to execute this Amendment.
(b) The Noteholders hereby direct the Indenture Trustee to execute this Amendment.
(c) ALER, as the sole Registered Owner, hereby instructs Wilmington Trust, National Association, not in its individual capacity but solely as Owner Trustee on behalf of the Issuer, to execute this Amendment.
4. Conditions to Effectiveness. This Amendment shall become effective on the date hereof (the “Effective Date”) upon satisfaction (or waiver in accordance with the Agreements) of the following conditions:
(a) the Administrative Agent’s receipt of counterparts of this Amendment, duly executed by the parties hereto;
(b) the Administrative Agent’s receipt of counterparts of that certain Upfront Fee Letter Agreement, dated as of the date hereof, duly executed by the parties thereto, and the payment by the Issuer of the fees set forth therein in accordance with the terms thereof;
(c) the Administrative Agent’s receipt of the favorable written opinions of counsel for the Issuer, the Transferor and the Servicer, addressed to the Administrative Agent, each Funding Agent, each Note Purchaser and the Indenture Trustee, dated the date
hereof, covering general corporate matters, no government consents or authorizations, no conflicts with organizational documents, any applicable law or other agreements and the due execution and delivery of, and the enforceability of, this Amendment and each of the Agreements; and
(d) the Issuer shall have paid all fees and other amounts due and payable on or prior to the date hereof pursuant to the Basic Documents, to the extent invoiced, including the fees and disbursements invoiced through the date hereof of the Administrative Agent’s special counsel, Mayer Brown LLP.
5. Effect of Amendment. Except as expressly amended and modified by this Amendment, all provisions of each Agreement shall remain in full force and effect. After this Amendment becomes effective, all references in any Agreement to “this Agreement”, “this Indenture”, “hereof”, “herein” or words of similar effect referring to the Agreement in which such reference is made shall be deemed to be references to such Agreement as amended by this Amendment. This Amendment shall not be deemed to expressly or impliedly amend or supplement any provision of any Agreement other than as set forth herein.
6. Representations and Warranties.
(a) Each of the Issuer, ALER and ALS makes each of its respective representations and warranties contained in Article VII of the Pooling and Servicing Agreement, as applicable (after giving effect to this Amendment).
(b) Each of the parties hereto represents and warrants that this Amendment has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation.
7. Consent. Pursuant to each Agreement, each of the Administrative Agent and each Note Purchaser agrees, as to itself only, that all notices required to be delivered to it and all consents required to be given by it in connection with this Amendment have been provided, and each such party hereby consents to the terms of the amendments to the Agreements contained in this Amendment.
8. Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, and each counterpart shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic mail shall be effective as delivery of a manually executed counterpart of this Amendment.
9. Governing Law. This Amendment shall be governed by, and construed in accordance with, the law of the State of New York; provided, however, that the duties and immunities of the Owner Trustee hereunder shall be governed by the laws of the State of Delaware.
10. Section Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or the Agreements or any provision hereof or thereof.
11. Indenture Trustee’s Responsibility. The Indenture Trustee shall have no responsibility for the validity or sufficiency of this Amendment, nor for the recitals herein.
12. Limitation of Owner Trustee Liability. It is expressly understood and agreed by the parties hereto that (a) this Amendment is executed and delivered by Wilmington Trust, National Association, not individually or personally but solely as trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by Wilmington Trust, National Association but is made and intended for the purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on Wilmington Trust, National Association, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (d) Wilmington Trust, National Association has made no investigation as to the accuracy or completeness of any representations and warranties made by the Issuer in this Amendment and (e) under no circumstances shall Wilmington Trust, National Association be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Amendment or any other related documents.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers as of the day and year first above written.
| | | | | | | | |
| ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES TRUST 2015-A |
| | |
| By: | Wilmington Trust, National Association,
not in its individual capacity but solely
as Owner Trustee |
| | | | | | | | |
| By: | /s/ Ingo Miranda |
| Name: Ingo Miranda |
| Title: Vice President |
Signature Page to Ninth Omnibus Amendment
| | | | | | | | | | | | | | |
| ALLIANCE LAUNDRY SYSTEMS LLC |
| | | | |
| | | | |
| By: | /s/ Dean J. Nolden | |
| Name: Dean Nolden | |
| Title: Chief Financial Officer | |
| | | | |
| | | | |
| | | | |
| | | | |
| ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES 2015 LLC |
| | | | |
| | | | |
| By: | /s/ Dean J. Nolden | |
| Name: Dean Nolden | |
| Title: President | |
Signature Page to Ninth Omnibus Amendment
| | | | | | | | |
| Solely with respect to Section 2(a) hereof: |
| | |
| THE BANK OF NEW YORK MELLON, not in its individual capacity but solely as Indenture Trustee |
| | |
| | |
| By: | /s/ Esther Antoine |
| Name: Esther Antoine |
| Title: Vice President |
Signature Page to Ninth Omnibus Amendment
| | | | | | | | |
| PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent |
| | |
| | |
| By: | /s/ Nina Austin |
| Name: Nina Austin |
| Title: Senior Vice President |
Signature Page to Ninth Omnibus Amendment
| | | | | | | | |
| PNC PURCHASER GROUP: |
| | |
| PNC BANK, NATIONAL ASSOCIATION, as
Committed Purchaser and as Funding Agent |
| | |
| | |
| By: | /s/ Nina Austin |
| Name: Nina Austin |
| Title: Senior Vice President |
Signature Page to Ninth Omnibus Amendment
| | | | | | | | |
| FIFTH THIRD PURCHASER GROUP: |
| | |
| FIFTH THIRD BANK, NATIONAL ASSOCIATION, as Committed Purchaser and as Funding Agent |
| | |
| | |
| By: | /s/ Joseph Sandy |
| Name: Joseph Sandy |
| Title: Officer |
Signature Page to Ninth Omnibus Amendment
Exhibit 10.14
Execution Version
NINTH AMENDMENT TO RECEIVABLES FINANCING AGREEMENT
THIS NINTH AMENDMENT TO RECEIVABLES FINANCING AGREEMENT, dated as of May 1, 2025 (this “Amendment”), is entered into by and among the following parties:
(i) ALLIANCE LAUNDRY TRADE RECEIVABLES LLC, a Delaware limited liability company, as the borrower (the “Borrower”);
(ii) ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company (“Alliance”), as the initial servicer (in such capacity, the “Servicer”);
(iii) PNC BANK, NATIONAL ASSOCIATION, as the lender (the “Lender”); and
(iv) PNC BANK, NATIONAL ASSOCIATION (“PNC”), as the administrative agent (in such capacity, the “Administrative Agent”).
R E C I T A L S
A. Each of the parties hereto are parties to that certain Receivables Financing Agreement, dated as of June 8, 2018 (as amended by that certain First Amendment to Receivables Financing Agreement, dated as of August 31, 2018, that certain Second Amendment to Receivables Financing Agreement, dated as of March 19, 2019, that certain Third Amendment to Receivables Financing Agreement, dated as of April 29, 2020, that certain Fourth Amendment to Receivables Financing Agreement, dated as of October 9, 2020, that certain Fifth Amendment to Receivables Financing Agreement, dated as of January 8, 2021, that certain Sixth Amendment to Receivables Financing Agreement, dated as of October 1, 2021, that certain First Omnibus Amendment, dated as of June 30, 2022, that certain Eighth Amendment to Receivables Financing Agreement, dated as of August 19, 2024, and as further amended, supplemented or otherwise modified prior to the date hereof, the “Agreement”).
B. The parties hereto desire to amend the Agreement as hereafter set forth.
NOW THEREFORE, in consideration of the premises and other material covenants contained herein, the parties hereto agree as follows:
SECTION 1. Certain Defined Terms. Capitalized terms which are used herein without definition and that are defined in the Agreement shall have the same meanings herein as in the Agreement.
SECTION 2. Amendments to the Agreement. Effective as of the Effective Date, the Agreement (including the Exhibits and Schedules thereto) is hereby amended and restated in its entirety in the form of Exhibit A attached hereto.
SECTION 3. Effect of Amendment; Ratification. All provisions of the Agreement, as amended by this Amendment, remain in full force and effect. After this Amendment becomes effective, all references in the Agreement to “this Agreement”, “hereof”, “herein” or words of similar effect referring to the Agreement, and each reference in each of the other Transaction
Documents to “the Receivables Financing Agreement”, “thereunder”, “thereof” or words of like import referring to the Agreement, shall be deemed to be references to the Agreement as amended by this Amendment. This Amendment shall not be deemed to expressly or impliedly waive, amend or supplement any provision of the Agreement or any other Transaction Document other than as expressly set forth herein and is hereby ratified and confirmed.
SECTION 4. Effectiveness of this Amendment. This Amendment shall become effective as of the date hereof (the “Effective Date”) upon satisfaction (or waiver in accordance with the Agreement) of the following conditions:
(a) receipt by the Administrative Agent of duly executed counterparts of this Amendment executed by each of the other parties hereto;
(b) receipt by the Administrative Agent of duly executed counterparts of that certain Third Amended and Restated Fee Letter, dated as of the date hereof, by and among the Administrative Agent, the Lender, PNC Capital Markets LLC, as structuring agent, and the Borrower;
(c) receipt by the Administrative Agent of favorable written opinions of counsel for the Borrower and Servicer, addressed to the Administrative Agent, dated the date hereof, covering general corporate matters, no government consents or authorizations, no conflicts with organizational documents, any applicable law or other agreements and the due execution and delivery of, and the enforceability of, this Amendment and the Agreement; and
(d) the Borrower shall have paid all fees and other amounts due and payable on or prior to the date hereof pursuant to the Transaction Documents, to the extent invoiced, including the fees and disbursements invoiced through the date hereof of the Administrative Agent’s special counsel, Mayer Brown LLP.
SECTION 5. Representations and Warranties. Each of the Borrower and Alliance hereby represents and warrants to the Administrative Agent and the Lender as follows:
(a) Representations and Warranties. Each of the representations and warranties made by it under the Agreement and each of the Transaction Documents to which it is a party are true and correct in all material respects as of the date hereof (unless stated to relate solely to an earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date).
(b) Enforceability. The execution and delivery by such Person of this Amendment, and the performance of its obligations under this Amendment and the Agreement, as amended hereby, are within its organizational powers and have been duly authorized by all necessary organizational action on its part. This Amendment and the Agreement, as amended hereby, are such Person’s valid and legally binding obligations, enforceable in accordance with its respective terms.
(c) No Default. Both before and immediately after giving effect to this Amendment and the transactions contemplated hereby, no Receivables Termination Event or Unmatured Receivables Termination Event exists or shall exist.
(d) Further Assurances. Such Person agrees to provide (or to cause to be provided) to the Administrative Agent a copy of all agreements, documents, certificates and instruments, if any, relating to the subject matter of this Amendment, as the Administrative Agent may reasonably request.
SECTION 6. Miscellaneous.
(a) Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart hereof by facsimile or other electronic means shall be equally effective as delivery of an originally executed counterpart.
(b) Section Headings. The descriptive headings of the various sections of this Amendment are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.
(c) Fees and Expenses. The Borrower unconditionally agrees to pay within ten (10) Business Days of any demand therefor all reasonable and documented costs and expenses incurred by the Administrative Agent and/or the Lender in connection with the preparation, execution and delivery of this Amendment and the transactions contemplated hereby, including, without limitation, reasonable fees, costs and expenses of legal counsel for the Administrative Agent and the Lender.
(d) Severability. Any provisions of this Amendment which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
(e) Transaction Document. This Amendment shall constitute a Transaction Document.
(f) GOVERNING LAW. THIS AMENDMENT, INCLUDING THE RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).
(g) JURISDICTION. EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION, IN EACH CASE, OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK CITY, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AMENDMENT OR ANY OTHER TRANSACTION DOCUMENT, AND EACH
PARTY HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED, IN EACH CASE, IN SUCH NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. NOTHING IN THIS CLAUSE (G) SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY OTHER CREDIT PARTY TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR THE SERVICER OR ANY OF THEIR RESPECTIVE PROPERTY IN THE COURTS OF OTHER JURISDICTIONS. EACH OF THE BORROWER AND THE SERVICER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH OF THE BORROWER AND THE SERVICER CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO IT AT ITS ADDRESS SPECIFIED IN SECTION 12.02 OF THE AGREEMENT. NOTHING IN THIS CLAUSE (G) SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY OTHER CREDIT PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(h) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AMENDMENT OR ANY OTHER TRANSACTION DOCUMENT.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.
| | | | | | | | | | | |
| ALLIANCE LAUNDRY TRADE RECEIVABLES |
| LLC, as the Borrower |
| | | |
| | | |
| By: | /s/ Dean J. Nolden |
| Name: | Dean Nolden |
| Title: | President |
| | | |
| | | |
| | | |
| ALLIANCE LAUNDRY SYSTEMS LLC, as the |
| Servicer |
| | | |
| | | |
| By: | /s/ Dean J. Nolden |
| Name: | Dean Nolden |
| Title: | Chief Financial Officer |
Signature Page to Ninth Amendment to Receivables Financing Agreement
| | | | | | | | | | | |
| PNC BANK, NATIONAL ASSOCIATION, |
| as the Lender |
| | | |
| | | |
| By: | /s/ Nina Austin |
| Name: | Nina Austin |
| Title: Senior Vice President |
| | | |
| | | |
| | | |
| | | |
| PNC BANK, NATIONAL ASSOCIATION, |
| as the Administrative Agent |
| | | |
| | | |
| By: | /s/ Nina Austin |
| Name: | Nina Austin |
| Title: Senior Vice President |
Signature Page to Ninth Amendment to Receivables Financing Agreement
Exhibit A
[Attached]
EXHIBIT A to Ninth Amendment, dated May 1, 2025
CONFORMED COPY through:
First Amendment, dated August 31, 2018
Second Amendment, dated March 19, 2019
Third Amendment, dated April 29, 2020
Fourth Amendment, dated October 9, 2020
Fifth Amendment, dated January 8, 2021
Sixth Amendment, dated October 1, 2021
First Omnibus Amendment, dated June 30, 2022
Eighth Amendment, dated August 19, 2024
Ninth Amendment, dated May 1, 2025
RECEIVABLES FINANCING AGREEMENT
Dated as of June 8, 2018
by and among
ALLIANCE LAUNDRY TRADE RECEIVABLES LLC,
as Borrower,
ALLIANCE LAUNDRY SYSTEMS LLC,
as initial Servicer,
THE PERSONS FROM TIME TO TIME PARTY HERETO,
as Lenders,
PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent,
and
PNC CAPITAL MARKETS LLC,
as Structuring Agent
| | | | | | | | |
| | Page |
| | |
| | |
| ARTICLE I DEFINITIONS | 1 |
| | |
| SECTION 1.01. Certain Defined Terms | 1 |
| | |
| SECTION 1.02. Other Interpretative Matters | 36 |
| | |
| SECTION 1.03. Rate Notification | 36 |
| | |
| ARTICLE II TERMS OF THE LOANS | 37 |
| | |
| SECTION 2.01. Loan Facility | 37 |
| | |
| SECTION 2.02. Making Loans; Repayment of Loans | 37 |
| | |
| SECTION 2.03. Interest and Fees | 39 |
| | |
| SECTION 2.04. Records of Loans | 40 |
| | |
| ARTICLE III SETTLEMENT PROCEDURES AND PAYMENT PROVISIONS | 40 |
| | |
| SECTION 3.01. Settlement Procedures | 40 |
| | |
| SECTION 3.02. Payments and Computations, Etc | 43 |
| | |
| ARTICLE IV INCREASED COSTS; FUNDING LOSSES; TAXES; ILLEGALITY AND SECURITY INTEREST | 43 |
| | |
| SECTION 4.01. Increased Costs | 43 |
| | |
| SECTION 4.02. [Reserved] | 45 |
| | |
| SECTION 4.03. Taxes | 45 |
| | |
| SECTION 4.04. Daily 1M SOFR or Term SOFR Rate Unascertainable; Increased Costs; Illegality | 49 |
| | |
| SECTION 4.05. Benchmark Replacement Setting | 50 |
| | |
| SECTION 4.06. Security Interest | 51 |
| | |
| ARTICLE V CONDITIONS TO EFFECTIVENESS AND CREDIT EXTENSIONS | 52 |
| | |
| SECTION 5.01. Conditions Precedent to Effectiveness and the Initial Credit Extension | 52 |
| | |
| SECTION 5.02. Conditions Precedent to All Credit Extensions | 52 |
| | |
| SECTION 5.03. Conditions Precedent to All Releases | 53 |
| | |
| ARTICLE VI REPRESENTATIONS AND WARRANTIES | 54 |
| | |
| SECTION 6.01. Representations and Warranties of the Borrower | 54 |
| | |
| SECTION 6.02. Representations and Warranties of the Servicer | 60 |
| | |
| ARTICLE VII COVENANTS | 64 |
| | |
| SECTION 7.01. Covenants of the Borrower | 64 |
| | |
| | |
|
TABLE OF CONTENTS |
(continued) |
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| | Page |
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| SECTION 7.02. Covenants of the Servicer | 73 |
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| SECTION 7.03. Separate Existence of the Borrower | 79 |
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| ARTICLE VIII ADMINISTRATION AND COLLECTION OF RECEIVABLES | 83 |
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| SECTION 8.01. Appointment of the Servicer | 83 |
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| SECTION 8.02. Duties of the Servicer | 84 |
| | |
| SECTION 8.03. Collection Account Arrangements | 85 |
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| SECTION 8.04. Enforcement Rights | 85 |
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| SECTION 8.05. Responsibilities of the Borrower | 87 |
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| SECTION 8.06. Servicing Fee | 87 |
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| SECTION 8.07. Credit Insurance Policies | 87 |
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| ARTICLE IX RECEIVABLES TERMINATION EVENTS | 90 |
| | |
| SECTION 9.01. Receivables Termination Events | 90 |
| | |
| ARTICLE X THE ADMINISTRATIVE AGENT | 94 |
| | |
| SECTION 10.01. Authorization and Action | 94 |
| | |
| SECTION 10.02. Administrative Agent’s Reliance, Etc | 94 |
| | |
| SECTION 10.03. Administrative Agent and Affiliates | 94 |
| | |
| SECTION 10.04. Indemnification of Administrative Agent | 95 |
| | |
| SECTION 10.05. Delegation of Duties | 95 |
| | |
| SECTION 10.06. Action or Inaction by Administrative Agent | 95 |
| | |
| SECTION 10.07. Notice of Receivables Termination Event or Rapid Amortization Event; Action by Administrative Agent | 95 |
| | |
| SECTION 10.08. Non-Reliance on Administrative Agent and Other Parties | 96 |
| | |
| SECTION 10.09. Successor Administrative Agent | 96 |
| | |
| SECTION 10.10. Structuring Agent | 96 |
| | |
| SECTION 10.11. No Reliance on Administrative Agent’s Customer Identification Program | 97 |
| | |
| SECTION 10.12. Erroneous Payments | 97 |
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| ARTICLE XI INDEMNIFICATION | 99 |
| | |
| SECTION 11.01. Indemnities by the Borrower | 99 |
| | |
| SECTION 11.02. Indemnification by the Servicer | 102 |
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|
TABLE OF CONTENTS |
(continued) |
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| | Page |
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| ARTICLE XII MISCELLANEOUS | 104 |
| | |
| SECTION 12.01. Amendments, Etc | 104 |
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| SECTION 12.02. Notices, Etc | 104 |
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| SECTION 12.03. Assignability; Addition of Lenders | 105 |
| | |
| SECTION 12.04. Costs and Expenses | 108 |
| | |
| SECTION 12.05. No Proceedings | 108 |
| | |
| SECTION 12.06. Confidentiality | 108 |
| | |
| SECTION 12.07. GOVERNING LAW | 110 |
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| SECTION 12.08. Execution in Counterparts | 110 |
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| SECTION 12.09. Integration; Binding Effect; Survival of Termination | 110 |
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| SECTION 12.10. CONSENT TO JURISDICTION | 110 |
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| SECTION 12.11. WAIVER OF JURY TRIAL | 111 |
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| SECTION 12.12. Ratable Payments | 111 |
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| SECTION 12.13. Limitation of Liability | 111 |
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| SECTION 12.14. Intent of the Parties | 112 |
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| SECTION 12.15. USA Patriot Act | 112 |
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| SECTION 12.16. Right of Setoff | 112 |
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| SECTION 12.17. Severability | 112 |
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| SECTION 12.18. Mutual Negotiations | 113 |
| SECTION 12.19. Captions and Cross References | 113 |
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| SECTION 12.20. Limited Recourse | 113 |
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|
TABLE OF CONTENTS |
(continued) |
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| | Page |
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| EXHIBITS | | |
| | |
| EXHIBIT A | – | Form of Loan Request |
| EXHIBIT B | – | Form of Reduction Notice |
| EXHIBIT C | – | Form of Assignment and Acceptance Agreement |
| EXHIBIT D | – | Form of Assumption Agreement |
| EXHIBIT E | – | Credit and Collection Policy |
| EXHIBIT F | – | Form of Information Package |
| EXHIBIT G | – | Form of Compliance Certificate |
| EXHIBIT H | – | Closing Memorandum |
| EXHIBIT I | – | Form of Interim Report |
| | | | | | | | |
| SCHEDULES | |
| | |
| SCHEDULE I | – | Commitments |
| SCHEDULE II | – | Lock-Boxes, Collection Accounts and Collection Account Banks |
SCHEDULE III | – | Notice Addresses |
This RECEIVABLES FINANCING AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) is entered into as of June 8, 2018 by and among the following parties:
(i) ALLIANCE LAUNDRY TRADE RECEIVABLES LLC, a Delaware limited liability company, as the Borrower (together with its permitted successors and assigns, the “Borrower”);
(ii) ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company, in its individual capacity (“Alliance”) and as the initial Servicer (in such capacity, together with its permitted successors and assigns in such capacity, the “Servicer”);
(iii) the Persons from time to time party hereto as Lenders;
(iv) PNC BANK, NATIONAL ASSOCIATION (“PNC”), as the Administrative Agent (in such capacity, the “Administrative Agent”); and
(v) PNC CAPITAL MARKETS LLC, a Pennsylvania limited liability company, as the Structuring Agent (the “Structuring Agent”).
PRELIMINARY STATEMENTS
The Borrower has acquired, and will acquire from time to time, Receivables from the Originator(s) pursuant to the Sale and Contribution Agreement. The Borrower has requested that the Lenders make Loans from time to time to the Borrower, on the terms, and subject to the conditions set forth herein, secured by, among other things, the Receivables.
In consideration of the mutual agreements, provisions and covenants contained herein, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
“Account Control Agreement” means each agreement, in form and substance satisfactory to the Administrative Agent, among the Borrower, Alliance, the Administrative Agent and a Collection Account Bank, governing the terms of the related Collection Accounts that provides the Administrative Agent with control within the meaning of the UCC over the deposit accounts subject to such agreement.
“Adjusted Net Receivables Pool Balance” means, at any time of determination, an amount equal to (a) the Net Receivables Pool Balance minus (b) the Specifically Reserved Dilution
Amount; provided that at all times before the SRDA Trigger Date the Specifically Reserved Dilution Amount shall be deemed to be zero (0.00).
“Administrative Agent” means PNC, in its capacity as contractual representative for the Credit Parties, and any successor thereto in such capacity appointed pursuant to Article X or Section 12.03(f).
“Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent.
“Adverse Claim” means a Lien, security interest, charge or encumbrance, or other right or claim in, of or on any Person’s assets or properties in favor of any other Person.
“Advisors” has the meaning set forth in Section 12.06(c).
“Affected Person” means each Credit Party and each of their respective Affiliates.
“Affiliate” means, with respect to any specified Person, any other Person controlling, controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Aggregate Capital” means, at any time of determination, the aggregate outstanding Capital of all Lenders at such time.
“Aggregate Interest” means, at any time of determination, the aggregate accrued and unpaid Interest on the Loans of all Lenders at such time.
“Agreement” has the meaning set forth in the preamble to this Agreement.
“Alliance” has the meaning set forth in the preamble to this Agreement.
“ALS Change of Control” means (a) at any time prior to the effectiveness of an initial registered public offering of common stock by ALH Holding Inc., (i) the Permitted Investors shall cease to have the power to vote or direct the voting of securities having at least 51% of the voting power for the election of directors of ALH Holding Inc. (determined on a fully diluted basis), or (ii) the board of directors of ALH Holding Inc. shall cease to consist of a majority of directors appointed by the Permitted Investors; (b) at any time after the effectiveness of an initial registered public offering of common stock by ALH Holding Inc., (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act as in effect on the Eighth Amendment Effective Date), excluding the Permitted Investors, shall (A) directly or indirectly become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act) of more than 45% of the total voting power of all outstanding voting securities of ALH Holding Inc. in the election of directors or (B) either (x) become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the
Exchange Act as in effect on the Eighth Amendment Effective Date), directly or indirectly, of a greater percentage of the outstanding common stock of ALH Holding Inc. than the percentage of such common stock then owned by the Permitted Investors or (y) have the power to vote or direct the voting of a greater percentage of the securities having the voting power for the election of directors of ALH Holding Inc. (determined on a fully diluted basis) than the percentage of such securities then owned by the Permitted Investors; or (c)(i) ALH Holding Inc. shall cease to own and control, of record and beneficially, directly or indirectly 100% of the outstanding Capital Stock of Alliance Laundry Holdings LLC free and clear of all Liens or (ii) Alliance Laundry Holdings LLC shall cease to own and control, of record and beneficially, directly or indirectly, 100% of the outstanding Capital Stock of Alliance free and clear of all Liens (except liens securing the obligations under the ALS Credit Agreement.
“ALS Credit Agreement” means that Credit Agreement, dated as of the Eighth Amendment Effective Date, by and among Alliance Laundry Holdings LLC, as holdings, Alliance Laundry Systems LLC, as borrower, Alliance Laundry (Thailand) Company Limited, as Thai borrower, the lenders and issuing banks from time to time party thereto, Citibank, N.A., as administrative agent, and the other parties party thereto from time to time, as such agreement may be amended, restated, modified, supplemented, refinanced or replaced from time to time.
“Anti-Corruption Laws” means (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended; (b) the U.K. Bribery Act 2010, as amended; and (c) any other applicable Law relating to anti-bribery or anti-corruption in any jurisdiction in which the Borrower or the Servicer or any of their respective Subsidiaries is located or doing business.
“Anti-Terrorism Law” means any Applicable Law in force or hereinafter enacted related to terrorism, money laundering, or economic sanctions, including the Bank Secrecy Act, 31 U.S.C. § 5311 et seq., the USA PATRIOT Act, the International Emergency Economic Powers Act, 50 U.S.C. 1701, et seq., the Trading with the Enemy Act, 50 U.S.C. App. 1, et seq., 18 U.S.C. § 2332d, and 18 U.S.C. § 2339B.
“Applicable Law” means, with respect to any Person, any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any settlement arrangement, by agreement, consent or otherwise, with any Governmental Authority, foreign or domestic. For the avoidance of doubt, FATCA shall constitute an “Applicable Law” for all purposes of this Agreement.
“Assignment and Acceptance Agreement” means an assignment and acceptance agreement entered into by a Lender, an Eligible Assignee and the Administrative Agent, and, if required, the Borrower, pursuant to which such Eligible Assignee may become a party to this Agreement, in substantially the form of Exhibit C hereto.
“Assignment of Proceeds Receivables” means a Receivable owing from a distributor that is to be repaid from the Proceeds of a commercial loan evidenced by an equipment note and the related security agreement that grants a security interest in the related equipment, including, after the applicable addition date, substitute loans.
“Assumption Agreement” has the meaning set forth in Section 12.03(h).
“Attorney Costs” means and includes all fees, costs, expenses and disbursements of any law firm or other external counsel.
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if such Benchmark is a term rate or is based on a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (y) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark pursuant to this Agreement, in each case, as of such date and not including, for the avoidance of doubt, any tenor of such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 4.05(d).
“Bankruptcy Code” means the United States Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et seq.), as amended from time to time.
“Base Rate” means, for any day, a fluctuating per annum rate of interest equal to the highest of (i) the Overnight Bank Funding Rate, plus 0.50%, (ii) the Prime Rate, and (iii) Daily Simple SOFR, plus 1.00%, so long as Daily Simple SOFR is offered, ascertainable and not unlawful; provided, however, if the Base Rate as determined above would be less than zero (0.00), then such rate shall be deemed to be zero (0.00). Any change in the Base Rate (or any component thereof) shall take effect at the opening of business on the day such change occurs.
“Base Rate Loan” means, at any time, any Loan or any related Capital (or portion thereof) on which Interest accrues by reference to the Base Rate.
“Benchmark” means, initially, Daily 1M SOFR and the Term SOFR Rate; provided that if a Benchmark Transition Event has occurred with respect to Daily 1M SOFR, the Term SOFR Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 4.05.
“Benchmark Replacement” means, with respect to any Benchmark Transition Event, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date: (1) the sum of: (A) Daily Simple SOFR and (B) the SOFR Adjustment; and (2) the sum of (A) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower, giving due consideration to (x) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (y) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated syndicated credit facilities at such time and (B) the related Benchmark Replacement Adjustment; provided, that if the Benchmark Replacement as determined pursuant to clause (2) above would be less than 0.00%, the Benchmark Replacement will be deemed to be 0.00% for the purposes of this Agreement and the other Transaction Documents; and provided, further, that any
Benchmark Replacement shall be administratively feasible as determined by the Administrative Agent in its sole discretion.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower, giving due consideration to (A) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (B) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities at such time.
“Benchmark Replacement Date” means a date and time determined by the Administrative Agent, which date shall be no later than the earliest to occur of the following events with respect to the then-current Benchmark: (1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event”, the later of (A) the date of the public statement or publication of information referenced therein and (B) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or (2) in the case of clause (3) of the definition of “Benchmark Transition Event”, the date determined by the Administrative Agent, which date shall promptly follow the date of the public statement or publication of information referenced therein. For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means, the occurrence of one or more of the following events, with respect to the then-current Benchmark: (1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); (2) a public statement or publication of information by a Governmental Authority having jurisdiction over the Administrative Agent, the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication,
there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or (3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) or a Governmental Authority having jurisdiction over the Administrative Agent announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative. For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Transaction Document in accordance with Section 4.05 and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Transaction Document in accordance with Section 4.05.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Borrower” has the meaning specified in the preamble to this Agreement.
“Borrower Indemnified Amounts” has the meaning set forth in Section 11.01(a).
“Borrower Indemnified Party” has the meaning set forth in Section 11.01(a).
“Borrower Obligations” means all present and future indebtedness, reimbursement obligations, and other liabilities and obligations (howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, or due or to become due) of the Borrower to any Credit Party, Borrower Indemnified Party and/or any Affected Person, arising under or in connection with this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby, and shall include, without limitation, all Capital and Interest on the Loans, all Fees and all other amounts due or to become due under the Transaction Documents (whether in respect of fees, costs, expenses, indemnifications or otherwise), including, without limitation, interest, fees and other obligations that accrue after the commencement of any Insolvency Proceeding with respect to the Borrower (in each case whether or not allowed as a claim in such proceeding).
“Borrower-Related Party” means each of the Borrower, the Servicer, the Parent, the Originators and any other Affiliate of the Parent from time to time party to any Transaction Document.
“Borrowing Base” means, at any time of determination, the amount equal to the lesser of (a) the Facility Limit and (b) the amount equal to (i) the Adjusted Net Receivables Pool Balance at such time, minus (ii) the Total Reserves at such time.
“Borrowing Base Deficit” means, at any time of determination, the amount, if any, by which (a) the Aggregate Capital at such time, exceeds (b) the Borrowing Base at such time.
“Borrowing Tranche” means specified portions of Advances outstanding as follows: (a) any Advances (or portions of principal thereof) for which the applicable Interest Rate is determined by reference to the Term SOFR Rate and which have the same Interest Period shall constitute one Borrowing Tranche, (b) all Advances (or portions of principal thereof) for which the applicable Interest Rate is determined by reference to Daily 1M SOFR shall constitute one Borrowing Tranche, and (c) all Advances (or portions of principal thereof) for which the applicable Interest Rate is determined by reference to the Base Rate shall constitute one Borrowing Tranche.
“Business Day” means any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed, or are in fact closed, for business in Pittsburgh, Pennsylvania (or, if otherwise, the Lending Office of the Administrative Agent); provided that, when used in connection with an amount that bears interest at a rate based on SOFR or any direct or indirect calculation or determination of SOFR, the term “Business Day” means any such day that is also a U.S. Government Securities Business Day.
“CAD VaR Percentage” means 6.00%, or such other percentage designated as such by the Administrative Agent from time to time upon ten (10) Business Days’ prior written notice to the Borrower.
“CAD Volatility Reserve Percentage” means, at any time of determination, the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed by dividing (a) the product of (i) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Pool Receivables denominated in Canadian Dollars at such time, times (ii) the CAD VaR Percentage at such time, by (b) the Net Receivables Pool Balance at such time.
“Canadian Dollars” or “CAD” means the lawful currency of Canada.
“Capital” means, with respect to any Lender, the aggregate amounts paid to, or on behalf of, the Borrower in connection with all Loans made by such Lender pursuant to Article II, as reduced from time to time by Collections distributed and applied on account of such Capital pursuant to Section 3.01; provided, that if such Capital shall have been reduced by any distribution and thereafter all or a portion of such distribution is rescinded or must otherwise be returned for any reason, such Capital shall be increased by the amount of such rescinded or returned distribution as though it had not been made.
“Capital Stock” means, with respect to any Person, any and all common shares, preferred shares, interests, participations, rights in or other equivalents (however designated) of such Person’s capital stock, partnership interests, limited liability company interests, membership interests or other equivalent interests and any rights (other than debt securities convertible into or exchangeable for capital stock), warrants or options exchangeable for or convertible into such capital stock or other equity interests.
“Change in Control” means Alliance ceases to own, directly, 100% of the issued and outstanding Capital Stock of the Borrower free and clear of all Adverse Claims.
“Closing Date” means June 8, 2018.
“Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.
“Coinmach DPD Test” means, at any time of determination, less than or equal to 15.00% of all Eligible Receivables then in the Receivables Pool, the Obligor of which is Coinmach Corporation, are Receivables for which any payment, or part thereof, remains unpaid for more than 121 days from the original due date for such payment.
“Collateral” has the meaning set forth in Section 4.06.
“Collection Account” means each account listed on Schedule II to this Agreement (as such schedule may be modified from time to time in connection with the closing or opening of any Collection Account in accordance with the terms hereof) (in each case, in the name of the Borrower) and maintained at a bank or other financial institution acting as a Collection Account Bank pursuant to an Account Control Agreement for the purpose of receiving Collections.
“Collection Account Bank” means any of the banks or other financial institutions holding one or more Collection Accounts.
“Collections” means, with respect to any Pool Receivable: (a) all funds that are received by any Originator, the Borrower, the Servicer or any other Person on their behalf in payment of any amounts owed in respect of such Pool Receivable (including purchase price, service charges, finance charges, interest, fees and all other charges), or applied to amounts owed in respect of such Pool Receivable (including insurance payments, proceeds of drawings under supporting letters of credit and net proceeds of the sale or other disposition of repossessed goods or other collateral or property of the related Obligor or any other Person directly or indirectly liable for the payment of such Pool Receivable and available to be applied thereon), (b) all Deemed Collections, (c) all proceeds of all Related Security with respect to such Pool Receivable, (d) all amounts paid by or on behalf of a Credit Insurer under any Credit Insurance Policy or in respect of any claim thereunder, and (e) all other proceeds of such Pool Receivable.
“Commitment” means, with respect to any Lender, the maximum aggregate amount of Capital which such Person is obligated to lend or pay hereunder on account of all Loans, on a combined basis, as set forth on Schedule I or in the Assumption Agreement or other agreement pursuant to which it became a Lender, as such amount may be modified in connection with any subsequent assignment pursuant to Section 12.03 or in connection with a reduction in the Facility Limit pursuant to Section 2.02(e). If the context so requires, “Commitment” also refers to a Lender’s obligation to make Loans hereunder in accordance with this Agreement.
“Concentration Percentage” means (a) except as provided in clause (b) below, (i) for any Group A Obligor, 20.00%, (ii) for any Group B Obligor, 15.00%, (iii) for any Group C Obligor, 10.00%, (iv) for the two (2) largest Group D Obligors, 6.00% and (v) for the third (3rd) largest Group D Obligor, 4.00%, and (b) for Coinmach Corporation (x) on any day the Coinmach DPD Test is satisfied, 16.00%, and (y) on any other day, 15.00%.
“Concentration Reserve Percentage” means, at any time of determination, the largest of: (a) the sum of the four (4) largest Obligor Percentages of the Group D Obligors, (b) the sum of the two (2) largest Obligor Percentages of the Group C Obligors and (c) the largest Obligor Percentage of the Group B Obligors; provided that, notwithstanding anything contained herein to the contrary and solely for the purpose of calculating the Concentration Reserve Percentage, Coinmach Corporation shall be deemed a (x) on any day the Coinmach DPD Test is satisfied, Group C Obligor, and (y) on any other day, Group D Obligor; provided, further, that, for purposes of determining the Concentration Reserve Percentage, with respect to any Eligible Receivable that is an Insured Receivable, the “Obligor” thereof (including for purposes of determining such Obligor’s Obligor Percentage and status as a Group A Obligor, Group B Obligor, Group C Obligor or Group D Obligor) shall be deemed to be the related Eligible Credit Insurance Provider.
“Conforming Changes” means, with respect to Daily 1M SOFR, the Term SOFR Rate or any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate”, the definition of “Business Day”, the definition of “Interest Period”, timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of Daily 1M SOFR, the Term SOFR Rate or such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of Daily 1M SOFR, the Term SOFR Rate or the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Transaction Documents).
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Contract” means, with respect to any Receivable, any and all contracts, instruments, agreements, leases, invoices, notes or other writings pursuant to which such Receivable arises or that evidence such Receivable or under which an Obligor becomes or is obligated to make payment in respect of such Receivable.
“Control Investment Affiliate” means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. For the avoidance of doubt, any investment fund managed by the Sponsor will constitute a Control Investment Affiliate of the Sponsor.
“Covered Entity” means (a) each of Borrower, the Servicer, each Originator, the Parent and each of Parent’s Subsidiaries and (b) each Person that, directly or indirectly, is in control of a Person described in clause (a) above. For purposes of this definition, control of a Person shall
mean the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.
“Credit and Collection Policy” means, as the context may require, those receivables credit and collection policies and practices of the Originators in effect on the Closing Date and described in Exhibit E, as modified in compliance with this Agreement.
“Credit Extension” means the making of any Loan.
“Credit Insurance Policy” means a credit insurance policy naming the Borrower as insured, which policy insures the payment of Pool Receivables owing by one or more Obligors.
“Credit Insurer” means each insurance company that provides a Credit Insurance Policy to the Borrower.
“Credit Party” means each Lender and the Administrative Agent.
“Credit Risk Retention Rules” means (i) Section 15G of the Securities Exchange Act of 1934, as amended, and (ii) Articles 404-410 of the EU Capital Requirements Regulation (including Article 122a of the Banking Consolidation Directive), in each case, together with the rules and regulations thereunder.
“Daily 1M SOFR” means, for any day, the rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) (a) the Term SOFR Reference Rate for such day for a one (1) month period, as published by the Term SOFR Administrator, by (b) a number equal to 1.00 minus the SOFR Reserve Percentage; provided that, if Daily 1M SOFR, determined as provided above, would be less than the SOFR Floor, then Daily 1M SOFR shall be deemed to be the SOFR Floor. Such rate of interest will be adjusted automatically as of each Business Day based on changes in Daily 1M SOFR without notice to the Borrower.
“Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), the interest rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) (A) SOFR for the day (the “SOFR Determination Date”) that is two (2) Business Days prior to (i) such SOFR Rate Day if such SOFR Rate Day is a Business Day or (ii) the Business Day immediately preceding such SOFR Rate Day if such SOFR Rate Day is not a Business Day, by (B) a number equal to 1.00 minus the SOFR Reserve Percentage, in each case, as such SOFR is published by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate) on the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source identified by the Federal Reserve Bank of New York or its successor administrator for the secured overnight financing rate from time to time. If Daily Simple SOFR as determined above would be less than the SOFR Floor, then Daily Simple SOFR shall be deemed to be the SOFR Floor. If SOFR for any SOFR Determination Date has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (Pittsburgh, Pennsylvania time) on the second (2nd)
Business Day immediately following such SOFR Determination Date, then SOFR for such SOFR Determination Date will be SOFR for the first (1st) Business Day preceding such SOFR Determination Date for which SOFR was published in accordance with the definition of “SOFR”; provided that SOFR determined pursuant to this sentence shall be used for purposes of calculating Daily Simple SOFR for no more than three (3) consecutive SOFR Rate Days. If and when Daily Simple SOFR as determined above changes, any applicable rate of interest based on Daily Simple SOFR will change automatically without notice to the Borrower, effective on the date of any such change.
“Days’ Sales Outstanding” means, for any Fiscal Month, an amount computed as of the last day of such Fiscal Month equal to: (a) the average of the U.S. Dollar Equivalent of the Outstanding Balance of all Pool Receivables as of the last day of each of the three (3) most recent Fiscal Months ended on the last day of such Fiscal Month, divided by (b) (i) the U.S. Dollar Equivalent of the aggregate initial Outstanding Balance of all Pool Receivables generated by the Originators during the three (3) most recent Fiscal Months ended on the last day of such Fiscal Month, divided by (ii) 90.
“Debt” means, as to any Person at any time of determination, any and all indebtedness, obligations or liabilities (whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, or joint or several) of such Person for or in respect of: (i) borrowed money, (ii) amounts raised under or liabilities in respect of any bonds, debentures, notes, note purchase, acceptance or credit facility, or other similar instruments or facilities, (iii) reimbursement obligations (contingent or otherwise) under any letter of credit, (iv) any other transaction (including production payments (excluding royalties), installment purchase agreements, forward sale or purchase agreements, capitalized leases and conditional sales agreements) having the commercial effect of a borrowing of money entered into by such Person to finance its operations or capital requirements (but not including accounts payable incurred in the ordinary course of such Person’s business payable on terms customary in the trade), (v) all net obligations of such Person in respect of interest rate or currency hedges or (vi) any Guaranty of any such Debt.
“Deemed Collections” has the meaning set forth in Section 3.01(d).
“Default Ratio” means the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each Fiscal Month by dividing: (a) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Pool Receivables that became Defaulted Receivables during such Fiscal Month, by (b) the U.S. Dollar Equivalent of the aggregate initial Outstanding Balance of all Pool Receivables generated by the Originators during the Fiscal Month that is eight Fiscal Months prior to such Fiscal Month.
“Defaulted Receivable” means a Receivable:
(a) as to which any payment, or part thereof, remains unpaid for more than 121 days from the original due date for such payment;
(b) without duplication, as to which any payment, or part thereof, remains unpaid for less than or equal to 121 days from the original due date for such payment and as to which an Insolvency Proceeding shall have occurred with respect to any Obligor
thereof unless the Lenders agree in writing to exclude such Receivable from being a Defaulted Receivable; or
(c) without duplication, as to which any payment, or part thereof, remains unpaid for less than or equal to 121 days from the original due date for such payment and that, consistent with the Credit and Collection Policy, has been written off, as charged-off, the applicable Originator’s or the Borrower’s books as uncollectible;
provided, however, that in each case above such amount shall be calculated without giving effect to any netting of credits that have not been matched to a particular Receivable for the purposes of aged trial balance reporting.
“Delinquency Ratio” means the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each Fiscal Month by dividing: (a) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Pool Receivables that were Delinquent Receivables on such day, by (b) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Pool Receivables on such day.
“Delinquent Receivable” means a Receivable as to which any payment, or part thereof, remains unpaid for 121 days or more from the original due date for such payment; provided, however, that such amount shall be calculated without giving effect to any netting of credits that have not been matched to a particular Receivable for the purposes of aged trial balance reporting.
“Dilution Horizon Ratio” means, for any Fiscal Month, the ratio (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of such Fiscal Month by dividing: (a) the U.S. Dollar Equivalent of the aggregate initial Outstanding Balance of all Pool Receivables generated by the Originators during the most recent Fiscal Month, by (b) the Net Receivables Pool Balance as of the last day of such Fiscal Month. Within thirty (30) days of the completion and the receipt by the Administrative Agent of the results of any annual audit or field exam of the Receivables and the servicing and origination practices of the Servicer and the Originators, the numerator of the Dilution Horizon Ratio may be adjusted by the Administrative Agent upon not less than five (5) Business Days’ notice to the Borrower to reflect such number of Fiscal Months as the Administrative Agent reasonably believes best reflects the business practices of the Servicer and the Originators and the U.S. Dollar Equivalent of the actual amount of dilution and Deemed Collections that occur with respect to Pool Receivables based on the weighted average dilution lag calculation completed as part of such audit or field exam.
“Dilution Ratio” means the ratio (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward), computed as of the last day of each Fiscal Month by dividing: (a) the U.S. Dollar Equivalent of the aggregate amount of Deemed Collections (excluding amounts that were written off as charged-off) during such Fiscal Month, by (b) the U.S. Dollar Equivalent of the aggregate initial Outstanding Balance of all Pool Receivables generated by the Originators during the Fiscal Month that is two (2) months prior to such Fiscal Month.
“Dilution Reserve Percentage” means, at any time of determination, the product (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward)
of (a) the Dilution Horizon Ratio, multiplied by (b) the sum of (i) the product of (A) 2.00, multiplied by (B) the average of the Dilution Ratios for the twelve (12) most recent Fiscal Months plus (ii) the Dilution Volatility Component.
“Dilution Volatility Component” means, for any Fiscal Month, the product (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) of:
(a) the positive difference, if any, between: (i) the highest two-month rolling average Dilution Ratio during the twelve (12) most recent Fiscal Months and (ii) the average of the Dilution Ratios for such twelve (12) Fiscal Months, multiplied by
(b) the quotient of (i) the highest two-month rolling average Dilution Ratio during the twelve (12) most recent Fiscal Months divided by (ii) the average of the Dilution Ratios for such twelve (12) Fiscal Months.
“Dollars” and “$” each mean the lawful currency of the United States of America.
“Domestic Person” means any Person that is organized under the laws of the United States of America or any State thereof, or has a place of business located in the United States of America or otherwise is subject to the jurisdiction of one or more civil courts of the United States of America (other than by reason of contractual submission to such jurisdiction).
“Eighth Amendment Effective Date” means August 19, 2024.
“Eligible Assignee” means (i) any Lender or any of its Affiliates, (ii) any Person managed by a Lender or any of its Affiliates and (iii) any other financial or other institution.
“Eligible Credit Insurance” means a Credit Insurance Policy issued by an Eligible Credit Insurance Provider, which policy (a) has been approved in writing by the Administrative Agent in its sole discretion, (b) is in full force and effect, (c) under which the Administrative Agent is an additional insured, loss-payee or bank-beneficiary (as the case may be) entitled to make, and receive payment of, insurance claims thereunder, (d) contains terms and endorsements permitting the transactions contemplated by the Transaction Documents (including with respect to the Pool Receivables insured thereby and the Borrower-Related Parties and the Credit Parties), and (e) with respect to which, all due and payable premiums have been paid in full. If the Credit Insurer of such a Credit Insurance Policy ceases to be an Eligible Credit Insurance Provider, such policy shall cease to constitute Eligible Credit Insurance. No Eligible Credit Insurance is in effect as of the First Omnibus Amendment Effective Date.
“Eligible Credit Insurance Provider” means an insurance company in the business of issuing commercial credit insurance (a) which company is not an Affiliate of any Borrower-Related Party and (b) with respect to which, no credit rating assigned to it by any of Moody’s, Standard Poor’s or A.M. Best Company, Inc. has been reduced by two or more ratings “notches” since the time any Credit Insurance Policy written by such Credit Insurer became Eligible Credit Insurance hereunder; provided that, with respect to any Credit Insurance Policy issued by multiple insurance providers, the Administrative Agent may elect (in its sole discretion) to treat such syndicate as a single insurer and apply a weighted average credit rating.
“Eligible Receivable” means, at any time of determination, a Pool Receivable:
(a) the Obligor of which is: (i) not a Sanctioned Person; (ii) not subject to any Insolvency Proceeding; (iii) not an Affiliate of the Borrower, the Servicer, the Parent or any Originator; (iv) not the Obligor with respect to Delinquent Receivables with a U.S. Dollar Equivalent aggregate Outstanding Balance exceeding 50% of the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all such Obligor’s Pool Receivables; (v) not a natural person; and (vi) not a material supplier to any Originator or an Affiliate of a material supplier;
(b) that is denominated and payable only in Dollars or Canadian Dollars, and the Obligor with respect to which has been instructed to remit Collections in respect thereof directly to a Lock-Box or Collection Account in the United States of America;
(c) that does not have a due date which is 241 days or more after the original invoice date of such Receivable;
(d) that (i) arises under a duly authorized Contract on an arm’s-length basis for the sale of goods or services in the ordinary course of the applicable Originator’s business and (ii) represents the legal, valid and binding bona fide obligation of the related Obligor to pay such invoiced or billed amount of such Receivable;
(e) that arises under a duly authorized Contract that (i) is in full force and effect, (ii) is governed by the law of the United States of America or of any State thereof, (iii) is a legal, valid and binding obligation of the related Obligor, enforceable against such Obligor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity regardless of whether enforceability is considered in a proceeding in equity or at law, and (iv) the payments thereunder are free and clear of any withholding Taxes;
(f) that has been transferred by an Originator to the Borrower pursuant to the Sale and Contribution Agreement with respect to which transfer all conditions precedent under the Sale and Contribution Agreement have been met;
(g) that, together with the Contract related thereto, was created without any fraud or misrepresentation and was created in accordance with, and conforms in all material respects with all Applicable Laws (including any applicable laws relating to usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy and whether Federal, state, local or foreign);
(h) with respect to which all consents, licenses, approvals or authorizations of, or registrations or declarations with or notices to, any Governmental Authority or other Person required to be obtained, effected or given by an Originator in connection with the creation of such Receivable, the execution, delivery and performance by such Originator of the related Contract or the assignment thereof under the Sale and Contribution Agreement have been duly obtained, effected or given and are in full force and effect;
(i) that is not subject to any existing dispute, right of rescission, set-off, counterclaim, any other defense against the applicable Originator (or any assignee of such Originator) or Adverse Claim, and the Obligor of which holds no right as against the applicable Originator to cause such Originator to repurchase the goods or merchandise, the sale of which shall have given rise to such Receivable;
(j) that satisfies in all material respects all applicable requirements of the Credit and Collection Policy as in effect on its date of origination;
(k) that, together with the Contract related thereto, has not been compromised, adjusted, satisfied, subordinated, rescinded, impaired, modified, waived or restructured since its creation, except as permitted pursuant to Section 8.02 of this Agreement;
(l) in which the Borrower owns good and marketable title, free and clear of any Adverse Claims, and that is freely assignable (including either without any consent of the related Obligor or any Governmental Authority or such consent has been obtained), the payments thereon are free and clear of any, or increased to account for any applicable, withholding Taxes, and arises under a Contract that does not require the Obligor of such Contract or any other Person to consent to the granting of a security interest in such Contract;
(m) for which the Administrative Agent (on behalf of the Secured Parties) shall have a valid and enforceable first priority perfected security interest therein and in the Related Security and Collections with respect thereto, in each case free and clear of any Adverse Claim;
(n) that (x) constitutes an “account” or “general intangible” (as defined in the UCC), (y) is not evidenced by instruments or chattel paper and (z) does not constitute, or arise from the sale of, as-extracted collateral (as defined in the UCC);
(o) that is neither a Defaulted Receivable nor a Delinquent Receivable;
(p) for which no Originator, the Borrower, the Parent or the Servicer has established any offset or netting arrangements (including customer deposits and advance payments (including payments relating to unearned revenues)) with the related Obligor in connection with the ordinary course of payment of such Receivable;
(q) that represents amounts earned by the Originator and payable by the Obligor that are not subject to the performance of additional services by the Originator thereof or by the Borrower and the related goods or merchandise shall have been shipped and/or services performed; provided, that if such Receivable is subject to the performance of additional services, only the portion of such Receivable attributable to such additional services shall be ineligible;
(r) which (i) does not arise from a sale of accounts made as part of a sale of a business or constitute an assignment for the purpose of collection only, (ii) is not a transfer of a single account made in whole or partial satisfaction of a preexisting indebtedness or an assignment of a right to payment under a contract to an assignee that is also obligated
to perform under the contract and (iii) is not a transfer of an interest in or an assignment of a claim under a policy of insurance;
(s) which does not relate to the sale of any consigned goods or finished goods which have incorporated any consigned goods into such finished goods;
(t) for which neither the related Originator nor any Affiliate thereof is holding any deposits received by or on behalf of the related Obligor; provided that only the portion of such Pool Receivable in an amount equal to such deposits shall be ineligible;
(u) the Obligor of which has been billed or invoiced for the related goods or merchandise or services;
(v) that represents amounts the related Originator has recognized as revenue on its financial books and records under GAAP; and
(w) all written and electronic information in respect of such Receivable set forth in the Information Package or Interim Report is true and correct in all material respects and such Receivable and all accompanying documents are complete and authentic and all signatures thereon are genuine.
“Embargoed Property” means any property: (a) owned, directly or indirectly, by a Sanctioned Person; (b) due to or from a Sanctioned Person; (c) in which a Sanctioned Person otherwise holds any interest; (d) located in a Sanctioned Jurisdiction; or (e) that otherwise could cause any actual or possible violation by any Credit Party of any applicable International Trade Law if the Lenders or the Administrative Agent were to obtain an encumbrance on, lien on, pledge of, or security interest in such property, or provide services in consideration of such property.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder.
“ERISA Affiliate” means, with respect to any Person, any corporation, trade or business which together with the Person is a member of a controlled group of corporations or a controlled group of trades or businesses and would be deemed a “single employer” within the meaning of Sections 414(b), (c) or (m) of the Code or Section 4001(b) of ERISA.
“Erroneous Payment” has the meaning assigned to it in Section 10.12(a).
“Erroneous Payment Deficiency Assignment” has the meaning assigned to it in Section 10.12(d).
“Erroneous Payment Return Deficiency” has the meaning assigned to it in Section 10.12(d).
“Erroneous Payment Subrogation Rights” has the meaning assigned to it in Section 10.12(d).
“Excess Concentration” means the sum of the following amounts, without duplication:
(a) the sum of the amounts calculated for each of the Obligors equal to the excess (if any) of (x) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of the Eligible Receivables of such Obligor, over (y) the product of (A) such Obligor’s Concentration Percentage, multiplied by (B) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; provided that, for purposes of this clause (a), with respect to any Eligible Receivable that is an Insured Receivable, the “Obligor” thereof (including for purposes of determining such Obligor’s Obligor Percentage and status as a Group A Obligor, Group B Obligor, Group C Obligor or Group D Obligor) shall be deemed to be the related Eligible Credit Insurance Provider; plus
(b) the excess (if any) of (i) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables of any single Obligor (other than Coinmach Corporation), over (ii) the product of (x) 4.00%, multiplied by (y) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus
(c) the excess (if any) of (i) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables that are Floorplan Receivables, over (ii) the product of (x) 40.00%, multiplied by (y) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus
(d) the excess (if any) of (i) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables, the Obligor of which is a Governmental Authority, over (ii) the product of (x) 2.00%, multiplied by (y) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus
(e) (I) the excess (if any) of (i) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables, the original scheduled due date of which is greater than one hundred twenty one (121) days but less than or equal to one hundred fifty (150) days, over (ii) the product of (x) 20.00%, multiplied by (y) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus (II) the excess (if any) of (i) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables, the original scheduled due date of which is greater than one hundred fifty one (151) days but less than or equal to one hundred eighty (180) days, over (ii) the product of (x) 10.00%, multiplied by (y) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus (III) the excess (if any) of (i) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables, the original scheduled due date of which is greater than one hundred eighty one (181) days but less than or equal to two hundred forty (240) days, over (ii) the product of (x) 5.00%, multiplied by (y) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus
(f) the excess (if any) of (i) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables, the Obligors of which are Foreign
Obligors, over (ii) the product of (x) 30.00%, multiplied by (y) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus
(g) the excess (if any) of (i) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables, the Obligors of which are Foreign Obligors located in a country that has a long-term transfer and convertibility rating of less than “BBB-” by S&P, over (ii) the product of (x) 5.00%, multiplied by (y) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus
(h) the excess (if any) of (i) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables, the Obligors of which are Foreign Obligors located in a country that has a long-term transfer and convertibility rating of less than or equal to “A-” by S&P and greater than or equal to “BBB-” by S&P, over (ii) the product of (x) 10.00%, multiplied by (y) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus
(i) the excess (if any) of (i) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables, the original scheduled due date of which has been extended for up to ninety (90) days, over (ii) the product of (x) 10.00%, multiplied by (y) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus
(j) the excess (if any) of (i) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables that are Assignment of Proceeds Receivables, over (ii) the product of (x) 8.00%, multiplied by (y) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus
(k) the excess (if any) of (i) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables that are denominated in Canadian Dollars, over (ii) the product of (x) 2.00%, multiplied by (y) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool.
“Exchange Act” means the Securities Exchange Act of 1934, as amended or otherwise modified from time to time.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to an Affected Person or required to be withheld or deducted from a payment to an Affected Person: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes and branch profits Taxes, in each case, (i) imposed as a result of such Affected Person being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in the Loans or Commitment pursuant to a law in effect on the date on which (i) such Lender makes a
Loan or its Commitment or (ii) such Lender changes its lending office, except in each case to the extent that amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office and (c) any U.S. federal withholding Taxes imposed pursuant to FATCA.
“Exiting Lender” has the meaning set forth in Section 2.02(g).
“Facility Limit” means $120,000,000 as reduced from time to time pursuant to Section 2.02(e). References to the unused portion of the Facility Limit shall mean, at any time of determination, an amount equal to (x) the Facility Limit at such time, minus (y) the Aggregate Capital.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code, any applicable intergovernmental agreement entered into between the United States and any other Governmental Authority in connection with the implementation of the foregoing and any fiscal or regulatory legislation, rules or official practices adopted pursuant to any such intergovernmental agreement.
“Federal Funds Rate” means, with respect to any Interest Period and any Loan, a fluctuating interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or any entity succeeding to any of its principal functions.
“Fee Letter” has the meaning specified in Section 2.03(a).
“Fees” has the meaning specified in Section 2.03(a).
“Final Maturity Date” means the date that (i) is one hundred eighty (180) days following the Termination Date or (ii) such earlier date on which the Loans become due and payable pursuant to clause (y) of the last paragraph of Section 9.01.
“Final Payout Date” means the date on or after the Termination Date when (i) the Aggregate Capital and Aggregate Interest have been paid in full, (ii) all Borrower Obligations shall have been paid in full, (iii) all other amounts owing to the Credit Parties and any other Borrower Indemnified Party or Affected Person hereunder and under the other Transaction Documents have been paid in full and (iv) all accrued Servicing Fees have been paid in full.
“Financial Officer” of any Person means, the chief executive officer, the chief financial officer, the chief accounting officer, the principal accounting officer, the controller, the treasurer or the assistant treasurer of such Person.
“First Omnibus Amendment Effective Date” means June 30, 2022.
“Fiscal Month” means each calendar month.
“Floorplan Receivable” means any Receivable the Obligor of which agreed to participate in a floorplan financing program provided by the related Originator.
“Foreign Obligor” means an Obligor who is not a Domestic Person.
“Fourth Amendment Effective Date” means October 9, 2020.
“GAAP” means generally accepted accounting principles in the United States of America, consistently applied.
“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
“Group A Obligor” means any Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) with a short-term rating of at least: (a) “A-1” by S&P, or if such Obligor does not have a short-term rating from S&P, a rating of “A+” or better by S&P on such Obligor’s, its parent’s, or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P-1” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Al” or better by Moody’s on such Obligor’s, its parent’s or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities; provided, that an Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) shall be deemed to have the rating from each of S&P and Moody’s as determined in accordance with the rules of construction found in Section 1.02, and such deemed rating shall be used for the purposes of whether such rating satisfies clauses (a) and (b) above. Notwithstanding the foregoing, any Obligor that is a Subsidiary of an Obligor that satisfies the definition of “Group A Obligor” shall be deemed to be a Group A Obligor and shall be aggregated with the Obligor that satisfies such definition for the purposes of determining the “Concentration Reserve Percentage” and the “Concentration Reserve” for such Obligors, unless such deemed Obligor separately satisfies the definition of “Group A Obligor”, “Group B Obligor”, or “Group C Obligor”, in which case such Obligor shall be separately treated as a Group A Obligor, a Group B Obligor or a Group C Obligor, as the case may be, and shall be aggregated and combined for such purposes with any of its Subsidiaries that are Obligors.
“Group B Obligor” means an Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) that is not a Group A Obligor, with a short-term rating of at least: (a) “A-2” by S&P, or if such Obligor does not have a short-term rating from S&P, a rating of “BBB+” to “A” by S&P on such Obligor’s, its parent’s or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P-2” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Baal” to “A2” by Moody’s on such Obligor’s, its parent’s or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities; provided, that an Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) shall be deemed to have the rating from each of S&P and Moody’s as determined in accordance with the rules of construction found in Section 1.02, and such deemed rating shall be used for the purposes of whether such rating satisfies clauses (a) and (b) above. Notwithstanding the foregoing, any Obligor that is a Subsidiary of an Obligor that satisfies the definition of “Group B Obligor” shall be deemed to be a Group B Obligor and shall be aggregated with the Obligor that satisfies such definition for the purposes of determining the “Concentration Reserve Percentage” and the “Concentration Reserve” for such Obligors, unless such deemed Obligor separately satisfies the definition of “Group A Obligor”, “Group B Obligor”, or “Group C Obligor”, in which case such Obligor shall be separately treated as a Group A Obligor, a Group B Obligor or a Group C Obligor, as the case may be, and shall be aggregated and combined for such purposes with any of its Subsidiaries that are Obligors.
“Group C Obligor” means an Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) that is not a Group A Obligor or a Group B Obligor, with a short-term rating of at least: (a) “A-3” by S&P, or if such Obligor does not have a short-term rating from S&P, a rating of “BBB-” to “BBB” by S&P on such Obligor’s, its parent’s or it’s majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P-3” by Moody’s, or if such Obligor does not have a short-term rating from Moody’s, “Baa3” to “Baa2” by Moody’s on such Obligor’s, its parent’s or its majority owner’s (as applicable) long-term senior unsecured and uncredit-enhanced debt securities; provided, that an Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) shall be deemed to have the rating from each of S&P and Moody’s as determined in accordance with the rules of construction found in Section 1.02, and such deemed rating shall be used for the purposes of whether such rating satisfies clauses (a) and (b) above. Notwithstanding the foregoing, any Obligor that is a Subsidiary of an Obligor that satisfies the definition of “Group C Obligor” shall be deemed to be a Group C Obligor and shall be aggregated with the Obligor that satisfies such definition for the purposes of determining the “Concentration Reserve Percentage” and the “Concentration Reserve” for such Obligors, unless such deemed Obligor separately satisfies the definition of “Group A Obligor”, “Group B Obligor”, or “Group C Obligor”, in which case such Obligor shall be separately treated as a Group A Obligor, a Group B Obligor or a Group C Obligor, as the case may be, and shall be aggregated and combined for such purposes with any of its Subsidiaries that are Obligors.
“Group D Obligor” means any Obligor that is not a Group A Obligor, Group B Obligor or Group C Obligor; provided, that any Obligor (or its parent or majority owner, as applicable, if such Obligor is unrated) that is not rated by both Moody’s and S&P shall be a Group D Obligor.
“Guaranty” means, with respect to any Person, any obligation of such Person guarantying or in effect guarantying any Debt, liability or obligation of any other Person in any manner, whether directly or indirectly, including any such liability arising by virtue of partnership
agreements, including any agreement to indemnify or hold harmless any other Person, any performance bond or other suretyship arrangement and any other form of assurance against loss, except endorsement of negotiable or other instruments for deposit or collection in the ordinary course of business.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower or any of its Affiliates under any Transaction Document and (b) to the extent not otherwise described in clause (a) above, Other Taxes.
“Independent Director” has the meaning set forth in Section 7.03(c).
“Information Package” means a report, in substantially the form of Exhibit F.
“Insolvency Proceeding” means (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors or (b) any general assignment for the benefit of creditors of a Person, composition, marshaling of assets for creditors of a Person, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in each of clauses (a) and (b) undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code.
“Insured Amount” means, with respect to any Insured Receivable, the excess, if any, of (a) the Outstanding Balance of such Receivable, over (b) the total amount of deductibles and coinsurance with respect to a claim in an amount equal to the Outstanding Balance of such Insured Receivable and such other amounts as determined by the Administrative Agent (in its reasonable discretion) likely to diminish any recovery from the Eligible Credit Insurance Provider for a related claim under the related Eligible Credit Insurance (including, without limitation, fees associated with claims, any discount to present value based on the expected timing of such recovery, other “haircut” amounts based on the likelihood of recovery under the related Eligible Credit Insurance).
“Insured Receivable” means each Receivable of an Obligor for which the Outstanding Balance (when aggregated with each other Receivable owing by such Obligor that was originated prior to such Receivable) is equal to or less than the then-effective maximum amount available for payments established for such Obligor for all claims relating to such Obligor during the related policy period under and pursuant to Eligible Credit Insurance; provided that no Receivable shall constitute an Insured Receivable at any time the Credit Insurance Policy relating thereto shall cease to constitute Eligible Credit Insurance.
“Intended Tax Treatment” has the meaning set forth in Section 12.14.
“Interest” means, for each Loan for any day during any Interest Period (or portion thereof), the amount of interest accrued on the Capital of such Loan during such Interest Period (or portion thereof) in accordance with Section 2.03(b).
“Interest Period” means, with respect to each Loan or fees payable hereunder, (a) before the Termination Date: (i) initially, the period commencing on the Closing Date and ending on the last calendar day of the month in which the Closing Date occurs and (ii) thereafter, each calendar
month, and (b) on and after the Termination Date, such period (including a period of one day) as shall be selected from time to time by the Administrative Agent (with the consent or at the direction of the Majority Lenders) or, in the absence of any such selection, each period of 30 days from the last day of the preceding Interest Period.
“Interest Rate” means, subject to Sections 2.03, 4.04 and 4.05, for any day in any Interest Period for any Loan (or any Portion of Capital thereof): (a) if no Receivables Termination Event is then continuing, the sum of (i) either (x) if the Borrower has elected for such Loan (or any Portion of Capital thereof) to accrue interest by reference to the Term SOFR Rate during such Interest Period in accordance with Section 2.03, the Term SOFR Rate for such day, or (y) otherwise, Daily 1M SOFR, and (ii) the SOFR Adjustment; or (b) if a Receivables Termination Event is then continuing, the greater of (x) the sum of the Daily 1M SOFR for such day and the SOFR Adjustment, and (y) the Base Rate for such day (in either case, plus any additional margin or spread imposed pursuant to Section 3.02 or any other provision of this Agreement). For the avoidance of doubt, if any Loan is converted to, or deemed to be, a Base Rate Loan pursuant to the terms hereof, the Interest Rate for such Loan shall be the Base Rate as in effect from time to time (plus any additional margin or spread imposed pursuant to Section 3.02 or any other provision of this Agreement).
“Interim Report” means a report, in substantially the form of Exhibit I.
“International Trade Laws” means all Applicable Laws relating to economic and financial sanctions, trade embargoes, export controls, customs and anti-boycott measures.
“Investment Company Act” means the Investment Company Act of 1940, as amended or otherwise modified from time to time.
“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
“LCR Security” means any commercial paper or security (other than equity securities issued to Alliance or any Originator that is a consolidated subsidiary of Alliance under GAAP) within the meaning of Paragraph __.32(e)(viii) of the final rules titled Liquidity Coverage Ratio: Liquidity Risk Measurement Standards, 79 Fed. Reg. 197, 61440 et seq. (October 10, 2014).
“Lenders” means each Person that is or becomes a party to this Agreement in the capacity of a “Lender”.
“Lending Office” means, as to the Administrative Agent or any Lender, the office or offices of such Person described as such in such Lender’s Administrative Questionnaire, or such other office or offices as such Person may from time to time notify the Borrower and the Administrative Agent.
“Lien” means any security interest, lien, charge, pledge, equity or encumbrance of any kind other than (i) liens for taxes not yet due and payable, (ii) mechanics’ liens, (iii) any liens that attach by operation of law, and (iv) any liens being contested by appropriate measures.
“Loan” means any loan made by a Lender pursuant to Section 2.02.
“Loan Request” means a letter in substantially the form of Exhibit A hereto executed and delivered by the Borrower to the Administrative Agent pursuant to Section 2.02(a).
“Lock-Box” means each locked postal box with respect to which a Collection Account Bank has executed an Account Control Agreement pursuant to which it has been granted exclusive access for the purpose of retrieving and processing payments made on the Receivables and which is listed on Schedule II (as such schedule may be modified from time to time in connection with the addition or removal of any Lock-Box in accordance with the terms hereof).
“Loss Horizon Ratio” means, at any time of determination, the ratio (expressed as a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each Fiscal Month by dividing:
(a) the sum of (i) the U.S. Dollar Equivalent of the aggregate initial Outstanding Balance of all Pool Receivables generated by the Originators during the nine (9) most recent Fiscal Months, plus (ii) the product of (x) 0.50, multiplied by (y) the U.S. Dollar Equivalent of the aggregate initial Outstanding Balance of all Pool Receivables generated by the Originators during the Fiscal Month that is ten (10) months prior to such Fiscal Month; by
(b) the Net Receivables Pool Balance as of such date.
“Loss Reserve Percentage” means, at any time of determination, the product (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) of (a) 2.00, multiplied by (b) the highest average of the Default Ratios for any three consecutive Fiscal Months during the twelve most recent Fiscal Months, multiplied by (c) the Loss Horizon Ratio.
“Majority Lenders” means Lenders representing more than 50% of the aggregate Commitments of all Lenders (or, if the Commitments have been terminated, Lenders representing more than 50% of the aggregate outstanding Capital held by all the Lenders).
“Management Shareholders” means the members of management of Alliance Laundry Holdings LLC or Alliance who are investors in Alliance Holding Inc.
“Material Adverse Effect” means relative to any Person (provided that if no particular Person is specified, “Material Adverse Effect” shall be deemed to be relative to the Borrower, the Servicer and the Originators, individually and in the aggregate) with respect to any event or circumstance, a material adverse effect on any of the following:
(a) the assets, operations, business or financial condition of the Borrower, the Servicer or any Originator;
(b) the ability of the Borrower, the Servicer or any Originator to perform its obligations under this Agreement or any other Transaction Document to which it is a party;
(c) the validity or enforceability of this Agreement or any other Transaction Document, or the validity, enforceability, value or collectability of any material portion of the Pool Receivables;
(d) the status, perfection, enforceability or priority of the Administrative Agent’s security interest in the Collateral; or
(e) the rights and remedies of any Credit Party under the Transaction Documents or associated with its respective interest in the Collateral.
“Minimum Dilution Reserve Percentage” means, at any time of determination, the product (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) of (a) the average of the Dilution Ratios for the twelve (12) most recent Fiscal Months, multiplied by (b) the Dilution Horizon Ratio.
“Minimum Funding Threshold” means, on any day, an amount equal to the lesser of (a) the product of (i) 50% times (ii) the Facility Limit at such time and (b) the Borrowing Base at such time.
“Monthly Settlement Date” means the fifteenth (15th) Business Day of each calendar month.
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto that is a nationally recognized statistical rating organization.
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which the Borrower, the Servicer, any Originator, the Parent or any of their respective ERISA Affiliates is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions.
“Net Receivables Pool Balance” means, at any time of determination: (a) the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool, minus (b) the Excess Concentration, minus (c) one percent (1.00%) of the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables then in the Receivables Pool.
“Obligor” means, with respect to any Receivable, the Person obligated to make payments pursuant to the Contract relating to such Receivable.
“Obligor Percentage” means, at any time of determination, for each Obligor, a fraction, expressed as a percentage, (a) the numerator of which is the U.S. Dollar Equivalent of the aggregate Outstanding Balance of the Eligible Receivables of such Obligor and its Affiliates less the amount (if any) then included in the calculation of the Excess Concentration with respect to such Obligor and its Affiliates and (b) the denominator of which is the U.S. Dollar Equivalent of the aggregate Outstanding Balance of all Eligible Receivables at such time.
“OFAC” means the U.S. Department of Treasury’s Office of Foreign Assets Control.
“Originator” and “Originators” have the meaning set forth in the Sale and Contribution Agreement, as the same may be modified from time to time by adding new Originators or removing Originators, in each case in accordance with the prior written consent of the Administrative Agent.
“Other Connection Taxes” means, with respect to any Affected Person, Taxes imposed as a result of a present or former connection between such Affected Person and the jurisdiction imposing such Tax (other than connections arising from such Affected Person having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Transaction Document, or sold or assigned an interest in any Loan or Transaction Document).
“Other Taxes” means any and all present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies or fees arising from any payment made hereunder or from the execution, delivery, filing, recording or enforcement of, or otherwise in respect of, this Agreement, the other Transaction Documents and the other documents or agreements to be delivered hereunder or thereunder.
“Outstanding Balance” means, at any time of determination, with respect to any Receivable, the then outstanding principal balance thereof.
“Overnight Bank Funding Rate” means, for any day, the rate comprised of funding costs for both overnight federal funds and overnight eurocurrency borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the Federal Reserve Bank of New York (“NYFRB”), as set forth on its public website from time to time, and as published on the next succeeding Business Day as the overnight bank funding rate by the NYFRB (or by such other recognized electronic source (such as Bloomberg) selected by the Administrative Agent for the purpose of displaying such rate); provided, that if such day is not a Business Day, the Overnight Bank Funding Rate for such day shall be such rate on the immediately preceding Business Day; provided, further, that if such rate shall at any time, for any reason, no longer exist, a comparable replacement rate determined by the Administrative Agent with the Servicer’s consent (such consent not to be unreasonably withheld; provided that the Servicer’s consent shall not be required if the replacement rate is the Federal Funds Rate) (which determination shall be conclusive absent manifest error). If the Overnight Bank Funding Rate determined as above would be less than zero, then such rate shall be deemed to be zero. The rate of interest charged shall be adjusted as of each Business Day based on changes in the Overnight Bank Funding Rate without notice to the Borrower.
“Parent” means ALH Holding Inc., a Delaware corporation.
“Parent Group” has the meaning set forth in Section 7.03(c).
“Participant” has the meaning set forth in Section 12.03(d).
“Participant Register” has the meaning set forth in Section 12.03(e).
“PATRIOT Act” has the meaning set forth in Section 12.15.
“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.
“Pension Plan” means a pension plan as defined in Section 3(2) of ERISA that is subject to Title IV of ERISA or Section 412 of the Code with respect to which any Originator, the Borrower, the Servicer, Parent or any ERISA Affiliate thereof may have any liability, contingent or otherwise.
“Percentage” means, at any time of determination, with respect to any Lender, a fraction (expressed as a percentage), (a) the numerator of which is (i) prior to the termination of all Commitments hereunder, its Commitment at such time or (ii) if all Commitments hereunder have been terminated, the aggregate outstanding Capital of all Loans being funded by such Lender at such time and (b) the denominator of which is (i) prior to the termination of all Commitments hereunder, the aggregate Commitments of all Lenders at such time or (ii) if all Commitments hereunder have been terminated, the aggregate outstanding Capital of all Loans at such time.
“Permitted Investors” means the collective reference to (a) the Sponsor, (b) its Control Investment Affiliates, (c) the Management Shareholders, (d) the Sponsor Associates and (e) any “group” (within the meaning of Section 13(d) or Section 14(d) of the Exchange Act or any successor provision) of which any of the foregoing are members; provided that in the case of such “group” and without giving effect to the existence of such “group” or any other “group”, such Persons specified in clauses (a), (b), (c) and (d) above, collectively, have beneficial ownership, directly or indirectly, of more than 50% of the total voting power of the voting securities of Alliance Laundry Holdings LLC or any of its direct or indirect parent entities held by such “group”; provided, further, that in no event shall Persons specified in clauses (a), (b) and (c) above, collectively, own a lesser percentage of voting securities of Alliance Laundry Holdings LLC than any other Person or group referred to in clauses (d) or (e).
“Person” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or any Governmental Authority.
“PINACLE” means PNC’s PINACLE® credit management service and any and all services and systems provided or used in connection therewith, and any similar or replacement electronic credit administration services implemented by PNC.
“PINACLE Agreement” means a separate written agreement between Borrower and PNC regarding PINACLE, and any amendments, modifications or replacements thereof.
“PNC” has the meaning set forth in the preamble to this Agreement.
“Pool Receivable” means a Receivable in the Receivables Pool.
“Proceeds” has the meaning given in Section 9-102(a)(64) of the UCC and, in any event, shall include (i) any and all accounts, chattel paper, instruments, cash or other proceeds payable to the Borrower from time to time in respect of the Collateral, (ii) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Borrower from time to time with respect to any of the Collateral, (iii) any and all payments (in any form whatsoever) made or due and payable to the Borrower from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral above by any Governmental
Authority (or any Person acting under color of Governmental Authority), and (iv) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.
“Portion of Capital” means, with respect to any Lender and its related Capital, the portion of such Capital being funded or maintained by such Lender by reference to a particular interest rate basis.
“Rapid Amortization Event” means the occurrence, as and when declared by the Administrative Agent by written notice to the Borrower, of any one of the following events or conditions and the continuation of such condition beyond any applicable grace and/or cure period:
(a) a Material Adverse Effect shall occur with respect to the Borrower;
(b) the rolling three (3) month average of the Default Ratio exceeds 4.00%;
(c) the rolling three (3) month average of the Delinquency Ratio exceeds 5.50%;
(d) the rolling three (3) month average of the Dilution Ratio exceeds 9.0%; or
(e) the Days’ Sales Outstanding exceeds one hundred twenty (120) days.
For the avoidance of doubt, any Rapid Amortization Event that occurs shall be deemed to be continuing at all times thereafter unless and until waived in accordance with Section 12.01.
“Receivable” means any right to payment of a monetary obligation, whether or not earned by performance, owed to any Originator or the Borrower (as assignee of an Originator), whether constituting an account, chattel paper, payment intangible, instrument or general intangible, in each instance arising in connection with the sale of goods that have been or are to be sold or for services rendered or to be rendered, and includes, without limitation, the obligation to pay any service charges, finance charges, interest, fees and other charges with respect thereto. Any such right to payment arising from any one transaction, including, without limitation, any such right to payment represented by an individual invoice or agreement, shall constitute a Receivable separate from a Receivable consisting of any such right to payment arising from any other transaction.
“Receivables Pool” means, at any time of determination, all of the then outstanding Receivables transferred (or purported to be transferred) to the Borrower pursuant to the Sale and Contribution Agreement prior to the Termination Date.
“Receivables Termination Event” has the meaning specified in Section 9.01. For the avoidance of doubt, any Receivables Termination Event that occurs shall be deemed to be continuing at all times thereafter unless and until waived in accordance with Section 12.01.
“Reduction Notice” means a letter in substantially the form of Exhibit B hereto delivered by the Borrower to the Administrative Agent pursuant to Section 2.02(d).
“Register” has the meaning set forth in Section 12.03(b).
“Regulatory Change” means, as to each Affected Person, any change, or any generally accepted change in the interpretation or application, occurring after the Closing Date or, if later, in the case of a Participant, any change occurring after the date on which its participation became effective, or in the case of an Affected Person, any change occurring after the date it became such an Affected Person, in any (or the adoption after such date of any new):
(a) United States federal or state law or foreign law applicable to such Affected Person; or
(b) regulation, interpretation, directive, guideline or request (whether or not having the force of law) applicable to such Affected Person of any court or other judicial authority or any Governmental Authority charged with the interpretation or administration of any law referred to in clause (a) or of any fiscal, monetary, banking or other Governmental Authority or central bank having jurisdiction over such Affected Person or charged with the administration, interpretation or application of any such regulation, interpretation, directive, guideline or request. For the avoidance of doubt, any interpretation of Accounting Research Bulletin No. 51 (or any revision or amendment to any existing interpretation thereof) by the Financial Accounting Standards Board shall constitute a Regulatory Change herein.
For the avoidance of doubt and notwithstanding anything to the contrary contained herein, (w) the final rule titled Risk-Based Capital Guidelines; Capital Adequacy Guidelines; Capital Maintenance: Regulatory Capital; Impact of Modifications to Generally Accepted Accounting Principles; Consolidation of Asset-Backed Commercial Paper Programs; and Other Related Issues, adopted by the United States bank regulatory agencies on December 15, 2009, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Regulatory Change” regardless of the date enacted, adopted or issued.
“Related Rights” has the meaning set forth in Section 1.1 of the Sale and Contribution Agreement.
“Related Security” means, with respect to any Receivable:
(a) all of the Borrower’s and each Originator’s interest in any goods (including Returned Goods), and documentation of title evidencing the shipment or storage of any goods (including Returned Goods), the sale of which gave rise to such Receivable;
(b) all instruments and chattel paper that may evidence such Receivable;
(c) all other security interests or liens and property subject thereto from time to time purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all UCC financing statements or similar filings relating thereto;
(d) all of the Borrower’s and each Originator’s rights, interests and claims under the related Contracts and all guaranties, indemnities, insurance (including any Credit Insurance Policy) and other agreements (including the related Contract) or arrangements of whatever character from time to time supporting or securing payment of such Receivable or otherwise relating to such Receivable, whether pursuant to the Contract related to such Receivable or otherwise;
(e) all books and records of the Borrower and each Originator to the extent related to any of the foregoing, and all rights, remedies, powers, privileges, title and interest (but not obligations) in and to each Lock-Box and all Collection Accounts, into which any Collections or other proceeds with respect to such Receivables may be deposited, and any related investment property acquired with any such Collections or other proceeds (as such term is defined in the applicable UCC);
(f) all of the Borrower’s rights, interests and claims under the Sale and Contribution Agreement and the other Transaction Documents; and
(g) all Collections and other proceeds (as defined in the UCC) of any of the foregoing.
“Release” has the meaning set forth in Section 3.01(a).
“Relevant Governmental Body” means the Federal Reserve Board or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board or the Federal Reserve Bank of New York, or any successor thereto.
“Reportable Compliance Event” means that: (a) any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint, or similar charging instrument, arraigned, custodially detained, penalized or the subject of an assessment for a penalty, or enters into a settlement with a Governmental Authority in connection with any economic sanctions or other Anti-Terrorism Law or Anti-Corruption law, or any predicate crime to any Anti-Terrorism Law or Anti-Corruption Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations represents a violation of any Anti-Terrorism Law or Anti-Corruption Law; (b) any Covered Entity engages in a transaction that has caused or may cause the Lenders or Administrative Agent to be in violation of any Anti-Terrorism Law or Anti-Corruption Law, including a Covered Entity’s use of any proceeds of the Loans to fund any operations in, finance any investments or activities in, or, make any payments to, directly or indirectly, a Sanctioned Person or Sanctioned Jurisdiction; or (c) any Collateral becomes Embargoed Property.
“Reportable Event” means any reportable event as defined in Section 4043(c) of ERISA or the regulations issued thereunder with respect to a Pension Plan.
“Reporting Date” means, with respect to each of Parent and the Borrower:
(a) if Parent is required to report its financial statements to only the SEC, such date following the end of Parent’s annual or quarterly period as the SEC shall require for delivery of financial statements to it by Parent;
(b) if Parent is required to report its financial statements to only the Ontario Securities Commission, such date following the end of Parent’s annual or quarterly period as the Ontario Securities Commission shall require for delivery of financial statements to it by Parent;
(c) if Parent is required to report its financial statements to both the SEC and the Ontario Securities Commission, the earlier of such dates as such commission shall require for delivery of financial statements to it by Parent; or
(d) if Parent is not required to report its financial statements to either the SEC or the Ontario Securities Commission, forty-five (45) days after the end of each fiscal quarter of Parent and ninety (90) days after the end of each fiscal year of Parent.
“Representatives” has the meaning set forth in Section 12.06(c).
“Restricted Payments” has the meaning set forth in Section 7.01(s).
“Returned Goods” means all right, title and interest in and to returned, repossessed or foreclosed goods and/or merchandise the sale of which gave rise to a Receivable; provided that such goods shall no longer constitute Returned Goods after a Deemed Collection has been deposited in a Collection Account with respect to the full Outstanding Balance of the related Receivables.
“S&P” means Standard & Poor’s Rating Services, a Standard & Poor’s Financial Services LLC business, and any successor thereto that is a nationally recognized statistical rating organization.
“Sale and Contribution Agreement” means the Sale and Contribution Agreement, dated as of the Closing Date, among the Servicer, the Originators and the Borrower, as such agreement may be amended, supplemented or otherwise modified from time to time.
“Sale and Contribution Termination Event” has the meaning set forth in the Sale and Contribution Agreement.
“Sanctioned Jurisdiction” means any country, territory, or region that is the subject of sanctions administered by OFAC.
“Sanctioned Person” means (a) a Person that is the subject of sanctions administered by OFAC or the U.S. Department of State (“State”), including by virtue of being (i) named on OFAC’s list of “Specially Designated Nationals and Blocked Persons”; (ii) organized under the Applicable Laws of, ordinarily resident in, or physically located in a Sanctioned Jurisdiction; (iii) owned or controlled 50% or more in the aggregate, by one or more Persons that are the subject of sanctions administered by OFAC; (b) a Person that is the subject of sanctions maintained by the European Union (“E.U.”), including by virtue of being named on the E.U.’s “Consolidated list of persons, groups and entities subject to E.U. financial sanctions” or other, similar lists; (c) a Person that is the subject of sanctions maintained by the United Kingdom (“U.K.”), including by virtue of being named on the “Consolidated List Of Financial Sanctions Targets in the U.K.” or other, similar lists; or (d) a Person that is the subject of sanctions imposed by any Governmental Authority of a jurisdiction whose Applicable Laws apply to this Agreement.
“Scheduled Termination Date” means May 1, 2028, as such date may be extended from time to time pursuant to Section 2.02(g).
“SEC” means the U.S. Securities and Exchange Commission or any governmental agencies substituted therefor.
“Second Amendment Effective Date” means March 19, 2019.
“Secured Parties” means each Credit Party, each Borrower Indemnified Party and each Affected Person.
“Servicer” has the meaning set forth in the preamble to this Agreement.
“Servicer Indemnified Amounts” has the meaning set forth in Section 11.02(a).
“Servicer Indemnified Party” has the meaning set forth in Section 11.02(a).
“Servicing Fee” means the fee referred to in Section 8.06(a).
“Settlement Date” means with respect to any Portion of Capital for any Interest Period or any Interest or Fees, (i) so long as no Receivables Termination Event has occurred and is continuing and the Termination Date has not occurred, the Monthly Settlement Date and (ii) on and after the Termination Date or if a Receivables Termination Event has occurred and is continuing, each day selected from time to time by the Administrative Agent (with the consent or at the direction of the Majority Lenders) (it being understood that the Administrative Agent (with the consent or at the direction of the Majority Lenders) may select such Settlement Date to occur as frequently as daily), or, in the absence of such selection, the Monthly Settlement Date.
“SOFR” means, for any day, a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Adjustment” means zero (0) basis points (0.00%).
“SOFR Floor” means a rate of interest per annum equal to zero (0.00) basis points (0.00%).
“SOFR Reserve Percentage” means, for any day, the maximum effective percentage in effect on such day, if any, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including, without limitation, supplemental, marginal and emergency reserve requirements) with respect to SOFR funding.
“Solvent” means, with respect to any Person and as of any particular date, (i) the present fair market value (or present fair saleable value) of the assets of such Person is not less than the total amount required to pay the probable liabilities of such Person on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured, (ii) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business, (iii) such Person is not incurring debts or liabilities beyond its ability to pay such debts and liabilities as they mature
and (iv) such Person is not engaged in any business or transaction, and is not about to engage in any business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged.
“Specifically Reserved Dilution Amount” means the aggregate amount of Deemed Collections, dilution or similar adjustments arising out of volume rebates, terms discounts, indirect rebates, direct rebates (net of any direct rebate recovery), key promotional programs or similar arrangements which are customary for the Originator and specified in the related Contract or applicable marketing program related to the applicable Receivable and Obligor thereof that are expected by any Borrower-Related Party to be made or otherwise incurred with respect to the then outstanding Pool Receivables as such expected dilution and similar adjustments are reflected on the books and records of the Borrower-Related Parties and reserved for by the Borrower-Related Parties, as determined in consultation with the Borrower-Related Parties’ external accountants and in accordance with the customary procedures established by the Borrower-Related Parties and such accountants.
“Sponsor” means BDT Capital Partners, LLC.
“Sponsor Associates” means (a) any managing director, general partner, limited partner, director, officer or employee of the Sponsor or any Control Investment Affiliate thereof, (b) the heirs, executors, administrators, testamentary trustees, legatees or beneficiaries of any Person described in clause (a) above, and (c) any trust, the beneficiaries of which, or a corporation or partnership, the stockholders or partners of which, include only a Person described in clause (a) above, his or her spouse, parents, siblings, members of his or her immediately family (including adopted children and stepchildren) and/or direct lineal descendants.
“Spot Rate” means, on any day, (i) for the purpose of exchanging Canadian Dollars into Dollars in connection with applying funds to pay amounts owing hereunder or under any other Transaction Document, the actual rate used by the Administrative Agent’s principal foreign exchange trading office for the purchase by the Administrative Agent of Dollars with Canadian Dollars through its principal foreign exchange trading office, and (ii) for the purpose of making any calculation hereunder that does not require the actual exchange of Canadian Dollars for Dollars to make a payment of amounts owing hereunder or under any other Transaction Document, the rate at which Canadian Dollars may be exchanged into Dollars, as set forth on the applicable date of determination at approximately 11:00 a.m. on the applicable Bloomberg Key Cross-Currency Rates Page; provided, that in the event that such rate does not appear on the applicable Bloomberg Key Cross-Currency Rates Page, the “Spot Rate” with respect to Canadian Dollars on such date shall be determined by reference to such other publicly available service for displaying exchange rates as the Administrative Agent may expressly approve, in its reasonable discretion; provided, that if at the time of any determination, for any reason, no such Spot Rate is being quoted in any such approved publication, the Administrative Agent shall designate any reasonable method it deems appropriate in its commercially reasonable discretion to determine such rate.
“SRDA Trigger Date” means the date that is the thirtieth (30th) day following the date on which the Administrative Agent, in its sole discretion, has provided written notice to the Borrower
that the reported Specifically Reserved Dilution Amount may be used as reported in the definition of Adjusted Net Receivables Pool Balance.
“Structuring Agent” means PNC Capital Markets LLC, a Pennsylvania limited liability company.
“Sub-Servicer” has the meaning set forth in Section 8.01(d).
“Subsidiary” means, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock of each class or other interests having ordinary voting power (other than stock or other 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 entity are at the time owned, or management of which is otherwise controlled: (a) by such Person, (b) by one or more Subsidiaries of such Person or (c) by such Person and one or more Subsidiaries of such Person.
“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority and all interest, penalties, additions to tax and any similar liabilities with respect thereto.
“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).
“Term SOFR Rate” means, with respect to any amount for which the Term SOFR Reference Rate applies, for any day in any Interest Period, the interest rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) (A) the Term SOFR Reference Rate for a term of one month on the day (the “Term SOFR Determination Date”) that is two (2) Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator, by (B) a number equal to 1.00 minus the SOFR Reserve Percentage. If the Term SOFR Reference Rate for the applicable tenor has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (Pittsburgh, Pennsylvania time) on the Term SOFR Determination Date, then the Term SOFR Reference Rate, for purposes of clause (A) in the preceding sentence, shall be the Term SOFR Reference Rate for such tenor on the first Business Day preceding such Term SOFR Determination Date for which such Term SOFR Reference Rate for such tenor was published in accordance herewith, so long as such first preceding Business Day is not more than three (3) Business Days prior to such Term SOFR Determination Date. If the Term SOFR Rate, determined as provided above, would be less than the SOFR Floor, then the Term SOFR Rate shall be deemed to be the SOFR Floor.
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
“Termination Date” means the earliest to occur of (a) the Scheduled Termination Date, (b) the date on which the “Termination Date” is declared or deemed to have occurred under Section 9.01, (c) the date on which a Rapid Amortization Event first occurs, (d) the date selected by the Borrower on which all Commitments have been reduced to zero pursuant to Section 2.02(e) or (e)
the date on which an ALS Change of Control first occurs, unless the Majority Lenders have provided their prior written consent to such ALS Change of Control to the Administrative Agent and the Borrower.
“Third Amendment Date” means April 29, 2020.
“Total Reserves” means, at any time of determination, an amount equal to the product of (i) the sum of (a) the Yield Reserve Percentage, plus (b) the CAD Volatility Reserve Percentage, plus (c) the greater of (I) the sum of the Concentration Reserve Percentage, plus the Minimum Dilution Reserve Percentage and (II) the sum of the Loss Reserve Percentage, plus the Dilution Reserve Percentage, multiplied by (ii) the Adjusted Net Receivables Pool Balance at such time.
“Transaction Documents” means this Agreement, the Sale and Contribution Agreement, the Account Control Agreements, the Fee Letter, any Credit Insurance Policy and all other certificates, instruments, UCC financing statements, reports, notices, agreements and documents executed or delivered under or in connection with this Agreement, in each case as the same may be amended, supplemented or otherwise modified from time to time in accordance with this Agreement.
“UCC” means the Uniform Commercial Code as from time to time in effect in the applicable jurisdiction.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Unmatured Receivables Termination Event” means an event that but for notice or lapse of time or both would constitute a Receivables Termination Event.
“U.S. Dollar Equivalent” means, on any date on which a determination thereof is to be made, with respect to (a) any amount denominated in Dollars, such amount and (b) any amount denominated in Canadian Dollars, the Dollar equivalent of such amount determined by reference to the Spot Rate determined as of such determination date.
“U.S. Government Securities Business Day” means any day except for (a) a Saturday or Sunday or (b) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“U.S. Tax Compliance Certificate” has the meaning set forth in Section 4.03(f)(ii)(B)(3).
“Volcker Rule” means Section 13 of the U.S. Bank Holding Company Act of 1956, as amended, and the applicable rules and regulations thereunder.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
“Yield Reserve Percentage” means, at any time of determination, the product (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) calculated using the following formula:
1.50 x DSO x [(1.00% + BR)/365]
where:
BR = the Base Rate at such time; and
DSO = the Days’ Sales Outstanding for the most recently ended Fiscal Month.
SECTION 1.02. Other Interpretative Matters. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York and not specifically defined herein, are used herein as defined in such Article 9. Unless otherwise expressly indicated, all references herein to “Article,” “Section,” “Schedule”, “Exhibit” or “Annex” shall mean articles and sections of, and schedules, exhibits and annexes to, this Agreement. For purposes of this Agreement, the other Transaction Documents and all such certificates and other documents, unless the context otherwise requires: (a) references to any amount as on deposit or outstanding on any particular date means such amount at the close of business on such day; (b) the words “hereof,” “herein” and “hereunder” and words of similar import refer to such agreement (or the certificate or other document in which they are used) as a whole and not to any particular provision of such agreement (or such certificate or document); (c) references to any Article, Section, Schedule, Exhibit or Annex are references to Articles, Sections, Schedules, Exhibits and Annexes in or to such agreement (or the certificate or other document in which the reference is made), and references to any paragraph, subsection, clause or other subdivision within any Section or definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition; (d) the term “including” means “including without limitation”; (e) references to any Applicable Law refer to that Applicable Law as amended from time to time and include any successor Applicable Law; (f) references to any agreement refer to that agreement as from time to time amended, restated or supplemented or as the terms of such agreement are waived or modified in accordance with its terms; (g) references to any Person include that Person’s permitted successors and assigns; (h) headings are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof; (i) unless otherwise provided, in the calculation of time from a specified date to a later specified date, the term “from” means “from and including”, and the terms “to” and “until” each means “to but excluding”; (j) terms in one gender include the parallel terms in the neuter and opposite gender; (k) references to any amount as on deposit or outstanding on any particular date means such amount at the close of business on such day and (l) the term “or” is not exclusive. If both short-term and long-term ratings exist for an Obligor, short-term ratings will be used. If only one short-term rating exists for an Obligor, that rating will be used. If no short-term ratings and only one long-term rating exists for an Obligor, that rating will be used. If S&P and Moody’s ratings for an Obligor indicate a different group, the lower of the ratings will be used.
SECTION 1.03. Rate Notification. Section 4.05 of this Agreement provides a mechanism for determining an alternative rate of interest in the event that Daily 1M SOFR or the Term SOFR
Rate is no longer available or in certain other circumstances. The Administrative Agent does not warrant or accept any responsibility for and shall not have any liability with respect to, the administration, submission or any other matter related to Daily 1M SOFR or the Term SOFR Rate or with respect to any alternative or successor rate thereto, or replacement rate therefor.
ARTICLE II
TERMS OF THE LOANS
SECTION 2.01. Loan Facility. Upon a request by the Borrower pursuant to Section 2.02, and on the terms and subject to the conditions hereinafter set forth, each Lender shall, ratably in accordance with their respective Commitments, severally and not jointly, make Loans to the Borrower from time to time during the period from the Closing Date to the Termination Date. Under no circumstances shall any Lender be obligated to make any such Loan if, after giving effect to such Loan:
(i) the Aggregate Capital would exceed the Facility Limit at such time;
(ii) the aggregate outstanding Capital of such Lender would exceed its Commitment; or
(iii) the Aggregate Capital would exceed the Borrowing Base at such time.
SECTION 2.02. Making Loans; Repayment of Loans. (a) Each Loan hereunder shall be made at the written request of the Borrower delivered to the Administrative Agent in the form of a Loan Request attached hereto as Exhibit A; provided that, at any time when PNC (or an Affiliate thereof) is the Administrative Agent and the Borrower has entered into a PINACLE Agreement, then any request for a Loan made by the Borrower using PINACLE shall constitute a Loan Request. Each Loan Request (1) shall be made by Borrower no later than (x) in the case of a Loan Request made pursuant to PINACLE, 4:00 p.m. Eastern Time on the proposed date of such Loan, or (y) in the case of any other Loan Request, 12:00 noon Eastern Time on the proposed date of such Loan; provided that any Loan Request made after such applicable time shall be deemed to have been made on the following Business Day, and (2) shall specify (i) the amount of the Loan(s) requested (which shall not be less than $1,000,000 and shall be an integral multiple of $100,000), (ii) other than for a Loan Request made pursuant to PINACLE, the allocation of such amount among the Lenders (which shall be ratable based on the Commitments), (iii) the account to which the proceeds of such Loan shall be distributed and (iv) the date such requested Loan is to be made (which shall be a Business Day). If a Loan Request is deemed to have been made on the following Business Day pursuant to the parentheticals above and such Loan Request requests a Loan to be made prior to such following Business Day, such Loan Request shall be deemed to request that such Loan be made on such following Business Day.
(b) On the date of each Loan specified in the applicable Loan Request, the Lenders shall, upon satisfaction of the applicable conditions set forth in Article V and pursuant to the other conditions set forth in this Article II, make available to the Borrower in same day funds
an aggregate amount equal to the amount of such Loans requested, at the account set forth in the related Loan Request.
(c) Each Lender’s obligation shall be several, such that the failure of any Lender to make available to the Borrower any funds in connection with any Loan shall not relieve any other Lender of its obligation, if any, hereunder to make funds available on the date such Loans are requested (it being understood, that no Lender shall be responsible for the failure of any other Lender to make funds available to the Borrower in connection with any Loan hereunder).
(d) The Borrower shall repay in full the outstanding Capital of each Lender on the Final Maturity Date. Prior thereto, the Borrower shall, on each Settlement Date, make a prepayment of the outstanding Capital of the Lenders to the extent required under Section 3.01 and otherwise in accordance therewith. Notwithstanding the foregoing, the Borrower, in its discretion, shall have the right to make a prepayment, in whole or in part, of the outstanding Capital of the Lenders (i) on any Business Day if, at such time, (A) PNC (or an Affiliate thereof) is the Administrative Agent, (B) Borrower has entered into a PINACLE Agreement and (C) such prepayment is made with PINACLE; provided, that any such prepayment made with PINACLE after 4:00 p.m. Eastern Time on any day shall be deemed to have been made on the next occurring Business Day, or (ii) upon same-day written notice by delivering to the Administrative Agent a Reduction Notice in the form attached hereto as Exhibit B no later than 12:00 noon Eastern Time on the proposed Business Day of such prepayment (it being understood that any such request made after such time shall be deemed to have been made on the next occurring Business Day); provided, however, that (i) each such prepayment shall be in a minimum aggregate amount of $1,000,000 and shall be an integral multiple of $100,000; provided, however, that notwithstanding the foregoing, a prepayment may be in an amount necessary to reduce any Borrowing Base Deficit existing at such time to zero, and (ii) any accrued Interest and Fees in respect of such prepaid Capital shall be paid on the immediately following Settlement Date.
(e) The Borrower may, at any time upon at least thirty (30) days’ prior written notice to the Administrative Agent and each Lender, terminate the Facility Limit in whole or ratably reduce the Facility Limit in part. Each partial reduction in the Facility Limit shall be in a minimum aggregate amount of $5,000,000 or integral multiples of $1,000,000 in excess thereof, and no such partial reduction shall reduce the Facility Limit to an amount less than $50,000,000. In connection with any partial reduction in the Facility Limit, the Commitment of each Lender shall be ratably reduced. If the Facility Limit is terminated in whole, the Commitment of each Lender shall be reduced to zero.
(f) In connection with any reduction of the Commitments, the Borrower shall remit to the Administrative Agent (i) instructions regarding such reduction and (ii) for payment to the Lenders, cash in an amount sufficient to pay (A) Capital of each Lender in excess of the Commitment of such Lender and (B) all other outstanding Borrower Obligations with respect to such reduction (determined based on the ratio of the reduction of the Commitments being effected to the amount of the Commitments prior to such reduction or, if the Administrative Agent reasonably determines that any portion of the outstanding Borrower Obligations is allocable solely to that portion of the Commitments being reduced or has arisen solely as a result of such reduction, all of such portion). Upon receipt of any such amounts, the Administrative Agent shall apply such amounts first to the reduction of the outstanding Capital, and second to the payment of the
remaining outstanding Borrower Obligations with respect to such reduction, in each case, by paying such amounts ratably to the Lenders.
(g) Provided that no Receivables Termination Event, Unmatured Receivables Termination Event or Rapid Amortization Event has occurred and is continuing, the Borrower may advise the Administrative Agent and each Lender in writing of its desire to extend the initial Scheduled Termination Date for one additional 364 day period, provided that such request is made not more than ninety (90) days prior to, and not less than sixty (60) days prior to, the initial Scheduled Termination Date. The Administrative Agent and each Lender shall notify the Borrower and the Administrative Agent in writing whether or not such Person is agreeable to such extension (it being understood that the Administrative Agent and the Lenders may accept or decline such a request in their sole discretion and on such terms as they may elect) not less than thirty (30) days prior to the initial Scheduled Termination Date; provided, however, that if the Administrative Agent or any Lender fails to so notify the Borrower and the Administrative Agent, the Administrative Agent or such Lender, as the case may be, shall be deemed to have declined such extension. In the event that the Administrative Agent and one or more Lenders have so notified the Borrower and the Administrative Agent in writing that they are agreeable to such extension, the Borrower, the Servicer, the Administrative Agent and the applicable Lenders shall enter into such documents as the Administrative Agent and the applicable Lenders may deem necessary or appropriate to effect such extension, and all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent and the applicable Lenders in connection therewith (including Attorney Costs) shall be paid by the Borrower. In the event any Lender declines such request to extend the Scheduled Termination Date or is deemed to have declined such extension, such Lender shall be an “Exiting Lender” for all purposes of this Agreement.
SECTION 2.03. Interest and Fees.
(a) On each Settlement Date, the Borrower shall, in accordance with the terms and priorities for payment set forth in Section 3.01, pay to each Lender, the Administrative Agent and the Structuring Agent certain fees (collectively, the “Fees”) in the amounts set forth in the fee letter agreements from time to time entered into, among the Borrower, the Lenders and/or the Administrative Agent (each such fee letter agreement, as amended, restated, supplemented or otherwise modified from time to time, collectively being referred to herein as the “Fee Letter”).
(b) Each Loan of each Lender and the Capital thereof shall accrue interest on each day when such Capital remains outstanding at the then applicable Interest Rate for such Loan. The Borrower shall pay all Interest and Fees accrued during each Interest Period on each Settlement Date in accordance with the terms and priorities for payment set forth in Section 3.01.
(c) If at any time the designated rate of interest applicable to any Loan made by any Lender exceeds such Lender’s highest lawful rate, the rate of interest on such Lender’s Loan shall be limited to such Lender’s highest lawful rate. The applicable Base Rate, Daily 1M SOFR or Term SOFR Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.
(d) So long as no Receivables Termination Event is continuing, the Borrower may, by written notice to the Administrative Agent, elect for all or any portion of the Aggregate
Capital to accrue interest by reference to the Term SOFR Rate (rather than Daily 1M SOFR) during any Interest Period. Any such notice must specify the amount of the Aggregate Capital subject of such election and must be delivered not later than two (2) Business Days prior to the first day of the affected Interest Period. Any such portion of the Aggregate Capital that is subject to such an election shall be apportioned among the respective Lenders’ Capital ratably. Notwithstanding the foregoing, (x) the Borrower shall not make such an election if, as a result thereof, more than five (5) Borrowing Tranches would exist and (y) each Borrowing Tranche for Loans accruing interest by reference to the Term SOFR Rate shall be not be less than $1,000,000 and shall be an integral multiple of $100,000. For the avoidance of doubt, if a Receivables Termination Event is then continuing, the Interest Rate for any Loan (and any Portion of Capital thereof) shall be determined pursuant to the definition of Interest Rate notwithstanding any otherwise applicable election by the Borrower. The Borrower may call the Administrative Agent on or before the date on which a Loan Request is to be delivered to receive an indication of the rates then in effect, but it is acknowledged that such projection shall not be binding on the Administrative Agent or the Lenders nor affect the rate of interest which thereafter is actually in effect when the election is made.
(e) With respect to Daily 1M SOFR and the Term SOFR Rate, the Administrative Agent will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Transaction Document; provided that, with respect to any such amendment effected, the Administrative Agent shall provide notice to the Borrower and the Lenders of each such amendment implementing such Conforming Changes reasonably promptly after such amendment becomes effective.
SECTION 2.04. Records of Loans. Each Lender shall record in its records, the date and amount of each Loan made by such Lender hereunder, the interest rate with respect thereto, the Interest accrued thereon and each repayment and payment thereof. Subject to Section 12.03(b), such records shall be conclusive and binding absent manifest error. The failure to so record any such information or any error in so recording any such information shall not, however, limit or otherwise affect the obligations of the Borrower hereunder or under the other Transaction Documents to repay the Capital of each Lender, together with all Interest accruing thereon and all other Borrower Obligations.
ARTICLE III
SETTLEMENT PROCEDURES AND PAYMENT PROVISIONS
SECTION 3.01. Settlement Procedures.
(a) The Servicer shall set aside and hold in trust for the benefit of the Secured Parties (or, if so requested by the Administrative Agent, segregate in a separate account designated by the Administrative Agent, which shall be an account maintained and controlled by the Administrative Agent unless the Administrative Agent otherwise instructs in its sole discretion), for application in accordance with the priority of payments set forth below, all Collections on Pool Receivables that are received by the Servicer or the Borrower or received in any Lock-Box or Collection Account; provided, however, that so long as each of the conditions precedent set forth
in Section 5.03 are satisfied on such date, the Servicer may release to the Borrower from such Collections the amount (if any) necessary to pay the purchase price for Receivables purchased by the Borrower on such date in accordance with the terms of the Sale and Contribution Agreement (each such release, a “Release”). On each Settlement Date, the Servicer (or, following its assumption of control of the Collection Accounts, the Administrative Agent) shall, distribute such Collections in the following order of priority:
(i) first, to the Servicer for the payment of the accrued Servicing Fees payable for the immediately preceding Interest Period (plus, if applicable, the amount of Servicing Fees payable for any prior Interest Period to the extent such amount has not been distributed to the Servicer);
(ii) second, to each Lender and other Credit Party (ratably, based on the amount then due and owing), all accrued and unpaid Interest and Fees due to such Lender and other Credit Party for the immediately preceding Interest Period (including any additional amounts or indemnified amounts payable under Sections 4.03 and 11.01 in respect of such payments), plus, if applicable, the amount of any such Interest and Fees (including any additional amounts or indemnified amounts payable under Sections 4.03 and 11.01 in respect of such payments) payable for any prior Interest Period to the extent such amount has not been distributed to such Lender or Credit Party;
(iii) third, as set forth in clause (x), (y) or (z) below, as applicable:
(x) prior to the occurrence of the Termination Date, to the extent that a Borrowing Base Deficit exists on such date, to the Lenders (ratably, based on the aggregate outstanding Capital of each Lender at such time) for the payment of a portion of the outstanding Aggregate Capital at such time, in an aggregate amount equal to the amount necessary to reduce the Borrowing Base Deficit to zero ($0);
(y) on and after the occurrence of the Termination Date, to each Lender (ratably, based on the aggregate outstanding Capital of each Lender at such time) for the payment in full of the aggregate outstanding Capital of each such Lender at such time; or
(z) prior to the occurrence of the Termination Date, at the election of the Borrower and in accordance with Section 2.02(d), to the payment of all or any portion of the outstanding Capital of the Lenders at such time (ratably, based on the aggregate outstanding Capital of each Lender at such time);
(iv) fourth, to any Exiting Lender (based on the amount due and owing at such time), for the payment of all other Borrower Obligations then due and owing by the Borrower to such Exiting Lender;
(v) fifth, to the Credit Parties, the Affected Persons and the Borrower Indemnified Parties (ratably, based on the amount due and owing at such time), for the
payment of all other Borrower Obligations then due and owing by the Borrower to the Credit Parties, the Affected Persons and the Borrower Indemnified Parties; and
(vi) sixth, the balance, if any, to be paid to the Borrower for its own account.
(b) All payments or distributions to be made by the Servicer, the Borrower and any other Person to the Lenders (or their respective related Affected Persons and the Borrower Indemnified Parties), shall be paid or distributed to the applicable party to which such amounts are owed.
(c) If and to the extent the Administrative Agent, any Credit Party, any Affected Person or any Borrower Indemnified Party shall be required for any reason to pay over to any Person (including any Obligor or any trustee, receiver, custodian or similar official in any Insolvency Proceeding) any amount received on its behalf hereunder, such amount shall be deemed not to have been so received but rather to have been retained by the Borrower and, accordingly, the Administrative Agent, such Credit Party, such Affected Person or such Borrower Indemnified Party, as the case may be, shall have a claim against the Borrower for such amount.
(d) For the purposes of this Section 3.01:
(i) if on any day the Outstanding Balance of any Pool Receivable is reduced or adjusted as a result of any defective, rejected, returned, repossessed or foreclosed goods or services, or any revision, cancellation, allowance, rebate, credit memo, discount or other adjustment made by the Borrower, any Originator, the Servicer or any Affiliate of the Servicer, or any setoff, counterclaim or dispute between the Borrower or any Affiliate of the Borrower, an Originator or any Affiliate of an Originator, or the Servicer or any Affiliate of the Servicer, and an Obligor, the Borrower shall be deemed to have received on such day a Collection of such Pool Receivable in the amount of such reduction or adjustment and shall immediately pay any and all such amounts in respect thereof to a Collection Account (or as otherwise directed by the Administrative Agent at such time) for the benefit of the Credit Parties for application pursuant to Section 3.01(a);
(ii) if on any day any of the representations or warranties in Section 6.01 is not true with respect to any Pool Receivable, the Borrower shall be deemed to have received on such day a Collection of such Pool Receivable in full and shall immediately pay the amount of such deemed Collection to a Collection Account (or as otherwise directed by the Administrative Agent at such time) for the benefit of the Credit Parties for application pursuant to Section 3.01(a) (Collections deemed to have been received pursuant to Section 3.01(d) are hereinafter sometimes referred to as “Deemed Collections”);
(iii) except as provided in clauses (i) or (ii) above or otherwise required by Applicable Law or the relevant Contract, all Collections received from an Obligor of any Receivable (or from a Credit Insurer if applicable) shall be applied to the Receivables of such Obligor in the order of the age of such Receivables, starting with the oldest such Receivable, unless such Obligor designates in writing its payment for application to specific Receivables; and
(iv) if and to the extent the Administrative Agent, any Credit Party, any Affected Person or any Borrower Indemnified Party shall be required for any reason to pay over to an Obligor (or any trustee, receiver, custodian or similar official in any Insolvency Proceeding) any amount received by it hereunder, such amount shall be deemed not to have been so received by such Person but rather to have been retained by the Borrower and, accordingly, such Person shall have a claim against the Borrower for such amount, payable when and to the extent that any distribution from or on behalf of such Obligor is made in respect thereof.
SECTION 3.02. Payments and Computations, Etc. (a) All amounts to be paid by the Borrower or the Servicer to the Administrative Agent, any Credit Party, any Affected Person or any Borrower Indemnified Party hereunder shall be paid no later than 12:00 noon Eastern Time on the day when due in same day funds to the applicable party to which such amounts are due.
(b) Each of the Borrower and the Servicer shall, to the extent permitted by Applicable Law, pay interest on any amount not paid or deposited by it when due hereunder, at an interest rate per annum equal to 2.00% per annum above the Base Rate, payable on demand.
(c) All computations of interest under clause (b) above and all computations of Interest, Fees and other amounts hereunder shall be made on the basis of a year of 360 days (or, in the case of amounts determined by reference to the Base Rate, 365 or 366 days, as applicable) for the actual number of days (including the first but excluding the last day) elapsed. Whenever any payment or deposit to be made hereunder shall be due on a day other than a Business Day, such payment or deposit shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of such payment or deposit.
ARTICLE IV
INCREASED COSTS; FUNDING LOSSES; TAXES; ILLEGALITY AND SECURITY INTEREST
SECTION 4.01. Increased Costs.
(a) In the event that any Affected Person shall have reasonably determined that any Regulatory Change shall (i) impose, modify, hold or deem applicable any reserve, special deposit, liquidity coverage requirement, compulsory loan or similar requirement (including any such requirement imposed by the Board of Governors of the Federal Reserve System and any such establishment or interpretation of accounting principles) against assets of or 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, such Affected Person, (ii) subject any Affected Person to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, or (iii) impose on any Affected Person or the London interbank market any other condition affecting this Agreement or any other Transaction Document, the ownership, maintenance or financing of the Receivables or payments of amounts due hereunder or its obligations to advance funds hereunder and the result of any of the foregoing is to increase the cost to such Affected
Person, by an amount which such Affected Person in good faith deems to be material, of maintaining its Commitment, its interests hereunder or its interest in the Loans or the Receivables or to reduce any amount receivable in respect thereof, then, in any such case, after submission by the Administrative Agent of a written request therefor to the Borrower, together with the certificate described in clause (d) below, the Borrower shall pay to the Administrative Agent for the account of such Affected Person any additional amounts necessary to compensate such Affected Person for such increased cost or reduced amount receivable, to the extent not already reflected in the applicable interest rate, together with interest on any such unpaid amount from the Settlement Date following receipt by the Borrower of such request for compensation under this Section 4.01(a), if such request is received by the Borrower at least five (5) Business Days prior to the related Settlement Date, and otherwise from the next succeeding Settlement Date, until payment in full thereof (after as well as before judgment) at the Overnight Bank Funding Rate in effect from time to time.
(b) In the event that any Affected Person shall have reasonably determined that any Regulatory Change regarding capital adequacy or liquidity coverage or any change in the application of generally accepted accounting principles has the effect of reducing the rate of return on such Affected Person’s capital or on the capital of any Person controlling such Affected Person as a consequence of its obligations hereunder or with respect hereto or the maintenance of its Commitment, its interests hereunder or its interest in the Loans or the Receivables to a level below that which such Affected Person or such Person could have achieved but for such Regulatory Change (taking into consideration such Affected Person’s or Person’s policies with respect to capital adequacy or liquidity requirements) or such accounting change by an amount in good faith deemed by such Affected Person or Person to be material, then, from time to time, after submission by the Administrative Agent of a written request therefor to the Borrower, together with the certificate described in clause (d) below, the Borrower shall pay to the Administrative Agent such additional amount or amounts as will compensate such Affected Person or Person, as applicable, for such reduction, together with interest on any such unpaid amount from the Settlement Date following receipt by the Borrower of such request for compensation under this Section 4.01(b), if such request is received by the Borrower at least five (5) Business Days prior to the related Settlement Date, and otherwise from the next succeeding Settlement Date, until payment in full thereof (after as well as before judgment) at the Overnight Bank Funding Rate in effect from time to time. Nothing in this Section 4.01(b) shall be deemed to require the Borrower to pay any amount to an Affected Person to the extent such Affected Person has been compensated therefor under another provision of this Agreement or to the extent such amount is already reflected in the applicable interest rate.
(c) Each Affected Person agrees that it shall use reasonable efforts to reduce or eliminate any claim for compensation pursuant to Sections 4.01(a) and (b) if in the reasonable opinion of such Affected Person such action or inaction is not unlawful or otherwise disadvantageous to such Affected Person or inconsistent with its policies or regulatory restrictions or could result in any unreimbursed cost or expense to such Affected Person or in an increase in the aggregate amount payable under Sections 4.01(a) and (b).
(d) Each Affected Person claiming increased amounts described in Section 4.01(a) or (b) will furnish to the Administrative Agent (together with its request for compensation) a certificate prepared in good faith setting forth the basis (which may include the use of estimates
derived using commercially reasonable methods) and the calculation of the amount (in reasonable detail) of each request by such Affected Person for any such increased amounts referred to in Section 4.01(a) or (b). Any such certificate shall be conclusive absent manifest error, and the Administrative Agent shall deliver a copy thereof to the Borrower. Failure on the part of any Affected Person to demand compensation for any amount pursuant to Section 4.01(a) or (b) with respect to any period shall not constitute a waiver of such Affected Person’s right to demand compensation with respect to such period; provided, however, that notwithstanding the foregoing provisions of this Section 4.01, as Affected Person shall not be compensated for any such amount relating to any period ending more than six (6) months prior to the date that the Administrative Agent submits to the Borrower a written request for such amount in accordance with Section 4.01(a) or (b). Amounts owing under this Section 4.01 by the Borrower shall be due and payable in accordance with Section 3.01.
SECTION 4.02. [Reserved].
SECTION 4.03. Taxes.
(a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under any Transaction Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of the applicable Credit Party, Affected Person or Borrower Indemnified Party) requires the deduction or withholding of any Tax from any such payment to a Credit Party, Affected Person or Borrower Indemnified Party, then the applicable Credit Party, Affected Person or Borrower Indemnified Party shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law, and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 4.03), the applicable Credit Party, Affected Person or Borrower Indemnified Party receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(b) Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or, at the option of the Administrative Agent, timely reimburse the Administrative Agent for the payment of, any Other Taxes.
(c) Indemnification by the Borrower. The Borrower shall indemnify each Affected Person, within ten days after demand therefor, for the full amount of any (I) Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 4.03) payable or paid by such Affected Person or required to be withheld or deducted from a payment to such Affected Person and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority and (II) Taxes that arise because a Loan is not treated for U.S. federal, state, local or franchise tax purposes as intended under Section 12.14 (such indemnification will include any U.S. federal, state or local income and franchise taxes necessary to make such Affected Person whole on an after-tax basis
taking into account the taxability of receipt of payments under this clause (II) and any reasonable expenses (other than Taxes) arising out of, relating to, or resulting from the foregoing). Promptly upon having knowledge that any such Indemnified Taxes have been levied, imposed or assessed, and promptly upon notice by the Administrative Agent or any Affected Person, the Borrower shall pay such Indemnified Taxes directly to the relevant taxing authority or Governmental Authority (or to the Administrative Agent or such Affected Person if such Taxes have already been paid to the relevant taxing authority or Governmental Authority); provided that neither the Administrative Agent nor any Affected Person shall be under any obligation to provide any such notice to the Borrower. A certificate as to the amount of such payment or liability delivered to the Borrower by an Affected Person (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of an Affected Person, shall be conclusive absent manifest error.
(d) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within ten days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender or any of its respective Affiliates that are Affected Persons (but only to the extent that the Borrower and its Affiliates have not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting any obligation of the Borrower, the Servicer or their Affiliates to do so), (ii) any Taxes attributable to the failure of such Lender or any of its respective Affiliates that are Affected Persons to comply with Section 12.03(e) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender or any of its respective Affiliates that are Affected Persons, in each case, that are payable or paid by the Administrative Agent in connection with any Transaction Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender or any of its respective Affiliates that are Affected Persons under any Transaction Document or otherwise payable by the Administrative Agent to such Lender or any of its respective Affiliates that are Affected Persons from any other source against any amount due to the Administrative Agent under this clause (d).
(e) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section 4.03, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(f) Status of Affected Persons. (i) Any Affected Person that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Transaction Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Affected Person, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Affected Person is subject to backup
withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Sections 4.03(f)(ii)(A), 4.03(f)(ii)(B) and 4.03(g)) shall not be required if, in the Affected Person’s reasonable judgment, such completion, execution or submission would subject such Affected Person to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Affected Person.
(ii) Without limiting the generality of the foregoing:
(A) an Affected Person that is a U.S. Person shall deliver to the Borrower and the Administrative Agent from time to time upon the reasonable request of the Borrower or the Administrative Agent, executed originals of Internal Revenue Service Form W-9 certifying that such Affected Person is exempt from U.S. federal backup withholding tax;
(B) any Affected Person that is not a U.S. Person shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the Affected Person) from time to time upon the reasonable request of the Borrower or the Administrative Agent, whichever of the following is applicable:
(1) in the case of such an Affected Person claiming the benefits of an income tax treaty to which the United States is a party, (x) with respect to payments of interest under any Transaction Document, executed originals of Internal Revenue Service Form W-8BEN or Internal Revenue Service Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Transaction Document, Internal Revenue Service Form W-8BEN or Internal Revenue Service Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(2) executed originals of Internal Revenue Service Form W-8ECI;
(3) in the case of such an Affected Person claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate to the effect that such Affected Person is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals of
Internal Revenue Service Form W-8BEN or Internal Revenue Service Form W-8BEN-E, as applicable; or
(4) to the extent such Affected Person is not the beneficial owner, executed originals of Internal Revenue Service Form W-8IMY, accompanied by Internal Revenue Service Form W-8ECI, Internal Revenue Service Form W-8BEN or Internal Revenue Service Form W-8BEN-E, as applicable, a U.S. Tax Compliance Certificate, Internal Revenue Service Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that, if such Affected Person is a partnership and one or more direct or indirect partners of such Affected Person are claiming the portfolio interest exemption, such Affected Person may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner; and
(C) any Affected Person that is not a U.S. Person shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient), from time to time upon the reasonable request of the Borrower or the Administrative Agent, executed originals of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made.
(g) Documentation Required by FATCA. If a payment made to an Affected Person under any Transaction Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Affected Person were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Affected Person shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by Applicable Law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Affected Person has complied with such Affected Person’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (g), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
(h) Survival. Each party’s obligations under this Section 4.03 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Credit Party or any other Affected person, the termination of the Commitments and the repayment, satisfaction or discharge of all the Borrower Obligations and the Servicer’s obligations hereunder.
(i) Updates. Each Affected Person agrees that if any form or certification it previously delivered pursuant to this Section 4.03 expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
SECTION 4.04. Daily 1M SOFR or Term SOFR Rate Unascertainable; Increased Costs; Illegality.
(a) Unascertainable; Increased Costs. If, on or prior to the first day of an Interest Period:
(i) the Administrative Agent shall have determined (which determination shall be conclusive and binding absent manifest error) that Daily 1M SOFR or the Term SOFR Rate cannot be determined pursuant to the definition thereof; or
(ii) any Lender determines that for any reason Daily 1M SOFR or the Term SOFR Rate for any requested Interest Period does not adequately and fairly reflect the cost to such Lender of funding such Lender’s Loans, and such Lender has provided notice of such determination to the Administrative Agent;
then the Administrative Agent shall have the rights specified in Section 4.04(c).
(b) Illegality. If at any time any Lender shall have determined that the making, maintenance or funding of any Loan accruing interest by reference to Daily 1M SOFR or the Term SOFR Rate has been made impracticable or unlawful, by compliance by such Lender in good faith with any Applicable Law or any interpretation or application thereof by any Governmental Authority or with any request or directive of any such Governmental Authority (whether or not having the force of Applicable Law), then the Administrative Agent shall have the rights specified in Section 4.04(c).
(c) Administrative Agent’s and Lender’s Rights. In the case of any event specified in Section 4.04(a), the Administrative Agent shall promptly so notify the Lenders and the Borrower thereof, and in the case of an event specified in Section 4.04(b), such Lender shall promptly so notify the Administrative Agent and endorse a certificate to such notice as to the specific circumstances of such notice, and the Administrative Agent shall promptly send copies of such notice and certificate to the other Lenders and the Borrower. Upon such date as shall be specified in such notice (which shall not be earlier than the date such notice is given), the obligation of (i) the Lenders, in the case of such notice given by the Administrative Agent, or (ii) such Lender, in the case of such notice given by such Lender, to allow the Borrower to select, convert to or renew a Loan accruing interest by reference to Daily 1M SOFR or the Term SOFR Rate shall be suspended (to the extent of the affected Interest Rate or the applicable Interest Periods) until the Administrative Agent shall have later notified the Borrower, or such Lender shall have later notified the Administrative Agent, of the Administrative Agent’s or such Lender’s, as the case may be, determination that the circumstances giving rise to such previous determination no longer exist. If at any time the Administrative Agent makes a determination under Section 4.04(a), (A) if the Borrower has delivered a Loan Request for an affected Loan that has not yet been made, such Loan Request shall be deemed to request a Base Rate Loan, (B) any outstanding affected Loans
shall be deemed to have been converted into Base Rate Loans at the end of the applicable Interest Period.
SECTION 4.05. Benchmark Replacement Setting.
(a) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Transaction Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to any setting of the then-current Benchmark, then (A) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Transaction Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Transaction Document and (B) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Transaction Document in respect of any Benchmark setting at or after 5:00 p.m. Eastern Time on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Transaction Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Majority Lenders.
(b) Benchmark Replacement Conforming Changes. In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Administrative Agent may make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Transaction Document.
(c) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (A) the implementation of any Benchmark Replacement, and (B) the effectiveness of any Conforming Changes in connection with the use, administration, adoption, or implementation of a Benchmark Replacement. The Administrative Agent will notify the Borrower of (x) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (d) below and (y) the commencement of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 4.05, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Transaction Document except, in each case, as expressly required pursuant to this Section 4.05.
(d) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Transaction Document, at any time (including in connection with
the implementation of a Benchmark Replacement), (A) if the then-current Benchmark is a term rate and either (I) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (II) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor; and (B) if a tenor that was removed pursuant to clause (A) above either (I) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (II) is not, or is no longer, subject to an announcement that it is not or will not be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(e) Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any pending request for a Loan bearing interest based on Daily 1M SOFR or the Term SOFR Rate, conversion to or continuation of Loans bearing interest based on Daily 1M SOFR or the Term SOFR Rate to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Base Rate Loan. During a Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Base Rate.
SECTION 4.06. Security Interest. As security for the performance by the Borrower of all the terms, covenants and agreements on the part of the Borrower to be performed under this Agreement or any other Transaction Document, including the punctual payment when due of the Aggregate Capital and all Interest in respect of the Loans and all other Borrower Obligations, the Borrower hereby grants to the Administrative Agent for its benefit and the ratable benefit of the Secured Parties, a continuing security interest in, all of the Borrower’s right, title and interest in, to and under all of the following, whether now or hereafter owned, existing or arising (collectively, the “Collateral”): (i) all Pool Receivables, (ii) all Related Security with respect to such Pool Receivables, (iii) all Collections with respect to such Pool Receivables, (iv) the Lock-Boxes and Collection Accounts and all amounts on deposit therein, and all certificates and instruments, if any, from time to time evidencing such Lock-Boxes and Collection Accounts and amounts on deposit therein, (v) all rights (but none of the obligations) of the Borrower under the Sale and Contribution Agreement and each Credit Insurance Policy; (vi) all other personal and fixture property or assets of the Borrower of every kind and nature including, without limitation, all goods (including inventory, equipment and any accessions thereto), instruments (including promissory notes), documents, accounts, chattel paper (whether tangible or electronic), deposit accounts, securities accounts, securities entitlements, letter-of-credit rights, commercial tort claims, securities and all other investment property, supporting obligations, money, any other contract rights or rights to the payment of money, insurance claims and proceeds, and all general intangibles (including all payment intangibles) (each as defined in the UCC) and (vii) all proceeds of, and all amounts received or receivable under any or all of, the foregoing.
The Administrative Agent (for the benefit of the Secured Parties) shall have, with respect to all the Collateral, and in addition to all the other rights and remedies available to the Administrative Agent (for the benefit of the Secured Parties), all the rights and remedies of a secured party under any applicable UCC. The Borrower hereby authorizes the Administrative Agent to file financing statements describing the collateral covered thereby as “all of the debtor’s personal property or assets” or words to that effect, notwithstanding that such wording may be broader in scope than the collateral described in this Agreement.
Immediately upon the occurrence of the Final Payout Date, the Collateral shall be automatically released from the lien created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent, the Lenders and the other Credit Parties hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Borrower; provided, however, that promptly following written request therefor by the Borrower delivered to the Administrative Agent following any such termination, and at the expense of the Borrower, the Administrative Agent shall execute and deliver to the Borrower UCC-3 termination statements and such other documents as the Borrower shall reasonably request to evidence such termination.
ARTICLE V
CONDITIONS TO EFFECTIVENESS AND CREDIT EXTENSIONS
SECTION 5.01. Conditions Precedent to Effectiveness and the Initial Credit Extension. This Agreement shall become effective as of the Closing Date when (a) the Administrative Agent shall have received each of the documents, agreements (in fully executed form), opinions of counsel, lien search results, UCC filings, certificates and other deliverables listed on the closing memorandum attached as Exhibit H hereto, in each case, in form and substance acceptable to the Administrative Agent and (b) all fees and expenses payable by the Borrower on the Closing Date to the Credit Parties have been paid in full in accordance with the terms of the Transaction Documents.
SECTION 5.02. Conditions Precedent to All Credit Extensions. Each Credit Extension hereunder on or after the Closing Date shall be subject to the conditions precedent that:
(a) the Borrower shall have delivered to the Administrative Agent a Loan Request for such Loan, in accordance with Section 2.02(a);
(b) the Servicer shall have delivered to the Administrative Agent and each Lender all Information Packages and Interim Reports, if any, required to be delivered hereunder;
(c) the conditions precedent to such Credit Extension specified in Section 2.01(i) through (iii), shall be satisfied;
(d) on the date of such Credit Extension the following statements shall be true and correct (and upon the occurrence of such Credit Extension, the Borrower and the Servicer shall be deemed to have represented and warranted that such statements are then true and correct):
(i) the representations and warranties of the Borrower and the Servicer contained in Sections 6.01 and 6.02 are true and correct in all material respects on and as of the date of such Credit Extension as though made on and as of such date unless such representations and warranties by their terms refer to an earlier date, in which case they shall be true and correct in all material respects on and as of such earlier date;
(ii) no Receivables Termination Event, Unmatured Receivables Termination Event or Rapid Amortization Event has occurred and is continuing, and no Receivables Termination Event, Unmatured Receivables Termination Event or Rapid Amortization Event would result from such Credit Extension;
(iii) no Borrowing Base Deficit exists or would exist after giving effect to such Credit Extension; and
(iv) the Termination Date has not occurred.
SECTION 5.03. Conditions Precedent to All Releases. Each Release hereunder on or after the Closing Date shall be subject to the conditions precedent that:
(a) after giving effect to such Release, the Servicer shall be holding in trust for the benefit of the Secured Parties an amount of Collections sufficient to pay the sum of (x) all accrued and unpaid Servicing Fees, Interest and Fees, in each case, through the date of such Release, (y) the amount of any Borrowing Base Deficit and (z) the amount of all other accrued and unpaid Borrower Obligations through the date of such Release;
(b) the Borrower shall use the proceeds of such Release solely to pay the purchase price for Receivables purchased by the Borrower in accordance with the terms of the Sale and Contribution Agreement; and
(c) on the date of such Release the following statements shall be true and correct (and upon the occurrence of such Release, the Borrower and the Servicer shall be deemed to have represented and warranted that such statements are then true and correct):
(i) the representations and warranties of the Borrower and the Servicer contained in Sections 6.01 and 6.02 are true and correct in all material respects on and as of the date of such Release as though made on and as of such date unless such representations and warranties by their terms refer to an earlier date, in which case they shall be true and correct in all material respects on and as of such earlier date;
(ii) no Receivables Termination Event, Unmatured Receivables Termination Event or Rapid Amortization Event has occurred and is continuing, and no Receivables Termination Event, Unmatured Receivables Termination Event or Rapid Amortization Event would result from such Release;
(iii) no Borrowing Base Deficit exists or would exist after giving effect to such Release; and
(iv) the Termination Date has not occurred.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of the Borrower. The Borrower represents and warrants to each Credit Party as of the Closing Date, on each Settlement Date and on each day that a Credit Extension or Release shall have occurred:
(a) Organization and Good Standing. The Borrower has been duly organized and is validly existing as a limited liability company in good standing under the laws of the State of Delaware, with power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted, and had at all relevant times, and now has, power, authority and legal right to acquire and own the Pool Receivables.
(b) Due Qualification. The Borrower is duly qualified to do business as a foreign limited liability company in good standing, and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business requires or shall require such qualification.
(c) Power and Authority; Due Authorization. The Borrower (i) has all necessary limited liability company power and authority to (A) execute and deliver this Agreement and the other Transaction Documents to which it is a party and to carry out the respective terms of such agreements, (B) perform its obligations under this Agreement and the other Transaction Documents to which it is a party and (C) grant a security interest in the Collateral to the Administrative Agent on the terms and subject to the conditions herein provided and (ii) has duly authorized by all necessary limited liability company action such grant and the execution, delivery and performance of, and the consummation of the transactions provided for in, this Agreement and the other Transaction Documents to which it is a party.
(d) Binding Obligations. This Agreement and each of the other Transaction Documents to which the Borrower is a party, when duly executed and delivered, shall 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 or other similar laws affecting the enforcement of creditors’ rights in general and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.
(e) No Conflict or Violation. The consummation by the Borrower of the transactions contemplated by this Agreement and the other Transaction Documents and the fulfillment of the terms of such agreements by the Borrower shall not conflict with, result in any breach of any of the terms and provisions of or constitute (with or without notice or lapse of time) a default under, the limited liability company agreement of the Borrower, or any indenture, agreement or other instrument to which the Borrower is a party or by which it is bound, or result in the creation or imposition of any Adverse Claim upon any of the Collateral pursuant to the terms of any such indenture, agreement or other instrument, other than this Agreement and the other Transaction Documents, or conflict with or violate any Applicable Law or, to the Borrower’s knowledge, any order, rule or regulation applicable to the Borrower of any court or of any federal
or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Borrower or any of its properties.
(f) Litigation and Other Proceedings. (i) There is no action, suit, proceeding or investigation pending or, to the best knowledge of the Borrower, threatened, against the Borrower before any Governmental Authority and (ii) the Borrower is not subject to any order, judgment, decree, injunction, stipulation or consent order of or with any Governmental Authority that, in the case of either of the foregoing clauses (i) and (ii), (A) asserts the invalidity of this Agreement or any other Transaction Document, (B) seeks to prevent the grant of a security interest in any Collateral by the Borrower to the Administrative Agent, the ownership or acquisition by the Borrower of any Pool Receivables or other Collateral or the consummation of any of the transactions contemplated by this Agreement or any other Transaction Document, (C) seeks any determination or ruling that could materially and adversely affect the performance by the Borrower of its obligations under, or the validity or enforceability of, this Agreement or any other Transaction Document or (D) individually or in the aggregate for all such actions, suits, proceedings and investigations could reasonably be expected to have a Material Adverse Effect.
(g) Governmental Approvals. No authorizations, consents, orders and approvals of, filing with, notice to or other act by or in respect of any Governmental Authority or any other Person is required in connection with the transactions contemplated hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement or any of the other Transaction Documents except as to which have already been obtained or made and are in full force and effect.
(h) Margin Regulations. The Borrower is not engaged, principally or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meanings of Regulations T, U, and X of the Board of Governors of the Federal Reserve System).
(i) Solvency. After giving effect to the transactions contemplated by this Agreement and the other Transaction Documents, the Borrower is Solvent. The Borrower is not a defendant in any case, proceeding or other action seeking issuance of a writ or warrant of attachment, execution, distraint or similar process against all or any part of its assets.
(j) Offices; Legal Name. The Borrower’s sole jurisdiction of organization is the State of Delaware and such jurisdiction has not changed within four months prior to the date of this Agreement. The office of the Borrower is located at 221 Shepard Street, Ripon, WI 54971-0990. The legal name of the Borrower is Alliance Laundry Trade Receivables LLC.
(k) Investment Company Act; Volcker Rule. The Borrower (i) is not, and is not controlled by, an “investment company” registered or required to be registered under the Investment Company Act and (ii) is not a “covered fund” under the Volcker Rule. In determining that the Borrower is not a “covered fund” under the Volcker Rule, the Borrower relies on, and is entitled to rely on, the exemption from the definition of “investment company” set forth in Section 3(c)(5) of the Investment Company Act.
(l) No Material Adverse Effect. Since the date of formation of the Borrower there has been no Material Adverse Effect with respect to the Borrower.
(m) Accuracy of Information. All Information Packages, Interim Reports, Loan Requests, certificates, reports, statements, documents and other information furnished to the Administrative Agent or any other Credit Party by or on behalf of the Borrower pursuant to any provision of this Agreement or any other Transaction Document, or in connection with or pursuant to any amendment or modification of, or waiver under, this Agreement or any other Transaction Document, is, at the time the same are so furnished, complete and correct in all material respects on the date the same are furnished to the Administrative Agent or such other Credit Party, and does not contain any material misstatement of fact or omit to state a material fact necessary to make the statements contained therein not misleading.
(n) Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws.
(i) No: (a) Covered Entity, nor to the Borrower’s knowledge any employees, officers, directors, affiliates, consultants, brokers, or agents acting on a Covered Entity’s behalf in connection with this Agreement: (i) is a Sanctioned Person; (ii) directly, or indirectly through any third party, is engaged in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction, or any transactions or other dealings that otherwise are prohibited by any Anti-Terrorism Laws; (b) Collateral is Embargoed Property.
(ii) Each Covered Entity has (a) conducted its business in compliance with all Anti-Corruption Laws and (b) has instituted and maintains policies and procedures designed to ensure compliance with such Applicable Laws.
(o) Perfection Representations.
(i) This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Borrower’s right, title and interest in, to and under the Collateral which (A) security interest has been or will be on the date hereof perfected and is enforceable against creditors of and purchasers from the Borrower and (B) will be free of all Adverse Claims in such Collateral.
(ii) The Receivables constitute “accounts” or “general intangibles” within the meaning of Section 9-102 of the UCC.
(iii) The Borrower owns and has good and marketable title to the Collateral free and clear of any Adverse Claim.
(iv) All appropriate financing statements, financing statement amendments and continuation statements have been filed in the proper filing office in the appropriate jurisdictions under Applicable Law in order to perfect (and continue the perfection of) the sale and contribution of the Receivables and Related Security from each Originator to the Borrower pursuant to the Sale and Contribution Agreement and the grant by the Borrower of a security interest in the Collateral to the Administrative Agent pursuant to this Agreement.
(v) Other than the security interest granted to the Administrative Agent pursuant to this Agreement, the Borrower has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Collateral except as permitted by this Agreement and the other Transaction Documents. The Borrower has not authorized the filing of and is not aware of any financing statements filed against the Borrower that include a description of collateral covering the Collateral other than any financing statement (i) in favor of the Administrative Agent or (ii) that has been terminated. The Borrower is not aware of any judgment lien, ERISA lien or tax lien filings against the Borrower.
(vi) Notwithstanding any other provision of this Agreement or any other Transaction Document, the representations contained in this Section 6.01(o) shall be continuing and remain in full force and effect until the Final Payout Date.
(p) The Lock-Boxes and Collection Accounts.
(i) Nature of Collection Accounts. Each Collection Account constitutes a “deposit account” within the meaning of the applicable UCC.
(ii) Ownership. Each Lock-Box and Collection Account is in the name of the Borrower, and the Borrower owns and has good and marketable title to the Collection Accounts free and clear of any Adverse Claim.
(iii) Perfection. The Borrower has delivered to the Administrative Agent a fully executed Account Control Agreement relating to each Lock-Box and Collection Account, pursuant to which each applicable Collection Account Bank has agreed to comply with the instructions originated by the Administrative Agent directing the disposition of funds in such Lock-Box and Collection Account without further consent by the Borrower, the Servicer or any other Person. The Administrative Agent has “control” (as defined in Section 9-104 of the UCC) over each Collection Account.
(iv) Instructions. Neither the Lock-Boxes nor the Collection Accounts are in the name of any Person other than the Borrower. Neither the Borrower nor the Servicer has consented to the applicable Collection Account Bank complying with instructions of any Person other than the Administrative Agent.
(q) Ordinary Course of Business. Each remittance of Collections by or on behalf of the Borrower to the Credit Parties under this Agreement will have been (i) in payment of a debt incurred by the Borrower in the ordinary course of business or financial affairs of the Borrower and (ii) made in the ordinary course of business or financial affairs of the Borrower.
(r) Compliance with Law. The Borrower has complied in all material respects with all Applicable Laws to which it may be subject.
(s) Bulk Sales Act. No transaction contemplated by this Agreement requires compliance by it with any bulk sales act or similar law.
(t) Eligible Receivables. Each Receivable included as an Eligible Receivable in the calculation of the Net Receivables Pool Balance as of any date is an Eligible Receivable as of such date.
(u) Taxes. The Borrower has (i) timely filed all federal income tax returns and all other material tax returns required to be filed by it and (ii) paid, or caused to be paid, all taxes, assessments and other governmental charges, if any, other than taxes, assessments and other governmental charges being contested in good faith by appropriate proceedings and as to which adequate reserves have been provided in accordance with GAAP.
(v) Tax Status. The Borrower (i) is, and shall at all relevant times continue to be, a “disregarded entity” within the meaning of U.S. Treasury Regulation § 301.7701-3 for U.S. federal income tax purposes that is wholly owned by a “United States person” (within the meaning of Section 7701(a)(30) of the Code) and (ii) is not and will not at any relevant time become an association (or publicly traded partnership) taxable as an association for U.S. federal income tax purposes. The Borrower is not subject to any Tax in any jurisdiction outside the United States of America.
(w) Opinions. The facts regarding the Borrower, the Servicer, each Originator, the Receivables, the Related Security and the related matters set forth or assumed in each of the opinions of counsel delivered in connection with this Agreement and the Transaction Documents are true and correct in all material respects.
(x) Other Transaction Documents. Each representation and warranty made by the Borrower under each other Transaction Document to which it is a party is true and correct in all material respects as of the date when made.
(y) Liquidity Coverage Ratio. The Borrower has not and does not issue any LCR Security. The Borrower further represents and warrants that its assets and liabilities are consolidated with the assets and liabilities of Alliance for purposes of GAAP.
(z) Non-Consolidation of the Borrower.
(i) The Borrower has, consistent with this Agreement and the other Transaction Documents, been operated in such a manner that it would not be substantively consolidated with the trust estate of any or all of the Servicer or any Originator in the event of the bankruptcy or insolvency of any or all of the Borrower, the Servicer or any Originator. Without limiting the foregoing the Borrower has (A) maintained its books, records and cash management accounts separate from those of any or all of the Servicer or any Originator, (B) maintained its bank accounts separate from those of any or all of the Servicer or any Originator, (C) maintained separate financial statements, showing its assets and liabilities separate and apart from those of any or all of the Servicer or any Originator (it being understood that the Borrower’s assets may also be included in consolidated financial statements of its Affiliates as long as such consolidated financial statements contain a footnote indicating that the assets of the Servicer or any Originator are not available to creditors of the Borrower), (D) paid its own liabilities
and expenses and not any or all of the Servicer or any Originator, (E) allocated fairly and reasonably any overhead expenses that are shared with any or all of the Servicer or any Originator and (F) held itself out as a separate entity from any or all of the Servicer or any Originator.
(ii) The Borrower has not (A) held itself out as being liable for the debts of any or all of the Servicer or any Originator, (B) acted or conducted its business in the name of any or all of the Servicer or any Originator, (C) engaged in any joint activity or transaction of any kind with or for the benefit of any or all of the Servicer or any Originator including any loan to or from or guarantee of the indebtedness of any Affiliate, (D) commingled its funds or other assets with those of any or all of the Servicer or any Originator, (E) created, incurred, assumed, guaranteed or in any manner became liable in respect of any indebtedness of any or all of the Servicer or any Originator, (F) entered into a transaction with any or all of the Servicer or any Originator unless such transaction is commercially reasonable and on the same terms as would be available in an arm’s length transaction with a person or entity that is not an Affiliate, or (G) taken any other action that would be inconsistent with maintaining the separate legal identity of any or all of the Servicer or any Originator.
(aa) Compliance with ALS Credit Agreement. The Borrower is a “Securitization Entity” under, and as defined in, the ALS Credit Agreement. The Transaction Documents and the transactions contemplated thereby constitute a “Permitted Securitization Financing” under, and as defined in, the ALS Credit Agreement.
(bb) Linked Accounts. There are no “Linked Accounts” (as defined in the Account Control Agreement with Wells Fargo Bank, National Association) with respect to any Collection Account maintained at Wells Fargo Bank, National Association.
(cc) Reaffirmation of Representations and Warranties. On the date of each Credit Extension, on the date of each Release, on each Settlement Date, the Borrower shall be deemed to have certified that (i) all representations and warranties of the Borrower hereunder are true and correct in all material respects on and as of such day as though made on and as of such day, except for representations and warranties which apply as to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such date) and (ii) no Receivables Termination Event, Unmatured Receivables Termination Event or Rapid Amortization Event has occurred and is continuing or will result from such Credit Extension or Release.
(dd) Beneficial Ownership Certification. As of the Third Amendment Date, the information included in the Beneficial Ownership Certification is true and correct in all respects.
Notwithstanding any other provision of this Agreement or any other Transaction Document, the representations and warranties contained in this Section 6.01 shall be continuing, and remain in full force and effect until the Final Payout Date.
SECTION 6.02. Representations and Warranties of the Servicer. The Servicer represents and warrants to each Credit Party as of the Closing Date, on each Settlement Date and on each day that a Credit Extension or Release shall have occurred:
(a) Organization and Good Standing. The Servicer has been duly organized and is validly existing as a limited liability company in good standing under the laws of the State of Delaware, with power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted, and had at all relevant times, and now has, power, authority and legal right to service the Pool Receivables.
(b) Due Qualification. The Servicer is duly qualified to do business as a foreign limited liability company in good standing, and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business requires or shall require such qualification.
(c) Power and Authority; Due Authorization. The Servicer has all necessary limited liability company power and authority to (i) execute and deliver this Agreement and the other Transaction Documents to which it is a party and to carry out the respective terms of such agreements and (ii) perform its obligations under this Agreement and the other Transaction Documents to which it is a party and the execution, delivery and performance of, and the consummation of the transactions provided for in, this Agreement and the other Transaction Documents to which it is a party have been duly authorized by the Servicer by all necessary limited liability company action.
(d) Binding Obligations. This Agreement and each of the other Transaction Documents to which the Servicer is a party, when duly executed and delivered, shall constitute a legal, valid and binding obligation of the Servicer enforceable against the Servicer in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights in general and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.
(e) No Conflict or Violation. The consummation by the Servicer of the transactions contemplated by this Agreement and the other Transaction Documents and the fulfillment of the terms of such agreements by the Servicer shall not conflict with, result in any breach of any of the terms and provisions of or constitute (with or without notice or lapse of time) a default under, the limited liability company agreement of the Servicer, or any indenture, agreement or other instrument to which the Servicer is a party or by which it is bound, or result in the creation or imposition of any Adverse Claim upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument, other than this Agreement and the other Transaction Documents, or conflict with or violate any Applicable Law or, to the Servicer’s knowledge, any order, rule or regulation applicable to the Servicer of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Servicer or any of its properties.
(f) Litigation and Other Proceedings. There is no action, suit, proceeding or investigation pending, or to the Servicer’s knowledge threatened, against the Servicer before any
Governmental Authority: (i) asserting the invalidity of this Agreement or any of the other Transaction Documents; (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any other Transaction Document; or (iii) seeking any determination or ruling that could materially and adversely affect the performance by the Servicer of its obligations under, or the validity or enforceability of, this Agreement or any of the other Transaction Documents.
(g) No Consents. No authorizations, consents, orders and approvals of, filing with, notice to or other act by or in respect of any Governmental Authority or any other Person is required in connection with the transactions contemplated hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement or any of the other Transaction Documents except as to which have already been obtained or made and are in full force and effect.
(h) Compliance with Applicable Law. The Servicer (i) shall duly satisfy all obligations on its part to be fulfilled under or in connection with the Pool Receivables and the related Contracts, (ii) has maintained in effect all qualifications required under Applicable Law in order to properly service the Pool Receivables and (iii) has complied in all material respects with all Applicable Laws in connection with servicing the Pool Receivables.
(i) Accuracy of Information. All Information Packages, Interim Reports, Loan Requests, certificates, reports, statements, documents and other information furnished to the Administrative Agent or any other Credit Party by the Servicer pursuant to any provision of this Agreement or any other Transaction Document, or in connection with or pursuant to any amendment or modification of, or waiver under, this Agreement or any other Transaction Document, is, at the time the same are so furnished, complete and correct in all material respects on the date the same are furnished to the Administrative Agent or such other Credit Party, and does not contain any material misstatement of fact or omit to state a material fact necessary to make the statements contained therein not misleading.
(j) Location of Records. The offices where the initial Servicer keeps all of its records relating to the servicing of the Pool Receivables are located at Shepard Street, Ripon, WI 54971-0990.
(k) Credit and Collection Policy. The Servicer has complied in all material respects with the Credit and Collection Policy with regard to each Pool Receivable and the related Contracts.
(l) Eligible Receivables. Each Receivable included as an Eligible Receivable in the calculation of the Net Receivables Pool Balance as of any date is an Eligible Receivable as of such date.
(m) Servicing Programs. No license or approval is required for the Administrative Agent’s use of any software or other computer program used by the Servicer, any Originator or any Sub-Servicer in the servicing of the Pool Receivables, other than those which have been obtained and are in full force and effect.
(n) Servicing of Pool Receivables. Since the Closing Date there has been no material adverse change in the ability of the Servicer or to the Servicer’s knowledge any Sub-Servicer to service and collect the Pool Receivables and the Related Security.
(o) Other Transaction Documents. Each representation and warranty made by the Servicer under each other Transaction Document to which it is a party (including, without limitation, the Sale and Contribution Agreement) is true and correct in all material respects as of the date when made.
(p) No Material Adverse Effect. Since the Closing Date there has been no Material Adverse Effect on the Servicer.
(q) Investment Company Act. The Servicer is not an “investment company,” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act.
(r) Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws.
(i) No: (a) Covered Entity, nor to the Servicer’s knowledge any employees, officers, directors, affiliates, consultants, brokers, or agents acting on a Covered Entity’s behalf in connection with this Agreement: (i) is a Sanctioned Person; (ii) directly, or indirectly through any third party, is engaged in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction, or any transactions or other dealings that otherwise are prohibited by any Anti-Terrorism Laws; (b) Collateral is Embargoed Property.
(ii) Each Covered Entity has (a) conducted its business in compliance with all Anti-Corruption Laws and (b) has instituted and maintains policies and procedures designed to ensure compliance with such Applicable Laws.
(s) Financial Condition. The consolidated balance sheets of the Servicer and its consolidated Subsidiaries as of March 31, 2018 and the related statements of income and shareholders’ equity of the Servicer and its consolidated Subsidiaries for the fiscal quarter then ended, copies of which have been furnished to the Administrative Agent and the Lenders, present fairly in all material respects the consolidated financial position of the Servicer and its consolidated Subsidiaries for the period ended on such date, all in accordance with GAAP.
(t) Bulk Sales Act. No transaction contemplated by this Agreement requires compliance by it with any bulk sales act or similar law.
(u) Taxes. The Servicer has (i) timely filed all federal income tax returns and all other material tax returns required to be filed by it and (ii) paid, or caused to be paid, all taxes, assessments and other governmental charges, if any, other than taxes, assessments and other governmental charges being contested in good faith by appropriate proceedings and as to which adequate reserves have been provided in accordance with GAAP.
(v) Opinions. The facts regarding the Borrower, the Servicer, each Originator, the Receivables, the Related Security and the related matters set forth or assumed in each of the
opinions of counsel delivered in connection with this Agreement and the Transaction Documents are true and correct in all material respects.
(w) Other Transaction Documents. Each representation and warranty made by the Servicer under each other Transaction Document to which it is a party is true and correct in all material respects as of the date when made.
(x) Solvency. The Servicer is Solvent. The Servicer is not a defendant in any case, proceeding or other action seeking issuance of a writ or warrant of attachment, execution, distraint or similar process against all or any part of its assets.
(y) Non-Consolidation of the Servicer.
(i) The Servicer has, consistent with this Agreement and the other Transaction Documents, been operated in such a manner that it would not be substantively consolidated with the Borrower in the event of the bankruptcy or insolvency of the Servicer or the Borrower. Without limiting the foregoing the Servicer has (A) maintained its books, records and cash management accounts separate from those of the Borrower, (B) maintained its bank accounts separate from those of the Borrower, (C) maintained separate financial statements, showing its assets and liabilities separate and apart from those of the Borrower or maintained consolidated financial statements that contain a footnote indicating that the assets of the Borrower are not available to creditors of the Servicer, (D) paid its own liabilities and expenses and not any of the Borrower’s liabilities or expenses, (E) allocated fairly and reasonably any overhead expenses that are shared with the Borrower and (F) held itself out as a separate entity from the Borrower.
(ii) The Servicer has not (A) held itself out as being liable for the debts of the Borrower, (B) acted or conducted its business in the name of the Borrower, (C) engaged in any joint activity or transaction of any kind with or for the benefit of the Borrower including any loan to or from or guarantee of the indebtedness of any Affiliate, (D) commingled its funds or other assets with those of the Borrower, (E) created, incurred, assumed, guaranteed or in any manner became liable in respect of any indebtedness of the Borrower, (F) entered into a transaction with the Borrower unless such transaction is commercially reasonable and on the same terms as would be available in an arm’s length transaction with a person or entity that is not an Affiliate, or (G) taken any other action that would be inconsistent with maintaining the separate legal identity of the Borrower.
(z) Compliance with ALS Credit Agreement. The Borrower is a “Securitization Entity” under, and as defined in, the ALS Credit Agreement. The Transaction Documents and the transactions contemplated thereby constitute a “Permitted Securitization Financing” under, and as defined in, the ALS Credit Agreement.
(aa) Linked Accounts. There are no “Linked Accounts” (as defined in the Account Control Agreement with Wells Fargo Bank, National Association) with respect to any Collection Account maintained at Wells Fargo Bank, National Association.
(bb) Reaffirmation of Representations and Warranties. On the date of each Credit Extension, on the date of each Release, on each Settlement Date and on the date each Information Package or Interim Report is delivered to the Administrative Agent or any Lender hereunder, the Servicer shall be deemed to have certified that (i) all representations and warranties of the Servicer hereunder are true and correct in all material respects on and as of such day as though made on and as of such day, except for representations and warranties which apply as to an earlier date (in which case such representations and warranties shall be true and correct in all material respects as of such date) and (ii) no Receivables Termination Event, Unmatured Receivables Termination Event or Rapid Amortization Event has occurred and is continuing or will result from such Credit Extension or Release.
(cc) Beneficial Ownership Certification. As of the Third Amendment Date, the information included in the Beneficial Ownership Certification is true and correct in all respects.
Notwithstanding any other provision of this Agreement or any other Transaction Document, the representations and warranties contained in this Section 6.02 shall be continuing, and remain in full force and effect until the Final Payout Date.
ARTICLE VII
COVENANTS
SECTION 7.01. Covenants of the Borrower. At all times from the Closing Date until the Final Payout Date:
(a) Payment of Principal and Interest. The Borrower shall duly and punctually pay Capital, Interest, Fees and all other amounts payable by the Borrower hereunder in accordance with the terms of this Agreement.
(b) Existence. The Borrower shall keep in full force and effect its existence and rights as a limited liability company under the laws of the State of Delaware, and shall obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement, the other Transaction Documents and the Collateral.
(c) Financial Reporting. The Borrower will maintain a system of accounting established and administered in accordance with GAAP, and the Borrower (or the Servicer on its behalf) shall furnish to the Administrative Agent and each Lender:
(i) Annual Financial Statements of the Borrower. As soon as publicly available and in any event by the Reporting Date after the end of each fiscal year of the Borrower, annual unaudited financial statements of the Borrower certified by a Financial Officer of the Borrower that they fairly present in all material respects, in accordance with GAAP, the financial condition of the Borrower as of the date indicated and the results of its operations for the periods indicated.
(ii) Information Packages and Interim Reports. As soon as available and in any event (A) not later than two (2) Business Days prior to each Settlement Date,
an Information Package as of the most recently completed Fiscal Month, (B) not later than the fifteenth (15th) calendar day of each calendar month, an Interim Report with respect to the Pool Receivables with data as of the immediately preceding Business Day, and (C) upon no less than ten (10) Business Days’ prior written notice from the Administrative Agent, on an ongoing basis from such notice, not later than the first Business Day of each calendar week, an Interim Report with respect to the Pool Receivables with data as of the last Business Day of the immediately preceding calendar week; provided, that at any time after the occurrence and during the continuance of a Rapid Amortization Event or a Receivables Termination Event, upon prior written notice from the Administrative Agent, the Borrower shall furnish or cause to be furnished to the Administrative Agent and each Lender on each Business Day an Interim Report with respect to the Pool Receivables with data as of the close of business on the immediately preceding Business Day.
(iii) Other Information. Such other information (including non-financial information) as the Administrative Agent or any Lender may from time to time reasonably request.
(iv) Quarterly Financial Statements of Parent. As soon as publicly available and in any event no later than the Reporting Date after the end of each of the first three (3) quarterly fiscal periods of the Parent, (A) the unaudited consolidated balance sheet and statements of income of Parent and its consolidated Subsidiaries as at the end of such fiscal quarter and the related unaudited consolidated statements of earnings and cash flows for such fiscal quarter and for the elapsed portion of the fiscal year ended with the last day of such fiscal quarter, in each case setting forth comparative figures for the corresponding fiscal quarter in the prior fiscal year, all of which shall be certified by a Financial Officer of Parent that they fairly present in all material respects, in accordance with GAAP, the financial condition of Parent and its consolidated Subsidiaries as of the dates indicated and the results of their operations for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes and (B) management’s discussion and analysis of the important operational and financial developments during such fiscal quarter.
(v) Annual Financial Statements of Parent. As soon as publicly available and in any event by the Reporting Date after the end of each fiscal year of the Parent, the consolidated balance sheet of Parent and its consolidated Subsidiaries as at the end of such fiscal year and the related consolidated statements of earnings and cash flows for such fiscal year setting forth comparative figures for the preceding fiscal year, all reported on by independent certified public accountants of recognized national standing (without (x) a “going concern” or like qualification or exception or (y) a qualification as to the scope of the audit) to the effect that such consolidated financial statements present fairly in all material respects, in accordance with GAAP, the financial condition of Parent and its consolidated Subsidiaries as of the dates indicated and the results of their operations for the periods indicated.
(vi) Other Reports and Filings. Promptly (but in any event within ten days) after the filing or delivery thereof, copies of all financial information, proxy materials and reports, if any, which Parent or any of its consolidated Subsidiaries shall publicly file
with the SEC or deliver to holders (or any trustee, agent or other representative therefor) of any of its material Debt pursuant to the terms of the documentation governing the same.
(d) Notices. The Borrower (or the Servicer on its behalf) will notify the Administrative Agent and each Lender in writing of any of the following events promptly upon (but in no event later than three (3) Business Days after) a Financial Officer learning of the occurrence thereof, with such notice describing the same, and if applicable, the steps being taken by the Person(s) affected with respect thereto:
(i) Notice of Receivables Termination Event, Unmatured Receivables Termination Event or Rapid Amortization Event. A statement of a Financial Officer of the Borrower setting forth details of any Receivables Termination Event, Unmatured Receivables Termination Event, Rapid Amortization Event or event or condition, if declared by the Administrative Agent, that would constitute a Rapid Amortization Event that has occurred and is continuing and the action which the Borrower proposes to take with respect thereto.
(ii) Representations and Warranties. The failure of any representation or warranty made or deemed to be made by the Borrower under this Agreement or any other Transaction Document to be true and correct in any material respect when made.
(iii) Litigation. The institution of any litigation, arbitration proceeding or governmental proceeding with respect to the Borrower, the Servicer or any Originator, which with respect to any Person other than the Borrower, could reasonably be expected to have a Material Adverse Effect.
(iv) Adverse Claim. (A) Any Person shall obtain an Adverse Claim upon the Collateral or any portion thereof, (B) any Person other than the Borrower, the Servicer or the Administrative Agent shall obtain any rights or direct any action with respect to any Collection Account (or related Lock-Box) or (C) any Obligor shall receive any change in payment instructions with respect to Pool Receivable(s) from a Person other than the Servicer or the Administrative Agent.
(v) Name Changes. At least thirty (30) days before any change in any Originator’s or the Borrower’s name, jurisdiction of organization or any other change requiring the amendment of UCC financing statements.
(vi) Change in Accountants or Accounting Policy. Any change in (A) the external accountants of the Borrower, the Servicer, any Originator or the Parent, (B) any accounting policy of the Borrower or (C) any material accounting policy of any Originator that is relevant to the transactions contemplated by this Agreement or any other Transaction Document (it being understood that any change to the manner in which any Originator accounts for the Pool Receivables shall be deemed “material” for such purpose).
(vii) Termination Event. The occurrence of a Sale and Contribution Termination Event under the Sale and Contribution Agreement.
(viii) Material Adverse Change. Promptly after the occurrence thereof, notice of any material adverse change in the business, operations, property or financial condition of the Borrower, the Servicer or any Originator.
(e) Conduct of Business. The Borrower will carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted and will do all things necessary to remain duly organized, validly existing and in good standing as a domestic organization in its jurisdiction of organization and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted.
(f) Compliance with Laws. The Borrower will comply with all Applicable Laws to which it may be subject if the failure to comply could reasonably be expected to have a Material Adverse Effect.
(g) Furnishing of Information and Inspection of Receivables. The Borrower will furnish or cause to be furnished to the Administrative Agent and each Lender from time to time such information with respect to the Pool Receivables and the other Collateral as the Administrative Agent or any Lender may reasonably request. The Borrower will, at the Borrower’s expense, during regular business hours with prior written notice (i) permit the Administrative Agent and each Lender or their respective agents or representatives to (A) examine and make copies of and abstracts from all books and records relating to the Pool Receivables or other Collateral, (B) visit the offices and properties of the Borrower for the purpose of examining such books and records and (C) discuss matters relating to the Pool Receivables, the other Collateral or the Borrower’s performance hereunder or under the other Transaction Documents to which it is a party with any of the officers, directors, employees or independent public accountants of the Borrower having knowledge of such matters and (ii) without limiting the provisions of clause (i) above, during regular business hours, at the Borrower’s expense, upon prior written notice from the Administrative Agent, permit certified public accountants or other auditors acceptable to the Administrative Agent to conduct a review of its books and records with respect to such Pool Receivables and other Collateral; provided, that the Borrower shall be required to reimburse the Administrative Agent for only one (1) such visit or review in any twelve-month period (whether pursuant to clause (i) or (ii) above) unless a Receivables Termination Event or Rapid Amortization Event has occurred and is continuing.
(h) Payments on Receivables, Collection Accounts. The Borrower (or the Servicer on its behalf) will, and will cause each Originator to, at all times, instruct all Obligors to deliver payments on the Pool Receivables to a Collection Account or a Lock-Box. The Borrower (or the Servicer on its behalf) will, and will cause each Originator to, at all times, maintain such books and records necessary to identify Collections received from time to time on Pool Receivables and to segregate such Collections from other property of the Servicer and the Originators. If any payments on the Pool Receivables or other Collections are received by the Borrower, the Servicer or an Originator, it shall hold such payments in trust for the benefit of the Administrative Agent, the Lenders and the other Secured Parties and promptly (but in any event within two (2) Business Days after receipt) remit such funds into a Collection Account. The Borrower (or the Servicer on its behalf) will cause each Collection Account Bank to comply with the terms of each applicable Account Control Agreement. The Borrower shall not permit funds other than Collections on Pool Receivables and other Collateral to be deposited into any Collection
Account. If such funds are nevertheless deposited into any Collection Account, the Borrower (or the Servicer on its behalf) will within two (2) Business Days identify and transfer such funds to the appropriate Person entitled to such funds. The Borrower will not, and will not permit the Servicer, any Originator or any other Person to commingle Collections or other funds to which the Administrative Agent, any Lender or any other Secured Party is entitled, with any other funds. The Borrower shall only add a Collection Account (or a related Lock-Box) or a Collection Account Bank to those listed on Schedule II to this Agreement, if the Administrative Agent has received notice of such addition and an executed and acknowledged copy of an Account Control Agreement (or an amendment thereto) in form and substance acceptable to the Administrative Agent from the applicable Collection Account Bank. The Borrower shall (and shall permit the Servicer or any Sub-Servicer to) only replace or terminate a Collection Account Bank or close a Collection Account (or a related Lock-Box) with the prior written consent of the Administrative Agent and shall provide the Administrative Agent with a signed and acknowledged Account Control Agreement (or an amendment thereto) with respect to such new Collection Accounts (or any related Lock-Box).
(i) Collection Account at PNC and Instructions to Obligors. On or after the Closing Date, the Borrower (or the Servicer on its behalf) shall open, and shall thereafter maintain, a Collection Account at PNC (as Collection Account Bank) for purposes of receiving Collections on Pool Receivables. On or prior to the ninetieth (90th) day after the Closing Date (or such later date as agreed to in writing by the Administrative Agent in its sole discretion), the Borrower shall cause the Servicer to instruct all Obligors to deliver payments on the Pool Receivables to a Collection Account maintained at PNC (as Collection Account Bank) or to a Lock-Box associated with such a Collection Account.
(j) Sales, Liens, etc. Except as otherwise provided herein, the Borrower will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any Pool Receivable or other Collateral, or assign any right to receive income in respect thereof.
(k) Extension or Amendment of Pool Receivables. Except as otherwise permitted in Section 8.02, the Borrower will not, and will not permit the Servicer to, alter the delinquency status or adjust the Outstanding Balance or otherwise modify the terms of any Pool Receivable in any material respect, or amend, modify or waive, in any material respect, any term or condition of any related Contract. The Borrower shall at its expense, timely and fully perform and comply in all material respects with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Pool Receivables, and timely and fully comply with the Credit and Collection Policy with regard to each Pool Receivable and the related Contract.
(l) Change in Credit and Collection Policy. The Borrower will comply with the Credit and Collection Policy in all material respects. The Borrower will not make any material change in the Credit and Collection Policy without the prior written consent of the Administrative Agent. Promptly following any change in the Credit and Collection Policy, the Borrower will deliver a copy of the updated Credit and Collection Policy to the Administrative Agent and each Lender.
(m) Fundamental Changes. The Borrower shall not, without the prior written consent of the Administrative Agent and the Majority Lenders, permit itself (i) to merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, any Person or (ii) to be directly owned by any Person other than an Originator. The Borrower shall not, without the prior written consent of the Administrative Agent and the Majority Lenders, make any change in the Borrower’s name, identity, corporate structure or location or make any other change in the Borrower’s identity or corporate structure that could impair or otherwise render any UCC financing statement filed in connection with this Agreement or any other Transaction Document “seriously misleading” as such term (or similar term) is used in the applicable UCC.
(n) Books and Records. The Borrower shall maintain and implement (or cause the Servicer to maintain and implement) administrative and operating procedures (including an ability to recreate records evidencing Pool Receivables and related Contracts in the event of the destruction of the originals thereof), and keep and maintain (or cause the Servicer to keep and maintain) all documents, books, records, computer tapes and disks and other information reasonably necessary or advisable for the collection of all Pool Receivables (including records adequate to permit the daily identification of each Pool Receivable and all Collections of and adjustments to each existing Pool Receivable).
(o) Identifying of Records. The Borrower shall: (i) identify (or cause the Servicer to identify) its master data processing records relating to Pool Receivables and related Contracts with a legend that indicates that the Pool Receivables have been pledged in accordance with this Agreement and (ii) cause each Originator so to identify its master data processing records with such a legend.
(p) Change in Payment Instructions to Obligors. The Borrower shall not (and shall not permit the Servicer or any Sub-Servicer to) make any change in its (or their) instructions to the Obligors regarding payments to be made to the Collection Accounts (or any related Lock-Box), other than any instruction to remit payments to a different Collection Account (or any related Lock-Box), unless the Administrative Agent shall have received (i) prior written notice of such change and (ii) the Administrative Agent shall have consented to such change in writing.
(q) Security Interest, Etc. The Borrower shall (and shall cause the Servicer to), at its expense, take all action necessary or reasonably desirable to establish and maintain a valid and enforceable first priority perfected security interest in the Collateral, in each case free and clear of any Adverse Claim, in favor of the Administrative Agent (on behalf of the Secured Parties), including taking such action to perfect, protect or more fully evidence the security interest of the Administrative Agent (on behalf of the Secured Parties) as the Administrative Agent or any Secured Party may reasonably request. In order to evidence the security interests of the Administrative Agent under this Agreement, the Borrower shall, from time to time take such action, or execute and deliver such instruments as may be necessary (including, without limitation, such actions as are reasonably requested by the Administrative Agent) to maintain and perfect, as a first-priority interest, the Administrative Agent’s security interest in the Receivables, Related Security and Collections. The Borrower shall, from time to time and within the time limits established by law, prepare and present to the Administrative Agent for the Administrative Agent’s
authorization and approval, all financing statements, amendments, continuations or initial financing statements in lieu of a continuation statement, or other filings necessary to continue, maintain and perfect the Administrative Agent’s security interest as a first-priority interest. The Administrative Agent’s approval of such filings shall authorize the Borrower to file such financing statements under the UCC without the signature of the Borrower, any Originator or the Administrative Agent where allowed by Applicable Law. Notwithstanding anything else in the Transaction Documents to the contrary, the Borrower shall not have any authority to file a termination, partial termination, release, partial release, or any amendment that deletes the name of a debtor or excludes collateral of any such financing statements filed in connection with the Transaction Documents, without the prior written consent of the Administrative Agent.
(r) Certain Agreements. Without the prior written consent of the Administrative Agent and the Majority Lenders, the Borrower will not (and will not permit any Originator or the Servicer to) amend, modify, waive, revoke or terminate any Transaction Document to which it is a party or any provision of the Borrower’s organizational documents which requires the consent of the “Independent Manager” (as such term is used in the Borrower’s certificate of formation and limited liability company agreement).
(s) Restricted Payments. (i) Except pursuant to clause (ii) below, the Borrower will not: (A) purchase or redeem any of its membership interests, (B) declare or pay any dividend or set aside any funds for any such purpose, (C) prepay, purchase or redeem any Debt, (D) lend or advance any funds or (E) repay any loans or advances to, for or from any of its Affiliates (the amounts described in clauses (A) through (E) being referred to as “Restricted Payments”).
(ii) The Borrower may make Restricted Payments only out of the funds, if any, it receives pursuant to Sections 3.01 of this Agreement; provided that the Borrower shall not pay, make or declare any Restricted Payment (including any dividend) if, after giving effect thereto, any Receivables Termination Event, Unmatured Receivables Termination Event or Rapid Amortization Event shall have occurred and be continuing.
(t) Other Business. The Borrower will not: (i) engage in any business other than the transactions contemplated by the Transaction Documents, (ii) create, incur or permit to exist any Debt of any kind (or cause or permit to be issued for its account any letters of credit or bankers’ acceptances) other than pursuant to this Agreement or (iii) form any Subsidiary or make any investments in any other Person.
(u) Use of Collections Available to the Borrower. The Borrower shall apply the Collections available to the Borrower to make payments in the following order of priority: (i) the payment of its obligations under this Agreement and each of the other Transaction Documents and (ii) other legal and valid purposes.
(v) Further Assurances; Change in Name or Jurisdiction of Origination, etc. (i) The Borrower hereby authorizes and hereby agrees from time to time, at its own expense, promptly to execute (if necessary) and deliver all further instruments and documents, and to take all further actions, that may be necessary or desirable, or that the Administrative Agent may reasonably request, to perfect, protect or more fully evidence the security interest granted pursuant to this Agreement or any other Transaction Document, or to enable the Administrative Agent (on behalf
of the Secured Parties) to exercise and enforce the Secured Parties’ rights and remedies under this Agreement and the other Transaction Documents. Without limiting the foregoing, the Borrower hereby authorizes, and will, upon the request of the Administrative Agent, at the Borrower’s own expense, execute (if necessary) and file such financing statements or continuation statements, or amendments thereto, and such other instruments and documents, that may be necessary or desirable, or that the Administrative Agent may reasonably request, to perfect, protect or evidence any of the foregoing.
(ii) The Borrower authorizes the Administrative Agent to file financing statements, continuation statements and amendments thereto and assignments thereof, relating to the Receivables, the Related Security, the related Contracts, Collections with respect thereto and the other Collateral without the signature of the Borrower. A photocopy or other reproduction of this Agreement shall be sufficient as a financing statement where permitted by law.
(iii) The Borrower shall at all times be organized under the laws of the State of Delaware and shall not take any action to change its jurisdiction of organization.
(iv) The Borrower will not change its name, location, identity or corporate structure unless (x) the Borrower, at its own expense, shall have taken all action necessary or appropriate to perfect or maintain the perfection of the security interest under this Agreement (including, without limitation, the filing of all financing statements and the taking of such other action as the Administrative Agent may request in connection with such change or relocation) and (y) if requested by the Administrative Agent, the Borrower shall cause to be delivered to the Administrative Agent, an opinion, in form and substance satisfactory to the Administrative Agent as to such UCC perfection and priority matters as the Administrative Agent may request at such time.
(w) Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws. The Borrower covenants and agrees that:
(i) it shall promptly notify any Credit Party in writing upon the occurrence of a Reportable Compliance Event;
(ii) if, at any time, any Collateral becomes Embargoed Property, then, in addition to all other rights and remedies available to any Credit Party, upon request by any Credit Party, the Borrower shall provide substitute Collateral acceptable to the Administrative Agent that is not Embargoed Property;
(iii) it shall, and shall require each other Covered Entity to, conduct its business in compliance with all Anti-Corruption Laws and maintain policies and procedures designed to ensure compliance with such Applicable Laws;
(iv) it and its Subsidiaries will not: (A) become a Sanctioned Person or consent to, or approve of, any employees, officers, directors, affiliates, consultants, brokers, or agents acting on its behalf in connection with this Agreement becoming a Sanctioned Person; (B) directly, or indirectly through a third party, engage in any transactions or other dealings with or for the benefit of any Sanctioned Person or
Sanctioned Jurisdiction; provided that, with the prior written consent of the Administrative Agent (in its sole discretion), the Borrow may engage in such transactions or other dealings if they would not be in violation of any applicable Anti-Terrorism Law or International Trade Law; (C) directly or indirectly use the proceeds of the Loans (1) to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Person or Sanctioned Jurisdiction or (2) in any manner that could result (x) in a violation by any Person of Anti-Corruption Law (including any Credit Party, underwriter, advisor, investor, or otherwise) or (y) in a violation of any Applicable Law, including, without limitation, any applicable Anti-Corruption Law; (D) pay or repay any Borrower Obligations with Embargoed Property or funds derived from any unlawful activity; (E) consent to, or approve of, any Collateral becoming Embargoed Property; or (F) cause any Credit Party to violate any Anti-Terrorism Law; and
(v) it will not, and will not permit any its Subsidiaries to, directly or indirectly, use the Loans or any proceeds thereof (A) for any purpose which would breach any Anti-Corruption Laws in any jurisdiction in which any Covered Entity conducts business or (B) in any manner that could result (x) in a violation by any Person of Anti-Corruption Law (including any Credit Party, underwriter, advisor, investor, or otherwise) or (y) in a violation of any Applicable Law, including, without limitation, any applicable Anti-Corruption Law.
(x) Taxes. The Borrower will (i) timely file all federal income tax returns and all other material tax returns required to be filed by it and (ii) pay, or cause to be paid, all taxes, assessments and other governmental charges, if any, other than taxes, assessments and other governmental charges being contested in good faith by appropriate proceedings and as to which adequate reserves have been provided in accordance with GAAP.
(y) Borrower’s Tax Status. The Borrower will remain a wholly-owned subsidiary of a United States person (within the meaning of Section 7701(a)(30) of the Code) and not be subject to withholding under Section 1446 of the Code. No action will be taken that would cause the Borrower to (i) be treated other than as a “disregarded entity” within the meaning of U.S. Treasury Regulation § 301.7701-3 for U.S. federal income tax purposes or (ii) become an association taxable as a corporation or a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes. The Borrower shall not become subject to any Tax in any jurisdiction outside the United States of America.
(z) Liquidity Coverage Ratio. The Borrower shall not issue any LCR Security.
(aa) Linked Accounts. The Borrower shall not permit any “Linked Account” (as defined in the Account Control Agreement with Wells Fargo Bank, National Association) to exist with respect to any Collection Account maintained at Wells Fargo Bank, National Association.
(bb) Beneficial Ownership Certification. The Borrower shall promptly give
notice to the Administrative Agent of any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified in parts (c) or (d) of such certification.
SECTION 7.02. Covenants of the Servicer. At all times from the Closing Date until the Final Payout Date:
(a) Existence. The Servicer shall keep in full force and effect its existence and rights as a corporation or other entity under the laws of the State of Delaware. The Servicer shall obtain and preserve its qualification to do business in each jurisdiction in which the conduct of its business or the servicing of the Pool Receivables as required by this Agreement requires such qualification, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.
(b) Financial Reporting. The Servicer will maintain a system of accounting established and administered in accordance with GAAP, and the Servicer shall furnish to the Administrative Agent and each Lender:
(i) Compliance Certificates. (a) A compliance certificate as soon as available and in any event by the Reporting Date after the end of each fiscal year of the Borrower, in form and substance substantially similar to Exhibit G signed by a Financial Officer of the Servicer stating that no Receivables Termination Event, Unmatured Receivables Termination Event or Rapid Amortization Event has occurred and is continuing, or if any Receivables Termination Event, Unmatured Receivables Termination Event or Rapid Amortization Event has occurred and is continuing, stating the nature and status thereof and (b) within forty-five (45) days after the close of each fiscal quarter of the Servicer, a compliance certificate in form and substance substantially similar to Exhibit G signed by a Financial Officer of the Servicer stating that no Receivables Termination Event, Unmatured Receivables Termination Event or Rapid Amortization Event has occurred and is continuing, or if any Receivables Termination Event, Unmatured Receivables Termination Event or Rapid Amortization Event has occurred and is continuing, stating the nature and status thereof.
(ii) Information Packages and Interim Reports. As soon as available and in any event (A) not later than two (2) Business Days prior to each Settlement Date, an Information Package as of the most recently completed Fiscal Month, (B) not later than the fifteenth (15th) calendar day of each calendar month, an Interim Report with respect to the Pool Receivables with data as of the immediately preceding Business Day, and (C) upon no less than ten (10) Business Days’ prior written notice from the Administrative Agent, on an ongoing basis from such notice, not later than the first Business Day of each calendar week, an Interim Report with respect to the Pool Receivables with data as of the last Business Day of the immediately preceding calendar week; provided, that at any time after the occurrence and during the continuance of a Rapid Amortization Event or a Receivables Termination Event, upon prior written notice from the Administrative Agent, the Servicer shall furnish or cause to be furnished to the Administrative Agent and each Lender on each Business Day an Interim Report with respect to the Pool Receivables with data as of the close of business on the immediately preceding Business Day.
(iii) Other Information. Such other information (including non-financial information) as the Administrative Agent or any Lender may from time to time reasonably request.
(c) Notices. The Servicer will notify the Administrative Agent and each Lender in writing of any of the following events promptly upon (but in no event later than three (3) Business Days after) a Financial Officer or other officer learning of the occurrence thereof, with such notice describing the same, and if applicable, the steps being taken by the Person(s) affected with respect thereto:
(i) Notice of Receivables Termination Event, Unmatured Receivables Termination Event or Rapid Amortization Event. A statement of a Financial Officer of the Servicer setting forth details of any Receivables Termination Event, Unmatured Receivables Termination Event, Rapid Amortization Event or event or condition, if declared by the Administrative Agent, that would constitute a Rapid Amortization Event that has occurred and is continuing and the action which the Servicer proposes to take with respect thereto.
(ii) Representations and Warranties. The failure of any representation or warranty made or deemed made by the Servicer under this Agreement or any other Transaction Document to be true and correct in any material respect when made.
(iii) Litigation. The institution of any litigation, arbitration proceeding or governmental proceeding with respect to the Borrower, the Servicer or any Originator which could reasonably be expected to have a Material Adverse Effect.
(iv) Adverse Claim. (A) Any Person shall obtain an Adverse Claim upon the Collateral or any portion thereof, (B) any Person other than the Borrower, the Servicer or the Administrative Agent shall obtain any rights or direct any action with respect to any Collection Account (or related Lock-Box) or (C) any Obligor shall receive any change in payment instructions with respect to Pool Receivable(s) from a Person other than the Servicer or the Administrative Agent.
(v) Name Changes. At least thirty (30) days before any change in any Originator’s or the Borrower’s name, jurisdiction of organization or any other change requiring the amendment of UCC financing statements.
(vi) Change in Accountants or Accounting Policy. Any change in (i) the external accountants of the Borrower, the Servicer, any Originator or the Parent, (ii) any accounting policy of the Borrower or (iii) any material accounting policy of any Originator that is relevant to the transactions contemplated by this Agreement or any other Transaction Document (it being understood that any change to the manner in which any Originator accounts for the Pool Receivables shall be deemed “material” for such purpose).
(vii) Termination Event. The occurrence of a Sale and Contribution Termination Event.
(viii) Material Adverse Change. Promptly after the occurrence thereof, notice of any material adverse change in the business, operations, property or financial condition of any Originator, the Servicer or the Borrower.
(d) Conduct of Business. The Servicer will carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted, and will do all things necessary to remain duly organized, validly existing and in good standing as a domestic limited liability company in its jurisdiction of organization and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted if the failure to have such authority could reasonably be expected to have a Material Adverse Effect.
(e) Compliance with Laws. The Servicer will comply with all Applicable Laws to which it may be subject if the failure to comply could reasonably be expected to have a Material Adverse Effect.
(f) Furnishing of Information and Inspection of Receivables. The Servicer will furnish or cause to be furnished to the Administrative Agent and each Lender from time to time such information with respect to the Pool Receivables and the other Collateral as the Administrative Agent or any Lender may reasonably request. The Servicer will, at the Servicer’s expense, during regular business hours with prior written notice, (i) permit the Administrative Agent and each Lender or their respective agents or representatives to (A) examine and make copies of and abstracts from all books and records relating to the Pool Receivables or other Collateral, (B) visit the offices and properties of the Servicer for the purpose of examining such books and records and (C) discuss matters relating to the Pool Receivables, the other Collateral or the Servicer’s performance hereunder or under the other Transaction Documents to which it is a party with any of the officers, directors, employees or independent public accountants of the Servicer (provided that representatives of the Servicer are present during such discussions) having knowledge of such matters and (ii) without limiting the provisions of clause (i) above, during regular business hours, at the Servicer’s expense, upon prior written notice from the Administrative Agent, permit certified public accountants or other auditors acceptable to the Administrative Agent to conduct a review of its books and records with respect to the Pool Receivables and other Collateral; provided, that the Servicer shall be required to reimburse the Administrative Agent for only one (1) such visit or review in any twelve-month period (whether pursuant to clause (i) or (ii) above) unless a Receivables Termination Event or Rapid Amortization Event has occurred and is continuing.
(g) Payments on Receivables, Collection Accounts. The Servicer will at all times, instruct all Obligors to deliver payments on the Pool Receivables to a Collection Account or a Lock-Box. The Servicer will, at all times, maintain such books and records necessary to identify Collections received from time to time on Pool Receivables and to segregate such Collections from other property of the Servicer and the Originators. If any payments on the Pool Receivables or other Collections are received by the Borrower, the Servicer or an Originator, it shall hold such payments in trust for the benefit of the Administrative Agent, the Lenders and the other Secured Parties and promptly (but in any event within two (2) Business Days after receipt) remit such funds into a Collection Account; provided, however, that up to three hundred thousand dollars ($300,000) of such payments deposited to a lockbox account associated with another financing facility in a calendar month may be remitted to a Collection Account on a later date which is no later than the last day of the calendar month in which they were received. Until such amounts are so remitted, the Servicer shall (or shall cause such recipient to) segregate such payments and hold such payments in trust for the benefit of the Administrative Agent, the Lenders and the other Secured Parties. Based upon the amounts set forth in the Information Package or an
Interim Report delivered pursuant to Section 7.02(b) the Servicer shall distribute the Collections in the Collection Accounts according to the priority of payments set forth in Section 3.01(a). The Servicer shall not permit funds other than Collections on Pool Receivables and other Collateral to be deposited into any Collection Account. If such funds are nevertheless deposited into any Collection Account, the Servicer will within two (2) Business Days identify and transfer such funds to the appropriate Person entitled to such funds. The Servicer will not, and will not permit the Borrower, any Originator or any other Person to commingle Collections or other funds to which the Administrative Agent, any Lender or any other Secured Party is entitled, with any other funds. The Servicer shall only add a Collection Account (or a related Lock-Box), or a Collection Account Bank to those listed on Schedule II to this Agreement, if the Administrative Agent has received notice of such addition and an executed and acknowledged copy of an Account Control Agreement (or an amendment thereto) in form and substance acceptable to the Administrative Agent from the applicable Collection Account Bank. The Servicer shall (and shall permit any Sub-Servicer to) only replace or terminate a Collection Account Bank or close a Collection Account (or a related Lock-Box) with the prior written consent of the Administrative Agent and shall provide the Administrative Agent with a signed and acknowledged Account Control Agreement (or an amendment thereto) with respect to such new Collection Accounts (or any related Lock-Box).
(h) Collection Account at PNC and Instructions to Obligors. On or after the Closing Date, the Servicer shall cause the Borrower to open, and to thereafter maintain, a Collection Account at PNC (as Collection Account Bank) for purposes of receiving Collections on Pool Receivables. On or prior to the ninetieth (90th) day after the Closing Date (or such later date as agreed to in writing by the Administrative Agent in its sole discretion), the Servicer shall instruct all Obligors to deliver payments on the Pool Receivables to a Collection Account maintained at PNC (as Collection Account Bank) or to a Lock-Box associated with such a Collection Account.
(i) Extension or Amendment of Pool Receivables. Except as otherwise permitted in Section 8.02, the Servicer will not alter the delinquency status or adjust the Outstanding Balance or otherwise modify the terms of any Pool Receivable in any material respect, or amend, modify or waive, in any material respect, any term or condition of any related Contract. The Servicer shall at its expense, timely and fully perform and comply in all material respects with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Pool Receivables, and timely and fully comply with the Credit and Collection Policy with regard to each Pool Receivable and the related Contract.
(j) Change in Credit and Collection Policy. The Servicer will comply with the Credit and Collection Policy in all material respects. The Servicer will not make any material change in the Credit and Collection Policy without the prior written consent of the Administrative Agent. Promptly following any change in the Credit and Collection Policy, the Servicer will deliver a copy of the updated Credit and Collection Policy to the Administrative Agent and each Lender.
(k) Records. The Servicer will maintain and implement administrative and operating procedures (including an ability to recreate records evidencing Pool Receivables and related Contracts in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records, computer tapes and disks and other information reasonably
necessary or advisable for the collection of all Pool Receivables (including records adequate to permit the daily identification of each Pool Receivable and all Collections of and adjustments to each existing Pool Receivable).
(l) Identifying of Records. The Servicer shall identify its master data processing records relating to Pool Receivables and related Contracts with a legend that indicates that the Pool Receivables have been pledged in accordance with this Agreement.
(m) Change in Payment Instructions to Obligors. The Servicer shall not (and shall not permit any Sub-Servicer to) make any change in its instructions to the Obligors regarding payments to be made to the Collection Accounts (or any related Lock-Box), other than any instruction to remit payments to a different Collection Account (or any related Lock-Box), unless the Administrative Agent shall have received (i) prior written notice of such addition, termination or change and (ii) the Administrative Agent shall have consented to such change in writing.
(n) Security Interest, Etc. The Servicer shall, at its expense, take all action necessary or reasonably desirable to establish and maintain a valid and enforceable first priority perfected security interest in the Collateral, in each case free and clear of any Adverse Claim in favor of the Administrative Agent (on behalf of the Secured Parties), including taking such action to perfect, protect or more fully evidence the security interest of the Administrative Agent (on behalf of the Secured Parties) as the Administrative Agent or any Secured Party may reasonably request. In order to evidence the security interests of the Administrative Agent under this Agreement, the Servicer shall, from time to time take such action, or execute and deliver such instruments as may be necessary (including, without limitation, such actions as are reasonably requested by the Administrative Agent) to maintain and perfect, as a first-priority interest, the Administrative Agent’s security interest in the Receivables, Related Security and Collections. The Servicer shall, from time to time and within the time limits established by law, prepare and present to the Administrative Agent for the Administrative Agent’s authorization and approval, all financing statements, amendments, continuations or initial financing statements in lieu of a continuation statement, or other filings necessary to continue, maintain and perfect the Administrative Agent’s security interest as a first-priority interest. The Administrative Agent’s approval of such filings shall authorize the Servicer to file such financing statements under the UCC without the signature of the Borrower, any Originator or the Administrative Agent where allowed by Applicable Law. Notwithstanding anything else in the Transaction Documents to the contrary, the Servicer shall not have any authority to file a termination, partial termination, release, partial release, or any amendment that deletes the name of a debtor or excludes collateral of any such financing statements filed in connection with the Transaction Documents, without the prior written consent of the Administrative Agent.
(o) Further Assurances; Change in Name or Jurisdiction of Origination, etc. The Servicer hereby authorizes and hereby agrees from time to time, at its own expense, promptly to execute (if necessary) and deliver all further instruments and documents, and to take all further actions, that may be necessary or desirable, or that the Administrative Agent may reasonably request, to perfect, protect or more fully evidence the security interest granted pursuant to this Agreement or any other Transaction Document, or to enable the Administrative Agent (on behalf of the Secured Parties) to exercise and enforce their respective rights and remedies under this Agreement or any other Transaction Document. Without limiting the foregoing, the Servicer
hereby authorizes, and will, upon the request of the Administrative Agent, at the Servicer’s own expense, execute (if necessary) and file such financing statements or continuation statements, or amendments thereto, and such other instruments and documents, that may be necessary or desirable, or that the Administrative Agent may reasonably request, to perfect, protect or evidence any of the foregoing.
(p) Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws. The Servicer covenants and agrees that:
(i) it shall promptly notify any Credit Party in writing upon the occurrence of a Reportable Compliance Event;
(ii) if, at any time, any Collateral becomes Embargoed Property, then, in addition to all other rights and remedies available to any Credit Party, upon request by any Credit Party, it shall cause the Borrower to provide substitute Collateral acceptable to the Administrative Agent that is not Embargoed Property;
(iii) it shall, and shall require each other Covered Entity to, conduct its business in compliance with all Anti-Corruption Laws and maintain policies and procedures designed to ensure compliance with such Applicable Laws;
(iv) it and its Subsidiaries will not: (A) become a Sanctioned Person or consent to, or approve of, any employees, officers, directors, affiliates, consultants, brokers, or agents acting on its behalf in connection with this Agreement becoming a Sanctioned Person; (B) directly, or indirectly through a third party, engage in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction; provided that, with the prior written consent of the Administrative Agent (in its sole discretion), the Servicer may engage in such transactions or other dealings if they would not be in violation of any applicable Anti-Terrorism Law or International Trade Law; (C) directly or indirectly use the proceeds of the Loans (1) to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Person or Sanctioned Jurisdiction or (2) in any manner that could result (x) in a violation by any Person of Anti-Corruption Law (including any Credit Party, underwriter, advisor, investor, or otherwise) or (y) in a violation of any Applicable Law, including, without limitation, any applicable Anti-Corruption Law; (D) pay or repay any Borrower Obligations with Embargoed Property or funds derived from any unlawful activity; (E) consent to, or approve of, any Collateral becoming Embargoed Property; or (F) cause any Credit Party to violate any Anti-Terrorism Law; and
(v) it will not, and will not permit any its Subsidiaries to, directly or indirectly, use the Loans or any proceeds thereof (A) for any purpose which would breach any Anti-Corruption Laws in any jurisdiction in which any Covered Entity conducts business or (B) in any manner that could result (x) in a violation by any Person of Anti-Corruption Law (including any Credit Party, underwriter, advisor, investor, or otherwise) or (y) in a violation of any Applicable Law, including, without limitation, any applicable Anti-Corruption Law.
(q) Taxes. The Servicer will (i) timely file all federal income tax returns and all other material tax returns required to be filed by it and (ii) pay, or cause to be paid, all taxes, assessments and other governmental charges, if any, other than taxes, assessments and other governmental charges being contested in good faith by appropriate proceedings and as to which adequate reserves have been provided in accordance with GAAP, except in each case to the extent that such failure to file or pay could not reasonably be expected to have a Material Adverse Effect.
(r) Borrower’s Tax Status. The Servicer shall not take or cause any action to be taken that could result in the Borrower (i) being treated other than as a “disregarded entity” within the meaning of U.S. Treasury Regulation § 301.7701-3 for U.S. federal income tax purposes or (ii) becoming an association taxable as a corporation or a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes.
(s) Credit Risk Retention. The Servicer shall, and shall cause each Originator to, cooperate with each Credit Party (including by providing such information and entering into or delivering such additional agreements or documents reasonably requested by such Credit Party) to the extent reasonably necessary to assure such Credit Party that the Originators retain credit risk in the amount and manner required by the Credit Risk Retention Rules and to permit such Credit Party to perform its due diligence and monitoring obligations (if any) under the Credit Risk Retention Rules.
(t) Linked Accounts. The Servicer shall not permit any “Linked Account” (as defined in the Account Control Agreement with Wells Fargo Bank, National Association) to exist with respect to any Collection Account maintained at Wells Fargo Bank, National Association.
(u) Frequency of Billing. The Servicer shall prepare and deliver (or cause to be prepared and delivered) invoices with respect to all Receivables in accordance with the Credit and Collection Policies, but in any event no less frequently than as required under the Contract related to such Receivable.
(v) Compliance with ALS Credit Agreement. Alliance shall cause Alliance Laundry Holdings LLC to comply with each of the covenants set forth in Article VI of the ALS Credit Agreement as in effect on the Eighth Amendment Effective Date (without giving effect to any amendment, modification, consent, supplement or other modification to Article VI (directly or indirectly, including any defined terms contained therein) of the ALS Credit Agreement after the Eighth Amendment Effective Date unless such amendment is consented to in writing by the Administrative Agent and the Majority Lenders).
(w) Beneficial Ownership Certification. The Servicer shall promptly give notice to the Administrative Agent of any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified in parts (c) or (d) of such certification.
SECTION 7.03. Separate Existence of the Borrower. Each of the Borrower and the Servicer hereby acknowledges that the Secured Parties, the Lenders and the Administrative Agent are entering into the transactions contemplated by this Agreement and the other Transaction Documents in reliance upon the Borrower’s identity as a legal entity separate from any Originator,
the Servicer and their Affiliates. Therefore, each of the Borrower and the Servicer shall take all steps specifically required by this Agreement or reasonably required by the Administrative Agent or any Lender to continue the Borrower’s identity as a separate legal entity and to make it apparent to third Persons that the Borrower is an entity with assets and liabilities distinct from those of the Originators, the Servicer and any other Person, and is not a division of the Originators, the Servicer, its Affiliates or any other Person. Without limiting the generality of the foregoing and in addition to and consistent with the other covenants set forth herein, each of the Borrower and the Servicer shall take such actions as shall be required in order that:
(a) Special Purpose Entity. The Borrower will be a special purpose company whose primary activities are restricted in its certificate of formation to: (i) purchasing or otherwise acquiring from the Originators, owning, holding, collecting, granting security interests or selling interests in the Collateral, (ii) entering into agreements for the selling, servicing and financing of the Receivables Pool (including the Transaction Documents) and (iii) conducting such other activities as it deems necessary or appropriate to carry out its primary activities.
(b) No Other Business or Debt. The Borrower shall not engage in any business or activity except as set forth in this Agreement nor, incur any indebtedness or liability other than as expressly permitted by the Transaction Documents.
(c) Independent Manager. Not fewer than two members of the Borrower’s board of managers (each an “Independent Manager”) shall be a natural person who (i) for the five-year period prior to such person’s appointment as Independent Manager has not been, and during the continuation of such person’s service as Independent Manager is not: (A) an employee, director, stockholder, manager, partner or officer of the Borrower or any of its Affiliates (other than such person’s service as an Independent Manager of the Borrower or any of the Alliance’s Affiliates); (B) a customer, creditor or supplier of the Borrower or any of its Affiliates; (C) a beneficial owner at the time of such individual’s appointment as an Independent Manager, or at any time thereafter while serving as an Independent Manager, of more than 2% of the voting securities of Alliance or any of its subsidiaries or Affiliates; (D) affiliated with a significant customer, supplier or creditor of Alliance or any of its Affiliates or subsidiaries; or (E) any member of the immediate family of a person described in clause (i)(A) or (B) above; (ii) for the five-year period prior to such person’s appointment as Independent Manager has not had, and during the continuation of such person’s service as Independent Manager does not have, any significant personal service contracts with Alliance or any of its Affiliates or subsidiaries; (iii) at the time of such person’s appointment as Independent Manager (A) has prior experience as an independent director for a corporation or an independent manager for a limited liability company whose charter documents require the unanimous consent of all independent directors or managers thereof before such corporation or limited liability company could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (B) has at least three (3) years of employment experience with one or more entities that provide, in the ordinary course of their respective businesses, advisory, management or placement services to issuers of securitization or structured finance instruments, agreements or securities; and (iv) is provided by and at all relevant times is employed by AMACAR Group, L.L.C., CT Corporation, Corporation Service Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Company, Global Securitization Services LLC, Lord Securities Corporation or, if none of those companies is then
providing professional independent managers, another nationally-recognized company reasonably approved by the Administrative Agent.
The Borrower shall (i) give written notice to the Administrative Agent of the election or appointment, or proposed election or appointment, of any new Independent Manager of the Borrower, which notice shall be given not later than ten (10) Business Days prior to the date such appointment or election would be effective and (ii) with any such written notice, certify to the Administrative Agent that such Independent Manager satisfies the criteria for an Independent Manager set forth in this clause (c).
The Borrower’s limited liability company agreement shall provide that: (A) the Borrower’s board of managers shall not approve, or take any other action to cause the filing of, a voluntary bankruptcy petition with respect to the Borrower unless the Independent Managers shall approve the taking of such action in writing before the taking of such action and (B) such provision and each other provision requiring the vote of the Independent Managers cannot be amended without the prior written consent of the Independent Managers.
No Independent Manager shall at any time serve as a trustee in bankruptcy for the Borrower, the Parent, any Originator, the Servicer or any of their respective Affiliates.
(d) Organizational Documents. The Borrower shall maintain its organizational documents in conformity with this Agreement, such that it does not amend, restate, supplement or otherwise modify its ability to comply with the terms and provisions of any of the Transaction Documents, including, without limitation, Section 7.01(q).
(e) Conduct of Business. The Borrower shall conduct its affairs strictly in accordance with its organizational documents and observe all necessary, appropriate and customary company formalities, including, but not limited to, holding all regular and special members’ and board of managers’ meetings appropriate to authorize all company action, keeping separate and accurate minutes of its meetings, passing all resolutions or consents necessary to authorize actions taken or to be taken, and maintaining accurate and separate books, records and accounts, including, but not limited to, payroll and intercompany transaction accounts.
(f) Compensation. Any employee, consultant or agent of the Borrower will be compensated from the Borrower’s funds for services provided to the Borrower, and to the extent that Borrower shares the same officers or other employees as the Servicer (or any other Affiliate thereof), the salaries and expenses relating to providing benefits to such officers and other employees shall be fairly allocated among such entities, and each such entity shall bear its fair share of the salary and benefit costs associated with such common officers and employees. The Borrower will not engage any agents other than its attorneys, auditors and other professionals, and a servicer and any other agent contemplated by the Transaction Documents for the Receivables Pool, which servicer will be fully compensated for its services by payment of the Servicing Fee.
(g) Servicing and Costs. The Borrower will contract with the Servicer to perform for the Borrower all operations required on a daily basis to service the Receivables Pool. The Borrower will not incur any indirect or overhead expenses for items shared with the Servicer (or any other Affiliate thereof) that are not reflected in the Servicing Fee. To the extent, if any,
that the Borrower (or any Affiliate thereof) shares items of expenses not reflected in the Servicing Fee, such as legal, auditing and other professional services, such expenses will be allocated to the extent practical on the basis of actual use or the value of services rendered, and otherwise on a basis reasonably related to the actual use or the value of services rendered.
(h) Operating Expenses. The Borrower’s operating expenses will not be paid by the Servicer, the Parent, any Originator or any Affiliate thereof.
(i) Stationery. The Borrower will have its own separate stationery.
(j) Books and Records. The Borrower’s books and records will be maintained separately from those of the Servicer, the Parent, the Originators and any of their Affiliates and in a manner such that it will not be difficult or costly to segregate, ascertain or otherwise identify the assets and liabilities of the Borrower.
(k) Disclosure of Transactions. All financial statements of the Servicer, the Parent, the Originators or any Affiliate thereof that are consolidated to include the Borrower will disclose that (i) the Borrower’s sole business consists of the purchase or acceptance through capital contributions of the Receivables and Related Rights from the Originators and the subsequent retransfer of or granting of a security interest in such Receivables and Related Rights to the Administrative Agent pursuant to this Agreement, (ii) the Borrower is a separate legal entity with its own separate creditors who will be entitled, upon its liquidation, to be satisfied out of the Borrower’s assets prior to any assets or value in the Borrower becoming available to the Borrower’s equity holders and (iii) the assets of the Borrower are not available to pay creditors of the Servicer, the Parent, the Originators or any Affiliate thereof.
(l) Segregation of Assets. The Borrower’s assets will be maintained in a manner that facilitates their identification and segregation from those of the Servicer, the Parent, the Originators or any Affiliates thereof.
(m) Corporate Formalities. The Borrower will strictly observe limited liability company formalities in its dealings with the Servicer, the Parent, the Originators or any Affiliates thereof, and funds or other assets of the Borrower will not be commingled with those of the Servicer, the Parent, the Originators or any Affiliates thereof except as permitted by this Agreement in connection with servicing the Pool Receivables. The Borrower shall not maintain joint bank accounts or other depository accounts to which the Servicer, the Parent, the Originators or any Affiliate thereof (other than the Servicer solely in its capacity as such) has independent access. The Borrower is not named, and has not entered into any agreement to be named, directly or indirectly, as a direct or contingent beneficiary or loss payee on any insurance policy with respect to any loss relating to the property of the Servicer, the Parent, the Originators or any Subsidiaries or other Affiliates thereof. The Borrower will pay to the appropriate Affiliate the marginal increase or, in the absence of such increase, the market amount of its portion of the premium payable with respect to any insurance policy that covers the Borrower and such Affiliate.
(n) Arm’s-Length Relationships. The Borrower will maintain arm’s-length relationships with the Servicer, the Parent, the Originators and any Affiliates thereof. Any Person that renders or otherwise furnishes services to the Borrower will be compensated by the Borrower
at market rates for such services it renders or otherwise furnishes to the Borrower. Neither the Borrower on the one hand, nor the Servicer, the Parent, any Originator or any Affiliate thereof, on the other hand, will be or will hold itself out to be responsible for the debts of the other or the decisions or actions respecting the daily business and affairs of the other. The Borrower, the Servicer, the Parent, the Originators and their respective Affiliates will immediately correct any known misrepresentation with respect to the foregoing, and they will not operate or purport to operate as an integrated single economic unit with respect to each other or in their dealing with any other entity.
(o) Allocation of Overhead. To the extent that Borrower, on the one hand, and the Servicer, the Parent, any Originator or any Affiliate thereof, on the other hand, have offices in the same location, there shall be a fair and appropriate allocation of overhead costs between them, and the Borrower shall bear its fair share of such expenses, which may be paid through the Servicing Fee or otherwise.
ARTICLE VIII
ADMINISTRATION AND COLLECTION
OF RECEIVABLES
SECTION 8.01. Appointment of the Servicer.
(a) The servicing, administering and collection of the Pool Receivables shall be conducted by the Person so designated from time to time as the Servicer in accordance with this Section 8.01. Until the Administrative Agent gives notice to Alliance (in accordance with this Section 8.01) of the designation of a new Servicer, Alliance is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer pursuant to the terms hereof. Upon the occurrence of a Receivables Termination Event, the Administrative Agent may (with the consent of the Majority Lenders) and shall (at the direction of the Majority Lenders) designate as Servicer any Person (including itself) to succeed Alliance or any successor Servicer, on the condition in each case that any such Person so designated shall agree to perform the duties and obligations of the Servicer pursuant to the terms hereof.
(b) Upon the designation of a successor Servicer as set forth in clause (a) above, Alliance agrees that it will terminate its activities as Servicer hereunder in a manner that the Administrative Agent reasonably determines will facilitate the transition of the performance of such activities to the new Servicer, and Alliance shall cooperate with and assist such new Servicer. Such cooperation shall include access to and transfer of records (including all Contracts) related to Pool Receivables and use by the new Servicer of all licenses (or the obtaining of new licenses), hardware or software necessary or reasonably desirable to collect the Pool Receivables and the Related Security.
(c) Alliance acknowledges that, in making its decision to execute and deliver this Agreement, the Administrative Agent and each Lender have relied on Alliance’s agreement to act as Servicer hereunder. Accordingly, Alliance agrees that it will not voluntarily resign as Servicer without the prior written consent of the Administrative Agent and the Majority Lenders.
(d) The Servicer may delegate its duties and obligations hereunder to any subservicer (each a “Sub-Servicer”); provided, that, in each such delegation: (i) such Sub-Servicer shall agree in writing to perform the delegated duties and obligations of the Servicer pursuant to the terms hereof, (ii) the Servicer shall remain liable for the performance of the duties and obligations so delegated, (iii) the Borrower, the Administrative Agent and each Lender shall have the right to look solely to the Servicer for performance, (iv) the terms of any agreement with any Sub-Servicer shall provide that the Administrative Agent may terminate such agreement upon the termination of the Servicer hereunder by giving notice of its desire to terminate such agreement to the Servicer (and the Servicer shall provide appropriate notice to each such Sub-Servicer) and (v) if such Sub-Servicer is not an Affiliate of the Parent, the Administrative Agent and the Majority Lenders shall have consented in writing in advance to such delegation.
SECTION 8.02. Duties of the Servicer.
(a) The Servicer shall take or cause to be taken all such action as may be necessary or reasonably advisable to service, administer and collect each Pool Receivable from time to time, all in accordance with this Agreement and all Applicable Laws, with reasonable care and diligence, and in accordance with the Credit and Collection Policy and consistent with the past practices of the Originators. The Servicer shall set aside, for the accounts of each Credit Party, the amount of Collections to which each such Credit Party is entitled in accordance with Article III hereof. The Servicer may, in accordance with the Credit and Collection Policy and consistent with past practices of the Originators, take such action, including modifications, waivers or restructurings of Pool Receivables and related Contracts, as the Servicer may reasonably determine to be appropriate to maximize Collections thereof or reflect adjustments expressly permitted under the Credit and Collection Policy or as expressly required under Applicable Laws or the applicable Contract; provided, that for purposes of this Agreement: (i) such action shall not, and shall not be deemed to, change the number of days such Pool Receivable has remained unpaid from the date of the original due date related to such Pool Receivable, (ii) such action shall not alter the status of such Pool Receivable as a Delinquent Receivable or a Defaulted Receivable or limit the rights of any Secured Party under this Agreement or any other Transaction Document, (iii) the Servicer shall not extend the original scheduled due date of any Receivable if, as of March 31, 2020, the Obligor of such Receivable is the Obligor under any Receivable as to which any payment, or part thereof, remains unpaid for more than 121 days from the original due date for such payment, and (iv) if a Receivables Termination Event or a Rapid Amortization Event has occurred and is continuing, the Servicer may take such action only upon the prior written consent of the Administrative Agent.. The Borrower shall deliver to the Servicer and the Servicer shall hold for the benefit of the Administrative Agent (individually and for the benefit of each Credit Party), in accordance with their respective interests, all records and documents (including computer tapes or disks) with respect to each Pool Receivable. Notwithstanding anything to the contrary contained herein, if a Receivables Termination Event or a Rapid Amortization Event has occurred and is continuing, the Administrative Agent may direct the Servicer to commence or settle any legal action to enforce collection of any Pool Receivable that is a Defaulted Receivable or to foreclose upon or repossess any Related Security with respect to any such Defaulted Receivable.
(b) The Servicer’s obligations hereunder shall terminate on the Final Payout Date. Promptly following the Final Payout Date, the Servicer shall deliver to the Borrower all
books, records and related materials that the Borrower previously provided to the Servicer, or that have been obtained by the Servicer, in connection with this Agreement.
SECTION 8.03. Collection Account Arrangements. Prior to the Closing Date, the Borrower shall have entered into Account Control Agreements with all of the Collection Account Banks and delivered executed counterparts of each to the Administrative Agent. Upon the occurrence and during the continuance of an Unmatured Receivables Termination Event, a Receivables Termination Event or a Rapid Amortization Event, the Administrative Agent may (with the consent of the Majority Lenders) and shall (upon the direction of the Majority Lenders) at any time thereafter give notice to each Collection Account Bank that the Administrative Agent is exercising its rights under the Account Control Agreements to do any or all of the following: (a) to have the exclusive dominion and control of the Collection Accounts transferred to the Administrative Agent (for the benefit of the Secured Parties) and to exercise exclusive dominion and control over the funds deposited therein (for the benefit of the Secured Parties), (b) to have the proceeds that are sent to the respective Collection Accounts redirected pursuant to the Administrative Agent’s instructions rather than deposited in the applicable Collection Account and (c) to take any or all other actions permitted under the applicable Account Control Agreement. The Borrower hereby agrees that if the Administrative Agent at any time takes any action set forth in the preceding sentence, the Administrative Agent shall have exclusive control (for the benefit of the Secured Parties) of the proceeds (including Collections) of all Pool Receivables and the Borrower hereby further agrees to take any other action that the Administrative Agent may reasonably request to transfer such control. Any proceeds of Pool Receivables received by the Borrower or the Servicer thereafter shall be sent immediately to, or as otherwise instructed by, the Administrative Agent.
SECTION 8.04. Enforcement Rights.
(a) At any time following the occurrence and during the continuation of a Receivables Termination Event:
(i) the Administrative Agent (at the Borrower’s expense) may direct the Obligors that payment of all amounts payable under any Pool Receivable is to be made directly to the Administrative Agent or its designee;
(ii) the Administrative Agent may instruct the Borrower or the Servicer to give notice of the Secured Parties’ interest in Pool Receivables to each Obligor, which notice shall direct that payments be made directly to the Administrative Agent or its designee (on behalf of the Secured Parties), and the Borrower or the Servicer, as the case may be, shall give such notice at the expense of the Borrower or the Servicer, as the case may be; provided, that if the Borrower or the Servicer, as the case may be, fails to so notify each Obligor within two (2) Business Days following instruction by the Administrative Agent, the Administrative Agent (at the Borrower’s or the Servicer’s, as the case may be, expense) may so notify the Obligors;
(iii) the Administrative Agent may request the Servicer to, and upon such request the Servicer shall: (A) assemble all of the records necessary or desirable to collect the Pool Receivables and the Related Security, and transfer or license to a successor
Servicer the use of all software necessary or desirable to collect the Pool Receivables and the Related Security, and make the same available to the Administrative Agent or its designee (for the benefit of the Secured Parties) at a place selected by the Administrative Agent and (B) segregate all cash, checks and other instruments received by it from time to time constituting Collections in a manner reasonably acceptable to the Administrative Agent and, promptly upon receipt, remit all such cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to the Administrative Agent or its designee;
(iv) the Administrative Agent may notify the Collection Account Banks that the Borrower and the Servicer will no longer have any access to the Collection Accounts;
(v) the Administrative Agent may (or, at the direction of the Majority Lenders shall) replace the Person then acting as Servicer; and
(vi) the Administrative Agent may collect any amounts due from an Originator under the Sale and Contribution Agreement.
For the avoidance of doubt, the foregoing rights and remedies of the Administrative Agent upon a Receivables Termination Event are in addition to and not exclusive of the rights and remedies contained herein and under the other Transaction Documents.
(b) The Borrower hereby authorizes the Administrative Agent (on behalf of the Secured Parties), and irrevocably appoints the Administrative Agent as its attorney-in-fact with full power of substitution and with full authority in the place and stead of the Borrower, which appointment is coupled with an interest, to take any and all steps in the name of the Borrower and on behalf of the Borrower necessary or desirable, in the reasonable determination of the Administrative Agent, after the occurrence and during the continuation of a Receivables Termination Event, to collect any and all amounts or portions thereof due under any and all Collateral, including endorsing the name of the Borrower on checks and other instruments representing Collections and enforcing such Collateral. Notwithstanding anything to the contrary contained in this clause (b), none of the powers conferred upon such attorney-in-fact pursuant to the preceding sentence shall subject such attorney-in-fact to any liability if any action taken by it shall prove to be inadequate or invalid, nor shall they confer any obligations upon such attorney-in-fact in any manner whatsoever.
(c) The Servicer hereby authorizes the Administrative Agent (on behalf of the Secured Parties), and irrevocably appoints the Administrative Agent as its attorney-in-fact with full power of substitution and with full authority in the place and stead of the Servicer, which appointment is coupled with an interest, to take any and all steps in the name of the Servicer and on behalf of the Servicer necessary or desirable, in the reasonable determination of the Administrative Agent, after the occurrence and during the continuation of a Receivables Termination Event, to collect any and all amounts or portions thereof due under any and all Collateral, including endorsing the name of the Servicer on checks and other instruments representing Collections and enforcing such Collateral. Notwithstanding anything to the contrary contained in this clause (c), none of the powers conferred upon such attorney-in-fact pursuant to
the preceding sentence shall subject such attorney-in-fact to any liability if any action taken by it shall prove to be inadequate or invalid, nor shall they confer any obligations upon such attorney-in-fact in any manner whatsoever.
SECTION 8.05. Responsibilities of the Borrower.
(a) Anything herein to the contrary notwithstanding, the Borrower shall: (i) perform all of its obligations, if any, under the Contracts related to the Pool Receivables to the same extent as if interests in such Pool Receivables had not been transferred hereunder, and the exercise by the Administrative Agent, or any other Credit Party of their respective rights hereunder shall not relieve the Borrower from such obligations and (ii) pay when due any taxes, including any sales taxes payable in connection with the Pool Receivables and their creation and satisfaction. None of the Credit Parties shall have any obligation or liability with respect to any Collateral, nor shall any of them be obligated to perform any of the obligations of the Borrower, the Servicer or any Originator thereunder.
(b) Alliance hereby irrevocably agrees that if at any time it shall cease to be the Servicer hereunder, it shall act (if the then-current Servicer so requests) as the data-processing agent of the Servicer and, in such capacity, Alliance shall conduct the data-processing functions of the administration of the Receivables and the Collections thereon in substantially the same way that Alliance conducted such data-processing functions while it acted as the Servicer. In connection with any such processing functions, the Borrower shall pay to Alliance its reasonable out-of-pocket costs and expenses and such amounts shall be deemed to constitute Servicing Fees payable to Alliance pursuant to Section 3.01(a).
SECTION 8.06. Servicing Fee.
(a) Subject to clause (b) below, the Borrower shall pay the Servicer a fee (the “Servicing Fee”) equal to 1.00% per annum of the daily average U.S. Dollar Equivalent aggregate Outstanding Balance of the Pool Receivables. Accrued Servicing Fees shall be payable from Collections to the extent of available funds in accordance with Section 3.01.
(b) If the Servicer ceases to be Alliance or an Affiliate thereof, the Servicing Fee shall be the greater of: (i) the amount calculated pursuant to clause (a) above and (ii) an alternative amount specified by the successor Servicer not to exceed 110% of the aggregate reasonable costs and expenses incurred by such successor Servicer in connection with the performance of its obligations as Servicer hereunder
SECTION 8.07.Credit Insurance Policies.
(a) At all times while (x) the Borrower is maintaining any Credit Insurance Policy, (y) any Pool Receivable is being reported in any Information Package as an Insured Receivable or (z) any Pool Receivable is being included in the Net Receivables Pool Balance as an Insured Receivable:
(i) the Borrower shall maintain each relevant Credit Insurance Policy in full force and effect;
(ii) the Borrower shall pay all premiums and other amounts due by the Borrower from time to time under each such Credit Insurance Policy when due in accordance with the terms thereof;
(iii) the Borrower and the Servicer shall refrain from taking any action or omitting to take any action which could reasonably be expected to prejudice or limit the Borrower’s or the Administrative Agent’s rights to payment under any such Credit Insurance Policy;
(iv) the Borrower and the Servicer shall enforce the obligations of the applicable Credit Insurer under each such Credit Insurance Policy;
(v) the Borrower and the Servicer shall maintain all records and documents that may be necessary to make claims for reimbursement under each such Credit Insurance Policy;
(vi) the Borrower shall, and the Servicer shall cause the Borrower to, perform all its other obligations under each such Credit Insurance Policy in accordance with the terms thereof (including, without limitation, delivering information regarding the relevant Pool Receivables and notices of insolvency with respect to Obligors when required pursuant to the terms of each such Credit Insurance Policy);
(vii) the Borrower and Servicer shall advise promptly the Administrative Agent of any payment the Borrower receives directly under any Credit Insurance Policy, any denial of coverage under any Credit Insurance Policy, any cancelation of any Credit Insurance Policy or any other information received in connection with any Credit Insurance Policy which is material to the payment of any claim thereunder;
(viii) neither the Borrower nor Servicer shall amend, modify or waive (or consent to any such amendment, modification or waiver of) any provision of any Credit Insurance Policy without the Administrative Agent’s prior written consent; and
(ix) the Borrower and Servicer shall deliver any additional instruments, certificates and documents, provide such other information and take such other actions as may be necessary or desirable, in the reasonable opinion of the Administrative Agent, to give further assurances of any of the rights granted or provided for herein or under any Credit Insurance Policy (including, without limitation, providing copies of invoices, purchase orders, and the proof of delivery of products as may be requested by the insurer thereunder).
(b) If the Borrower fails to pay any premium or other amount due under any Credit Insurance Policy, the Administrative Agent may (in its discretion) pay such premium or other amount from the Collateral or from its own funds in order to keep such Credit Insurance Policy in force. Any amount so paid by the Administrative Agent from its own funds shall constitute a Borrower Indemnified Amount payable by the Borrower to the Administrative Agent hereunder.
(c) As to any Insured Receivables only, in the event that any Obligor defaults on the payment of any of its Pool Receivables, becomes subject to an Insolvency Proceeding or becomes subject to any other event that gives rise to a claim for reimbursement under a Credit Insurance Policy, the Borrower and the Servicer shall, promptly (but not later than the later of (x) ten (10) Business Days after such event or (y) the first date on which such a claim may be filed pursuant to the terms of such Credit Insurance Policy), file a claim for such reimbursement (with a copy thereof to the Administrative Agent) in accordance with the terms of such Credit Insurance Policy and shall take any other actions required under the terms of such Credit Insurance Policy to obtain such reimbursement (including, without limitation, providing the applicable Credit Insurer with itemized statements, invoices, bills of lading, purchase orders, summaries of collections efforts, evidence of debt or other documentation that may be required under the terms of such Credit Insurance Policy). The Borrower and the Servicer shall cause any amounts paid in respect of any Pool Receivable (or losses thereon) by a Credit Insurer under any Credit Insurance Policy to be paid directly to a Collection Account and to be applied as a Collection in accordance with the terms of this Agreement.
(d) In the event that a Credit Insurer pays a claim under a Credit Insurance Policy with respect to a Pool Receivable and the Borrower is required to subrogate it rights, claims, guaranties, security, collateral or defenses to such Credit Insurer in respect of such Pool Receivable, the Borrower shall (and the Servicer shall cause Borrower to) so subrogate such rights, claims, guaranties, security, collateral or defenses in accordance with the terms of such Credit Insurance Policy. Simultaneously with receipt of such a payment in a Collection Account and upon such subrogation, the Administrative Agent shall be automatically deemed to have released to the Borrower any ownership or security interest it may have hereunder (on behalf of itself and the Lenders) in such rights, claims, guaranties, security, collateral or defenses so subrogated, to the extent necessary to permit such subrogation and shall execute such documents to evidence the same as shall be reasonably requested by the Borrower, in each case at the sole expense of the Borrower; provided, however, that the Administrative Agent shall not be deemed to have released any such ownership or security interest it may have in related rights under such Credit Insurance Policy (including, without limitation, any right of the Borrower to receive ratable or other allocations of Collections or other recoveries in respect of the related Pool Receivables).
(e) If any Credit Insurance Policy ceases to be Eligible Credit Insurance, the Borrower and the Servicer shall furnish to the Administrative Agent and each Lender written notice thereof, together with a statement of the actions the Borrower plans to take to remedy such situation, if any, promptly but not later than five (5) Business Days thereafter. If any Credit Insurance Policy no longer constitutes Eligible Credit Insurance, the Termination Date has not occurred, no Receivables Termination Event is continuing and no Borrowing Base Deficit exists, then the Borrower may terminate such Credit Insurance Policy or permit such Credit Insurance Policy to lapse. The Borrower shall furnish to the Administrative Agent and each Lender written notice of any such termination or lapse and shall promptly notify the Administrative Agent when such termination or lapse has occurred.
(f) Any Collections received by the Administrative Agent pursuant to any Credit Insurance Policy (including as an additional insured thereunder) shall be distributed in accordance with the priority of payments set forth in Section 3.01(a).
ARTICLE IX
RECEIVABLES TERMINATION EVENTS
SECTION 9.01. Receivables Termination Events. If any of the following events (each a “Receivables Termination Event”) shall occur:
(a) (i) the Borrower, any Originator or the Servicer shall fail to perform or observe in any material respect any term, covenant or agreement under this Agreement or any other Transaction Document (other than any such failure which would constitute a Receivables Termination Event under clause (ii) or (iii) of this clause (a)), which failure materially and adversely affects the rights of the Lenders or the Administrative Agent and, solely to the extent capable of cure, such breach shall continue or not be cured for a period of thirty (30) days after the earlier of (x) the date on which written notice of such breach shall have been given to the Borrower, such Originator or the Servicer, as applicable, by the Administrative Agent or any Lender and (y) the date on which the Borrower, such Originator or the Servicer, as applicable, has actual knowledge of such failure, or should, in the exercise of reasonable diligence, have become knowledgeable, (ii) the Borrower, any Originator or the Servicer shall fail to make when due (x) any payment or deposit to be made by it under this Agreement or any other Transaction Document and such failure shall continue unremedied for three (3) Business Days or (iii) Alliance shall resign as Servicer, and no successor Servicer reasonably satisfactory to the Administrative Agent shall have been appointed;
(b) any representation or warranty made or deemed made by the Borrower, any Originator or the Servicer (or any of their respective officers) under or in connection with this Agreement or any other Transaction Document or any information or report delivered by the Borrower, any Originator or the Servicer pursuant to this Agreement or any other Transaction Document, shall prove to have been incorrect or untrue in any material respect when made or deemed made or delivered, which incorrect or untrue representation, warranty, information or report materially and adversely affects the rights of the Lenders or the Administrative Agent and continues to be incorrect or not be cured for a period of thirty (30) days after the earlier of (x) the date on which written notice of such breach shall have been given to the Borrower, such Originator or the Servicer, as applicable, by the Administrative Agent or any Lender and (y) the date on which the Borrower, such Originator or the Servicer, as applicable, has actual knowledge of such failure, or should, in the exercise of reasonable diligence, have become knowledgeable;
(c) the Borrower or the Servicer shall fail to deliver an Information Package or Interim Report pursuant to this Agreement, and such failure shall remain unremedied for three (3) days; provided that, once per any twelve (12) month period, an additional two (2) Business Days shall be given to cure such failure if such failure is (x) caused by the occurrence of events or circumstances out of the reasonable control of the Borrower or the Servicer, as applicable, and (y) such extension has been consented to in writing by the Administrative Agent (such consent not to be unreasonably withheld);
(d) this Agreement or any security interest granted pursuant to this Agreement or any other Transaction Document shall for any reason cease to create, or for any reason cease to
be, a valid and enforceable first priority perfected security interest in favor of the Administrative Agent with respect to the Collateral, free and clear of any Adverse Claim;
(e) the Borrower, any Originator or the Servicer shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any Insolvency Proceeding shall be instituted by or against the Borrower, any Originator or the Servicer and, in the case of any such proceeding instituted against such Person (but not instituted by such Person), either such proceeding shall remain undismissed or unstayed for a period of sixty (60) consecutive days, or any of the actions sought in such proceeding (including the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Borrower, any Originator or the Servicer shall take any corporate or organizational action to authorize any of the actions set forth above in this clause (e);
(f) a Change in Control shall occur;
(g) if an ALS Change of Control shall have occurred, then the earlier to occur of (i) failure to pay in full all of its outstanding obligations under this Agreement and each other Transaction Document by the six (6) month anniversary date of the occurrence of such ALS Change in Control or (ii) the Scheduled Termination Date, unless, in each case, the Administrative Agent and the Majority Lenders have provided their prior written consent to the related ALS Change of Control;
(h) a Borrowing Base Deficit shall occur, and shall not have been cured within three (3) days;
(i) (i) the Borrower shall fail to pay any principal of or premium or interest on any of its Debt when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement, mortgage, indenture or instrument relating to such Debt (whether or not such failure shall have been waived under the related agreement); (ii) any Originator or the Servicer, or any of their respective Subsidiaries (other than the Borrower), individually or in the aggregate, shall fail to pay any principal of or premium or interest on any of its Debt that is outstanding in a principal amount of at least $5,000,000 in the aggregate when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period (not to exceed 30 days), if any, specified in the agreement, mortgage, indenture or instrument relating to such Debt (whether or not such failure shall have been waived under the related agreement); (iii) any other event shall occur or condition shall exist under any agreement, mortgage, indenture or instrument relating to any such Debt (as referred to in clause (i) or (ii) above) and shall continue after the applicable grace period, if any, specified in such agreement, mortgage, indenture or instrument (whether or not such failure shall have been waived under the related agreement), if the effect of such event or condition is to accelerate the maturity of such Debt (as referred to in clause (i) or (ii) above) or to terminate the commitment of any lender thereunder, or (iv) any such Debt (as referred to in clause (i) or (ii) above) shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to repay, redeem, purchase or defease
such Debt shall be required to be made or the commitment of any lender thereunder terminated, in each case before the stated maturity thereof;
(j) the Borrower shall fail (x) at any time (other than for twenty (20) Business Days following notice of the death or resignation of any Independent Director) to have an Independent Director who satisfies each requirement and qualification specified in Section 7.03(c) of this Agreement for Independent Directors, on the Borrower’s board of directors or (y) to timely notify the Administrative Agent of any replacement or appointment of any director that is to serve as an Independent Director on the Borrower’s board of directors as required pursuant to Section 7.03(c) of this Agreement;
(k) either (i) the Internal Revenue Service shall file notice of a lien pursuant to Section 6323 of the Code with regard to any assets of the Borrower or any Originator or (ii) the PBGC shall, or shall indicate its intention to, file notice of a lien pursuant to Section 4068 of ERISA with regard to any of the assets of the Borrower, the Servicer, any Originator or the Parent;
(l) (i) the occurrence of a Reportable Event; (ii) the adoption of an amendment to a Pension Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code; (iii) the existence with respect to any Multiemployer Plan of an “accumulated funding deficiency” (as defined in Section 431 of the Code or Section 304 of ERISA), whether or not waived; (iv) the failure to satisfy the minimum funding standard under Section 412 of the Code with respect to any Pension Plan (v) the incurrence of any liability under Title IV of ERISA with respect to the termination of any Pension Plan or the withdrawal or partial withdrawal of any of the Borrower, any Originator, the Servicer, the Parent or any of their respective ERISA Affiliates from any Multiemployer Plan; (vi) the receipt by any of the Borrower, any Originator, the Servicer, the Parent or any of their respective ERISA Affiliates from the PBGC or any plan administrator of any notice relating to the intention to terminate any Pension Plan or Multiemployer Plan or to appoint a trustee to administer any Pension Plan or Multiemployer Plan; (vii) the receipt by the Borrower, any Originator, the Servicer, the Parent or any of their respective ERISA Affiliates of any notice concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent, within the meaning of Title IV of ERISA; (viii) the occurrence of a prohibited transaction with respect to any of the Borrower, any Originator, the Servicer, the Parent or any of their respective ERISA Affiliates (pursuant to Section 4975 of the Code); (ix) the occurrence or existence of any other similar event or condition with respect to a Pension Plan or a Multiemployer Plan, with respect to each of clause (i) through (ix), either individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect;
(m) [reserved];
(n) the Borrower, any Originator or the Servicer shall (i) be required to register as an “investment company” within the meaning of the Investment Company Act or (ii) become a “covered fund” within the meaning of the Volker Rule;
(o) any material provision of this Agreement or any other Transaction Document shall cease to be in full force and effect or any of the Borrower, any Originator or the Servicer (or any of their respective Affiliates) shall so state in writing;
(p) one or more judgments or decrees shall be entered against the Borrower, any Originator or the Servicer, or any Affiliate of any of the foregoing involving in the aggregate a liability (not paid or to the extent not covered by a reputable and solvent insurance company) and such judgments and decrees either shall be final and non-appealable or shall not be vacated, discharged or stayed or bonded pending appeal for any period of 30 consecutive days, and the aggregate amount of all such judgments equals or exceeds $10,000,000 (or solely with respect to the Borrower, $15,775);
(q) the Net First Lien Leverage Ratio (as defined in the ALS Credit Agreement as in effect on the Eighth Amendment Effective Date and without giving effect to any subsequent amendments or modifications thereof unless any such amendment or modification is consented to in writing by the Administrative Agent and the Majority Lenders) as of the last day of any fiscal quarter (beginning with the end of the second full fiscal quarter ending after the Eighth Amendment Effective Date), solely to the extent that on such date the Testing Condition (as defined in the ALS Credit Agreement as in effect on the Eighth Amendment Effective Date and without giving effect to any subsequent amendments or modifications thereof unless any such amendment or modification is consented to in writing by the Administrative Agent and the Majority Lenders) is satisfied, shall exceed the ratio for such fiscal quarter set forth in Section 6.11 of the ALS Credit Agreement as in effect on the Eighth Amendment Effective Date and as amended thereafter in accordance with its terms but, unless otherwise consented to in writing by the Administrative Agent and the Majority Lenders, without giving effect to any such amendment (or any other modification) of such Section 6.11 that would apply a ratio that permits a higher Net First Lien Leverage Ratio for such fiscal quarter than the applicable ratio in effect on the Eighth Amendment Effective Date; or
(r) the Borrower shall cease to constitute a “Securitization Entity” under, and as defined in, the ALS Credit Agreement, or the Transaction Documents and the transactions contemplated thereby shall cease to constitute a “Permitted Securitization Financing” under, and as defined in, the ALS Credit Agreement;
then, and in any such event, the Administrative Agent may (or, at the direction of the Majority Lenders shall) by notice to the Borrower (x) declare the Termination Date to have occurred (in which case the Termination Date shall be deemed to have occurred) and (y) declare the Aggregate Capital and all other Borrower Obligations to be immediately due and payable (in which case the Aggregate Capital and all other Borrower Obligations shall be immediately due and payable); provided that, automatically upon the occurrence of any event (without any requirement for the giving of notice) described in clause (e) of this Section 9.01 with respect to the Borrower, the Termination Date shall occur and the Aggregate Capital and all other Borrower Obligations shall be immediately due and payable. Upon any such declaration or designation or upon such automatic termination, the Administrative Agent and the other Secured Parties shall have, in addition to the rights and remedies which they may have under this Agreement and the other Transaction Documents, all other rights and remedies provided after default under the UCC and under other Applicable Law, which rights and remedies shall be cumulative. Any proceeds from liquidation of the Collateral shall be applied in the order of priority set forth in Section 3.01.
ARTICLE X
THE ADMINISTRATIVE AGENT
SECTION 10.01. Authorization and Action. Each Credit Party hereby appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto. The Administrative Agent shall not have any duties other than those expressly set forth in the Transaction Documents, and no implied obligations or liabilities shall be read into any Transaction Document, or otherwise exist, against the Administrative Agent. The Administrative Agent does not assume, nor shall it be deemed to have assumed, any obligation to, or relationship of trust or agency with, the Borrower or any Affiliate thereof or any Credit Party except for any obligations expressly set forth herein. Notwithstanding any provision of this Agreement or any other Transaction Document, in no event shall the Administrative Agent ever be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to any provision of any Transaction Document or Applicable Law.
SECTION 10.02. Administrative Agent’s Reliance, Etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them as Administrative Agent under or in connection with this Agreement (including, without limitation, the Administrative Agent’s servicing, administering or collecting Pool Receivables in the event it replaces the Servicer in such capacity pursuant to Section 8.01), in the absence of its or their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, the Administrative Agent: (a) may consult with legal counsel (including counsel for any Credit Party or the Servicer), independent certified public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (b) makes no warranty or representation to any Credit Party (whether written or oral) and shall not be responsible to any Credit Party for any statements, warranties or representations (whether written or oral) made by any other party in or in connection with this Agreement; (c) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of any Credit Party or to inspect the property (including the books and records) of any Credit Party; (d) shall not be responsible to any Credit Party for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; and (e) shall be entitled to rely, and shall be fully protected in so relying, upon any notice (including notice by telephone), consent, certificate or other instrument or writing (which may be by facsimile) believed by it to be genuine and signed or sent by the proper party or parties.
SECTION 10.03. Administrative Agent and Affiliates. With respect to any Credit Extension or interests therein owned by any Credit Party that is also the Administrative Agent, such Credit Party shall have the same rights and powers under this Agreement as any other Credit Party and may exercise the same as though it were not the Administrative Agent. The Administrative Agent and any of its Affiliates may generally engage in any kind of business with the Borrower or any Affiliate thereof and any Person who may do business with or own securities of the Borrower or any Affiliate thereof, all as if the Administrative Agent were not the
Administrative Agent hereunder and without any duty to account therefor to any other Secured Party.
SECTION 10.04. Indemnification of Administrative Agent. Each Lender agrees to indemnify the Administrative Agent (to the extent not reimbursed by the Borrower or any Affiliate thereof), ratably according to the respective Percentage of such Lender, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any other Transaction Document or any action taken or omitted by the Administrative Agent under this Agreement or any other Transaction Document; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct.
SECTION 10.05. Delegation of Duties. The Administrative Agent may execute any of its duties through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
SECTION 10.06. Action or Inaction by Administrative Agent. The Administrative Agent shall in all cases be fully justified in failing or refusing to take action under any Transaction Document unless it shall first receive such advice or concurrence of the Majority Lenders and assurance of its indemnification by the Lenders, as it deems appropriate. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Transaction Document in accordance with a request or at the direction of the Majority Lenders and such request or direction and any action taken or failure to act pursuant thereto shall be binding upon all Credit Parties. The Credit Parties and the Administrative Agent agree that unless any action to be taken by the Administrative Agent under a Transaction Document (i) specifically requires the advice or concurrence of all Lenders or (ii) may be taken by the Administrative Agent alone or without any advice or concurrence of any Lender, then the Administrative Agent may take action based upon the advice or concurrence of the Majority Lenders.
SECTION 10.07. Notice of Receivables Termination Event or Rapid Amortization Event; Action by Administrative Agent. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Unmatured Receivables Termination Event, Receivables Termination Event or Rapid Amortization Event unless the Administrative Agent has received notice from any Credit Party, the Borrower or the Servicer stating that an Unmatured Receivables Termination Event, Receivables Termination Event or Rapid Amortization Event has occurred hereunder and describing such Unmatured Receivables Termination Event, Receivables Termination Event or Rapid Amortization Event. If the Administrative Agent receives such a notice, it shall promptly give notice thereof to each Lender. The Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, concerning an Unmatured Receivables Termination Event, Receivables Termination Event or Rapid Amortization Event or any other matter hereunder as the Administrative Agent deems advisable and in the best interests of the Secured Parties.
SECTION 10.08. Non-Reliance on Administrative Agent and Other Parties. Each Credit Party expressly acknowledges that neither the Administrative Agent nor any of its directors, officers, agents or employees has made any representations or warranties to it and that no act by the Administrative Agent hereafter taken, including any review of the affairs of the Borrower or any Affiliate thereof, shall be deemed to constitute any representation or warranty by the Administrative Agent. Each Credit Party represents and warrants to the Administrative Agent that, independently and without reliance upon the Administrative Agent or any other Credit Party and based on such documents and information as it has deemed appropriate, it has made and will continue to make its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of the Borrower, each Originator or the Servicer and the Pool Receivables and its own decision to enter into this Agreement and to take, or omit, action under any Transaction Document. Except for items expressly required to be delivered under any Transaction Document by the Administrative Agent to any Credit Party, the Administrative Agent shall not have any duty or responsibility to provide any Credit Party with any information concerning the Borrower, any Originator or the Servicer that comes into the possession of the Administrative Agent or any of its directors, officers, agents, employees, attorneys-in-fact or Affiliates.
SECTION 10.09. Successor Administrative Agent.
(a) The Administrative Agent may, upon at least thirty (30) days’ notice to the Borrower, the Servicer and each Lender, resign as Administrative Agent. Except as provided below, such resignation shall not become effective until a successor Administrative Agent is appointed by the Majority Lenders as a successor Administrative Agent and has accepted such appointment. If no successor Administrative Agent shall have been so appointed in accordance with Section 12.03(f) by the Majority Lenders, within thirty (30) days after the departing Administrative Agent’s giving of notice of resignation, the departing Administrative Agent may, on behalf of the Secured Parties, appoint a successor Administrative Agent as successor Administrative Agent in accordance with Section 12.03(f). If no successor Administrative Agent shall have been so appointed by the Majority Lenders within sixty (60) days after the departing Administrative Agent’s giving of notice of resignation, the departing Administrative Agent may, on behalf of the Secured Parties, petition a court of competent jurisdiction to appoint a successor Administrative Agent.
(b) Upon such acceptance of its appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall succeed to and become vested with all the rights and duties of the resigning Administrative Agent, and the resigning Administrative Agent shall be discharged from its duties and obligations under the Transaction Documents. After any resigning Administrative Agent’s resignation hereunder, the provisions of this Article X and Article XI shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent.
SECTION 10.10. Structuring Agent. Each of the parties hereto hereby acknowledges and agrees that the Structuring Agent shall not have any right, power, obligation, liability, responsibility or duty under this Agreement, other than the Structuring Agent’s right to receive fees pursuant to Section 2.03. Each Credit Party acknowledges that it has not relied, and will not
rely, on the Structuring Agent in deciding to enter into this Agreement and to take, or omit to take, any action under any Transaction Document.
SECTION 10.11.No Reliance on Administrative Agent’s Customer Identification Program. Each Credit Party acknowledges and agrees that neither such Credit Party, nor any of its Affiliates, participants or assignees, may rely on the Administrative Agent to carry out such Credit Party’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA PATRIOT Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law or any Anti-Corruption Law, including any programs involving any of the following items relating to or in connection with any of the Borrower-Related Parties, their Affiliates or their agents, the Transaction Documents or the transactions hereunder or contemplated hereby: (i) any identity verification procedures, (ii) any recordkeeping, (iii) comparisons with government lists, (iv) customer notices or (v) other procedures required under the CIP Regulations or such other Applicable Laws.
SECTION 10.12.Erroneous Payments.
(a) If the Administrative Agent notifies a Lender or Secured Party, or any Person who has received funds on behalf of a Lender or Secured Party (any such Lender, Secured Party or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously or mistakenly transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender, Secured Party or other Payment Recipient on its behalf) (any such funds, whether transmitted or received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands in writing the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Lender or Secured Party shall (or, with respect to any Payment Recipient who receives such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two (2) Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Overnight Bank Funding Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
(b) Without limiting immediately preceding clause (a), each Lender or Secured Party, or any Person who has received funds on behalf of a Lender or Secured Party, hereby further agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a
different date from, that specified in this Agreement or in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) or (z) that such Lender or Secured Party, or such other recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part) in each case:
(i) (A) in the case of immediately preceding clauses (x) or (y), an error or mistake shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error or mistake has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(ii) such Lender or Secured Party shall (and shall cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one (1) Business Day of its knowledge of such error) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 10.12(b).
(c) Each Lender or Secured Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender or Secured Party under any Transaction Document, or otherwise payable or distributable by the Administrative Agent to Lender or Secured Party from any source, against any amount due to the Administrative Agent under immediately preceding clause (a) or under the indemnification provisions of this Agreement.
(d) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance with immediately preceding clause (a), from any Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender at any time, (i) such Lender shall be deemed to have assigned to the Administrative Agent its Loans (but not its Commitments) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments), the “Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance), and is hereby (together with each other party to an Assignment and Acceptance Agreement as required hereunder) deemed to execute and deliver an Assignment and Acceptance Agreement with respect to such Erroneous Payment Deficiency Assignment, (ii) the Administrative Agent as the assignee Lender shall be deemed to acquire the Erroneous Payment Deficiency Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender shall cease to be a Lender hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender and (iv) the Administartive Agent
may reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment. The Administrative Agent may, in its discretion, sell any portion of its Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender (and/or against any recipient that receives funds on its respective behalf). For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender and such Commitments shall remain available in accordance with the terms of this Agreement and the other Transaction Documents. In addition, each party hereto agrees that, except to the extent that the Administrative Agent has sold its Loans (or portion thereof) acquired pursuant to an Erroneous Payment Deficiency Assignment, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of the applicable Lender or Secured Party under the Transaction Documents with respect to each Erroneous Payment Return Deficiency (the “Erroneous Payment Subrogation Rights”).
(e) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Borrower Obligations or obligations of any other Borrower-Related Party, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower or any other Borrower-Related Party for the purpose of making such Erroneous Payment.
(f) To the extent permitted by Applicable Law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including, without limitation, waiver of any defense based on “discharge for value” or any similar doctrine.
(g) Each party’s obligations, agreements and waivers under this Section 10.12 shall survive the resignation or replacement of the Administrative Agent, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Borrower Obligations (or any portion thereof) under any Transaction Document.
ARTICLE XI
INDEMNIFICATION
SECTION 11.01. Indemnities by the Borrower.
(a) Without limiting any other rights that the Administrative Agent, the Credit Parties, the Affected Persons and their respective assigns, officers, directors, agents and employees (each, a “Borrower Indemnified Party”) may have hereunder or under Applicable Law, but without duplication of any amounts paid by the Servicer under Section 11.02, the Borrower hereby agrees to indemnify each Borrower Indemnified Party from and against any and all claims, losses and
liabilities (including reasonable out-of-pocket Attorney Costs) (all of the foregoing being collectively referred to as “Borrower Indemnified Amounts”) arising out of or resulting from this Agreement or any other Transaction Document or the use of proceeds of the Credit Extensions or the security interest in respect of any Pool Receivable or any other Collateral; excluding, however, (a) Borrower Indemnified Amounts to the extent a final non-appealable judgment of a court of competent jurisdiction holds that such Borrower Indemnified Amounts resulted from the gross negligence or willful misconduct by the Borrower Indemnified Party seeking indemnification and (b) Taxes that are covered by Section 4.03 (other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim). Without limiting or being limited by the foregoing, but without duplication of any amounts paid by the Servicer under Section 11.02, the Borrower shall pay on demand (it being understood that if any portion of such payment obligation is made from Collections, such payment will be made at the time and in the order of priority set forth in Section 3.01), to each Borrower Indemnified Party any and all amounts necessary to indemnify such Borrower Indemnified Party from and against any and all Borrower Indemnified Amounts relating to or resulting from any of the following (but excluding Borrower Indemnified Amounts and Taxes described in clauses (a) and (b) above):
(i) any Pool Receivable which the Borrower or the Servicer includes as an Eligible Receivable as part of the Net Receivables Pool Balance but which is not an Eligible Receivable at such time;
(ii) any representation, warranty or statement made or deemed made by the Borrower (or any of its respective officers) under or in connection with this Agreement, any of the other Transaction Documents, any Information Package, any Interim Report or any other information or report delivered by or on behalf of the Borrower pursuant hereto which shall have been untrue or incorrect when made or deemed made;
(iii) the failure by the Borrower to comply with any Applicable Law with respect to any Pool Receivable or the related Contract; or the failure of any Pool Receivable or the related Contract to conform to any such Applicable Law;
(iv) the failure to vest in the Administrative Agent a first priority perfected security interest in all or any portion of the Collateral, in each case free and clear of any Adverse Claim;
(v) the failure to have filed, or any delay in filing, financing statements, financing statement amendments, continuation statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other Applicable Laws with respect to any Pool Receivable and the other Collateral and Collections in respect thereof, whether at the time of any Credit Extension or at any subsequent time;
(vi) any dispute, claim or defense (other than discharge in bankruptcy) of an Obligor to the payment of any Pool Receivable (including, without limitation, a defense based on such Pool Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from or relating to collection activities with respect to such Pool Receivable, or any other claim resulting from the sale of goods or the rendering of services
related to such Pool Receivable or the furnishing or failure to furnish any such goods or services or other similar claim or defense not arising from the financial inability of any Obligor to pay undisputed indebtedness;
(vii) any failure of the Borrower to perform any of its duties or obligations in accordance with the provisions hereof and of each other Transaction Document related to Pool Receivables or to timely and fully comply with the Credit and Collection Policy in regard to each Pool Receivable;
(viii) any products liability, environmental or other claim arising out of or in connection with any Pool Receivable or other merchandise, goods or services which are the subject of or related to any Pool Receivable;
(ix) the commingling of Collections of Pool Receivables at any time with other funds;
(x) any investigation, litigation or proceeding (actual or threatened) related to this Agreement or any other Transaction Document or the use of proceeds of any Credit Extensions or in respect of any Pool Receivable or other Collateral or any related Contract;
(xi) any failure of the Borrower to comply with its covenants, obligations and agreements contained in this Agreement or any other Transaction Document;
(xii) any setoff with respect to any Pool Receivable;
(xiii) any claim brought by any Person other than a Borrower Indemnified Party arising from any activity by the Borrower or any Affiliate of the Borrower in servicing, administering or collecting any Pool Receivable;
(xiv) the failure by the Borrower to pay when due any Taxes, including, without limitation, sales, excise or personal property taxes;
(xv) any failure of a Collection Account Bank to comply with the terms of the applicable Account Control Agreement or any amounts (including in respect of an indemnity) payable by the Administrative Agent to a Collection Account Bank under any Account Control Agreement;
(xvi) the failure or delay to provide any Obligor with an invoice or other evidence of indebtedness;
(xvii) the use of proceeds of any Credit Extension;
(xviii) any reduction in Capital as a result of the distribution of Collections if all or a portion of such distributions shall thereafter be rescinded or otherwise must be returned for any reason;
(xix) any failure by the Borrower to pay any premium or other amount when due under the terms of any Credit Insurance Policy, to keep any Credit Insurance Policy in force or to make or perfect any claim for reimbursement under any Credit Insurance Policy; in each case, to the extent required pursuant to Section 8.07; or
(xx) any insurance premium payments paid by the Administrative Agent on any Credit Insurance Policy in accordance with this Agreement.
(b) Notwithstanding anything to the contrary in this Agreement, solely for purposes of the Borrower’s indemnification obligations in clauses (ii), (iii), (vii) and (xi) of this Article XI, any representation, warranty or covenant qualified by the occurrence or non-occurrence of a material adverse effect or similar concepts of materiality shall be deemed to be not so qualified.
(c) If for any reason the foregoing indemnification is unavailable to any Borrower Indemnified Party or insufficient to hold it harmless, then the Borrower shall contribute to such Borrower Indemnified Party the amount paid or payable by such Borrower Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative economic interests of the Borrower and its Affiliates on the one hand and such Borrower Indemnified Party on the other hand in the matters contemplated by this Agreement as well as the relative fault of the Borrower and its Affiliates and such Borrower Indemnified Party with respect to such loss, claim, damage or liability and any other relevant equitable considerations. The reimbursement, indemnity and contribution obligations of the Borrower under this Section 11.01 shall be in addition to any liability which the Borrower may otherwise have, shall extend upon the same terms and conditions to each Borrower Indemnified Party, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Borrower and the Borrower Indemnified Parties.
(d) Any indemnification or contribution under this Section 11.01 shall survive the termination of this Agreement.
SECTION 11.02. Indemnification by the Servicer.
(a) Without duplication of any amounts paid by the Borrower under Section 11.01, the Servicer hereby agrees to indemnify and hold harmless the Borrower, the Administrative Agent, the Credit Parties, the Affected Persons and their respective assigns, officers, directors, agents and employees (each, a “Servicer Indemnified Party”), from and against any loss, liability, expense, damage or injury suffered or sustained by reason of any acts, omissions or alleged acts or omissions arising out of activities of the Servicer pursuant to this Agreement or any other Transaction Document, including any judgment, award, settlement, reasonable out-of-pocket Attorney Costs and other costs or expenses incurred in connection with the defense of any actual or threatened action, proceeding or claim (all of the foregoing being collectively referred to as, “Servicer Indemnified Amounts”); excluding (i) Servicer Indemnified Amounts to the extent a final non-appealable judgment of a court of competent jurisdiction holds that such Servicer Indemnified Amounts resulted from the gross negligence or willful misconduct by the Servicer Indemnified Party seeking indemnification, (ii) Taxes that are covered by Section 4.03 (other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim) and (iii) Servicer Indemnified Amounts to the extent the same includes losses in respect of Pool
Receivables that are uncollectible solely on account of the insolvency, bankruptcy, lack of creditworthiness or other financial inability to pay of the related Obligor. Without limiting or being limited by the foregoing, but without duplication of any amount paid by the Borrower under Section 11.01, the Servicer shall pay on demand, to each Servicer Indemnified Party any and all amounts necessary to indemnify such Servicer Indemnified Party from and against any and all Servicer Indemnified Amounts relating to or resulting from any of the following (but excluding Servicer Indemnified Amounts described in clauses (i), (ii) and (iii) above):
(i) any representation, warranty or statement made or deemed made by the Servicer (or any of its respective officers) under or in connection with this Agreement, any of the other Transaction Documents, any Information Package, any Interim Report or any other information or report delivered by or on behalf of the Servicer pursuant hereto which shall have been untrue or incorrect when made or deemed made;
(ii) the failure by the Servicer to comply with any Applicable Law with respect to any Pool Receivable or the related Contract; or the failure of any Pool Receivable or the related Contract to conform to any such Applicable Law;
(iii) the commingling of Collections of Pool Receivables at any time with other funds;
(iv) any failure of a Collection Account Bank to comply with the terms of the applicable Account Control Agreement or any amounts (including in respect o an indemnity) payable by the Administrative Agent to a Collection Account Bank under any Account Control Agreement;
(v) any failure of the Servicer to comply with its covenants, obligations and agreements contained in this Agreement or any other Transaction Document; or
(vi) the failure or delay to provide any Obligor with an invoice or other evidence of indebtedness.
(b) If for any reason the foregoing indemnification is unavailable to any Servicer Indemnified Party or insufficient to hold it harmless, then the Servicer shall contribute to the amount paid or payable by such Servicer Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative economic interests of the Servicer and its Affiliates on the one hand and such Servicer Indemnified Party on the other hand in the matters contemplated by this Agreement as well as the relative fault of the Servicer and its Affiliates and such Servicer Indemnified Party with respect to such loss, claim, damage or liability and any other relevant equitable considerations. The reimbursement, indemnity and contribution obligations of the Servicer under this Section 11.02 shall be in addition to any liability which the Servicer may otherwise have, shall extend upon the same terms and conditions to Servicer Indemnified Party, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Servicer and the Servicer Indemnified Parties.
(c) Any indemnification or contribution under this Section 11.02 shall survive the termination of this Agreement.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Amendments, Etc.
(a) No failure on the part of any Credit Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. No amendment or waiver of any provision of this Agreement or consent to any departure by any of the Borrower or any Affiliate thereof shall be effective unless in a writing signed by the Administrative Agent and the Majority Lenders (and, in the case of any amendment, also signed by the Borrower), and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that (A) no amendment, waiver or consent shall, unless in writing and signed by the Servicer, affect the rights or duties of the Servicer under this Agreement; (B) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent and each Lender:
(i) change (directly or indirectly) the definitions of, Borrowing Base Deficit, Defaulted Receivable, Delinquent Receivable, Eligible Credit Insurance, Eligible Receivable, Excess Concentration, Facility Limit, Final Maturity Date, Net Receivables Pool Balance or Total Reserves contained in this Agreement, or increase the then existing Concentration Percentage for any Obligor or change the calculation of the Borrowing Base;
(ii) reduce the amount of Capital or Interest that is payable on account of any Loan or with respect to any other Credit Extension or delay any scheduled date for payment thereof;
(iii) change any Receivables Termination Event or Rapid Amortization Event;
(iv) release all or a material portion of the Collateral from the Administrative Agent’s security interest created hereunder;
(v) change any of the provisions of this Section 12.01 or the definition of “Majority Lenders”; or
(vi) change the order of priority in which Collections are applied pursuant to Section 3.01.
Notwithstanding the foregoing, (A) no amendment, waiver or consent shall increase any Lender’s Commitment hereunder without the consent of such Lender and (B) no amendment, waiver or consent shall reduce any Fees payable by the Borrower to any Credit Party or delay the dates on which any such Fees are payable, in either case, without the consent of such Credit Party.
SECTION 12.02. Notices, Etc. All notices and other communications hereunder shall, unless otherwise stated herein, be in writing (which shall include electronic mail) and emailed or delivered, to each party hereto, at its address set forth under its name on Schedule III hereto or at
such other address as shall be designated by such party in a written notice to the other parties hereto. Notices and communications by email shall be effective when sent (and shall be followed by hard copy sent by regular mail), and notices and communications sent by other means shall be effective when received.
SECTION 12.03. Assignability; Addition of Lenders.
(a) Assignment by Lenders. Each Lender may assign to any Eligible Assignee or to any other Lender all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment and any Loan or interests therein owned by it); provided, however that
(i) except for an assignment by a Lender to either an Affiliate of such Lender or any other Lender, each such assignment shall require the prior written consent of the Borrower (such consent not to be unreasonably withheld, conditioned or delayed; provided, however, that such consent shall not be required if a Receivables Termination Event or Unmatured Receivables Termination Event or Rapid Amortization Event has occurred and is continuing);
(ii) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement;
(iii) the amount being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance Agreement with respect to such assignment) shall in no event be less than the lesser of (x) $5,000,000 and (y) all of the assigning Lender’s Commitment; and
(iv) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance Agreement.
Upon such execution, delivery, acceptance and recording from and after the effective date specified in such Assignment and Acceptance Agreement, (x) the assignee thereunder shall be a party to this Agreement, and to the extent that rights and obligations under this Agreement have been assigned to it pursuant to such Assignment and Acceptance Agreement, have the rights and obligations of a Lender hereunder and (y) the assigning Lender shall, to the extent that rights and obligations have been assigned by it pursuant to such Assignment and Acceptance Agreement, relinquish such rights and be released from such obligations under this Agreement (and, in the case of an Assignment and Acceptance Agreement covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto).
(b) Register. The Administrative Agent shall, acting solely for this purpose as an agent of the Borrower, maintain at its address referred to on Schedule III of this Agreement (or such other address of the Administrative Agent notified by the Administrative Agent to the other parties hereto) a copy of each Assignment and Acceptance Agreement delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders, the Commitment of each Lender and the aggregate outstanding Capital (and stated interest) of the Loans of each Lender from time to time (the “Register”). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the Servicer, the Administrative Agent and the other Credit Parties shall treat each Person whose name is recorded in the Register pursuant to the terms of this Agreement as a Lender under this Agreement for all purposes of this Agreement. The Register shall be available for inspection by the Borrower, the Servicer or any Lender at any reasonable time and from time to time upon reasonable prior notice.
(c) Procedure. Upon its receipt of an Assignment and Acceptance Agreement executed and delivered by an assigning Lender and an Eligible Assignee or assignee Lender, the Administrative Agent shall, if such Assignment and Acceptance Agreement has been duly completed, (i) accept such Assignment and Acceptance Agreement, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower and the Servicer.
(d) Participations. Each Lender may sell participations to one or more Eligible Assignees (each, a “Participant”) in or to all or a portion of its rights and/or obligations under this Agreement (including, without limitation, all or a portion of its Commitment and the interests in the Loans owned by it); provided, however, that
(i) such Lender’s obligations under this Agreement (including, without limitation, its Commitment to the Borrower hereunder) shall remain unchanged, and
(ii) such Lender shall remain solely responsible to the other parties to this Agreement for the performance of such obligations.
The Administrative Agent, the Lenders, the Borrower and the Servicer shall have the right to continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 4.01 and 4.03 (subject to the requirements and limitations therein, including the requirements under Section 4.03(f) (it being understood that the documentation required under Section 4.03(f) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to clause (b) of this Section 12.03; provided that such Participant shall not be entitled to receive any greater payment under Section 4.01 or 4.03, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Regulatory Change that occurs after the Participant acquired the applicable participation.
(e) Participant Register. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans or its other obligations under any this Agreement) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive
absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(f) Assignments by the Administrative Agent. This Agreement and the rights and obligations of the Administrative Agent herein shall be assignable by the Administrative Agent and its successors and assigns; provided that in the case of an assignment to a Person that is not an Affiliate of the Administrative Agent or a Lender, so long as no Receivables Termination Event, Unmatured Receivables Termination Event or Rapid Amortization Event has occurred and is continuing, such assignment shall require the Borrower’s consent (not to be unreasonably withheld, conditioned or delayed).
(g) Assignments by the Borrower or the Servicer. Neither the Borrower nor, except as provided in Section 8.01, the Servicer may assign any of its respective rights or obligations hereunder or any interest herein without the prior written consent of the Administrative Agent and each Lender (such consent to be provided or withheld in the sole discretion of such Person).
(h) Addition of Lenders. The Borrower may, with the prior written consent of the Administrative Agent, add additional Persons as Lenders or cause an existing Lender to increase its Commitment; provided, however, that the Commitment of any existing Lender may only be increased with the prior written consent of such Lender. Each new Lender shall become a party hereto, by executing and delivering to the Administrative Agent and the Borrower, an assumption agreement (each, an “Assumption Agreement”) in the form of Exhibit D hereto (which Assumption Agreement shall, in the case of any new Lender, be executed by each Person in such new Lender).
(i) Pledge to a Federal Reserve Bank. Notwithstanding anything to the contrary set forth herein, (i) any Lender or any of its Affiliates may at any time pledge or grant a security interest in all or any portion of its interest in, to and under this Agreement (including, without limitation, rights to payment of Capital and Interest) and any other Transaction Document to secure its obligations to a Federal Reserve Bank, without notice to or the consent of the Borrower, the Servicer, any Affiliate thereof or any Credit Party; provided, however, that that no such pledge shall relieve such assignor of its obligations under this Agreement.
(j) Pledge to a Security Trustee. Notwithstanding anything to the contrary set forth herein, (i) any Credit Party or any of their respective Affiliates may at any time pledge or grant a security interest in all or any portion of its interest in, to and under this Agreement (including, without limitation, rights to payment of Capital and Interest) and any other Transaction Document to a security trustee in connection with the funding by such Person of Loans, without notice to or the consent of the Borrower, the Servicer, any Affiliate thereof or any Credit Party; provided, however, that that no such pledge shall relieve such assignor of its obligations under this Agreement.
SECTION 12.04. Costs and Expenses. In addition to the rights of indemnification granted under Section 11.01 hereof, the Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses in connection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other Transaction Documents (together with all amendments, restatements, supplements, consents and waivers, if any, from time to time hereto and thereto), including, without limitation, (i) the reasonable Attorney Costs for the Structuring Agent, the Administrative Agent and the other Credit Parties and any of their respective Affiliates with respect thereto and with respect to advising the Structuring Agent, the Administrative Agent and the other Credit Parties and their respective Affiliates as to their rights and remedies under this Agreement and the other Transaction Documents and (ii) reasonable accountants’, auditors’ and consultants’ fees and expenses for the Structuring Agent, the Administrative Agent and the other Credit Parties and any of their respective Affiliates incurred in connection with the administration and maintenance of this Agreement or advising the Structuring Agent, the Administrative Agent or any other Credit Party as to their rights and remedies under this Agreement or as to any actual or reasonably claimed breach of this Agreement or any other Transaction Document. In addition, the Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses (including reasonable Attorney Costs), of the Structuring Agent, the Administrative Agent and the other Credit Parties and their respective Affiliates, incurred in connection with the enforcement of any of their respective rights or remedies under the provisions of this Agreement and the other Transaction Documents.
SECTION 12.05. No Proceedings. Each of the Servicer, each Lender and each assignee of a Loan or any interest therein, hereby covenants and agrees that it will not institute against, or join any other Person in instituting against, the Borrower any Insolvency Proceeding until one year and one day after the Final Payout Date; provided, that the Administrative Agent may take any such action in its sole discretion following the occurrence of a Receivables Termination Event. The provisions of this Section 12.05 shall survive any termination of this Agreement.
SECTION 12.06. Confidentiality.
(a) Each of the Borrower and the Servicer covenants and agrees to hold in confidence, and not disclose to any Person, the terms of this Agreement or the Fee Letter (including any fees payable in connection with this Agreement, the Fee Letter or any other Transaction Document or the identity of the Administrative Agent or any other Credit Party), except as the Administrative Agent and each Lender may have consented to in writing prior to any proposed disclosure; provided, however, that it may disclose such information (i) to its Advisors and Representatives, (ii) to the extent such information has become available to the public other than as a result of a disclosure by or through the Borrower, the Servicer or their Advisors and Representatives or (iii) to the extent it should be (A) required by Applicable Law, or in connection with any legal or regulatory proceeding or (B) requested by any Governmental Authority to disclose such information; provided, that, in the case of clause (iii) above, the Borrower and the Servicer will use reasonable efforts to maintain confidentiality and will (unless otherwise prohibited by Applicable Law) notify the Administrative Agent and the affected Credit Party of its intention to make any such disclosure prior to making such disclosure. Each of the Borrower and the Servicer agrees to be responsible for any breach of this Section 12.06(a) by its Representatives and Advisors and agrees that its Representatives and Advisors will be advised by it of the confidential nature of such information and shall agree to comply with this Section
12.06(a). Notwithstanding the foregoing, it is expressly agreed that each of the Borrower, the Servicer and their respective Affiliates may publish a press release or otherwise publicly announce the existence and principal amount of the Commitments under this Agreement and the transactions contemplated hereby; provided that the Administrative Agent shall be provided a reasonable opportunity to review such press release or other public announcement prior to its release and provide comment thereon; provided, further, that no such press release shall name or otherwise identify the Administrative Agent, any other Credit Party or any of their respective Affiliates without such Person’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed). Notwithstanding the foregoing, the Borrower consents to the publication by the Administrative Agent or any other Credit Party of a tombstone or similar advertising material relating to the financing transactions contemplated by this Agreement.
(b) Each of the Administrative Agent and each other Credit Party, severally and with respect to itself only, agrees to hold in confidence, and not disclose to any Person, any confidential and proprietary information concerning the Borrower, the Servicer, any Originator, any Obligor (solely to the extent such information regarding such Obligor was provided in connection with the Transaction Documents) and their respective Affiliates and their businesses or the terms of this Agreement (including any fees payable in connection with this Agreement or the other Transaction Documents), except as the Borrower, the Servicer, any Originator or any Obligor may have consented to in writing prior to any proposed disclosure; provided, however, that it may disclose such information (i) to its Advisors and Representatives, (ii) to its assignees and Participants and potential assignees and Participants and their respective counsel if they agree in writing to hold it confidential, (iii) to the extent such information has become available to the public other than as a result of a disclosure by or through it or its Representatives or Advisors, (iv) at the request of a bank examiner or other regulatory authority or in connection with an examination of any of the Administrative Agent or any Lender or their respective Affiliates or (v) to the extent it should be (A) required by Applicable Law, or in connection with any legal or regulatory proceeding or (B) requested by any Governmental Authority to disclose such information; provided, that, in the case of clause (v) above, the Administrative Agent and each Lender will use reasonable efforts to maintain confidentiality and will (unless otherwise prohibited by Applicable Law) notify the Borrower and the Servicer of its intention to make any such disclosure prior to making such disclosure. Each of the Administrative Agent and each Lender, severally and with respect to itself only, agrees to be responsible for any breach of this Section 12.06(b) by its Representatives and Advisors and agrees that its Representatives and Advisors will be advised by it of the confidential nature of such information and shall agree to comply with this Section 12.06(b).
(c) As used in this Section 12.06, (i) “Advisors” means, with respect to any Person, such Person’s accountants, attorneys and other confidential advisors and (ii) “Representatives” means, with respect to any Person, such Person’s Affiliates, Subsidiaries, directors, managers, officers, employees, members, investors, financing sources, insurers, professional advisors, representatives and agents; provided that such Persons shall not be deemed to be Representatives of a Person unless (and solely to the extent that) confidential information is furnished to such Person.
(d) Notwithstanding the foregoing, to the extent not inconsistent with applicable securities laws, each party hereto (and each of its employees, representatives or other
agents) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure (as defined in Section 1.6011-4 of the Treasury Regulations) of the transactions contemplated by the Transaction Documents and all materials of any kind (including opinions or other tax analyses) that are provided to such Person relating to such tax treatment and tax structure.
(e) For the avoidance of doubt, nothing in this Section 12.06 shall prohibit any Person from voluntarily communicating, disclosing or providing information within the scope of the confidentiality provisions of this Section 12.06 regarding suspected violations of laws, rules, or regulations to a governmental, regulatory or self-regulatory organization without any notification to any Person.
SECTION 12.07. GOVERNING LAW. THIS AGREEMENT, INCLUDING THE RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO ANY OTHER CONFLICTS OF LAW PROVISIONS THEREOF, EXCEPT TO THE EXTENT THAT THE PERFECTION, THE EFFECT OF PERFECTION OR PRIORITY OF THE INTERESTS OF ADMINISTRATIVE AGENT OR ANY LENDER IN THE COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK).
SECTION 12.08. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart hereof by facsimile or other electronic means shall be equally effective as delivery of an originally executed counterpart.
SECTION 12.09. Integration; Binding Effect; Survival of Termination. This Agreement and the other Transaction Documents contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until the Final Payout Date; provided, however, that the provisions of Sections 4.01, 4.03, 10.04, 10.06, 11.01, 11.02, 12.04, 12.05, 12.06, 12.07, 12.09, 12.11 and 12.13 shall survive any termination of this Agreement.
SECTION 12.10. CONSENT TO JURISDICTION. (a) EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION, IN EACH CASE, OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK CITY, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND EACH PARTY HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED, IN EACH CASE, IN SUCH NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. NOTHING IN THIS SECTION 12.10 SHALL AFFECT THE
RIGHT OF THE ADMINISTRATIVE AGENT OR ANY OTHER CREDIT PARTY TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR THE SERVICER OR ANY OF THEIR RESPECTIVE PROPERTY IN THE COURTS OF OTHER JURISDICTIONS. EACH OF THE BORROWER AND THE SERVICER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
(b) EACH OF THE BORROWER AND THE SERVICER CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO IT AT ITS ADDRESS SPECIFIED IN SECTION 12.02. NOTHING IN THIS SECTION 12.10 SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY OTHER CREDIT PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 12.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.
SECTION 12.12. Ratable Payments. If any Credit Party, whether by setoff or otherwise, has payment made to it with respect to any Borrower Obligations in a greater proportion than that received by any other Credit Party entitled to receive a ratable share of such Borrower Obligations, such Credit Party agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion of such Borrower Obligations held by the other Credit Parties so that after such purchase each Credit Party will hold its ratable proportion of such Borrower Obligations; provided that if all or any portion of such excess amount is thereafter recovered from such Credit Party, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
SECTION 12.13. Limitation of Liability.
(a) No claim may be made by the Borrower or any Affiliate thereof or any other Person against any Credit Party or their respective Affiliates, members, directors, officers, employees, incorporators, attorneys or agents for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement or any other Transaction Document, or any act, omission or event occurring in connection herewith or therewith; and each of the Borrower and the Servicer hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. None of the Credit Parties and their respective Affiliates shall have any liability to the Borrower or any Affiliate thereof or any other Person asserting claims on behalf of or in right of
the Borrower or any Affiliate thereof in connection with or as a result of this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby, except to the extent that any losses, claims, damages, liabilities or expenses incurred by the Borrower or any Affiliate thereof result from the breach of contract, gross negligence or willful misconduct of such Credit Party in performing its duties and obligations hereunder and under the other Transaction Documents to which it is a party.
(b) The obligations of the Administrative Agent and each of the other Credit Parties under this Agreement and each of the Transaction Documents are solely the corporate obligations of such Person. No recourse shall be had for any obligation or claim arising out of or based upon this Agreement or any other Transaction Document against any member, director, officer, employee or incorporator of any such Person.
SECTION 12.14. Intent of the Parties. The Borrower has structured this Agreement with the intention that the Loans and the obligations of the Borrower hereunder will be treated under United States federal, and applicable state, local and foreign tax law as debt (the “Intended Tax Treatment”). The Borrower, the Servicer, the Administrative Agent and the other Credit Parties agree to file no tax return, or take any action, inconsistent with the Intended Tax Treatment unless required by law. Each assignee and each Participant acquiring an interest in a Credit Extension, by its acceptance of such assignment or participation, agrees to comply with the immediately preceding sentence.
SECTION 12.15. USA Patriot Act. Each of the Administrative Agent and each of the other Credit Parties hereby notifies the Borrower and the Servicer that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “PATRIOT Act”), the Administrative Agent and the other Credit Parties may be required to obtain, verify and record information that identifies the Borrower, the Originators and the Servicer, which information includes the name, address, tax identification number and other information regarding the Borrower, the Originators and the Servicer that will allow the Administrative Agent and the other Credit Parties to identify the Borrower, the Originators and the Servicer in accordance with the PATRIOT Act. This notice is given in accordance with the requirements of the PATRIOT Act. Each of the Borrower and the Servicer agrees to provide the Administrative Agent and each other Credit Parties, from time to time, with all documentation and other information required by bank regulatory authorities under “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act.
SECTION 12.16. Right of Setoff. Each Credit Party is hereby authorized (in addition to any other rights it may have), at any time during the continuance of a Receivables Termination Event, to setoff, appropriate and apply (without presentment, demand, protest or other notice which are hereby expressly waived) any deposits and any other indebtedness held or owing by such Credit Party (including by any branches or agencies of such Credit Party) to, or for the account of, the Borrower or the Servicer against amounts owing by the Borrower or the Servicer hereunder (even if contingent or unmatured); provided that such Credit Party shall notify the Borrower or the Servicer, as applicable, promptly following such setoff.
SECTION 12.17. Severability. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 12.18. Mutual Negotiations. This Agreement and the other Transaction Documents are the product of mutual negotiations by the parties thereto and their counsel, and no party shall be deemed the draftsperson of this Agreement or any other Transaction Document or any provision hereof or thereof or to have provided the same. Accordingly, in the event of any inconsistency or ambiguity of any provision of this Agreement or any other Transaction Document, such inconsistency or ambiguity shall not be interpreted against any party because of such party’s involvement in the drafting thereof.
SECTION 12.19. Captions and Cross References. The various captions (including the table of contents) in this Agreement are provided solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement. Unless otherwise indicated, references in this Agreement to any Section, Schedule or Exhibit are to such Section Schedule or Exhibit to this Agreement, as the case may be, and references in any Section, subsection, or clause to any subsection, clause or subclause are to such subsection, clause or subclause of such Section, subsection or clause.
SECTION 12.20. Limited Recourse. No recourse shall be had against any officer, director, employee, member, manager, partner, shareholder or incorporator of the Borrower or its successors or assigns for any amounts payable by the Borrower under this Agreement. It is understood that the foregoing provisions of this Section 12.20 shall not (x) prevent recourse to the Collateral for the sums due or to become due under any security, instrument or agreement which is part of the Collateral or (y) constitute a waiver, release or discharge of any indebtedness or obligation evidenced by the Loans or secured by this Agreement until such Collateral has been realized. It is further understood that the foregoing provisions of this Section 12.20 shall not limit the right of any Person to name the Borrower as a party defendant in any proceeding or in the exercise of any other remedy under this Agreement, so long as no judgment in the nature of a deficiency judgment or seeking personal liability shall be asked for or (if obtained) enforced against any such Person or entity.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
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| ALLIANCE LAUNDRY TRADE RECEIVABLES LLC |
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| By: | | |
| Name: | | |
| Title: | | |
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| ALLIANCE LAUNDRY SYSTEMS LLC, |
| in its individual capacity and as the Servicer | |
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| By: | | |
| Name: | | |
| Title: | | |
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S-1 | Receivables Financing Agreement |
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| PNC BANK, NATIONAL ASSOCIATION, |
| as Administrative Agent |
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| By: | |
| Name: | |
| Title: | |
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| PNC BANK, NATIONAL ASSOCIATION, |
| as a Lender |
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| By: | |
| Name: | |
| Title: | |
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| PNC CAPITAL MARKETS LLC, |
| as Structuring Agent |
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| By: | |
| Name: | |
| Title: | |
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S-2 | Receivables Financing Agreement |
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT, dated as of [●], 2025 (as it may be amended, supplemented or otherwise modified from time to time, this “Agreement”) among the parties listed on the signature pages hereto (each, together with his, her or its Permitted Transferees as defined below, a “Holder” and together, the “Holders”) and Alliance Laundry Holdings Inc. (the “Corporation”).
WHEREAS, the Corporation intends to consummate an initial public offering (the “IPO”) of its common stock, par value $0.01 per share (“Common Stock”); and
WHEREAS, the Holders desire to effect an agreement pursuant to which the Holders will have certain designation rights with respect to nominees to the Board (as defined below) and its committees, certain information rights with respect to the Corporation and certain other rights with respect to the Corporation, in each case as specified herein.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Stockholder Rights and Restrictions
SECTION 1.01. Composition of the Board.
(a) For so long as the Principal Stockholder (as defined below) beneficially owns (as defined below):
(i) at least 40.0% of the issued and outstanding shares of Common Stock, the Principal Stockholder shall have the right, but not the obligation, to nominate to the Board a number of Directors (as defined below) (rounded up to the nearest whole number) equal to the authorized number of Directors of the Board at such time multiplied by 50.1%; and
(ii) at least 10.0%, but less than 40.0%, of the issued and outstanding shares of Common Stock, the Principal Stockholder shall have the right, but not the obligation, to nominate to the Board a number of Directors (rounded up to the nearest whole number) equal to the authorized number of Directors of the Board at such time multiplied by such percentage of the issued and outstanding shares of Common Stock beneficially owned by the Principal Stockholder.
(b) The Corporation agrees, to the fullest extent permitted by applicable law and the listing standards of the stock exchange on which the Common Stock is then listed (the “Applicable Exchange Listing Standards”), to take all necessary and desirable actions to (i) include in the slate of nominees recommended by the Board for election at any meeting of stockholders called for the purpose of electing Directors the individuals designated pursuant to Section 1.01(a) (to the extent that Directors of such nominee’s class are to be elected at such meeting for so long as the Board is classified), (ii) nominate and recommend each such
individual to be elected as a Director as provided herein, (iii) solicit proxies or consents, as the case may be, in favor thereof and (iv) make, or cause to be made, with applicable government, administrative or regulatory authorities, all filings, registrations or similar actions that are required to achieve such result. The Corporation shall be entitled, solely for the purposes set forth in Section 1.01(a), to identify each such individual as a BDT Director pursuant to this Agreement. In the event that the Principal Stockholder has nominated fewer than the total number of designees the Principal Stockholder is entitled to nominate pursuant to Section 1.01(a), the Principal Stockholder shall have the right, at any time, to nominate such additional designees to which the Principal Stockholder is entitled, in which case the Corporation and the Directors shall take all necessary corporate action, to the fullest extent permitted by applicable law, to (1) enable the Principal Stockholder to nominate and effect the election or appointment of such additional individuals and (2) to effect the election or appointment of such additional individuals nominated by the Principal Stockholder to fill such newly-created directorships resulting from any increase in the authorized number of Directors or to fill any other existing vacancies. Any Director(s) nominated pursuant to Section 1.01(a) shall be referred to as the “BDT Director” or “BDT Directors” hereunder, as applicable.
(c) In the absence of any designation from the Principal Stockholder as specified in Section 1.01(a) above, the Director or Directors previously designated by the Principal Stockholder and then-serving shall be nominated if still eligible to serve as provided herein.
SECTION 1.02. Vacancies of Directors. Unless the Board otherwise requests, in the event of a reduction in the number of BDT Directors to be nominated in accordance with the provisions of Section 1.01, the Principal Stockholder shall use its best efforts to obtain the resignations of the number of BDT Directors corresponding with such reduction. If a vacancy is created at any time by the death, disability, resignation, retirement, disqualification, removal from office or other cause of any BDT Director nominated pursuant to Section 1.01, other than the removal or resignation of a BDT Director due to a reduction in the number of BDT Directors to be nominated in accordance with the provisions of this Section 1.02, if requested by the Principal Stockholder, the remaining Directors shall, to the fullest extent permitted by applicable law, cause the vacancy created thereby to be filled by a new nominee, designee or appointee of the Principal Stockholder as soon as possible, and the Corporation agrees to take, to the fullest extent permitted by applicable law at any time and from time to time, all actions necessary to accomplish the same.
SECTION 1.03. Chair of the Board. As of the date hereof and for so long as the Principal Stockholder beneficially owns at least 25.0% of the issued and outstanding shares of Common Stock, the Principal Stockholder shall, and the Corporation shall take all action necessary to ensure that the Principal Stockholder shall, have the right to appoint (including by filling any vacancy in the position of Chair of the Board) a then-serving Director as the Chair of the Board (as defined in the Corporation’s corporate governance guidelines, as may be amended, supplemented or otherwise modified from time to time, the “Corporate Governance Guidelines”) and to remove any person serving as Chair of the Board from such position. For so long as the Principal Stockholder beneficially owns at least 25.0% of the issued and outstanding shares of
Common Stock, the Corporation shall not amend, supplement or otherwise modify, and shall take all actions necessary to ensure that the Corporate Governance Guidelines are not amended, supplemented or otherwise modified, with respect to the role, responsibilities or duties of the Chair of the Board without the consent of the Principal Stockholder, such consent not to be unreasonably withheld.
SECTION 1.04. Lead Director. As of the date hereof, and for so long as the Principal Stockholder beneficially owns at least 25.0% of the issued and outstanding shares of Common Stock, the Principal Stockholder shall, and the Corporation shall take all action necessary to ensure that the Principal Stockholder shall, have the right to appoint (including by filling any vacancy in the position of Lead Director) a then-serving Director as the Lead Director (if any, as defined in the Corporate Governance Guidelines) and to remove any person serving as Lead Director from such position. For so long as the Principal Stockholder beneficially owns at least 25.0% of the issued and outstanding shares of Common Stock, the Corporation shall not amend, supplement or otherwise modify, and shall take all actions necessary to ensure that the Corporate Governance Guidelines are not amended, supplemented or otherwise modified, with respect to the role, responsibilities or duties of the Lead Director without the consent of the Principal Stockholder, such consent not to be unreasonably withheld.
SECTION 1.05. Committee Membership. For so long as the Principal Stockholder is entitled to nominate at least one BDT Director to the Board in accordance with Section 1.01, the Principal Stockholder shall also be entitled to designate at least one BDT Director to each committee of the Board, including those formed after the date hereof; provided, however, that any such BDT Director designee must at all times remain eligible to serve on the applicable committee under applicable law and the Applicable Exchange Listing Standards, including any applicable general and heightened independence requirements (subject in each case to any applicable exceptions, including those for newly public companies and for “controlled companies”, and any applicable phase-in periods). If, at any time, the continued service of a committee member designated by the Principal Stockholder would cause the Corporation to violate any applicable law or Applicable Exchange Listing Standard, including any applicable general and heightened independence requirements and subject to any such exceptions referred to in the immediately prior sentence, the Principal Stockholder shall use its best efforts to obtain the resignation of such nominee from the applicable committee. Notwithstanding the foregoing, no BDT Director shall be required to be designated by the Principal Stockholder on any committee and any failure by the Principal Stockholder to exercise such right provided for herein at any time shall not constitute any waiver of such right at any time.
SECTION 1.06. No Liability for Election of Recommended Directors. None of the Corporation, the Principal Stockholder, nor any officer, director, stockholder, partner, member, manager, equity holder, employee, agent or other representative of any such person, makes or shall be deemed to have made any representation or warranty as to the fitness or competence of the nominee of any person hereunder to serve on the Board by virtue of such person’s execution of this Agreement or by the act of such person in voting for such nominee pursuant to this Agreement.
SECTION 1.07. Information Rights. (a) Until such time as the Principal Stockholder shall cease to own at least 3.0% of the issued and outstanding shares of Common Stock, upon the request of the Principal Stockholder, the Corporation shall, and shall cause its subsidiaries to, provide the Principal Stockholder:
(i) promptly after the end of each month, the monthly operating report of the Corporation and, to the extent prepared by the Corporation in the ordinary course, a consolidated balance sheet of the Corporation and its subsidiaries as of the end of such month and consolidated statements of comprehensive income and cash flows of the Corporation and its subsidiaries, for each month and for the current fiscal year of the Corporation to date, prepared in accordance with GAAP (as defined below) (subject to normal year-end audit adjustments and the absence of notes thereto), together with a comparison of such statements to the corresponding periods of the prior fiscal year and to the Corporation’s business plan then in effect and approved by the Board;
(ii) an annual budget, a business plan and financial forecasts for the Corporation for the fiscal year of the Corporation (the “Annual Budget”), no later than three business days after the approval thereof by the Board, in such manner and form as approved by the Board, which shall include at least a projection of income and a projected cash flow statement for each fiscal quarter in such fiscal year and a projected balance sheet as of the end of each fiscal quarter in such fiscal year, in each case, prepared in reasonable detail, with appropriate presentation and discussion of the principal assumptions upon which such budgets and projections are based, which shall be accompanied by the statement of the chief executive officer or chief financial officer or equivalent officer of the Corporation to the effect that such budget and projections are based on reasonable and good faith estimates and assumptions made by the management of the Corporation for the respective periods covered thereby, it being recognized by such holders that such budgets and projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by them may differ from the projected results, as well as any material changes in such Annual Budget which shall be delivered to the Principal Stockholder as promptly as practicable after such changes have been approved by the Board;
(iii) as soon as available after the end of each fiscal year of the Corporation, and in any event within 90 days thereafter, (A) the annual financial statements required to be filed by the Corporation pursuant to the Exchange Act (as defined below) or (B) a consolidated balance sheet of the Corporation and its subsidiaries as of the end of such fiscal year, and consolidated statements of comprehensive income, cash flows and stockholders’ equity of the Corporation and its subsidiaries for such year, prepared in accordance with GAAP and setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and accompanied by the opinion of independent public accountants of recognized national standing selected by the Corporation, and a
Corporation-prepared comparison to the Corporation’s Annual Budget for such year as approved by the Board; and
(iv) as soon as available after the end of the first, second and third quarterly accounting periods in each fiscal year of the Corporation, and in any event within 45 days thereafter, (A) the quarterly financial statements required to be filed by the Corporation pursuant to the Exchange Act or (B) a consolidated balance sheet of the Corporation and its subsidiaries as of the end of each such quarterly period, and consolidated statements of comprehensive income, cash flows and stockholders’ equity of the Corporation and its subsidiaries for such period and for the current fiscal year to date, prepared in accordance with GAAP (subject to normal year-end audit adjustments and the absence of notes thereto) and setting forth in comparative form the figures for the corresponding periods of the previous fiscal year and to the Corporation’s Annual Budget then in effect as approved by the Board, all of the information to be provided pursuant to this Section 1.07(a)(iv) in reasonable detail and certified by the principal financial or accounting officer of the Corporation.
In addition to the foregoing, the Corporation shall provide periodic updates to the Principal Stockholder during the course of the preparation of the Annual Budget and keep the Principal Stockholder reasonably informed as to the Corporation’s progress, status and the budgeted items set forth therein. Notwithstanding anything to the contrary in this Section 1.07(a), the Corporation’s obligations hereunder shall be deemed satisfied to the extent that such information is provided by (A) providing the financial statements of any wholly-owned subsidiary of the Corporation to the extent such financial statements reflect the entirety of the operations of the business or (B) in the case of Section 1.07(a)(iii) and Section 1.07(a)(iv), filing such financial statements of the Corporation or any wholly-owned subsidiary of the Corporation whose financial statements satisfy the requirements of clause (A), as applicable, with the Securities and Exchange Commission on EDGAR or in such other manner as makes them publicly available.
(b) Other Information. Until such time as the Principal Stockholder shall cease to own any Common Stock, upon the request of the Principal Stockholder, the Corporation shall deliver to the Principal Stockholder, with reasonable promptness, such other information and data (including such information and reports made available to any lender of the Corporation or any of its subsidiaries under any credit agreement or otherwise) with respect to the Corporation and each of its subsidiaries as from time to time may be reasonably requested by the Principal Stockholder. Until such time as the Principal Stockholder shall cease to own any Common Stock, the Principal Stockholder shall have access to such other information concerning the Corporation’s business or financial condition and the Corporation’s management as may be reasonably requested, including such information as may be necessary to comply with regulatory, tax or other governmental filings; provided, however, that the Corporation shall not be required to disclose any privileged information of the Corporation so long as the Corporation has used commercially reasonable efforts to enter into an arrangement pursuant to which it may provide such information to the Principal Stockholder without the loss of any such privilege.
(c) Access. Until such time as the Principal Stockholder shall cease to own any Common Stock, the Corporation shall, and shall cause its subsidiaries, officers, directors, employees, auditors and other agents to (i) afford the Principal Stockholder and its officers, employees, auditors and other agents, during normal business hours and upon reasonable notice, at reasonable times, access to the Corporation’s and its subsidiaries’ officers, employees, auditors, legal counsel, properties, offices, plants and other facilities and to all books and records, and (ii) afford the Principal Stockholder and its officers, employees, auditors and other agents the opportunity to discuss the affairs, finances and accounts of the Corporation and its subsidiaries with their respective officers from time to time as the Principal Stockholder may reasonably request; provided, however, that the Corporation shall not be required to disclose any privileged information of the Corporation so long as the Corporation has used commercially reasonable efforts to enter into an arrangement pursuant to which it may provide such information to the Principal Stockholder without the loss of any such privilege.
SECTION 1.08. Confidentiality. Each Holder, individually and not jointly, hereby agrees with the Corporation (and only with the Corporation) that it will keep confidential any confidential information obtained from the Corporation pursuant to Section 1.07, unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of any confidentiality obligation by such Holder or its Affiliates (as defined below)), (b) is or has been independently developed or conceived by such Holder without use of the Corporation’s confidential information or (c) is or has been made known or disclosed to such Holder by a third party (other than an Affiliate of such Holder) without a breach of any confidentiality obligations such third party may have to the Corporation that is known to such Holder; provided that a Holder may disclose confidential information (i) to its attorneys, accountants, consultants and other professional advisors to the extent necessary to obtain their services in connection with monitoring its investment in the Corporation, (ii) to any Affiliate, partner, member, manager, equity holder, investor, prospective partner or related investment fund of such Holder or its Affiliates and its and their respective directors, employees, consultants and representatives, in each case, in the ordinary course of business (provided that the recipients of such confidential information are subject to a customary confidentiality obligation), (iii) as may be reasonably determined by such Holder to be necessary in connection with such Holder’s enforcement of its rights in connection with this Agreement or its investment in the Corporation and its subsidiaries or (iv) as may otherwise be required or requested by law or legal, judicial or regulatory process.
SECTION 1.09. Dual Purpose. Individuals associated with the Principal Stockholder may from time to time serve on the Board. The Corporation, on its behalf and on behalf of its subsidiaries, recognizes that such individuals (i) will from time to time receive non-public information concerning the Corporation and its subsidiaries and (ii) may (subject to the obligation to maintain the confidentiality in accordance with Section 1.08) share such information with other individuals associated with the Principal Stockholder. Such sharing will be for the dual purpose of facilitating support to such individuals in their capacity as members of the Board and enabling the Principal Stockholder, as equity holder, to better evaluate the Corporation’s performance and prospects. The Corporation, on behalf of itself and its subsidiaries, hereby irrevocably consents to such sharing.
SECTION 1.10. Expenses. In accordance with the Corporation’s organizational documents and other applicable Corporation policies and practices, the Corporation shall reimburse each BDT Director for the reasonable out-of-pocket costs and expenses incurred by each member of the Board in the course of his or her service as such, including in connection with attending regular and special meetings of the Board, any committee thereof or any board or committee of any subsidiary of the Corporation, including reasonable travel, lodging and meal expenses.
ARTICLE II
Representations and Warranties of the Holders
SECTION 2.01. Corporation Authorization. Each Holder that is not a natural person represents and warrants to each of the other Holders and the Corporation that such Holder is validly organized and existing under the laws of its state of organization and has all requisite power and authority to execute and deliver this Agreement, to perform fully its obligations hereunder and to consummate the transactions contemplated hereby, and that this Agreement constitutes the valid and binding agreement of such Holder, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to creditors’ rights generally and general principles of equity.
SECTION 2.02. Non-Contravention. Each Holder represents and warrants to each of the other Holders and the Corporation that the execution, delivery and performance by such Holder of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) if such Holder is not a natural person, contravene or conflict with, or constitute a violation of, any articles or certificate of incorporation or formation, bylaws, operating agreement or comparable organizational documents of such Holder or (ii) contravene or conflict with, or constitute a violation of, any material applicable law or any material agreement or order binding on such Holder.
ARTICLE III
Representations and Warranties of the Corporation
The Corporation represents and warrants to each Holder that:
SECTION 3.01. Corporation Authorization. The Corporation is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to execute and deliver this Agreement, to perform fully its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly authorized by all necessary corporate and other action by the Corporation and constitutes a legal, valid and binding obligation and agreement of the Corporation, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to creditors’ rights generally and general principles of equity.
SECTION 3.02. Non-Contravention. The execution, delivery and performance by the Corporation of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) contravene or conflict with, or constitute a violation of, any provision of the organizational documents of the Corporation, (ii) contravene or conflict with, or constitute a violation of, any material applicable law or any material agreement or order binding on the Corporation or (iii) result in the imposition of any liens, charges, security interests, options, claims, mortgages, pledges, proxies, voting trusts or agreements, obligations, understandings or arrangements or other restrictions on title or transfer of any nature whatsoever on any asset of the Corporation.
ARTICLE IV
Miscellaneous
SECTION 4.01. Other Definitional and Interpretative Provisions. Unless specified otherwise, in this Agreement the obligations of any party consisting of more than one person are joint and several. The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References to any Person (as defined below) include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.
SECTION 4.02. Additional Definitions.
(a) “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person; provided, that (i) neither the Corporation nor any of its subsidiaries will be deemed an Affiliate of any stockholder of the Corporation (including any Holder) or any of such stockholders’ Affiliates and (ii) no stockholder of the Corporation (including any Holder) will be deemed an Affiliate of any other stockholder of the Corporation, in each case, solely by reason of any investment in the Corporation or any rights conferred on such stockholder pursuant to this Agreement (including any representatives of such stockholder serving on the Board).
(b) “beneficial owner”, including the terms “beneficially own” and “beneficial ownership”, when used with respect to any stock, shall have the meaning set forth in Rules 13d-3 and 13d-5 under the Exchange Act.
(c) “Board” means the board of directors of the Corporation.
(d) “Directors” means the directors of the Corporation at the applicable time.
(e) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(f) “GAAP” means generally accepted accounting principles, as in effect in the United States of America from time to time.
(g) “Permitted Transferee” means (i) in the case of any transferor that is not a natural person, any Person that is an Affiliate of such transferor and (ii) in the case of any transferor that is a natural person, (A) any Person to whom Common Stock is transferred from such transferor (1) by will or the laws of descent and distribution or (2) by gift without consideration of any kind; provided that, in the case of clause (2), such transferee is the spouse, the lineal descendant, sibling, parent, heir, executor, administrator, testamentary trustee, legatee or beneficiary of such transferor, (B) a trust that is for the exclusive benefit of such transferor or its Permitted Transferees under (A) above or (C) any institution qualified as tax-exempt under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
(h) “Person” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity.
(i) “Principal Stockholder” means BDT Badger Holdings, LLC and its Affiliates that are not natural Persons and its and their respective successors and Permitted Transferees that are not natural Persons.
SECTION 4.03. Further Assurances. Each party to this Agreement, at any time and from time to time upon the reasonable request of another party to this Agreement, shall promptly execute and deliver, or cause to be executed and delivered, all such further instruments and take all such further actions as may be reasonably necessary or appropriate to confirm or carry out the purposes and intent of this Agreement.
SECTION 4.04. Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 4.05. Assignment. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other parties hereto; provided, however, that a Holder shall be entitled to assign, delegate or otherwise transfer, in whole or in part, any of its rights and obligations hereunder to a Permitted Transferee of such Holder without such prior consent (and such Permitted Transferee shall thereafter be a “Holder” hereunder with
the applicable rights hereunder without any further action by or on behalf of any Holder (including the Permitted Transferee) or the Corporation).
SECTION 4.06. Governing Law. This Agreement shall be governed by, construed and enforced in accordance with the law of the State of Delaware, without regard to the conflicts of law rules of such state.
SECTION 4.07. Consent to Jurisdiction. The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the Court of Chancery of the State of Delaware and any state appellate court therefrom located in the State of Delaware (or, only if the Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court sitting in Wilmington, Delaware) (together, the “Specified Courts”), and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of Delaware, and each of the parties hereby irrevocably consents to the jurisdiction of the Specified Courts in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in the Specified Courts or that any such suit, action or proceeding brought in the Specified Courts has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of the Specified Courts.
SECTION 4.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 4.09. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any person or entity or any circumstance, is found to be invalid or unenforceable in any jurisdiction, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other persons, entities or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
SECTION 4.10. Counterparts. This Agreement may be executed (including by facsimile transmission or other electronic signature of this Agreement signed by such party (via PDF, TIFF, JPEG or the like)) with counterpart pages or in one or more counterparts, each of which shall be deemed an original and all of which shall, taken together, be considered one and the same agreement, it being understood that both parties need not sign the same counterpart.
SECTION 4.11. Entire Agreement. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes all prior and contemporaneous agreements and understanding, both oral and written, among the parties hereto with respect to the subject matter hereof.
SECTION 4.12. Amendments; Waiver. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement or in the case of a waiver, by the party against whom the waiver is to be effective.
SECTION 4.13. Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement is not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof in addition to any other remedy to which they are entitled at law or in equity. Accordingly, it also is agreed that each of the Corporation and the Holders shall be entitled to, in addition to any other legal and equitable remedies available, an injunction to prevent breaches of this Agreement, and to specific enforcement of this Agreement and its terms and provisions in any action instituted in any court of the United States or any state having subject matter jurisdiction.
SECTION 4.14. IPO Closing; Termination. This Agreement will automatically terminate and be of no force and effect if the closing of the IPO does not occur within twelve months from the date of this Agreement. This Agreement shall terminate on the earlier of (i) the written election of the Principal Stockholder or (ii) such date as the Principal Stockholder ceases to beneficially own any shares of Common Stock. Termination of this Agreement shall not relieve any party for the breach of any obligations under this Agreement prior to such termination.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
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| ALLIANCE LAUNDRY HOLDINGS INC. |
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| | By: |
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| | | Name: |
| | | Title: |
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| BDT BADGER HOLDINGS, LLC |
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| | By: |
| | | |
| | | Name: |
| | | Title: |
[Signature Page to the Stockholders Agreement]
REGISTRATION RIGHTS AGREEMENT
by and among
the Persons listed on Schedule A hereto
and
ALLIANCE LAUNDRY HOLDINGS INC.
Dated as of [●], 2025
This REGISTRATION RIGHTS AGREEMENT, dated as of [●], 2025 (as it may be amended, supplemented or otherwise modified from time to time, this “Agreement”), is made among Alliance Laundry Holdings Inc., a Delaware corporation (the “Company”), the stockholders listed on Schedule A hereto and any transferee of Registrable Securities to whom any Person who is a party to this Agreement shall Assign any rights hereunder in accordance with Section 4.6 (each such Person, a “Holder”). Capitalized terms used in this Agreement without definition have the meaning set forth in Article I.
Article I
Certain Definitions
As used herein, the following terms shall have the following meanings:
“Additional Piggyback Rights” has the meaning set forth in Section 2.2(c).
“Additional Piggyback Shares” has the meaning set forth in Section 2.3(a)(iv).
“Affiliate” means with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with, such Person.
“Agreement” has the meaning set forth in the preamble.
“Assign” means to directly or indirectly sell, transfer, assign, distribute, exchange, pledge, hypothecate, mortgage, grant a security interest in, encumber or otherwise dispose of Registrable Securities, whether voluntarily or by operation of law, including by way of a merger. “Assignee”, “Assigning” and “Assignment” have meanings corresponding to the foregoing.
“automatic shelf registration statement” has the meaning set forth in Section 2.5.
“Business Day” means any day other than a Saturday, Sunday or day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close.
“Carryover Amount” for any Holder means, with respect to any registered offering in which such Holder elected not to participate after receipt of a notice under Section 2.2(a), a number of Registrable Securities equal to the number of Registrable Securities then held by such Holder, multiplied by a fraction (expressed as a percentage), the numerator of which is equal to the number of Registrable Securities sold by the Holder that sold the most Registrable Securities in such offering and the denominator of which is the number of Registrable Securities held by such selling Holder immediately prior to such offering.
“Claims” has the meaning set forth in Section 2.10(a).
“Company” has the meaning set forth in the preamble.
“Company Shares” means the common stock of the Company, par value $0.01 per share, and any and all securities of any kind whatsoever of the Company that may be issued by
the Company after the date hereof in respect of, in exchange for, or in substitution of, such common stock, pursuant to any stock dividends, splits, reverse splits, combinations, reclassifications, recapitalizations, reorganizations and the like occurring after the date hereof.
“Company Shares Equivalents” means, with respect to the Company, all options, warrants and other securities convertible into, or exchangeable or exercisable for (at any time or upon the occurrence of any event or contingency and without regard to any vesting or other conditions to which such securities may be subject) Company Shares or other equity securities of the Company (including, without limitation, any note or debt security convertible into or exchangeable for Company Shares or other equity securities of the Company).
“Demand Exercise Notice” has the meaning set forth in Section 2.1(a).
“Demand Registration” has the meaning set forth in Section 2.1(a).
“Demand Registration Request” has the meaning set forth in Section 2.1(a).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.
“Expenses” means any and all fees and expenses incident to the Company’s performance of or compliance with Article II, including, without limitation: (i) SEC, stock exchange or FINRA, and all other registration and filing fees and all listing fees and fees with respect to the inclusion of securities on any national securities exchange or on any other securities market on which the Company Shares are listed or quoted, (ii) fees and expenses of compliance with state securities or “blue sky” laws of any state or jurisdiction of the United States or compliance with the securities laws of foreign jurisdictions and in connection with the preparation of a “blue sky” survey, including, without limitation, reasonable fees and expenses of outside “blue sky” counsel and securities counsel in foreign jurisdictions, (iii) word processing, printing and copying expenses, (iv) messenger and delivery expenses, (v) expenses incurred in connection with any road show, (vi) fees and disbursements of counsel for the Company, (vii) with respect to each registration or underwritten offering, the fees and disbursements of one counsel for the Participating Holder(s) (selected by the Majority Participating Holders), (viii) fees and disbursements of all independent public accountants (including the expenses of any audit and/or comfort letter and updates thereof) and fees and expenses of other Persons, including special experts, retained by the Company, (ix) fees and expenses payable to any Qualified Independent Underwriter, (x) any other fees and disbursements of underwriter(s), if any, customarily paid by issuers or sellers of securities, including reasonable fees and expenses of counsel for the underwriter(s) in connection with any filing with, or review by, FINRA (excluding, for the avoidance of doubt, any underwriting discount, commissions or spread), (xi) fees and expenses of any transfer agent or custodian and (xii) expenses for securities law liability insurance and any rating agency fees.
“FINRA” means the Financial Industry Regulatory Authority, Inc.
“Holder” or “Holders” has the meaning set forth in the preamble.
“Initiating Holder(s)” has the meaning set forth in Section 2.1(a).
“IPO” means the first underwritten public offering of the Company Shares to the general public pursuant to the Registration Statement on Form S-1 filed with the SEC completed on or about the date of this Agreement.
“Lock-Up Agreement” means any agreement entered into by a Holder that provides for restrictions on the transfer of Registrable Securities held by such Holder.
“Majority Participating Holders” means the Participating Holders holding more than 50% of the Registrable Securities proposed to be included in offerings of Registrable Securities by such Participating Holders pursuant to Section 2.1 or Section 2.2.
“Manager” has the meaning set forth in Section 2.1(c).
“Participating Holders” means all Holders of Registrable Securities which are proposed to be included in any registration or offering of Registrable Securities pursuant to Section 2.1 or Section 2.2.
“Person” means any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, governmental entity or agency or other entity of any kind or nature.
“Qualified Independent Underwriter” means a “qualified independent underwriter” within the meaning of FINRA Rule 5121.
“Registrable Securities” means any Company Shares held by the Holders at any time (including those held as a result of the conversion, exchange or exercise of Company Shares Equivalents); provided that, as to any Registrable Securities held by a particular Holder, such securities shall cease to be Registrable Securities when (i) a registration statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement or (ii) such securities are eligible to be sold by such Holder in compliance with the requirements of Rule 144 without being subject to volume or manner of sale limits, as such Rule 144 may be amended (or any successor provision thereto).
“Rule 144” and “Rule 144A” have the meanings set forth in Section 4.2.
“SEC” means the U.S. Securities and Exchange Commission.
“Section 2.3(a) Sale Number” has the meaning set forth in Section 2.3(a).
“Section 2.3(b) Sale Number” has the meaning set forth in Section 2.3(b).
“Section 2.3(c) Sale Number” has the meaning set forth in Section 2.3(c).
“Securities Act” means the Securities Act of 1933, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.
“Specified Courts” has the meaning set forth in Section 4.9(c).
“Stockholders Agreement” means the Stockholders Agreement, dated as of [●], 2025, by and among the Company and BDT Badger Holdings, LLC and the other Persons who may become parties thereto from time to time, as it may be amended, supplemented or otherwise modified from time to time.
“Subsidiary” means any direct or indirect subsidiary of the Company on the date hereof and any direct or indirect subsidiary of the Company organized or acquired after the date hereof.
“Transfer” means, with respect to any Company Shares or Company Shares Equivalents, (i) when used as a verb, to sell, assign, dispose of, exchange, pledge, mortgage, encumber, hypothecate or otherwise transfer, in whole or in part, any of the economic consequences of ownership of such Company Shares or Company Shares Equivalents, as applicable, whether directly or indirectly, or agree or commit to do any of the foregoing and (ii) when used as a noun, a direct or indirect sale, assignment, disposition, exchange, pledge, mortgage, encumbrance, hypothecation or other transfer, in whole or in part, of any of the economic consequences of ownership of such Company Shares or Company Shares Equivalents, as applicable, whether directly or indirectly, or any agreement or commitment to do any of the foregoing. For the avoidance of doubt, a sale, assignment, disposition, exchange, pledge, mortgage, encumbrance, hypothecation or other transfer of an interest in any Holder, or direct or indirect parent thereof, all or substantially all of whose assets are, directly or indirectly, Company Shares shall constitute a “Transfer” of Company Shares or Company Shares Equivalents, as applicable, for purposes of this Agreement. For the avoidance of doubt, a sale, assignment, disposition, exchange, pledge, mortgage, encumbrance, hypothecation or other transfer of an interest in any Holder, or direct or indirect parent thereof, which has substantial assets in addition to Company Shares or Company Shares Equivalents shall not constitute a “Transfer” of Company Shares or Company Shares Equivalents, as applicable, for purposes of this Agreement. The term “Transferred” shall have the correlating meaning to Transfer.
“Valid Business Reason” has the meaning set forth in Section 2.1(a).
“WKSI” has the meaning set forth in Section 2.5.
Article II
Registration Rights
Section 2.1. Demand Registrations. (a) If the Company shall receive from any Holder or group of Holders holding at least 10% of the Registrable Securities at any time beginning 180 days after the closing of the IPO (or such earlier time as permitted by the terms of the lockup agreements executed in connection with the IPO), a written request that the Company file a registration statement with respect to all or a portion of the Registrable Securities (a “Demand
Registration Request”, and the registration statement so requested is referred to herein as a “Demand Registration”, and the sender(s) of such request pursuant to this Agreement shall be known as the “Initiating Holder(s)”), then the Company shall, within five Business Days of the receipt thereof, give written notice (the “Demand Exercise Notice”) of such request to all other Holders, and subject to the limitations of this Section 2.1, use its reasonable best efforts to effect, as soon as practicable, the registration (including, without limitation, by means of a shelf registration pursuant to Rule 415 thereunder if requested pursuant to the Demand Registration Request and if the Company is then eligible to use such a registration) of all Registrable Securities that the Holders request to be registered within five Business Days of receipt of such notice. There is no limitation on the number of Demand Registrations pursuant to this Section 2.1 which the Company is obligated to effect. However, the Company shall not be obligated to take any action to effect any Demand Registration:
(i) within four months after a Demand Registration pursuant to this Section 2.1 that has been declared or ordered effective;
(ii) during the period starting with the date 15 days prior to its good faith estimate of the date of filing of, and ending on a date 90 days after the effective date of, a Company-initiated registration (other than a registration relating solely to the sale of securities to employees of the Company pursuant to a stock option, stock purchase or similar plan or to a Rule 145 transaction); provided that the Company is actively employing in good faith reasonable best efforts to cause such registration statement to become effective; or
(iii) in the case of a demand for a non-shelf registered offering that will result in the imposition of a lockup on the Company, where the anticipated offering price, before any underwriting discounts or commissions and any offering-related Expenses, is equal to or less than $25,000,000.
In addition, if the Company shall furnish to such Holders a certificate signed by the Chief Executive Officer of the Company stating that in the good faith judgment of the Company, any registration of Registrable Securities should not be made or continued (or sales under a shelf registration statement should be suspended) because (i) such registration (or continued sales under an existing shelf registration statement) would materially and adversely interfere with any existing or potential material financing, acquisition, corporate reorganization or merger or other material transaction or event involving the Company or any of its Subsidiaries or (ii) the Company is in possession of material non-public information, the premature disclosure of which, in the determination of the Company, could materially and adversely affect the Company (in either case, a “Valid Business Reason”), then (x) the Company may postpone filing a registration statement relating to a Demand Registration Request (or suspend sales under an existing shelf registration statement) until five Business Days after such Valid Business Reason no longer exists, but in no event for more than 90 days after the date the Company determines a Valid Business Reason exists and (y) in case a registration statement has been filed relating to a Demand Registration Request, the Company may cause such registration statement to be withdrawn and its effectiveness terminated or may postpone amending or supplementing such
registration statement until five Business Days after such Valid Business Reason no longer exists, but in no event for more than 90 days after the date the Company determines a Valid Business Reason exists, and the Company shall give written notice to the Participating Holders of its determination to postpone the filing of, or withdraw, a registration statement (or suspend sales under an existing shelf registration statement) and of the fact that the Valid Business Reason for such postponement, withdrawal or suspension no longer exists, in each case, promptly after the occurrence thereof; provided, however, that the Company shall not defer its obligation in this manner more than twice or for more than 90 days in any 12 month period.
Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company that the Company has determined to withdraw any registration statement pursuant to the immediately prior paragraph of this Section 2.1(a), such Holder will discontinue its Transfer of Registrable Securities pursuant to such registration statement and, if so directed by the Company, will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies or copies retained for legal and compliance purposes, then in such Holder’s possession of the prospectus covering such Registrable Securities that was in effect at the time of receipt of such notice. If the Company shall have withdrawn or prematurely terminated a registration statement filed pursuant to a Demand Registration (whether pursuant to this Section 2.1(a) or as a result of any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court), the Company shall not be considered to have effected an effective registration for the purposes of this Agreement until the Company shall have filed a new registration statement covering the Registrable Securities covered by such withdrawn or terminated registration statement and such new registration statement shall have been declared effective and shall not have been withdrawn or terminated. If the Company shall give any notice of withdrawal or postponement of a registration statement, the Company shall, not later than five Business Days after the Valid Business Reason that caused such withdrawal or postponement no longer exists (but in no event later than 90 days after the date of the postponement or withdrawal), use its reasonable best efforts to effect the registration of the Registrable Securities covered by the withdrawn or postponed registration statement in accordance with Section 2.1 (unless the Initiating Holder(s) shall have withdrawn such request, in which case the Company shall not be considered to have effected an effective registration for the purposes of this Agreement), and such registration shall not be withdrawn or postponed pursuant to this Section 2.1(a).
(b) (i) The Company, subject to Sections 2.3 and 2.7, shall include in a Demand Registration (x) the Registrable Securities of the Initiating Holder(s) and (y) the Registrable Securities of any other Holder of Registrable Securities, which shall have made a written request to the Company for inclusion in such registration pursuant to Section 2.2 within five Business Days after the receipt of the Demand Exercise Notice.
(ii) The Company shall, as expeditiously as possible, but subject to the limitations set forth in this Section 2.1, use its reasonable best efforts to (x) effect such registration (including, without limitation, by means of a shelf registration pursuant to Rule 415 under the Securities Act, if so requested and if the Company is then eligible to use such a registration) of the Registrable Securities which the Company has been so
requested to register for distribution in accordance with the method of distribution intended by the Initiating Holder(s) and (y) if requested by the Initiating Holder(s), obtain acceleration of the effective date of the registration statement relating to such registration.
(c) In connection with any Demand Registration, the Initiating Holder(s) shall have the right to designate the lead managing underwriter (any lead managing underwriter for the purposes of this Agreement, the “Manager”) in connection with such registration and each other managing underwriter for such registration, in each case subject to consent of the Company, not be unreasonably withheld, conditioned or delayed.
(d) If so requested by the Initiating Holder(s), the Company (together with all Holders proposing to distribute their securities through such underwriting) shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Initiating Holder(s) pursuant to Section 2.1(c).
Section 2.2. Piggyback Registrations.
(a) If, at any time or from time to time, the Company proposes or is required to register or commence an offering of any of its securities for its own account or otherwise (other than pursuant to registrations on Form S-4 or Form S-8 or any similar successor forms thereto) (including but not limited to the registrations or offerings pursuant to Section 2.1), the Company will:
(i) promptly give to each Holder written notice thereof (in any event within five Business Days) prior to the filing of any registration statement; and
(ii) include in such registration, and in any underwriting involved therein (if any), all the Registrable Securities specified in a written request or requests (which request(s) shall specify the maximum number of Registrable Securities intended to be disposed of by any such Participating Holder), made within five Business Days after mailing or personal delivery of such written notice from the Company, by any of the Holders, except as set forth in Sections 2.2(b) and 2.2(f), with the securities which the Company at the time proposes to register or sell, to permit the Transfer by the Holders (in accordance with the intended method of distribution thereof) of the Registrable Securities to be so registered or sold, including, if necessary, by filing with the SEC a post-effective amendment or a supplement to the registration statement filed by the Company or the prospectus related thereto. There is no limitation on the number of such piggyback registrations pursuant to the preceding sentence which the Company is obligated to effect. No registration of Registrable Securities effected under this Section 2.2(a) shall relieve the Company of its obligations to effect Demand Registrations under Section 2.1 hereof.
(b) If the registration in this Section 2.2 involves an underwritten offering, the right of any Holder to include its Registrable Securities in a registration or offering pursuant to this Section 2.2 shall be conditioned upon such Holder’s participation in the underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to Transfer their Registrable Securities through such underwriting
shall (together with the Company) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company or, in the case that such underwriting is in connection with a Demand Registration, by the Initiating Holder(s) pursuant to Section 2.1(c).
(c) The Company, subject to Sections 2.3 and 2.7, may elect to include in any registration statement and offering pursuant to demand registration rights by any Person, (i) authorized but unissued shares of Company Shares or Company Shares held by the Company as treasury shares and (ii) any other Company Shares which are requested to be included in such registration pursuant to the exercise of piggyback registration rights granted by the Company after the date hereof and which are not inconsistent with the rights granted in, or otherwise in conflict with the terms of, this Agreement (“Additional Piggyback Rights”); provided, however, that such inclusion shall be permitted only to the extent that it is pursuant to, and subject to, the terms of the underwriting agreement or arrangements, if any, entered into by the Initiating Holder(s).
(d) Other than in connection with a Demand Registration, if, at any time after giving written notice of its intention to register or sell any equity securities and prior to the effective date of the registration statement filed in connection with such registration or sale of such equity securities, the Company shall determine for any reason not to register or sell or to delay registration or sale of such equity securities, the Company may, at its election, give written notice of such determination to all Holders of record of Registrable Securities and (i) in the case of a determination not to register or sell, shall be relieved of its obligation to register or sell any Registrable Securities in connection with such abandoned registration or sale, without prejudice, however, to the rights of Holders under Section 2.1 and (ii) in the case of a determination to delay such registration or sale of its equity securities, shall be permitted to delay the registration or sale of such Registrable Securities for the same period as the delay in registering or selling such other equity securities.
(e) Notwithstanding anything contained herein to the contrary, the Company shall, at the written request of any Holder, file any prospectus supplement or post-effective amendment and otherwise take any action necessary to include therein all disclosure and language deemed necessary or advisable by such Holder if such disclosure or language was not included in the initial registration statement, or revise such disclosure or language if deemed necessary or advisable by such Holder, including by filing a prospectus supplement naming such Holder’s partners, members and shareholders to the extent required by law. Any Holder shall have the right to withdraw its request for inclusion of its Registrable Securities in any registration statement pursuant to this Section 2.2, without prejudice to the rights of such Holders under this Agreement, by giving written notice to the Company of its request to withdraw; provided, however, that such request must be made in writing prior to the earlier of the execution by such Holder of the underwriting agreement or the execution by such Holder of the custody agreement with respect to such registration or as otherwise required by the underwriter(s).
(f) Notwithstanding anything in this Agreement to the contrary, the rights of any Holder set forth in this Agreement shall be subject to any Lock-Up Agreement that such Holder has entered into.
Section 2.3. Allocation of Securities Included in Registration Statement or Offering.
(a) Notwithstanding any other provision of this Agreement, in connection with an underwritten offering initiated by a Demand Registration Request, if the Manager advises the Initiating Holder(s) in writing that marketing factors require a limitation of the number of shares to be underwritten (such number, the “Section 2.3(a) Sale Number”) within a price range acceptable to the Initiating Holder(s), the Initiating Holder(s) shall so advise all Holders of Registrable Securities that would otherwise be underwritten pursuant hereto, and the Company shall use its reasonable best efforts to include in such registration or offering, as applicable, the number of shares of Registrable Securities in the registration and underwriting as follows:
(i) first, all Registrable Securities requested to be included in such registration or offering by the Holders thereof (including pursuant to the exercise of piggyback rights pursuant to Section 2.2); provided, however, that if such number of Registrable Securities exceeds the Section 2.3(a) Sale Number, the number of such Registrable Securities (not to exceed the Section 2.3(a) Sale Number) to be included in such registration shall be allocated among all such Holders requesting inclusion thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing of the registration statement or the time of the offering, as applicable, as adjusted to give effect to any Carryover Amount(s) for any such Holder;
(ii) second, if by the withdrawal of Registrable Securities by a Participating Holder, a greater number of Registrable Securities held by other Holders may be included in such registration or offering (up to the Section 2.3(a) Sale Number), then the Company shall offer to all Holders who have included Registrable Securities in the registration or offering the right to include additional Registrable Securities in the same proportions as set forth in Section 2.3(a)(i), up to the Section 2.3(a) Sale Number;
(iii) third, to the extent that the number of Registrable Securities to be included pursuant to clause (i) and (ii) of this Section 2.3(a) is less than the Section 2.3(a) Sale Number, and if the underwriter(s) so agrees, any securities that the Company proposes to register or sell, up to the Section 2.3(a) Sale Number; and
(iv) fourth, to the extent that the number of securities to be included pursuant to clauses (i), (ii) and (iii) of this Section 2.3(a) is less than the Section 2.3(a) Sale Number, the remaining securities to be included in such registration or offering shall be allocated on a pro rata basis among all Persons requesting that securities be included in such registration or offering pursuant to the exercise of Additional Piggyback Rights (“Additional Piggyback Shares”), based on the aggregate number of Additional Piggyback Shares then owned by each Person requesting inclusion in relation to the aggregate number of Additional Piggyback Shares owned by all Persons requesting inclusion, up to the Section 2.3(a) Sale Number.
(b) In a registration or offering made pursuant to Section 2.2 involves an underwritten primary offering on behalf of the Company, which was initiated by the Company, if the Manager determines that marketing factors require a limitation of the number of shares to be underwritten (such number, the “Section 2.3(b) Sale Number”) in order for the sale of the securities within a price range acceptable the Company, the Company shall so advise all Holders whose securities would otherwise be registered and underwritten pursuant hereto, and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated as follows:
(i) first, all securities that the Company proposes to register for its own account;
(ii) second, to the extent that the number of securities to be included pursuant to clause (i) of this Section 2.3(b) is less than the Section 2.3(b) Sale Number, the remaining Registrable Securities (not to exceed the Section 2.3(b) Sale Number) to be included in the underwritten offering shall be allocated among all Holders requesting inclusion pursuant to exercise of rights under Section 2.2 in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders based on the number of Registrable Securities then owned by each such Holder requesting inclusion in relation to the aggregate number of Registrable Securities owned by all Holders requesting inclusion, as adjusted to give effect to any Carryover Amount(s) for any such Holder; and
(iii) third, to the extent that the number of securities to be included pursuant to clauses (i) and (ii) of this Section 2.3(b) is less than the Section 2.3(b) Sale Number, the remaining securities to be included in such underwritten offering shall be allocated on a pro rata basis among all Persons requesting that securities be included in such registration pursuant to the exercise of Additional Piggyback Rights, based on the aggregate number of Additional Piggyback Shares then owned by each Person requesting inclusion in relation to the aggregate number of Additional Piggyback Shares owned by all Persons requesting inclusion, up to the Section 2.3(b) Sale Number.
(c) If any registration pursuant to Section 2.2 involves an underwritten offering by any Person(s) other than a Holder to whom the Company has granted registration rights which are not inconsistent with the rights granted in, or otherwise in conflict with the terms of, this Agreement, the Manager (as selected by the Company or such other Person) shall advise the Company that, in its view, the number of securities requested to be included in such registration exceeds the number (the “Section 2.3(c) Sale Number”) that can be sold in an orderly manner in such registration within a price range acceptable to the Company, the Company shall include shares in such registration as follows:
(i) first, the shares requested to be included in such underwritten offering shall be allocated on a pro rata basis among such Person(s) requesting the registration and all Holders requesting that Registrable Securities be included in such registration pursuant to the exercise of piggyback rights pursuant to Section 2.2, based on the aggregate number of securities or Registrable Securities, as applicable, then owned by
each of the foregoing requesting inclusion in relation to the aggregate number of securities or Registrable Securities, as applicable, owned by all such Holders and Persons requesting inclusion, up to the Section 2.3(c) Sale Number, as adjusted to give effect to any Carryover Amount(s) for any such Holder;
(ii) second, to the extent that the number of securities to be included pursuant to clause (i) of this Section 2.3(c) is less than the Section 2.3(c) Sale Number, the remaining shares to be included in such underwritten offering shall be allocated on a pro rata basis among all Persons requesting that securities be included in such registration pursuant to the exercise of Additional Piggyback Rights, based on the aggregate number of Additional Piggyback Shares then owned by each Person requesting inclusion in relation to the aggregate number of Additional Piggyback Shares owned by all Persons requesting inclusion, up to the Section 2.3(c) Sale Number; and
(iii) third, to the extent that the number of securities to be included pursuant to clauses (i) and (ii) of this Section 2.3(c) is less than the Section 2.3(c) Sale Number, the remaining shares to be included in such registration shall be allocated to shares the Company proposes to register for its own account, up to the Section 2.3(c) Sale Number.
(d) If any Holder of Registrable Securities disapproves of the terms of the underwriting, or if, as a result of the proration provisions set forth in clauses (a), (b) or (c) of this Section 2.3, any Holder shall not be entitled to include all Registrable Securities in a registration or offering that such Holder has requested be included, such Holder may elect to withdraw such Holder’s request to include Registrable Securities in such registration or offering or may reduce the number requested to be included; provided, however, that (x) such request must be made in writing, to the Company, the Manager and, if applicable, the Initiating Holder(s), prior to the execution of the underwriting agreement with respect to such registration and (y) such withdrawal or reduction shall be irrevocable and, after making such withdrawal or reduction, such Holder shall no longer have any right to include such withdrawn Registrable Securities in the registration as to which such withdrawal or reduction was made to the extent of the Registrable Securities so withdrawn or reduced.
Section 2.4. Registration Procedures. If and whenever the Company is required by the provisions of this Agreement to use its reasonable best efforts to effect or cause the registration of any Registrable Securities as provided in this Agreement, the Company shall, as expeditiously as possible (but, in any event, within 75 days after a Demand Registration Request in the case of Section 2.4(a) below), in connection with the Demand Registration of the Registrable Securities and, where applicable, a takedown off of a shelf registration statement:
(a) prepare and file all filings with the SEC and FINRA required for the consummation of the offering, including preparing and filing with the SEC a registration statement on an appropriate registration form of the SEC for the Transfer of such Registrable Securities in accordance with the intended method of Transfer thereof, which registration form (i) shall be selected by the Company and (ii) shall, in the case of a shelf registration, be available for the Transfer of the Registrable Securities by the selling Holders thereof and such registration statement shall comply as to form in all material respects with the requirements of the applicable
registration form and include all financial statements required by the SEC to be filed therewith, and the Company shall use its reasonable best efforts to cause such registration statement to become effective and remain continuously effective from the date such registration statement is declared effective until the earliest to occur of: (A) the first date as of which all of the Registrable Securities included in the registration statement have been Transferred or (B) a period of 90 days in the case of an underwritten offering effected pursuant to a registration statement other than a shelf registration statement; provided, however, that as far in advance as reasonably practicable before filing a registration statement or prospectus or any amendments or supplements thereto, or comparable statements under securities or state “blue sky” laws of any jurisdiction, or any free writing prospectus related thereto, the Company will furnish to one counsel for the Participating Holders in the planned offering (selected by the Initiating Holder(s)) and to one counsel for the Manager, if any, copies of all such documents proposed to be filed (including all exhibits thereto), which documents will be subject to the reasonable review and reasonable comment of such counsel (provided that the Company shall be under no obligation to make any changes suggested by the Holders), and the Company shall not file any registration statement or amendment thereto, any prospectus or supplement thereto or any free writing prospectus related thereto to which the Initiating Holder(s) or the underwriter(s), if any, shall reasonably object;
(b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith and such free writing prospectuses and Exchange Act reports as may be necessary to keep such registration statement continuously effective for the period set forth in Section 2.4(a) and to comply with the provisions of the Securities Act with respect to the Transfer of all Registrable Securities covered by such registration statement in accordance with the intended methods of Transfer by the seller or sellers thereof set forth in such registration statement (and, in connection with any shelf registration statement, file one or more prospectus supplements pursuant to Rule 424 under the Securities Act covering Registrable Securities upon the request of one or more Holders wishing to offer or sell Registrable Securities whether in an underwritten offering or otherwise);
(c) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in customary form, with the Manager of such offering;
(d) furnish, without charge, to each Participating Holder and each underwriter, if any, of the securities covered by such registration statement such number of copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits), the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus), any other prospectus filed under Rule 424 under the Securities Act and each free writing prospectus utilized in connection therewith, in each case, in conformity with the requirements of the Securities Act, and other documents, as such Participating Holder and underwriter may reasonably request in order to facilitate the public Transfer of the Registrable Securities owned by such Participating Holder (the Company hereby consenting to the use in accordance with all applicable law of each such registration statement (or amendment or post-effective amendment thereto) and each such prospectus (or preliminary
prospectus or supplement thereto) or free writing prospectus by each such Participating Holder and the underwriter(s), if any, in connection with the offering and Transfer of the Registrable Securities covered by such registration statement or prospectus);
(e) use its reasonable best efforts to register or qualify the Registrable Securities covered by such registration statement under such other securities or state “blue sky” laws of such jurisdictions as any sellers of Registrable Securities or any managing underwriter, if any, shall reasonably request in writing, and do any and all other acts and things which may be reasonably necessary or advisable to enable such sellers or underwriter(s), if any, to consummate the Transfer of the Registrable Securities in such jurisdictions (including keeping such registration or qualification in effect for so long as such registration statement remains in effect);
(f) promptly notify each Participating Holder and each managing underwriter, if any, in writing: (i) when the registration statement, any pre-effective amendment, the prospectus or any prospectus supplement related thereto, any post-effective amendment to the registration statement or any free writing prospectus has been filed and, with respect to the registration statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or state securities authority for amendments or supplements to the registration statement or the prospectus related thereto or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the securities or state “blue sky” laws of any jurisdiction or the initiation of any proceeding for such purpose, (v) of the existence of any fact of which the Company becomes aware which results in the registration statement or any amendment thereto, the prospectus related thereto or any supplement thereto, any document incorporated therein by reference, any free writing prospectus or the information conveyed to any purchaser at the time of sale to such purchaser containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make any statement therein not misleading and (vi) if at any time the representations and warranties contemplated by any underwriting agreement, securities sale agreement, or other similar agreement, relating to the offering shall cease to be true and correct in all material respects, and, if the notification relates to an event described in clause (v), the Company shall promptly prepare and furnish to each such seller and each underwriter, if any, a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they were made not misleading;
(g) comply (and continue to comply) with all applicable rules and regulations of the SEC (including, without limitation, maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) in accordance with the Exchange Act), and make generally available to its stockholders, as soon as reasonably practicable after the effective date of the registration statement (and in any event within 45 days, or 90 days if it is a fiscal year, after the
end of such 12 month period described hereafter), an earnings statement (which need not be audited) covering the period of at least 12 consecutive months beginning with the first day of the Company’s first fiscal quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(h) (i) (A) cause all such Registrable Securities covered by such registration statement to be listed on the principal securities exchange on which similar securities issued by the Company are then listed (if any), if the listing of such Registrable Securities is then permitted under the rules of such exchange or (B) if no similar securities are then so listed, to cause all such Registrable Securities to be listed on a national securities exchange and, without limiting the generality of the foregoing, take all actions that may be required by the Company as the issuer of such Registrable Securities in order to facilitate the managing underwriter’s arranging for the registration of at least two market makers as such with respect to such shares with FINRA and (ii) comply (and continue to comply) with the requirements of any self-regulatory organization applicable to the Company, including without limitation all corporate governance requirements;
(i) in connection with an underwritten offering, cause its senior management, officers, employees and personnel to participate in, and to otherwise facilitate and cooperate with (i) the preparation of the registration statement and prospectus and any amendments or supplements thereto (including participating in meetings, drafting sessions, due diligence sessions and rating agency presentations) taking into account the Company’s reasonable business needs and (ii) “road shows” and other marketing efforts and otherwise provide reasonable assistance to the underwriter(s) (taking into account the Company’s reasonable business needs and the requirements of the marketing process) in marketing the Registrable Securities in any underwritten offering;
(j) provide and cause to be maintained a transfer agent and registrar for all such Registrable Securities covered by such registration statement not later than the effective date of such registration statement;
(k) in connection with an underwritten offering, enter into such customary agreements (including an underwriting agreement) and take such other actions as the Initiating Holder(s) or the underwriter(s) shall reasonably request in order to expedite or facilitate the Transfer of such Registrable Securities (it being understood that the Holders of the Registrable Securities which are to be Transferred by any underwriter(s) shall be parties to any such underwriting agreement and may, at their option, require that the Company make to and for the benefit of such Holders the representations, warranties and covenants of the Company which are being made to and for the benefit of such underwriter(s));
(l) in connection with an underwritten offering, use its reasonable best efforts to (i) obtain an opinion from the Company’s counsel, including local and/or regulatory counsel, and a comfort letter and updates thereof from the Company’s independent public accountants who have certified the Company’s financial statements included or incorporated by reference in such registration statement, in each case, in customary form and covering such matters as are
customarily covered by such opinions and comfort letters (including, in the case of such comfort letter, events subsequent to the date of such financial statements) delivered to underwriter(s) in underwritten public offerings, which opinion and letter shall be dated the dates such opinions and comfort letters are customarily dated and otherwise reasonably satisfactory to the underwriter(s) and to the Majority Participating Holders and (ii) furnish to each Holder participating in the offering and to each underwriter a copy of such opinion and comfort letter addressed to such underwriter;
(m) deliver promptly to counsel for each Participating Holder and to each managing underwriter, if any, copies of all correspondence between the SEC and the Company, its counsel or auditors and all memoranda relating to discussions with the SEC or its staff with respect to the registration statement and, upon receipt of such confidentiality agreements as the Company may reasonably request, make reasonably available for inspection by counsel for each Participating Holder, by counsel for any underwriter participating in any Transfer to be effected pursuant to such registration statement and by any accountant or other agent retained by any Participating Holder or any such underwriter, all pertinent financial and other records, pertinent corporate documents and properties of the Company, and cause all of the Company’s officers, directors and employees to supply all information reasonably requested by any such counsel for a Participating Holder, counsel for an underwriter, accountant or agent in connection with such registration statement;
(n) use its reasonable best efforts to obtain the prompt withdrawal of any order suspending the effectiveness of the registration statement, or the prompt lifting of any suspension of the qualification of any of the Registrable Securities for Transfer in any jurisdiction, in each case, as promptly as reasonably practicable;
(o) provide a CUSIP number for all Registrable Securities, not later than the effective date of the registration statement;
(p) promptly prior to the filing of any document which is to be incorporated by reference into the registration statement or the prospectus (after the initial filing of such registration statement), and prior to the filing of any free writing prospectus, provide copies of such document to counsel for each Participating Holder and to each managing underwriter, if any, and make the Company’s representatives reasonably available for discussion of such document and make such changes in such document concerning the Participating Holders prior to the filing thereof as counsel for the Participating Holders or underwriter(s) may reasonably request;
(q) furnish to counsel for each Participating Holder and to each managing underwriter, without charge, at least one signed copy of the registration statement and any post-effective amendments or supplements thereto, including financial statements and schedules, all documents incorporated therein by reference, the prospectus contained in such registration statement (including each preliminary prospectus and any summary prospectus), any other prospectus filed under Rule 424 under the Securities Act and all exhibits (including those incorporated by reference) and any free writing prospectus utilized in connection therewith;
(r) cooperate with the Participating Holders and the managing underwriter, if any, to facilitate the timely preparation and delivery of certificates not bearing any restrictive legends representing the Registrable Securities to be Transferred, and cause such Registrable Securities to be issued in such denominations and registered in such names in accordance with the underwriting agreement at least two Business Days prior to any Transfer of Registrable Securities to the underwriter(s) or, if not an underwritten offering, in accordance with the instructions of the Participating Holders at least two Business Days prior to any Transfer of Registrable Securities and instruct any transfer agent and registrar of Registrable Securities to release any stop transfer orders in respect thereof;
(s) in connection with an underwritten offering, cooperate with any due diligence investigation by any Manager, underwriter or Participating Holder and make available such documents and records of the Company and its Subsidiaries that they reasonably request (which, in the case of the Participating Holder, may be subject to the execution by the Participating Holder of a customary confidentiality agreement in a form which is reasonably satisfactory to the Company);
(t) take no direct or indirect action prohibited by Regulation M under the Exchange Act;
(u) take all such other commercially reasonable actions as are necessary or advisable in order to expedite or facilitate the Transfer of such Registrable Securities;
(v) take all reasonable actions to ensure that any free writing prospectus utilized in connection with any registration covered by Section 2.1 or 2.2 complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related prospectus, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and
(w) in connection with any underwritten offering, if at any time the information conveyed to a purchaser at the time of sale includes any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, promptly file with the SEC such amendments or supplements to such information as may be necessary so that the statements as so amended or supplemented will not, in light of the circumstances, be misleading.
It shall be a condition precedent to the obligations of the Company to take any action pursuant to Sections 2.1, 2.2 or 2.4 that each Participating Holder shall furnish to the Company such information regarding themselves, the Registrable Securities held by them, and the intended method of Transfer of such securities as the Company may from time to time reasonably request so long as such information is necessary for the Company to consummate such registration and shall be used only in connection with such registration.
If any such registration statement or comparable statement under state “blue sky” laws refers to any Holder by name or otherwise as the Holder of any securities of the Company, then such Holder shall have the right to require (i) the insertion therein of language, in form and substance satisfactory to such Holder and the Company, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the Company’s securities covered thereby and that such holding does not imply that such Holder will assist in meeting any future financial requirements of the Company, or (ii) in the event that such reference to such Holder by name or otherwise is not in the judgment of the Company, as advised by counsel, required by the Securities Act or any similar federal statute or any state “blue sky” or securities law then in force, the deletion of the reference to such Holder.
Section 2.5. Shelf Offerings. To the extent the Company is a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) (a “WKSI”) at the time, any Initiating Holder may request that the Company file an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) (an “automatic shelf registration statement”) on Form S-3, in which case the Company shall file an automatic shelf registration statement which covers those Registrable Securities which are requested to be registered. If the Company does not pay the filing fee covering the Registrable Securities at the time the automatic shelf registration statement is filed, the Company agrees to pay such fee at such time or times as the Registrable Securities are to be sold. If the automatic shelf registration statement has been outstanding for three years, at or around the end of the third year the Company shall file a new automatic shelf registration statement covering the Registrable Securities, it being understood that the Company may elect to file such a new automatic shelf registration statement in advance of such three-year anniversary. If at any time when the Company is required to re-evaluate its WKSI status the Company determines that it is not a WKSI, the Company shall use its reasonable best efforts to refile the shelf registration statement on Form S-3 and, if such form is not available, Form S-1 and keep such registration statement effective during the period during which such registration statement is required to be kept effective hereunder.
The Holders may use such Form S-3 to Transfer their Registrable Securities on a non-underwritten basis and may utilize such Form S-3 on an underwritten basis if requested by the Initiating Holder(s) (with any such request being deemed to be a Demand Registration Request pursuant to Section 2.1 and subject to the limits and rules set forth therein, mutatis mutandis). For so long as such Form S-3 is effective and available for use, Initiating Holder(s) may only request usage of such Form S-3 for an underwritten offering and not any other Demand Registration under Section 2.1.
Section 2.6. Registration Expenses. All Expenses incurred in connection with any registration, filing, qualification or compliance pursuant to Article II shall be borne by the Company, whether or not a registration statement becomes effective. All underwriting discounts and all selling commissions relating to securities registered by the Holders shall be borne by the holders of such securities pro rata in accordance with the number of shares Transferred in the offering by such Participating Holder.
Section 2.7. Certain Limitations on Registration Rights. In the case of any registration under Section 2.1 pursuant to an underwritten offering, or, in the case of a registration under Section 2.2, if the Company has determined to enter into a customary underwriting agreement in connection therewith, all securities to be included in such registration shall be subject to the underwriting agreement and no Person may participate in such registration or offering unless such Person (i) agrees to sell such Person’s securities on the basis provided therein and completes and executes all reasonable questionnaires and other documents (including custody agreements and powers of attorney) that must be executed in connection therewith (provided, however, that all such documents shall be consistent with the provisions hereof) and (ii) provides such other information to the Company or the underwriter(s) as may be necessary to register such Person’s securities.
Section 2.8. Limitations on Sale or Distribution of Other Securities.
(a) Each Holder agrees, (i) to the extent requested in writing by a managing underwriter, if any, of any registration effected pursuant to Section 2.1, not to Transfer, including any sale pursuant to Rule 144 under the Securities Act, any Company Shares or Company Shares Equivalents (other than as part of such underwritten public offering) during the time period reasonably requested by the managing underwriter, not to exceed 90 days and (ii) to the extent requested in writing by a managing underwriter of any underwritten public offering effected by the Company for its own account, not to sell any Company Shares or Company Shares Equivalents (other than as part of such underwritten public offering) during the time period reasonably requested by the managing underwriter, which period shall not exceed 90 days subject to the same exceptions as provided in the lock-up provisions contained in the underwriting agreement for the IPO; and, if so requested, each Holder agrees to enter into a customary lock-up agreement with such managing underwriter.
(b) The Company hereby agrees that, if it shall previously have received a request for registration pursuant to Section 2.1 or 2.2, and if such previous registration shall not have been withdrawn or abandoned, the Company shall not Transfer Company Shares or Company Shares Equivalents (other than as part of such underwritten public offering, a registration on Form S-4 or Form S-8 or any successor or similar form which is (x) then in effect or (y) shall become effective upon the conversion, exchange or exercise of any then outstanding Company Shares Equivalent) until a period of 90 days shall have elapsed from the effective date of such previous registration.
Section 2.9. No Required Sale. Nothing in this Agreement shall be deemed to create an independent obligation on the part of any Holder to sell any Registrable Securities pursuant to any effective registration statement. A Holder is not required to include any of its Registrable Securities in any registration statement, is not required to sell any of its Registrable Securities which are included in any effective registration statement and may sell any of its Registrable Securities in any manner in compliance with applicable law (subject to the restrictions set forth in the Stockholders Agreement) even if such shares are already included in an effective registration statement.
Section 2.10. Indemnification.
(a) In the event of any registration and/or offering of any securities of the Company pursuant to this Article II, the Company will, and hereby agrees to, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, each Holder, its directors, officers, fiduciaries, trustees, employees, shareholders, members, beneficiaries or general and limited partners (and the directors, officers, fiduciaries, trustees, employees, shareholders, members, beneficiaries or general and limited partners of any of the foregoing), any underwriter(s) (as defined in the Securities Act) for such Holder and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or Exchange Act, from and against any and all losses, claims, damages or liabilities, joint or several, actions or proceedings (whether commenced or threatened) and expenses (including reasonable fees of counsel and any amounts paid in any settlement effected with the Company’s consent, which consent shall not be unreasonably withheld or delayed) to which each such indemnified party may become subject under the Securities Act or otherwise in respect of such registration or offering (collectively, “Claims”), insofar as such Claims arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement under which such securities were registered or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any violation or alleged violation by the Company of the Securities Act or any other similar federal or state securities laws or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and the Company will reimburse any such indemnified party for any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Claim as such expenses are incurred; provided, however, that the Company shall not be liable to any such indemnified party in any such case to the extent such Claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact made in such registration statement, preliminary or final prospectus, free writing prospectus or amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of such indemnified party specifically for use therein. Such indemnity and reimbursement of expenses shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified party and shall survive the Transfer of such securities by such seller.
(b) Each Participating Holder shall, severally and not jointly, indemnify and hold harmless (in the same manner and to the same extent as set forth in paragraph (a) of this Section 2.10), to the fullest extent permitted by law, the Company, its officers and directors, each Person controlling the Company within the meaning of the Securities Act, each underwriter (within the meaning of the Securities Act) of the Company’s securities covered by such a registration statement, any Person who controls such underwriter and any other Holder selling securities in such registration statement and each of its directors, officers, fiduciaries, trustees, employees, shareholders, members, beneficiaries or general and limited partners (and the directors, officers, fiduciaries, trustees, employees, shareholders, members, beneficiaries or
general and limited partners of any of the foregoing) or any Person who controls such Holder with respect to any untrue statement or alleged untrue statement of any material fact in, or omission or alleged omission of any material fact from, such registration statement, any preliminary or final prospectus contained therein, or any amendment or supplement thereto, or any free writing prospectus utilized in connection therewith, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company or its representatives by or on behalf of such Participating Holder specifically for use therein, and reimburse such indemnified party for any legal or other expenses reasonably incurred in connection with investigating or defending any such Claim as such expenses are incurred; provided, however, that the aggregate amount which any such Participating Holder shall be required to pay pursuant to this Section 2.10(b) and Sections 2.10(c) and 2.10(e) shall in no case be greater than the amount of the net proceeds actually received by such Participating Holder upon the sale of the Registrable Securities pursuant to any such registration statement, preliminary or final prospectus, free writing prospectus or amendment or supplement thereto giving rise to such Claim. The Company and each Participating Holder hereby acknowledge and agree that, unless otherwise expressly agreed to in writing by such Participating Holders to the contrary, for all purposes of this Agreement, the only information furnished or to be furnished to the Company for use in any such registration statement, preliminary or final prospectus, free writing prospectus or amendment or supplement thereto are statements specifically relating to (i) the beneficial ownership of Company Shares or Company Shares Equivalents by such Participating Holder and its Affiliates and (ii) the name and address of such Participating Holder. Such indemnity and reimbursement of expenses shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified party and shall survive the Transfer of such securities by such Holder.
(c) Indemnification similar to that specified in the preceding paragraphs (a) and (b) of this Section 2.10 (with appropriate modifications) shall be given by the Company and each Participating Holder with respect to any required registration or other qualification of securities under any applicable securities and state “blue sky” laws.
(d) Any Person entitled to indemnification under this Agreement shall notify promptly the indemnifying party in writing of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Section 2.10, but the failure of any indemnified party to provide such notice shall not relieve the indemnifying party of its obligations under the preceding paragraphs of this Section 2.10, except to the extent the indemnifying party is materially and actually prejudiced thereby, and shall not relieve the indemnifying party from any liability which it may have to any indemnified party otherwise than under this Article II. In case any action or proceeding is brought against an indemnified party, the indemnifying party shall be entitled to (x) participate in such action or proceeding and (y) unless, in the reasonable opinion of outside counsel to the indemnified party, a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, assume the defense thereof jointly with any other indemnifying party similarly notified, with counsel reasonably satisfactory to such indemnified party. The indemnifying party shall promptly notify the indemnified party of its decision to assume the defense of such action or proceeding. If, and after, the indemnified party has received such notice from the indemnifying
party, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense of such action or proceeding other than reasonable costs of investigation; provided, however, that (i) if the indemnifying party fails to take reasonable steps necessary to defend diligently the action or proceeding within 20 days after receiving notice from such indemnified party that the indemnified party believes it has failed to do so, (ii) if such indemnified party who is a defendant in any action or proceeding which is also brought against the indemnifying party reasonably shall have concluded that there may be one or more legal or equitable defenses available to such indemnified party which are not available to the indemnifying party or which may conflict with those available to another indemnified party with respect to such Claim or (iii) if representation of both parties by the same counsel is otherwise inappropriate under applicable standards of professional conduct, then, in any such case, the indemnified party shall have the right to assume or continue its own defense as set forth above (but with no more than one firm of counsel for all indemnified parties in each jurisdiction, except to the extent any indemnified party or parties reasonably shall have made a conclusion described in clause (ii) or (iii) above) and the indemnifying party shall be liable for any expenses therefor. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim), unless such settlement or compromise (A) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action or claim and (B) does not include a statement as to, or an admission of, fault, culpability or a failure to act by or on behalf of an indemnified party. The indemnity obligations contained in Sections 2.10(a) and 2.10(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the indemnified party which consent shall not be unreasonably withheld, conditioned or delayed.
(e) If for any reason the foregoing indemnity is held by a court of competent jurisdiction to be unavailable to an indemnified party under Section 2.10(a), (b) or (c), then each applicable indemnifying party shall contribute to the amount paid or payable to such indemnified party as a result of any Claim in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, with respect to such Claim as well as any other relevant equitable considerations. The relative fault shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. If, however, the allocation provided in the second preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative faults but also the relative benefits of the indemnifying party and the indemnified party as well as any other relevant equitable considerations. The parties hereto agree that it would not be just and equitable if any contribution pursuant to this Section 2.10(e) were to be determined by pro rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in the preceding sentences of this Section 2.10(e). The amount paid or payable in respect of any Claim shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Claim. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Notwithstanding anything in this Section 2.10(e) to the contrary, no indemnifying party (other than the Company) shall be required pursuant to this Section 2.10(e) to contribute any amount greater than the amount of the net proceeds actually received by such indemnifying party upon the sale of the Registrable Securities pursuant to the registration statement giving rise to such Claim, less the amount of any indemnification payment made by such indemnifying party pursuant to Section 2.10(b) and (c).
(f) The indemnity and contribution agreements contained herein shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract (except as set forth in subsection (h) below) and shall remain operative and in full force and effect regardless of any investigation made or omitted by or on behalf of any indemnified party and shall survive the transfer of the Registrable Securities by any such party and the completion of any offering of Registrable Securities in a registration statement.
(g) The indemnification and contribution required by this Section 2.10 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when (and in any event within the date that is 30 days after) bills are received or expense, loss, damage or liability is incurred; provided, however, that the recipient thereof hereby undertakes to repay such payments if and to the extent it shall be determined by a court of competent jurisdiction that such recipient is not entitled to such payment hereunder.
Article III
Underwritten Offerings
Section 3.1. Requested Underwritten Offerings. If the Initiating Holder(s) request an underwritten offering pursuant to a registration under Section 2.1 (pursuant to a request for a registration statement to be filed in connection with a specific underwritten offering or a request for a shelf takedown in the form of an underwritten offering), the Company shall enter into a customary underwriting agreement with the underwriter(s). Each such Participating Holder shall not be required to make any representations or warranties to or agreements with the Company or the underwriter(s) other than representations, warranties or agreements regarding such Participating Holder, its ownership of and title to the Registrable Securities and any written information specifically provided by such Participating Holder for inclusion in the registration statement and its intended method of Transfer. Any liability of such Participating Holder to any underwriter or other Person under such underwriting agreement for indemnity, contribution or otherwise shall be limited to the amount of the net proceeds received by such Holder upon the sale of the Registrable Securities pursuant to any registration statement, preliminary or final prospectus, free writing prospectus or amendment or supplement thereto and shall be limited to liability for written information specifically provided by such Participating Holder for use in any
such registration statement, preliminary or final prospectus, free writing prospectus or amendment or supplement thereto .
Section 3.2. Piggyback Underwritten Offerings. In the case of a registration pursuant to Section 2.2 that involves an underwritten offering, if the Company shall enter into a customary underwriting agreement in connection therewith, then all of the Participating Holders’ Registrable Securities to be included in such registration shall be subject to such underwriting agreement.
Article IV
General
Section 4.1. Adjustments Affecting Registrable Securities. The provisions of this Agreement shall apply, to the full extent set forth herein with respect to the Registrable Securities, to any and all shares of capital stock of the Company or any successor or assign of the Company (whether by merger, share exchange, consolidation, sale of assets or otherwise) that may be issued in respect of, in exchange for or in substitution of Registrable Securities and shall be appropriately adjusted for any stock dividends, splits, reverse splits, combinations, recapitalizations and the like occurring after the date hereof so that the rights and privileges granted herein will continue.
Section 4.2. Rule 144 and Rule 144A. If the Company shall have filed a registration statement pursuant to the requirements of Section 12 of the Exchange Act or a registration statement pursuant to the requirements of the Securities Act in respect of the Company Shares or Company Shares Equivalents, the Company covenants that (i) so long as it remains subject to the reporting provisions of the Exchange Act, it will timely file the reports required to be filed by it under the Securities Act or the Exchange Act (including, but not limited to, the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 under the Securities Act, as such Rule may be amended (“Rule 144”)) or, if the Company is not required to file such reports, it will, upon the request of any Holder, make publicly available other information so long as necessary to permit sales by such Holder under Rule 144, Rule 144A under the Securities Act, as such Rule may be amended (“Rule 144A”), or any similar rules or regulations hereafter adopted by the SEC, and (ii) it will take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration within the limitation of the exemptions provided by Rule 144 or any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder of Registrable Securities, the Company will deliver to such Holder a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements) or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies), a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company and such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to such form.
Section 4.3. Amendments and Waivers; Termination. Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holders of a majority of the Registrable Securities. Any amendment or waiver effected in accordance with this Section 4.3 shall be binding upon each Holder and the Company. Any waiver of any breach or default by any other party of any of the terms of this Agreement effected in accordance with this Section 4.3 shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by any party to assert its or his or her rights hereunder on any occasion or series of occasions. This Agreement will terminate as to any Holder when it no longer holds any Registrable Securities.
Section 4.4. Beneficial Ownership. If Registrable Securities are held by a nominee for the beneficial owner thereof, the beneficial owner thereof may, at its option, be treated as the Holder of such Registrable Securities for purposes of any request or other action by any Holder or Holders of Registrable Securities pursuant to this Agreement (or any determination of any number or percentage of shares constituting Registrable Securities held by any Holder or Holders of Registrable Securities contemplated by this Agreement); provided, however, that the Company shall have received evidence reasonably satisfactory to it of such beneficial ownership.
Section 4.5. Notices. Unless otherwise specified herein, all notices, consents, approvals, reports, designations, requests, waivers, elections and other communications authorized or required to be given pursuant to this Agreement shall be in writing and shall be given, made or delivered (and shall be deemed to have been duly given, made or delivered upon receipt) by personal hand-delivery, by facsimile transmission, by electronic mail, by mailing the same in a sealed envelope, registered first-class mail, postage prepaid, return receipt requested, or by air courier guaranteeing overnight delivery, in each case addressed to the Company at the address set forth below or to the applicable Holder at the address indicated on Schedule A hereto (or at such other address for a Holder as shall be specified by like notice):
if to the Company, to it at:
Alliance Laundry Holdings Inc.
221 Shepard Street
Ripon, Wisconsin 54971
Attention: Samantha Hannan
E-mail: Samantha.Hannan@alliancels.com
with copies (which shall not constitute actual notice) to:
Cravath, Swaine & Moore LLP
Two Manhattan West
375 Ninth Avenue
New York, New York 10001
Attention: Nicholas A. Dorsey and Kelly M. Smercina
E-mail: ndorsey@cravath.com; ksmercina@cravath.com
Section 4.6. Successors and Assigns.
(a) This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, legal representatives and permitted assigns.
(b) A Holder may Assign his, her or its rights under this Agreement without the Company’s consent to an Assignee of Registrable Securities which (i) is, with respect to any Holder, the spouse, parent, sibling, child, step-child or grandchild of such Holder, or the spouse thereof and any trust, limited liability company, limited partnership, private foundation or other estate planning vehicle for such Holder or for the benefit of any of the foregoing or other persons pursuant to the laws of descent and distribution or (ii) is a legatee, executor or other fiduciary pursuant to a last will and testament of the Holder or pursuant to the terms of any trust which take effect upon the death of the Holder. In addition, any Holder may Assign his, her or its rights under this Agreement without the Company’s prior written consent so long as such Assignment (A) occurs in connection with the Transfer of all, but not less than all, of such Holder’s Registrable Securities in a single transaction in the case of such an Assignment by a Holder and (B) results in the Assignee holding not less than 5% of the issued and outstanding shares of Company Shares at the time of such transfer. Subject to subsection (c) below, any Assignment shall be conditioned upon prior written notice to the Company identifying the name and address of such Assignee and any other material information as to the identity of such Assignee as may be reasonably requested, and Schedule A hereto shall be updated to reflect such Assignment.
(c) Notwithstanding anything to the contrary contained in this Section 4.6, any Holder may elect to Transfer all or a portion of its Registrable Securities to any third party without Assigning its rights hereunder with respect thereto; provided that in any such event all rights under this Agreement with respect to the Registrable Securities so Transferred shall cease and terminate.
Section 4.7. Limitations on Subsequent Registration Rights. From and after the effective date of the first registration statement filed by the Company for the offering of its securities to the general public, the Company may, without the prior written consent of the Holders, enter into any agreement with any holder or prospective holder of any securities of the Company that provides such holder or prospective holder of securities of the Company comparable, but not conflicting, registration rights granted to the Holders hereby.
Section 4.8. Entire Agreement. This Agreement, the Stockholders Agreement and the other agreements referenced herein and therein constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede any prior agreement or understanding among them with respect to the matters referred to herein.
Section 4.9. Governing Law; Waiver of Jury Trial; Jurisdiction.
(a) Governing Law. This Agreement is governed by and will be construed in accordance with the laws of the State of Delaware, excluding any conflict-of-laws rule or
principle (whether of Delaware or any other jurisdiction) that might refer the governance or the construction of this Agreement to the law of another jurisdiction.
(b) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE PARTIES HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. The Company or any Holder may file an original counterpart or a copy of this Section 4.9(b) with any court as written evidence of the consent of any of the parties hereto to the waiver of their rights to trial by jury.
(c) Jurisdiction. Each of the parties hereto (i) consents to submit itself to the personal jurisdiction of the Court of Chancery of the State of Delaware and any state appellate court therefrom located in the State of Delaware (or, only if the Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court sitting in Wilmington, Delaware) (together, the “Specified Courts”) in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from such court, (iii) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the Specified Courts and (iv) to the fullest extent permitted by law, consents to service being made through the notice procedures set forth in Section 4.5. Each party hereto hereby agrees that, to the fullest extent permitted by law, service of any process, summons, notice or document by U.S. registered mail to the respective addresses set forth in Section 4.5 shall be effective service of process for any suit or proceeding in connection with this Agreement or the transactions contemplated hereby.
Section 4.10. Interpretation; Construction.
(a) The headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.
(b) The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
Section 4.11. Counterparts. This Agreement may be executed (including by facsimile transmission or other electronic signature of this Agreement signed by such party (via PDF, TIFF, JPEG or the like)) with counterpart pages or in one or more counterparts, each of which shall be deemed an original and all of which shall, taken together, be considered one and the same agreement, it being understood that both parties need not sign the same counterpart.
Section 4.12. Severability. In the event that any provision of this Agreement shall be invalid, illegal or unenforceable, such provision shall be construed by limiting it so as to be valid, legal and enforceable to the maximum extent provided by law, and the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.
Section 4.13. Specific Performance. It is hereby agreed and acknowledged that it will be impossible to measure the money damages that would be suffered if the parties fail to comply with any of the obligations imposed on them by this Agreement and that, in the event of any such failure, an aggrieved party will be irreparably damaged and will not have an adequate remedy at law. Each party hereto shall, therefore, be entitled (in addition to any other remedy to which such party may be entitled at law or in equity) to injunctive relief, including specific performance, to enforce such obligations, without the posting of any bond, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.
Section 4.14. Confidentiality. Each Holder agrees that any information obtained thereby pursuant to this Agreement (including any information about any proposed registration or offering pursuant to Articles II or III hereof) will not, without the prior written consent of the Company, be disclosed by such Holder or used by such Holder for any purpose other than the exercise of such Holder’s rights under this Agreement; provided that each Holder may disclose any such information on a confidential basis to its directors, officers, fiduciaries, trustees, employees and representatives.
Section 4.15. Further Assurances. Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
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| COMPANY |
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| ALLIANCE LAUNDRY HOLDINGS INC. |
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| By: | |
| Name: |
| Title: |
[Signature Page to Registration Rights Agreement]
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| BDT BADGER HOLDINGS, LLC |
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| By: | |
| Name: |
| Title: |
[Signature Page to Registration Rights Agreement]
SCHEDULE A
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| Party | | Address |
BDT Badger Holdings, LLC | | c/o BDT Capital Partners, LLC, 401 North Michigan Avenue, Suite 3100, Chicago, IL 60611 |
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this “Agreement”) is made and entered into as of [●], 2025, by and among Alliance Laundry Holdings Inc., a Delaware corporation (the “Company”), and [NAME OF DIRECTOR/OFFICER] (“Indemnitee”).
WHEREAS, in light of the litigation costs and risks to directors and officers resulting from their service to companies, and the desire of the Company to attract and retain qualified individuals to serve as directors and officers, it is reasonable, prudent and necessary for the Company to indemnify and advance expenses on behalf of the Company’s directors and/or officers to the fullest extent permitted by Delaware corporate law so that they will serve or continue to serve the Company free from undue concern regarding such risks;
WHEREAS, the Company has requested that Indemnitee serve or continue to serve as a director and/or officer of the Company and may have requested or may in the future request that Indemnitee serve one or more Alliance Entities (as hereinafter defined) as a director or an officer or in other capacities;
WHEREAS, one of the conditions that Indemnitee requires in order to serve as a director and/or officer of the Company is that Indemnitee be so indemnified; and
WHEREAS, Indemnitee may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more of the Affiliate Indemnitors (as hereinafter defined) (or their affiliates) and/or any insurer providing insurance coverage under any policy purchased or maintained by such Affiliate Indemnitors (or their affiliates), which Indemnitee, the Company and the Affiliate Indemnitors (or their affiliates) intend to be secondary to the primary obligation of the Company to indemnify Indemnitee as provided herein, with the Company’s acknowledgement of and agreement to the foregoing being a material condition to Indemnitee’s willingness to serve as a director and/or officer of the Company.
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
1.Services by Indemnitee. Indemnitee agrees to serve or continue to serve as a director and/or officer of the Company. Indemnitee may at any time and for any reason resign from such position (subject to any contractual obligation Indemnitee may have under any other agreement).
2.Indemnification - General. On the terms and subject to the conditions of this Agreement, the Company shall, to the fullest extent permitted by law in effect as of the date hereof or as such law may hereafter be amended to increase the scope of such permitted or required indemnification, indemnify Indemnitee with respect to, and hold Indemnitee harmless from and against, all losses, damages, liabilities, judgments, fines, penalties, costs, amounts paid in settlement, Expenses (as hereinafter defined) and other amounts that Indemnitee reasonably incurs and that result from, arise in connection with or are by reason of Indemnitee’s Corporate Status (as hereinafter defined) if, in connection therewith, Indemnitee acted in good faith and in a
manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal action or proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful, and shall advance Expenses to Indemnitee in accordance with Section 8 of this Agreement. The obligations of the Company shall continue after such time as Indemnitee ceases to serve as a director and/or officer of the Company or in any other Corporate Status and include, without limitation, claims for monetary damages against Indemnitee in respect of any actual or alleged liability or other loss of Indemnitee, to the fullest extent permitted under Delaware corporate law (including, if applicable, Section 145 of the Delaware General Corporation Law) as in existence on the date hereof and as amended from time to time. For the avoidance of doubt, to the extent permitted by applicable law, no repeal or amendment of any applicable law will in any way diminish or adversely affect the rights of Indemnitee pursuant to this Agreement in respect of any such occurrence or matter arising prior to any such repeal or amendment.
3.Proceedings Other Than Proceedings by or in the Right of the Company. If in connection with or by reason of Indemnitee’s Corporate Status, Indemnitee was, is, or is threatened to be made, a party to or a participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company to procure a judgement in its favor, the Company shall, to the fullest extent permitted by law, indemnify Indemnitee with respect to, and hold Indemnitee harmless from and against, all Expenses, losses, damages, liabilities, judgments, penalties, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such liabilities, judgments, penalties, fines and amounts paid in settlement) reasonably incurred by Indemnitee or on behalf of Indemnitee in connection with such Proceeding or any claim, issue or matter therein if (i), in connection therewith, Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company (ii) the Indemnitee’s conduct is not determined to be knowingly fraudulent or deliberately dishonest or to constitute willful misconduct and (iii) with respect to any criminal action or proceeding, had no reasonable cause to believe that Indemnitee’s conduct was unlawful.
4.Proceedings by or in the Right of the Company. If in connection with or by reason of Indemnitee’s Corporate Status, Indemnitee was, is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company, the Company shall, to the fullest extent permitted by law, indemnify Indemnitee with respect to, and hold Indemnitee harmless from and against, all Expenses reasonably incurred by Indemnitee or on behalf of Indemnitee in connection with such Proceeding or any claim, issue or matter therein if (i) the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Company and (ii) the Indemnitee’s conduct is not determined to be knowingly fraudulent or deliberately dishonest or to constitute willful misconduct.
5.Mandatory Indemnification in Case of Successful Defense. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a party to (or a participant in) and is successful, on the merits or otherwise, in defense of any Proceeding or any claim, issue or matter therein
(including, without limitation, any Proceeding brought by or in the right of the Company), the Company shall, to the fullest extent permitted by law, indemnify Indemnitee with respect to, and hold Indemnitee harmless from and against, all Expenses reasonably incurred by Indemnitee or on behalf of Indemnitee in connection therewith. If Indemnitee is not wholly successful in defense of such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall, to the fullest extent permitted by law, indemnify Indemnitee against all Expenses reasonably incurred by Indemnitee or on behalf of Indemnitee in connection with each successfully resolved claim, issue or matter. For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, on substantive or procedural grounds, or settlement of any such claim prior to a final judgment by a court of competent jurisdiction with respect to such Proceeding, shall be deemed to be a successful result as to such claim, issue or matter; provided, however, that any settlement of any claim, issue or matter in such a Proceeding shall not be deemed to be a successful result as to such claim, issue or matter if such settlement is effected by Indemnitee without the Company’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned.
6.Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement or otherwise to indemnification by the Company for some or a portion of the Expenses, liabilities, judgments, penalties, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such liabilities, judgments, penalties, fines and amounts paid in settlement) incurred by Indemnitee or on behalf of Indemnitee in connection with a Proceeding or any claim, issue or matter therein, in whole or in part, the Company shall, to the fullest extent permitted by law, indemnify Indemnitee to the fullest extent to which Indemnitee is entitled to such indemnification.
7.Indemnification for Additional Expenses Incurred to Secure Recovery or as Witness.
(a) The Company shall, to the fullest extent permitted by law, indemnify Indemnitee with respect to, and hold Indemnitee harmless from and against, any and all Expenses and, if requested by Indemnitee, shall advance on an as-incurred basis (as provided in Section 8 of this Agreement) such Expenses to Indemnitee, which are incurred by Indemnitee in connection with any action, proceeding or part thereof brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement, any other agreement, the Certificate of Incorporation (as hereinafter defined) or Bylaws (as hereinafter defined) of the Company as now or hereafter in effect, or pursuant to indemnification agreements in effect as of the date hereof; or (ii) recovery under any director and officer liability insurance policies maintained by any Alliance Entity.
(b) To the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness (or is forced or asked to respond to discovery requests) in any Proceeding to which Indemnitee is not a party, the Company shall, to the fullest extent permitted by law, indemnify Indemnitee with respect to, and hold Indemnitee harmless from and against, and the
Company will advance on an as-incurred basis (as provided in Section 8 of this Agreement), all Expenses reasonably incurred by Indemnitee or on behalf of Indemnitee in connection therewith.
8.Advancement of Expenses. The Company shall, to the fullest extent permitted by law in effect as of the date hereof or as such law may hereafter be amended to increase the scope of such advancement of Expenses, pay on a current and as-incurred basis all Expenses incurred by Indemnitee in connection with any Proceeding in any way connected with, resulting from or relating to Indemnitee’s Corporate Status. Such Expenses shall be paid in advance of the final disposition of such Proceeding, without regard to whether Indemnitee will ultimately be entitled to be indemnified for such Expenses and without regard to whether an Adverse Determination (as hereinafter defined) has been or may be made. Upon submission of a request for advancement of Expenses pursuant to Section 9(c) of this Agreement, Indemnitee shall be entitled to advancement of Expenses as provided in this Section 8, and such advancement of Expenses shall continue until such time (if any) as there is a final non-appealable judicial determination that Indemnitee is not entitled to indemnification. Indemnitee shall repay such amounts advanced if and to the extent that it shall ultimately be determined in a decision by a court of competent jurisdiction from which no appeal can be taken that Indemnitee is not entitled to be indemnified by the Company for such Expenses. Such repayment obligation shall be unsecured and shall not bear interest. The Company shall not impose on Indemnitee additional conditions to advancement or require from Indemnitee additional undertakings regarding repayment. Indemnitee shall, pursuant to this Agreement, be entitled to advancement of Expenses, without regard to Indemnitee’s ultimate entitlement to indemnification, until the final determination of the Proceeding.
9.Indemnification Procedures.
(a) Notice of Proceeding. Indemnitee agrees to notify the Company promptly upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses hereunder. Any failure by Indemnitee to notify the Company will not relieve the Company of its advancement or indemnification obligations under this Agreement unless, and only to the extent that, the Company can establish that such omission to notify resulted in actual and material prejudice to it, which prejudice cannot be reversed or otherwise eliminated without any material negative effect on the Company, and the omission to notify the Company will, in any event, not relieve the Company from any liability which it may have to indemnify Indemnitee otherwise than under this Agreement. If, at the time of receipt of any such notice, the Company has a director and officer liability insurance policy in effect, the Company will promptly notify the relevant insurer in accordance with the procedures and requirements of such policy. If requested by Indemnitee, the Company will use its best efforts, at the Company’s expense, to enforce on behalf of and for the benefit of Indemnitee, all rights that may exist under the applicable director and officer liability insurance policies.
(b) Defense; Settlement. Indemnitee shall have the sole right and obligation to control the defense or conduct of any claim or Proceeding with respect to Indemnitee. The Company shall not, without the prior written consent of Indemnitee, which may be provided or
withheld in Indemnitee’s sole discretion, effect any settlement of any Proceeding against Indemnitee or which, in the opinion of Independent Counsel (as hereinafter defined), could have been brought against Indemnitee or which potentially or actually imposes any cost, liability, exposure or burden on Indemnitee unless (i) such settlement solely involves the payment of money or performance of any obligation by persons other than Indemnitee or any Affiliate Indemnitor affiliated with Indemnitee and includes an unconditional, full release of Indemnitee and Affiliate Indemnitors by all relevant parties from all liability on any matters that are the subject of such Proceeding and an acknowledgment that Indemnitee denies all wrongdoing in connection with such matters and (ii) the Company has fully indemnified Indemnitee with respect to, and held Indemnitee harmless from and against, all Expenses and other amounts incurred by Indemnitee or on behalf of Indemnitee in connection with such Proceeding. The Company shall not be obligated to indemnify Indemnitee against amounts paid in settlement of a Proceeding against Indemnitee if such settlement is effected by Indemnitee without the Company’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned, unless such settlement solely involves the payment of money or performance of any obligation by persons other than the Company and includes an unconditional release of the Company by any party to such Proceeding other than Indemnitee from all liability on any matters that are the subject of such Proceeding and an acknowledgment that the Company denies all wrongdoing in connection with such matters; provided, however, that if a Change in Control (as hereinafter defined) has occurred, the Company shall be liable for indemnification of Indemnitee for amounts paid in settlement if the Independent Counsel (selected pursuant to Section 9(e) of this Agreement) has approved the settlement.
(c) Request for Advancement; Request for Indemnification.
(i) To obtain advancement of Expenses under this Agreement, Indemnitee shall submit to the Company a written request therefor, together with such invoices or other supporting information as may be reasonably requested by the Company and reasonably available to Indemnitee, and, only to the extent required by applicable law which cannot be waived, an unsecured written undertaking to repay amounts advanced in the event of a decision by a court of competent jurisdiction from which no appeal can be taken that Indemnitee is not entitled to be indemnified by the Company for such Expenses. The Company shall make advance payment of Expenses to Indemnitee no later than twenty (20) days after receipt of the written request for advancement (and each subsequent request for advancement) by Indemnitee. If, at the time of receipt of any such written request for advancement of Expenses, the Company has a director and officer insurance policy in effect, the Company will promptly notify the relevant insurer in accordance with the procedures and requirements of such policy. The Company shall thereafter keep such insurer informed of the status of the Proceeding or other claim (with assistance from Indemnitee as reasonably required) and use its best efforts and take such other actions, as necessary or appropriate to secure coverage of Indemnitee for such claim.
(ii) To obtain indemnification under this Agreement, at any time before or after submission of a request for advancement pursuant to Section 9(c)(i) of this
Agreement, Indemnitee may submit a written request for indemnification hereunder. The time at which Indemnitee submits a written request for indemnification shall be determined by Indemnitee in Indemnitee’s sole discretion. Once Indemnitee submits such a written request for indemnification (and only at such time that Indemnitee submits such a written request for indemnification), a Determination (as hereinafter defined) shall thereafter be made, as provided in and only to the extent required by Section 9(d) of this Agreement. In no event shall a Determination be made, or required to be made, as a condition to or otherwise in connection with any advancement of Expenses pursuant to Section 8 and Section 9(c)(i) of this Agreement. If, at the time of receipt of any such request for indemnification, the Company has a director and officer insurance policy in effect, the Company will promptly notify the relevant insurer and use its best efforts and take such other actions as necessary or appropriate to secure coverage of Indemnitee for such claim in accordance with the procedures and requirements of such policies.
(d) Determination. The Company agrees that Indemnitee shall be indemnified to the fullest extent permitted by law in effect as of the date hereof or as such law may hereafter be amended to increase the scope of such permitted or required indemnification, and that no Determination shall be required in connection with such indemnification unless specifically required by applicable law which cannot be waived. In no event shall a Determination be required in connection with indemnification for Expenses pursuant to Section 7 of this Agreement or incurred in connection with any Proceeding or portion thereof with respect to which Indemnitee has been successful on the merits or otherwise. Any decision that a Determination is required by law in connection with any other indemnification of Indemnitee, and any such Determination, shall be made as soon as is reasonably practicable (but in any event not later than sixty (60) days) after receipt of Indemnitee’s written request for indemnification pursuant to Section 9(c)(ii) and such Determination shall be made by one of the following methods: (i) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors (or by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors), even though less than a quorum or (B) if there are no Disinterested Directors or if the Disinterested Directors so direct, by Independent Counsel in a written opinion to the Disinterested Directors, a copy of which shall be delivered to Indemnitee, or (ii) if a Change in Control shall have occurred, (A) by Independent Counsel in a written opinion to the Disinterested Directors, a copy of which shall be delivered to Indemnitee, or (B) if Indemnitee so directs and the Disinterested Directors so accept, by a majority vote of Disinterested Directors (or by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors), even though less than a quorum. If a Determination is made that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such Determination. Indemnitee shall reasonably cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such Determination. Any Expenses incurred by Indemnitee in so cooperating with the Disinterested Directors or Independent Counsel, as the case may be, making such determination shall be advanced and borne by the Company (irrespective of the Determination as to Indemnitee’s
entitlement to indemnification). If the person, persons or entity empowered or selected under this Section 9(d) to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such sixty (60) day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 9(d) shall not apply if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 9(e).
(e) Independent Counsel. In the event Indemnitee requests that the Determination be made by Independent Counsel pursuant to Section 9(d) of this Agreement, the Independent Counsel shall be selected as provided in this Section 9(e). The Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors (as hereinafter defined), in which event the Board of Directors shall make such selection on behalf of the Company, subject to the remaining provisions of this Section 9(e)), and Indemnitee or the Company, as the case may be, shall give written notice to the other, advising the Company or Indemnitee of the identity of the Independent Counsel so selected. The Company or Indemnitee, as the case may be, may, within ten (10) days after such written notice of selection shall have been received, deliver to Indemnitee or the Company, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 15 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court of competent jurisdiction has determined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 9(c)(ii) of this Agreement and after a request for the appointment of Independent Counsel has been made, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 9(d) of this Agreement. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 9(f) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing). Any expenses incurred by or in connection with the appointment of Independent Counsel shall be borne by the Company (irrespective of the Determination of Indemnitee’s entitlement to indemnification) and not by Indemnitee.
(f) Presumptions; Burden and Standard of Proof. The parties intend and agree that, to the extent permitted by law, in connection with any Determination with respect to Indemnitee’s entitlement to indemnification hereunder by any person, including a court:
(i) it will be presumed that Indemnitee is entitled to indemnification under this Agreement (notwithstanding any Adverse Determination), and the Company or any other person or entity challenging such right will have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption;
(ii) the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that Indemnitee’s conduct was unlawful;
(iii) Indemnitee will be deemed to have acted in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that Indemnitee’s conduct was unlawful, if Indemnitee’s action is based on the records or books of account of the Company, including financial statements, or on information supplied to Indemnitee by the officers, employees or committees of the board of directors of the Company, or on the advice of legal counsel or other advisors (including financial advisors and accountants) for the Company or on information or records given in reports made to the Company by an independent certified public accountant or by an appraiser or other expert or advisor selected by the Company; and
(iv) the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company or relevant enterprises will not be imputed to Indemnitee in a manner that limits or otherwise adversely affects Indemnitee’s rights hereunder.
The provisions of this Section 9(f) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.
10.Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to Section 9(d) of this Agreement that Indemnitee is not entitled to indemnification under this Agreement,
(ii) advancement of Expenses is not timely made pursuant to Section 8 and Section 9(c)(i) of this Agreement, (iii) no determination of entitlement to indemnification shall have been timely made pursuant to Section 9(d) of this Agreement after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5, 6 or 7 of this Agreement within ten (10) days after receipt by the Company of a written request therefor, (v) payment of indemnification pursuant to Section 3 or 4 of this Agreement is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, Indemnitee the benefits provided or intended to be provided to Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of his or her entitlement to such indemnification or advancement of Expenses. Alternatively, Indemnitee, at his or her option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association in New York (or JAMS in New York, if requested by Indemnitee). Indemnitee shall commence such proceeding seeking adjudication or arbitration within one hundred eighty (180) days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 10(a). The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to Section 9(d) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 10 shall be conducted in all respects as a de novo trial, or arbitration, on the merits, in which (i) Indemnitee shall not be prejudiced by reason of that adverse determination, and (ii) the Company shall bear the burden of establishing that Indemnitee is not entitled to indemnification.
(c) If a determination shall have been made pursuant to Section 9(d) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 10, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under Delaware corporate law.
(d) The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 10 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.
(e) The Company shall indemnify Indemnitee to the fullest extent permitted by law against all Expenses and, if requested by Indemnitee, shall (within ten (10) days after the Company’s receipt of such written request) advance such Expenses to Indemnitee, which are reasonably incurred by Indemnitee in connection with any judicial proceeding or arbitration
brought by Indemnitee for (i) indemnification or advances of Expenses (or otherwise for the enforcement, interpretation or defense of his or her rights) under this Agreement or any other agreement, including any other indemnification, contribution or advancement agreement, or any provision of the Certificate of Incorporation or Bylaws now or hereafter in effect or (ii) recovery or advances under any directors’ and officers’ liability insurance policy maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, contribution, advancement or insurance recovery, as the case may be.
(f) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding with respect to which indemnification is sought.
11.Insurance; Subrogation; Other Rights of Recovery, etc.
(a) The Company shall use its reasonable best efforts to purchase and maintain a policy or policies of insurance with reputable insurance companies with A.M. Best ratings of “A” or better, providing Indemnitee with coverage for any liability asserted against, and incurred by, Indemnitee or on Indemnitee’s behalf by reason of Indemnitee’s Corporate Status, or arising out of Indemnitee’s status as such, whether or not the Company would have the power to indemnify Indemnitee against such liability. Such insurance policies shall have coverage terms and policy limits at least as favorable to Indemnitee as the insurance coverage provided to any other director and/or officer of the Company. If the Company has such insurance in effect at the time it receives from Indemnitee any notice of the commencement of an action, suit, proceeding or other claim, the Company shall give prompt notice of the commencement of such action, suit, proceeding or other claim to the insurers and take such other actions in accordance with the procedures set forth in the policy as required or appropriate to secure coverage of Indemnitee for such action, suit, proceeding or other claim. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such action, suit, proceeding or other claim in accordance with the terms of such policy.
(b) In the event of any payment by the Company under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee against any other Alliance Entity, and Indemnitee hereby agrees, as a condition to obtaining any advancement or indemnification from the Company, to assign the Company all of Indemnitee’s rights to obtain from such other Alliance Entity such amounts to the extent that they have been paid by the Company to or for the benefit of Indemnitee as advancement or indemnification under this Agreement and are adequate to indemnify Indemnitee with respect to the costs, Expenses or other items to the full extent that Indemnitee is entitled to indemnification or other payment hereunder; and Indemnitee will (upon request by the Company) execute all papers required and use reasonable best efforts to take all action reasonably necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit or enforce such rights.
(c) The Company hereby acknowledges that the rights to indemnification, advancement of expenses and/or insurance provided pursuant to this Agreement may also be provided to certain Indemnitees by one or more of their respective affiliates (other than the Alliance Entities) or their insurers (collectively, and including, in the case of BDT Capital Partners, LLC, each of its partners, shareholders, members, affiliates, associated investment funds, directors, officers, fiduciaries, managers, controlling persons, employees and agents and each of the partners, shareholders, members, affiliates, associated investment funds, directors, officers, fiduciaries, managers, controlling persons, employees and agents of each of the foregoing, the “Affiliate Indemnitors”). The Company hereby agrees that, as between the Company, on the one hand, and the Affiliate Indemnitors, on the other hand, (i) the Company is the full indemnitor of first resort and the Affiliate Indemnitors are the full indemnitors of second resort with respect to all such indemnifiable claims against such Indemnitees, whether arising under this Agreement or otherwise (i.e., the obligations of the Company to such Indemnitees are primary and any obligation of the Affiliate Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Indemnitees are secondary), (ii) upon receipt by the Company of an undertaking by or on behalf of such Indemnitees to repay such amount if it shall be determined that Indemnitee is not entitled to be indemnified as authorized by this Agreement or otherwise, the Company shall be required to advance the full amount of expenses incurred by such Indemnitees and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement (or any other agreement between the Company and such Indemnitees), without regard to any rights such Indemnitees may have against the Affiliate Indemnitors and (iii) the Company irrevocably waives, relinquishes and releases the Affiliate Indemnitors from any and all claims against the Affiliate Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company agrees to indemnify the Affiliate Indemnitors directly for any amounts that the Affiliate Indemnitors pay as indemnification or advancement on behalf of any such Indemnitee and for which such Indemnitee may be entitled to indemnification from the Company in connection with serving as a director and/or officer of the Company. The Company further agrees that no advancement or payment by the Affiliate Indemnitors on behalf of any such Indemnitee with respect to any claim for which such Indemnitee has sought indemnification from the Company shall affect the foregoing and the Affiliate Indemnitors shall be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Indemnitee against the Company, and the Company shall cooperate with the Affiliate Indemnitors in pursuing such rights.
(d) Except as provided in Section 11(c), the Company shall not be liable to pay or advance to Indemnitee any amounts otherwise indemnifiable under this Agreement or under any other indemnification agreement if, and to the extent that, Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
(e) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee in respect of or relating to Indemnitee’s service at the request of the Company as a director, officer, employee, fiduciary, trustee, representative, partner or agent of any other Alliance Entity shall be reduced by any amount Indemnitee has actually received as payment of
indemnification or advancement of Expenses from such other Alliance Entity, except to the extent that such indemnification payments and advance payment of Expenses when taken together with any such amount actually received from other Alliance Entities or under director and officer insurance policies maintained by one or more Alliance Entities are inadequate to fully pay all costs, Expenses or other items to the full extent that Indemnitee is otherwise entitled to indemnification or other payment hereunder.
(f) Except as provided in Sections 11(c), 11(d) and 11(e) of this Agreement, the rights to indemnification and advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time, whenever conferred or arising, be entitled under applicable Delaware corporate law, under the Alliance Entities’ organizational documents, or under any other agreement, vote of stockholders or resolution of directors of any Alliance Entity, or otherwise. Indemnitee’s rights under this Agreement are present contractual rights that fully vest upon Indemnitee’s first service as a director and/or officer of the Company. The Parties hereby agree that Sections 11(c), 11(d) and 11(e) of this Agreement shall be deemed exclusive and shall be deemed to modify, amend and clarify any right to indemnification or advancement provided to Indemnitee under any other contract, agreement or document with any Alliance Entity.
(g) No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the General Corporation Law of the State of Delaware (or other applicable law), whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Alliance Entities’ organizational documents and this Agreement, it is the intent of the parties hereto that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change. No change in applicable law shall have the effect of reducing the benefits available to Indemnitee hereunder based on Delaware law as in effect on the date hereof or as such benefits may improve as a result of amendments to Delaware law that become effective after the date hereof. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
12.Employment Rights; Successors; Third Party Beneficiaries.
(a) This Agreement shall not be deemed an employment contract between the Company and Indemnitee. This Agreement shall continue in force as provided above after Indemnitee has ceased to serve as a director and/or officer of the Company or any other Corporate Status.
(b) This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and Indemnitee’s heirs, executors and administrators. If the Company or any of its successors or assigns shall (i) consolidate with or merge into any other corporation or entity and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfer all or substantially all of its properties and assets to any individual, corporation or other entity, then, and in each such case,
proper provisions shall be made so that the successors and assigns of the Company shall assume all of the obligations set forth in this Agreement.
(c) The Affiliate Indemnitors are express third party beneficiaries of this Agreement, are entitled to rely upon this Agreement, and may specifically enforce the Company’s obligations hereunder (including but not limited to the obligations specified in Section 11 of this Agreement) as though a party hereunder.
13.Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; (ii) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (iii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
14.Exception to Right of Indemnification or Advancement of Expenses. Notwithstanding any other provision of this Agreement and except as provided in Section 7(a) of this Agreement or as may otherwise be agreed by the Company, Indemnitee shall not be entitled to indemnification or advancement of Expenses under this Agreement with respect to any Proceeding brought by Indemnitee (other than a Proceeding by Indemnitee (i) by way of defense or counterclaim or other similar portion of a Proceeding, (ii) to enforce any other rights of Indemnitee to indemnification, advancement or contribution from the Company under this Agreement, or under any other contract, bylaws or charter or under statute or other law, including any rights under Section 145 of the Delaware General Corporation Law, or (iii) after a Change in Control), unless the bringing of such Proceeding or making of such claim shall have been approved by the Board of Directors or similar governing body of the Company.
15.Definitions. For purposes of this Agreement:
(a) “Alliance Entity” means the Company, any of its subsidiaries and any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise with respect to which Indemnitee serves as a director, officer, employee, partner, representative, fiduciary, trustee or agent, or in any similar capacity, at the request of the Company.
(b) “Board of Directors” means the board of directors of the Company.
(c) “Bylaws” means, in each case, the bylaws or similar governing document of the relevant entity as amended from time to time.
(d) “Certificate of Incorporation” means, in each case, the certificate of incorporation, articles of incorporation or similar constituting document of the relevant entity as amended from time to time.
(e) “Change in Control” shall be deemed to have occurred if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, becomes the “Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of the total voting power represented by the Company’s then outstanding Voting Securities (as hereinafter defined), (ii) during any period of two consecutive years, (A) individuals who at the beginning of such period constitute the Board of Directors and (B) any new director whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved (other than, in the case of this clause (B), individuals that are initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of a person other than the Board of Directors), cease for any reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 50% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series of transactions) of all or substantially all of the Company’s assets.
(f) “Corporate Status” describes the status of a person by reason of such person’s past, present or future service as a director, officer, employee, fiduciary, trustee or agent of the Company (including, without limitation, one who serves at the request of the Company as a director, officer, employee, fiduciary, trustee or agent of any other Alliance Entity), in all cases whether or not Indemnitee is acting or serving in any such capacity or has such status at the time any Expenses are incurred or for which indemnification, advancement or any other right can be provided by this Agreement.
(g) “Determination” means a determination that either (i) there is a reasonable basis for the conclusion that indemnification of Indemnitee is proper in the circumstances because Indemnitee met a/the particular standard(s) of conduct (a “Favorable Determination”) or (ii) there is no reasonable basis for the conclusion that indemnification of Indemnitee is proper in the circumstances because Indemnitee met a/the particular standard(s) of conduct (an “Adverse
Determination”). An Adverse Determination shall include the decision that a Determination was required in connection with indemnification and the decision as to the applicable standard of conduct.
(h) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee and does not otherwise have an interest materially adverse to any interest of Indemnitee.
(i) “Expenses” shall mean all direct and indirect costs, fees and expenses of any type or nature whatsoever and shall specifically include, without limitation, all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees and costs of experts, witness fees and costs, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness, in, or otherwise participating in, a Proceeding or an appeal resulting from a Proceeding, including, but not limited to, the premium for appeal bonds, attachment bonds or similar bonds and all interest, assessments and other charges paid or payable in connection with or in respect of any such Expenses, and shall also specifically include, without limitation, all reasonable attorneys’ fees and all other expenses incurred by or on behalf of Indemnitee in connection with preparing and submitting any requests or statements for indemnification, advancement, contribution or any other right provided by this Agreement. Expenses, however, shall not include amounts of judgments or fines against Indemnitee.
(j) “Independent Counsel” means, at any time, any law firm, or a member of a law firm, that (i) is experienced in matters of corporation law and (ii) is not, at such time, and has not been in the five years prior to such time, retained to represent: (A) any Alliance Entity or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (B) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto and to be jointly and severally liable therefor.
(k) “Proceeding” includes any actual, threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation (formal or informal), inquiry, administrative hearing or any other actual, threatened, pending or completed proceeding, whether brought by or in the right of any Alliance Entity or otherwise and whether civil, criminal, administrative or investigative in nature, in which Indemnitee was, is, may be or
will be involved as a party, witness or otherwise, by reason of Indemnitee’s Corporate Status or by reason of any action taken by Indemnitee or of any inaction on Indemnitee’s part while acting as director, officer, employee, fiduciary, trustee or agent of any Alliance Entity (in each case whether or not Indemnitee is acting or serving in any such capacity or has such status at the time any liability or expense is incurred for which indemnification or advancement of Expenses can be provided under this Agreement). If Indemnitee believes in good faith that a given situation may lead to or culminate in the institution of a Proceeding, this shall be considered a Proceeding under this paragraph.
(l) “Voting Securities” means any securities of the Company that vote generally in the election of directors.
16.Construction. Whenever required by the context, as used in this Agreement the singular number shall include the plural, the plural shall include the singular, and all words herein in any gender shall be deemed to include (as appropriate) the masculine, feminine and neuter genders.
17.Reliance. The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director and/or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director and/or officer of the Company.
18.Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in a writing identified as such by all of the parties hereto. Except as otherwise expressly provided herein, the rights of a party hereunder (including the right to enforce the obligations hereunder of the other parties) may be waived only with the written consent of such party, and no waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
19.Notice Mechanics. All notices, requests, demands or other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (ii) when sent by confirmed electronic mail if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, or (iii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:
(a) If to Indemnitee to:
[DIRECTOR/OFFICER CONTACT INFORMATION]
(b) If to the Company, to:
Alliance Laundry Holdings Inc.
221 Shepard Street
Ripon, WI 54971
Attn: Samantha Hannan
E-mail: [●]
with a copy to:
Cravath, Swaine & Moore LLP
Two Manhattan West
375 Ninth Avenue
New York, NY 10001
Attn: Nicholas A. Dorsey
Kelly M. Smercina
E-mail: [●]
or to such other address as may have been furnished (in the manner prescribed above) as follows: (a) in the case of a change in address for notices to Indemnitee, furnished by Indemnitee to the Company and (b) in the case of a change in address for notices to the Company, furnished by the Company to Indemnitee.
20.Contribution. To the fullest extent permissible under Delaware corporate law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for reasonably incurred Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its other directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
21.Governing Law; Submission to Jurisdiction; Appointment of Agent for Service of Process. This Agreement and the legal relations among the parties shall, to the fullest extent permitted by law, be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Court of Chancery of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to
make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or otherwise inconvenient forum.
22.Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
23.Counterparts. This Agreement may be executed in counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement or any document to be signed in connection with this Agreement shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form. Counterparts may be delivered via facsimile, electronic mail (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, and the parties hereto consent to conduct the transactions contemplated hereunder by electronic means.
[Remainder of Page Intentionally Blank]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.
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| ALLIANCE LAUNDRY HOLDINGS INC. |
| by |
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| | Name: |
| | Title: |
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| INDEMNITEE, |
| by |
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| | Name: [NAME OF INDEMNITEE] |
| | Title: |
[Signature Page to Indemnification Agreement]
ALH Holding Inc. 2015 Stock Option Plan
SECTION 1.
PURPOSE
The purpose of this Plan (as such term and any other capitalized terms used herein without definition are defined in Section 2) is to foster and promote the long-term financial success of the Company and the Subsidiaries and materially increase stockholder value by (a) motivating superior performance by means of service- and performance-related incentives, (b) encouraging and providing for the acquisition of an ownership interest in the Company by Employees, Directors and Other Service Providers and (c) enabling the Company and the Subsidiaries to attract and retain the services of an outstanding management team upon whose judgment, interest and special effort the successful conduct of its and their operations is largely dependent.
SECTION 2.
DEFINITIONS
Whenever used herein, the following terms shall have the respective meanings set forth below:
Act: the Securities Act of 1933, as amended.
Adjustment Event: shall mean (i) any stock dividend, stock split or reverse-split, or share combination or division affecting the Common Stock, (ii) any recapitalization, reorganization or exchange of shares affecting the Common Stock, (iii) extraordinary dividend or other extraordinary distribution or (iv) any other similar event affecting the Common Stock.
BDT Investor Group: shall have the meaning ascribed to such term in the Stockholders Agreement.
Board: the Board of Directors of the Company.
Cause: has the meaning given to such term in an employment or similar agreement then in effect between a Participant, on the one hand, and the Company or any Subsidiary, on the other hand and if no such agreement exists or is then in effect, such term shall mean (i) the commission of a felony or the commission of any act or omission involving moral turpitude, dishonesty, disloyalty or fraud, (ii) conduct tending to bring the Company or any of its affiliates into public disgrace or disrepute, (iii) gross negligence or willful misconduct with respect to the Company or any of its affiliates, (iv) failure to accept and cooperate with actions and initiatives assigned to the Participant by the Board of Directors of the Company, the Chief Executive Officer, or the Participant’s direct supervisor or (v) the Participant or any member of the Participant’s family shall engage in any Restricted Activity with any customer, supplier or other person having a business relation with the Company, without the prior written approval of the Board of Directors of the Company.
CEO: the Chief Executive Officer of the Company or, if such position is not then occupied, the Committee.
Change in Control: a transaction which, when aggregated with all prior transactions occurring after the Effective Date,
(i) involves the acquisition by any Person (other than (A) the Company, (B) the BDT Investor Group, (C) any Participant, (D) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or an affiliate of the Company or (E) any entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the voting securities of the Company) of beneficial ownership, directly or indirectly, of more than 50% of the voting securities of the Company; provided, however, that for purposes of this subparagraph (i), the following acquisitions shall not constitute a Change in Control: (v) any acquisition directly from the Company, (w) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or an Affiliate, (x) any acquisition by an underwriter temporarily holding such Company voting securities pursuant to an offering of such securities, (y) any acquisition by a pledgee of Company voting securities holding such securities as collateral or temporarily holding such securities upon foreclosure of the underlying obligation or (z) any acquisition by any Person that is controlled by the Company, BDT Investor Group, or any Participant; or
(ii) involves the sale, exchange, transfer or other disposition of more than 50% of all of the assets of the Company and the Subsidiaries, taken as a whole, to one or more persons or entities that are not, immediately prior to such sale, transfer or other disposition, affiliates of the Company or the BDT Investor Group.
For purposes of this definition, a Public Offering shall not be a Change in Control; provided that, any Common Stock sold, exchanged, transferred or otherwise disposed of by the BDT Investor Group in a Public Offering shall be counted for purposes of determining whether a Change in Control shall have occurred in connection with any other sale, exchange, transfer or other disposition of the Common Stock by the BDT Investor Group.
Change in Control Price: the price per share of Common Stock paid in conjunction with any transaction resulting in a Change in Control (as determined in good faith by the Committee if any part of the offered price is payable other than in cash).
Code: the Internal Revenue Code of 1986, as amended.
Committee: the Compensation Committee of the Board or, if there shall not be any committee then serving, the Board.
Common Stock: the common stock of the Company, par value $.01 per share.
Company: ALH Holding Inc., a Delaware corporation, and any successor thereto.
Director: any member of the board of directors of the Company or any Subsidiary.
Disability: shall mean a physical or mental impairment that renders a Participant unable to perform the essential functions of the Participant’s position even with reasonable accommodation (that does not impose an undue hardship on the Company), and which has lasted at least sixty (60) consecutive days. A physician selected by the Company or its insurers, and consented to by the Participant or the Participant’s personal representative shall make the determination of the existence of a Disability. Consent by the Participant or the Participant personal representative shall not be unreasonably withheld.
Effective Date: August 31, 2015.
Employee: any officer or other key employee of the Company or any Subsidiary.
Fair Market Value: if no Public Offering has occurred, the fair market value of a share of Common Stock as determined in accordance with the Stockholders Agreement and in a manner consistent with determining the fair market value of stock not readily tradable on an established securities market under Section 409A of the Code; provided that such determination of Fair Market Value may be made in good faith by the Board or the Committee. Following a Public Offering, the Fair Market Value, on any date of determination, shall mean the average of the closing sales prices for a share of Common Stock as reported on a national exchange for each of the ten business days preceding the date of determination or the average of the last transaction prices for a share of Common Stock as reported on a nationally recognized system of price quotation for each of the ten business days preceding the date of determination. In the event that there are no Common Stock transactions reported on such exchange or system on such date, Fair Market Value shall mean the closing price on the immediately preceding date on which Common Stock transactions were so reported.
Marketable Securities: any securities that are (i) of a class listed on a national exchange or on NASDAQ, (ii) freely tradable on such national exchange or on NASDAQ, or not freely tradable but for which registration rights are currently available, and (iii) not subject to any contractual restriction on transfer.
Option: the right to purchase Common Stock pursuant to the terms of the Plan at a stated price for a specified period of time. For purposes of the Plan, an Option may be either (i) an “Incentive Stock Option” within the meaning of section 422 of the Code (an “Incentive Stock Option”) or (ii) an Option which is not an Incentive Stock Option (a “Non-Qualified Stock Option”).
Other Service Provider: an independent contractor or consultant to the Company or any Subsidiary.
Participant: any Employee, Director or Other Service Provider designated by the Committee to receive an award of Options under the Plan.
Permitted Transferee: a transferee permitted under Section 1.1 of the Stockholders Agreement.
Person: means an individual, corporation, partnership, limited liability company, joint venture, association, trust or other entity or organization, including, without limitation, a government or political subdivision or an agency or instrumentality thereof.
Plan: this ALH Holding Inc. 2015 Stock Option Plan, as set forth herein and as the same may be amended from time to time in accordance with its terms.
Public Offering: a public offering pursuant to an effective registration statement filed with the Securities and Exchange Commission that covers shares of Common Stock that, after the closing of such public offering, will be traded on the New York Stock Exchange, the American Stock Exchange or the National Association of Securities Dealers Automated Quotation System.
Registration Rights Agreement: the Registration Rights Agreement, dated as of August 31, 2015, among the Company, the BDT Investor Group and certain other stockholders of the Company, as it may be amended from time to time.
Restricted Activity: means directly or indirectly owning any interest in, managing, controlling, participating in, consulting with, rendering services for, or in any manner engaging in any business with any customer, supplier or other person having a business relation with the Company; provided however that the term Restricted Activity shall not include passive ownership of less than 2% of the outstanding stock of any class of a corporation which is publicly traded, so long as the you have no active participation in the business of that corporation.
Retirement: means resignation by a Participant from his position at or after age sixty-two with ten or more years of prior service with the Company or its Subsidiaries.
Stockholders Agreement: the Stockholders Agreement, dated as of August 31, 2015, among the Company, BDT Investor Group and certain other stockholders of the Company, as it may be amended from time to time.
Subsidiary: any corporation a majority of whose outstanding voting securities is owned, directly or indirectly, by the Company.
Voluntary Resignation: the termination of a Participant’s employment with the Company or any Subsidiary due to such Participant’s voluntary resignation other than due to Retirement or Disability.
SECTION 3.
ELIGIBILITY AND PARTICIPATION
Participants in the Plan shall be those Directors, Employees and Other Service Providers (i) selected by the Committee or (ii) selected by an authorized officer of the Company subject to the approval of the Committee to participate in the Plan and receive Options (which may include such Persons who are members of the Committee). The selection of a Director,
Employee or Other Service Provider as a Participant shall neither entitle such Person to, nor disqualify such Person from, participation in any other award or incentive plan of the Company or any Subsidiary.
SECTION 4.
ADMINISTRATION
4.1 Power to Grant and Establish Terms of Options. The Committee shall have the discretionary authority, subject to the terms of the Plan, to determine the Employees, Directors and Other Service Providers to whom Options shall be granted (which may include such Persons who are members of the Committee) and the terms and conditions of any and all Options, including, but not limited to, the number of shares of Common Stock covered by each Option, the time or times at which Options shall be granted and the terms and provisions of the instruments by which Options shall be evidenced and to designate Options as Incentive Stock Options or Non-Qualified Stock Options. Subject to the terms of the Plan, the terms and conditions of each Option grant shall be determined by the Committee at the time of grant and, subject to Section 8, such terms and conditions shall not be subsequently changed in a manner which would be adverse to the Participant without the consent of the Participant to whom such Option has been granted, even if this Plan shall be subsequently amended. The Committee may establish different terms and conditions for different Participants receiving Options and for the same Participant for each Option such Participant may receive, whether or not granted at the same or different times. The grant of any Option to any Participant shall neither entitle such Participant to, nor disqualify him from, the grant of any other Options.
4.2 Substitute Options. The Committee shall have the right, subject to the consent of Participants to whom Options have been granted, to grant in substitution for outstanding Options, replacement Options which may contain terms more favorable to the Participant than the Options they replace, including, without limitation, a lower exercise price (subject to Section 6.2), and to cancel replaced Options.
4.3 Administration. The Committee shall be responsible for the administration of the Plan. Any Options granted by the Committee may be subject to such conditions, not inconsistent with the terms of the Plan, as the Committee shall determine, in its sole discretion. The Committee shall have discretionary authority to prescribe, amend and rescind rules and regulations relating to the Plan, to provide for conditions deemed necessary or advisable to protect the interests of the Company, to interpret the Plan and to make all other determinations necessary or advisable for the administration and interpretation of the Plan and to carry out its provisions and purposes. Any determination, interpretation or other action made or taken (including any failure to make any determination or interpretation, or take any other action) by the Committee pursuant to the provisions of the Plan shall be final, binding and conclusive for all purposes and upon all persons and shall be given deference in any proceeding with respect thereto. The Committee may consult with legal counsel, who may be counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel.
4.4 Participants Based Outside the United States. To conform with the provisions of local laws and regulations, or with local compensation practices and policies, in foreign countries in which the Company or any of its Subsidiaries operate, but subject to the limitations set forth herein regarding the maximum number of shares issuable hereunder, the Committee may (i) modify the terms and conditions of Options (including by granting a stock appreciation right or a form of award that is not an Option) granted to Participants employed outside the United States (“Non-US Awards”), (ii) establish subplans with modified exercise procedures and such other modifications as may be necessary or advisable under the circumstances (“Subplans”), and (iii) take any action which it deems advisable to obtain, comply with or otherwise reflect any necessary governmental regulatory procedures, exemptions or approvals with respect to the Plan. The Committee’s decision to grant Non-US Awards or to establish Subplans is entirely voluntary, and at the complete discretion of the Committee. The Committee may amend, modify or terminate any Subplans at any time, and such amendment, modification or termination may be made without prior notice to the Participants. The Company, Subsidiaries, and members of the Committee shall not incur any liability of any kind to any Participant as a result of any change, amendment or termination of any Subplan at any time. The benefits and rights provided under any Subplan or by any Non-US Award (x) are wholly discretionary and, although provided by either the Company or a Subsidiary, do not constitute regular or periodic payments and (y) are not to be considered part of the Participant’s salary or compensation under the Participant’s employment with the Participant’s local employer for purposes of calculating any severance, resignation, redundancy or other end of service payments, vacation, bonuses, long-term service awards, indemnification, pension or retirement benefits, or any other payments, benefits or rights of any kind. If a Subplan is terminated, the Committee may direct the payment of Non-US Awards (or direct the deferral of payments whose amount shall be determined) prior to the dates on which payments would otherwise have been made, and, in the Committee’s discretion, such payments may be made in a lump sum or in installments.
SECTION 5.
STOCK SUBJECT TO PLAN
5.1 Number. Subject to the provisions of Section 5.3, the number of shares of Common Stock subject to Options under the Plan may not exceed 82,658.921 shares. The shares of Common Stock to be delivered under the Plan may consist, in whole or in part, of shares held in treasury or authorized but unissued shares not reserved for any other purpose.
5.2 Canceled, Terminated or Forfeited Awards. Any shares of Common Stock subject to an Option which for any reason expire or are canceled, terminated, forfeited, substituted for or otherwise settled without the issuance of such shares of Common Stock shall again be available for grant under the Plan.
5.3 Adjustment in Capitalization. The aggregate number of shares of Common Stock available for grants of Options under Section 5.1 or subject to outstanding Option grants and the respective prices and/or vesting criteria applicable to outstanding Options, and any other terms and conditions of outstanding Options, shall be proportionately adjusted to reflect, as deemed equitable and appropriate by the Committee, each Adjustment Event. To the
extent deemed equitable and appropriate by the Committee, in its good faith judgment, and subject to any required action by stockholders, in any corporate transaction constituting an Adjustment Event (other than a Change in Control), any Option granted under the Plan shall pertain to the securities or other property to which a holder of the number of shares of Common Stock covered by the Option would have been entitled to receive in connection with such event.
SECTION 6.
STOCK OPTIONS
6.1 Grant of Options. Options may be granted to Participants at such time or times as shall be determined by the Committee. Options pursuant to this Plan may be of two types: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options. The date of grant of an Option under the Plan will be the date on which the Option is awarded by the Committee or, if so determined by the Committee on the date of award of an Option, the date on which occurs any event the occurrence of which is an express condition precedent to the grant of the Option. The Committee shall determine the number of Options, if any, to be granted to a Participant. Each Option shall be evidenced by an Option agreement that shall specify the type of Option granted, the exercise price, the duration of the Option, the number of shares of Common Stock to which the Option pertains, the conditions upon which the Options or any portion thereof shall become vested or exercisable and otherwise shall be in substantially the form of the Option agreement attached hereto as Exhibit A, subject to such changes not inconsistent with the Plan as the Committee shall determine, in its good faith judgment, to be equitable and appropriate.
6.2 Exercise Price. Non-Qualified Stock Options and Incentive Stock Options granted pursuant to the Plan shall have an exercise price per share of Common Stock determined by the Committee, provided that such per share exercise price may not be less than the Fair Market Value of a share of Common Stock on the date the Option is granted.
6.3 Exercise of Options. Options awarded to a Participant under the Plan shall be exercisable at such times and shall be subject to such restrictions and conditions, including the performance of a minimum period of service or the satisfaction of performance goals, as the Committee may impose at the time of grant of such Options, subject to the Committee’s right to accelerate the exercisability of such Options in its discretion. Notwithstanding the foregoing, no Option shall be exercisable on or after the tenth anniversary of the date on which it is granted. Except as may be provided in any provision approved by the Committee pursuant to this Section 6.3, after becoming exercisable each installment of an Option shall remain exercisable until expiration, termination or cancellation of the Option. Subject to Section 9.7, an Option may be exercised from time to time, in whole or in part, up to the total number of shares of Common Stock with respect to which it is then exercisable.
6.4 Payment. Exercisable Options may be exercised by a Participant upon (a) the Participant’s written notice to the Company of exercise, (b) the Participant’s payment in full of the Option exercise price for each Option at the time of exercise (i) in cash or cash equivalents, (ii) in unencumbered shares of Common Stock owned by the Participant or which are deliverable to the Participant upon exercise of the Option and in each case having an
aggregate Fair Market Value on the date of exercise equal to such aggregate Option exercise price, (iii) in a combination of cash and such shares of Common Stock or (iv) in accordance with such procedures or in such other form as the Committee shall from time to time determine and (c) if such Options are exercised prior to a Public Offering, the Participant’s execution of the Stockholders Agreement and the Registration Rights Agreement (if not already a party thereto) in order to become a party to such agreements with respect to the shares of Common Stock issuable upon the exercise of such Options. After receipt of a written exercise notice and payment in full of the Option exercise price and, if applicable, receipt of evidence of the Participant’s execution of the Stockholders Agreement and the Registration Rights Agreement in accordance with this Section 6.4, the Company shall deliver to the Participant shares of Common Stock acquired upon the exercise thereof (in, at the option of the Company, certificated or book-entry form), registered in the name of the Participant, provided that, if the Company, in its sole discretion, shall determine that, under applicable securities laws, any certificates issued under this Section 6.4 must bear a legend restricting the transfer of such Common Stock, such certificates shall bear the appropriate legend. For the avoidance of doubt, such shares of Common Stock shall be subject to the terms of the Stockholders Agreement and the Registration Rights Agreement (including, without limitation, the right of the Company and the BDT Investor Group to repurchase such shares of Common Stock pursuant to the terms of the Stockholders Agreement).
6.5 Incentive Stock Options. Notwithstanding anything in the Plan to the contrary, no term of the Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be so exercised, so as to disqualify the Plan under section 422 of the Code, or, without the consent of any Participant affected thereby, to cause any Incentive Stock Option previously granted to fail to qualify for the federal income tax treatment afforded under section 421 of the Code.
6.6 Termination of Employment Due to Death, Disability or Retirement. Unless otherwise determined by the Committee at the time of grant, in the event a Participant’s employment with the Company or any Subsidiary terminates by reason of death, Retirement or Disability, any Options granted to such Participant which, on or prior to the date of such termination, have become exercisable in accordance with Section 6.3, may be exercised by the Participant or the Participant’s designated beneficiary (or, if no such beneficiary is named, in accordance with Section 9.2) at any time prior to the first anniversary of the Participant’s termination of employment or the expiration of the term of the Options, whichever period is shorter.
6.7 Termination of Employment For Cause. Unless otherwise determined by the Committee at the time of grant, in the event a Participant’s employment with the Company or any Subsidiary is terminated for Cause, all Options granted to such Participant which are then outstanding (whether or not exercisable on or prior to the date of such termination) shall be immediately forfeited and canceled.
6.8 Termination of Employment Due to Voluntary Resignation or For Any Other Reason. Unless otherwise determined by the Committee at or after the time of grant, in the
event the Participant’s employment with the Company or any Subsidiary terminates due to Voluntary Resignation or for any reason other than one described in Sections 6.6 or 6.7, any Options granted to such Participant which, on or prior to the date of such termination, have become exercisable in accordance with Section 6.3, may be exercised at any time during the 60 day period following the Participant’s termination of employment or the expiration of the term of such Options, whichever period is shorter.
6.9 Termination of Options. Unless otherwise determined by the Committee at the date of grant, upon the termination of a Participant’s employment, any Options that are not then exercisable shall terminate and be canceled effective upon the date of such termination.
6.10 Committee Discretion. Notwithstanding anything else contained in this Section 6 to the contrary, the Committee may permit all or any portion of any Options to be exercised following a Participant’s termination of employment for any reason on such terms and subject to such conditions not less favorable to such Participant than those terms and conditions provided for herein or in the Option agreement evidencing the grant to such Participant of the applicable Options, as the Committee shall determine for a period up to and including, but not beyond, the expiration of the term of such Options.
6.11 Services. For purposes of this Plan, (i) the term “employment” shall be deemed to refer to the Participant’s provision of services to the Company or any Subsidiary as an Employee, Director or Other Service Provider, as applicable, (ii) the term “employer” shall be deemed to refer to the recipient of a Participant’s services as an Employee, Director or Other Service Provider, as applicable and (iii) unless otherwise determined by the Committee, the phrase “termination of employment” and corollary phrases shall be deemed to refer to the Participant’s cessation of such services in the applicable capacity. For example, the cessation of services by a Participant as an Employee shall be deemed a termination of employment notwithstanding the Participant providing services as an Other Service Provider after the date of cessation of such services as an Employee.
SECTION 7.
CHANGE IN CONTROL
7.1 Accelerated Vesting and Payment. Unless otherwise determined by the Committee at the time of grant, in the event of a Change in Control, (i) each Option that, by its terms, becomes exercisable solely upon the completion of a stated period of service (whether or not then exercisable), together with any outstanding Options that, prior to or in connection with such Change in Control, have become exercisable in connection with the attainment of performance objectives, shall be canceled in exchange for a payment in cash by the Company to each Option holder of an amount equal to the excess of the Change in Control Price over the exercise price for such Option (except as provided in Section 7.2 below), and (ii) any Options that are subject to the attainment of performance objectives that have not been met at or prior to the Change in Control shall be forfeited without payment therefor.
7.2 Alternative Awards. Notwithstanding Section 7.1, if provided in the Option agreement evidencing the Options, no cancellation, cash settlement or other payment shall occur with respect to any Option that would otherwise have been canceled pursuant to Section 7.1 if the Committee reasonably determines in good faith prior to the occurrence of a Change in Control that such Option shall be honored or assumed, or new rights substituted therefor (such honored, assumed or substituted award hereinafter called an “Alternative Award”) by a Participant’s employer (or the parent or a subsidiary of such employer) immediately following the Change in Control, provided that any such Alternative Award must:
(i) provide that such Options are fully vested and exercisable;
(ii) provide such Participant (or each Participant in a class of Participants) with other rights and entitlements substantially equivalent to or better than the rights applicable under such Option; and
(iii) have substantially equivalent economic value to such Option (determined at the time of the Change in Control).
7.3 Conflict with Option Agreement. With respect to any Options granted hereunder that may become exercisable upon the attainment of performance objectives, in the event of a conflict between this Section 7 and the terms and conditions set forth in the Option agreement evidencing such Options, the terms and conditions set forth in the Option agreement evidencing such Options shall control.
7.4 Limitation on Benefits. Notwithstanding anything contained in the Plan or an Option agreement to the contrary (i) to the extent that any of the payments and benefits provided for under the Plan, an applicable Option agreement or any other agreement or arrangement between the Company and a Participant (collectively, the “Payments”) would constitute a “parachute payment” within the meaning of section 280G of the Code, the amount of such Payments shall be reduced to the amount that would result in no portion of the Payments being subject to the excise tax imposed pursuant to section 4999 of the Code and (ii) if and to the extent any Payments in respect of the Options that vest based on the performance of a minimum period of service would, absent application of this clause (ii), be an “excess parachute payment” within the meaning of section 280G of the Code (and the regulations promulgated thereunder), such Options shall not accelerate in the event of a Change in Control (notwithstanding Section 7.1), and shall be honored, assumed or new rights substituted therefor by a Participant’s employer (or the parent or a subsidiary of such employer) in such Change in Control in accordance with Section 7.2. If Payments that would otherwise be reduced or eliminated, as the case may be, pursuant to the immediately preceding sentence would not be so reduced or eliminated, as the case may be, if the shareholder approval requirements of section 280G(b)(5) of the Code are capable of being satisfied, the Company shall use its reasonable best efforts to cause such payments to be submitted for such approval prior to the Change in Control giving rise to such payments.
SECTION 8.
AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN
8.1 In General. The Committee may at its discretion at any time and from time to time alter, amend, suspend, or terminate the Plan and any Options in whole or in part, including without limitation, amending the criteria for vesting and exercisability set forth in Section 6 hereof (or in any Option agreement), substituting alternative vesting and exercisability criteria and imposing certain blackout periods on Options, provided, however, that such alteration, amendment, suspension or termination shall preserve the before- and after-tax economic value, and vesting and exercisability, as determined by the Committee in its sole good faith discretion, of any previously granted Option.
8.2 Public Offering. Unless otherwise determined by the Committee, in the event of a Public Offering, the Committee shall have the authority to amend any outstanding Options to provide for (i) subject to Section 8.1 above, the substitution of any exercisability criteria based on the attainment of applicable performance goals (including relating to the BDT Investor Group’s return on its investment) with criteria based on stock price and (ii) the imposition of certain blackout periods, in each case, as the Committee shall determine to be appropriate; provided, however that such amendments shall preserve the economic value, and vesting and exercisability of the Options, as determined by the Committee in its sole good faith discretion. In exercising its authority pursuant to clause (i) of the immediately preceding sentence, the Committee shall consider the progress made towards achieving the exercisability criteria that may relate to the BDT Investor Group’s return on its investment as of the date the Committee exercises such authority.
SECTION 9.
MISCELLANEOUS PROVISIONS
9.1 Nontransferability of Awards. Unless the Committee shall permit (on such terms and conditions as it shall establish) an Option to be transferred to a Permitted Transferee, no Option granted under the Plan may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. All rights with respect to any Option granted to a Participant under the Plan shall be exercisable during his lifetime only by such Participant or, if permitted by the Committee, any such Permitted Transferee.
9.2 Beneficiary Designation. Each Participant under the Plan may from time to time name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid or by whom any right under the Plan is to be exercised in case of his death. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee and will be effective only when filed by the Participant in writing with the Committee during his lifetime. In the absence of any such designation, benefits remaining unpaid or Options outstanding at the Participant’s death shall be
paid to or exercisable by the Participant’s surviving spouse, if any, or otherwise to or by his estate.
9.3 No Guarantee of Employment or Participation; No Additional Compensation for Loss of Rights Under Plan. Nothing in the Plan shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate any Participant’s employment at any time, nor confer upon any Participant any right to continue in the employ of the Company or any Subsidiary. No Employee, Director or Other Service Provider shall have a right to be selected as a Participant, or, having been so selected, to receive any future Option grants. If any Participant’s employment with the Company or any Subsidiary shall be terminated for any reason, such Participant shall not be entitled to any compensation or other form of remuneration with respect to such termination (except as otherwise provided herein) to compensate such Participant for the loss of any rights under the Plan notwithstanding any provision to the contrary in his or her contract of employment.
9.4 Tax Withholding. The Company or any Subsidiary shall have the power to withhold, or require a Participant to remit to the Company or such Subsidiary promptly upon notification of the amount due, an amount (in cash or in shares of Common Stock otherwise deliverable to a Participant upon Option exercise, at the election of such Participant) sufficient to satisfy the statutory minimum federal, state, local and foreign withholding tax requirements with respect to any Option.
9.5 Indemnification. Each person who is or shall have been a member of the Board or the Committee (an “Indemnified Person”) shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by such Indemnified Person in connection with or resulting from any claim, action, suit or proceeding to which such Indemnified Person may be made a party or in which such Indemnified Person may be involved by reason of any action taken or failure to act under the Plan or any option agreement and against and from any and all amounts paid by such Indemnified Person in settlement thereof, with the Company’s approval, or paid by such Indemnified Person in satisfaction of any judgment in any such action, suit or proceeding against such Indemnified Person; provided that, such Indemnified Person acted in good faith and in a manner such Indemnified Person reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal proceeding had no reasonable cause to believe his or her conduct was unlawful; provided further that, such Indemnified Person shall give the Company an opportunity, at its own expense, to handle and defend the same before such Indemnified Person undertakes to handle and defend it on such Indemnified Person’s own behalf. Expenses, including attorneys’ fees, incurred by an Indemnified Person in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Company. The foregoing right of indemnification shall not be exclusive and shall be independent of any other rights of indemnification to which such Indemnified Person may be entitled under the Company’s Articles of Incorporation or By-laws, by contract, as a matter of law or otherwise.
9.6 No Limitation on Compensation. Nothing in the Plan shall be construed to limit the right of the Company to establish other plans or to pay compensation to its employees in cash or property.
9.7 Requirements of Law. The granting of Options, the exercisability of any Options and the issuance of shares of Common Stock shall be subject to all applicable laws, rules, and regulations and to such approvals by any governmental agencies or national securities exchanges as may be required.
9.8 Governing Law. The Plan, and all agreements hereunder, shall be governed by and construed in accordance with the law of the State of Delaware, regardless of the law that might be applied under principles of conflict of laws.
9.9 No Impact On Benefits. Options granted under the Plan are not compensation for purposes of calculating an Employee’s rights under any employee benefit plan.
9.10 Securities Law Compliance; Other Laws. (a) The obligation of the Company to offer, sell and deliver shares with respect to Options granted hereunder and the exercisability of Options shall be subject to all applicable laws, rules and regulations, including all applicable Federal and state securities laws, the availability of exemptions from the registration requirements of such Federal and state securities laws, and the obtaining of all approvals by governmental authorities as may be deemed necessary or appropriate by the Board. In no event shall the Company be obligated to register shares under Federal or state securities laws, to make any public filing to comply with the requirements of any exemption from registration requirements or to take any other action that may be required in order to permit, or to remove any prohibition or limitation on, the issuance of shares pursuant to the exercise of Options granted hereunder which may be imposed by any applicable law, rule or regulation. Without limiting the generality of the foregoing, no Option granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Committee, in its discretion, has determined that any such offer, if made, would be in compliance with all applicable requirements of state, foreign and Federal law, and the rules, rulings, regulations and other requirements of any applicable governmental body or securities exchange.
(b) Instruments evidencing the grant of Options may contain such other provisions, not inconsistent with the Plan, as the Committee deems advisable, including a requirement that a Participant represent to the Company in writing, when such Participant receives shares upon exercise of an Option (or at such other time as the Committee deems appropriate) that such Participant is acquiring such shares (unless they are then covered by an effective registration statement filed under the Act) for such Participant’s own account for investment only and with no present intention to transfer, sell or otherwise dispose of such shares except such disposition by a legal representative as shall be required by will or the laws of any jurisdiction in winding up the estate of such Participant. Such shares shall be transferable only if the proposed transfer shall be permissible pursuant to the Plan and if, in the opinion of counsel satisfactory to the Company, such transfer at such time will be in compliance with all applicable securities laws. Notwithstanding anything to the contrary in the Plan or any stock option
agreement, the Committee may revoke any Option if it is contrary to law or modify any Option to bring it into compliance with any valid and mandatory government laws or regulations.
9.11 Freedom of Action. Subject to Section 7, nothing in the Plan or any agreement entered into pursuant to this Plan shall be construed as limiting or preventing the Company or any Subsidiary from taking any action with respect to the operation or conduct of its business that it deems appropriate or in its best interest.
9.12 No Fiduciary Relationship. Nothing contained in the Plan and no action taken pursuant to the Plan shall create or be construed to create a trust of any kind or any fiduciary relationship between the Company or any Subsidiary and any Participant or executor, administrator or other personal representative or designated beneficiary of such Participant, or any other persons.
9.13 No Right to Particular Assets. Any reserves that may be established by the Company in connection with this Plan shall continue to be held as part of the general funds of the Company, and no individual or entity other than the Company shall have any interest in such funds until paid to a Participant.
9.14 Unsecured Creditor. To the extent that any Participant or his executor, administrator or other personal representative, as the case may be, acquires a right to receive any payment from the Company pursuant to this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company.
9.15 Severability of Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provision had not been included.
9.16 Term of Plan. This Plan shall be effective as of Effective Date and shall expire on the tenth anniversary of such date (except as to Options outstanding on that date), unless sooner terminated pursuant to Section 8.
9.17 Section 409A of the Code. This Plan and any Option agreement entered into pursuant to this Plan are intended to be exempt from or comply with the requirements of Section 409A of the Code and shall be construed and interpreted in accordance with such intent.
FIRST AMENDMENT TO
ALH HOLDING INC. 2015 STOCK OPTION PLAN
This First Amendment (“Amendment”) to the ALH Holding Inc. 2015 Stock Option Plan is entered into on behalf of the Compensation Committee of the Board of Directors of ALH Holding Inc. as of July 14, 2021 (the “Execution Date”).
PRELIMINARY STATEMENTS
1.ALH Holding Inc. (the “Company”) adopted the ALH Holding Inc. 2015 Stock Option Plan on August 31, 2015 (the “Plan”) to foster and promote the long-term financial success of the Company and materially increase stockholder value. Capitalized terms not defined in this Amendment shall have the meanings given them in the Plan.
2.Pursuant to Section 8.1 of the Plan, the Compensation Committee of the Board of Directors of the Company (the “Committee”) has the discretion to amend the terms of the Plan and any Options, in whole or in part.
3.The Committee desires to amend the terms of the Plan pursuant to this Amendment to add an additional 60,000 shares of Common Stock available for issuance as Options under the Plan.
TERMS
1.Effective Date. The Compensation Committee approved this Amendment to the Plan and the terms contained herein at a Committee meeting on February 4, 2021 (the “Effective Date”) and as reflected in the minutes of such meeting.
2.As of the Effective Date, Section 5.1 of the Plan shall be amended to add an additional 60,000 available shares of Common Stock for issuance as Options under the Plan, which shall bring the total shares of Common Stock available for issuance as Options under the Plan not to exceed a total of 142, 658.921 shares.
3.Except as specifically modified by this Amendment, all other terms and conditions of the Plan are hereby ratified and reaffirmed and shall remain in full force and effect.
The undersigned, executing on behalf of the Committee, hereto has executed this Amendment as of Execution Date to be effective as of the Effective Date.
| | | | | | | | |
| /s/ Rob Verigan | |
| Rob Verigan | |
ALH HOLDING INC.
2015 STOCK PURCHASE PLAN
SECTION 1.
PURPOSE
The purpose of this Plan (as such term and any other capitalized terms used herein without definition are defined in Section 2) is to foster and promote the long-term financial success of the Company and the Subsidiaries and materially increase stockholder value by encouraging and providing for the acquisition of an ownership interest in the Company (as defined below) by Employees, Directors and Other Service Providers.
SECTION 2.
DEFINITIONS
Whenever used herein, the following terms shall have the respective meanings set forth below:
BDT Investor Group: shall have the meaning ascribed to such term in the Stockholders Agreement.
Board: the Board of Directors of the Company.
Closing Date: as defined in the Merger Agreement.
Committee: the Compensation Committee of the Board or, if there shall not be any committee then serving, the Board.
Common Stock: the Common Stock of the Company, par value $.01 per share.
Company: ALH Holding Inc., a Delaware corporation and the surviving entity in the of the Merger, and any successor thereto.
Director: a member of the Board or a member of the board of directors of any Subsidiary of the Company.
Effective Date: August 31, 2015.
Employee: any officer or other key employee of the Company or any Subsidiary.
Fair Market Value: the value of a share of Common Stock, as of the date of determination, determined in good faith by the Board or the Committee and set forth in the Subscription Agreement.
Merger: the consummation of the transactions contemplated under the Merger Agreement, pursuant to which MergerCo will be merged with and into the Company.
Merger Agreement: that certain Agreement and Plan of Merger, dated as of August 5, 2015, by and among the Company, Rally Acquisition Corp., a Delaware corporation (“MergerCo”) and Ontario Teacher’s Pension Plan Board pursuant to which MergerCo will be merged with and into the Company, with the Company being the surviving entity of the Merger.
Option Plan: ALH Holding Inc. 2015 Stock Option Plan, as amended from time to time.
Other Service Provider: an independent contractor or consultant to the Company or any Subsidiary.
OTPP: Ontario Teachers’ Pension Plan Board, an entity without share capital organized under the laws of Ontario, Canada.
Participant: any Employee, Director or Other Service Provider (or a Person related to such Employee, Director or Other Service Provider) designated by the Committee to participate in the Plan.
Person: means an individual, corporation, partnership, limited liability company, joint venture, association, trust or other entity or organization, including, without limitation, a government or political subdivision or an agency or instrumentality thereof.
Plan: this 2015 ALH Holding Inc. Stock Purchase Plan, as set forth herein and as the same may be amended from time to time in accordance with its terms.
Public Offering: a public offering pursuant to an effective registration statement filed with the Securities and Exchange Commission that covers shares of Common Stock that, after the closing of such public offering, will be traded on the New York Stock Exchange, the American Stock Exchange or the National Association of Securities Dealers Automated Quotation System.
Purchase Date: the date on which a Participant and the Company execute a Subscription Agreement.
Registration Rights Agreement: the Registration Rights Agreement, dated as of August 31, 2015, among the Company, the BDT Investor Group and certain other stockholders of the Company, as it may be amended from time to time.
Stockholders Agreement: the Stockholders Agreement, dated as of August 31, 2015, among the Company, BDT Investor Group and certain other stockholders of the Company, as it may be amended from time to time.
Subscription Agreement: any written agreement to subscribe for Common Stock pursuant to the Plan between any Participant and the Company.
Subsidiary: any corporation or other entity a majority of whose outstanding voting securities is owned, directly or indirectly, by the Company.
SECTION 3.
ELIGIBILITY AND PARTICIPATION
Participants in the Plan shall be those Employees, Directors or Other Service Providers (or Persons related to such Employees, Directors or Other Service Providers) designated by the Committee. The selection of an Employee, Director or Other Service Provider as a Participant shall neither entitle such Person to, nor disqualify such Person from, participation in any other award or incentive plan of the Company or any Subsidiary.
SECTION 4.
ADMINISTRATION
The Committee shall be responsible for the administration of the Plan. The Committee shall have discretionary authority to prescribe, amend and rescind rules and regulations relating to the Plan, to provide for conditions deemed necessary or advisable to protect the interests of the Company, to interpret the Plan and to make all other determinations necessary or advisable for the administration and interpretation of the Plan and to carry out its provisions and purposes. Any determination, interpretation or other action made or taken (including any failure to make any determination or interpretation, or take any other action) by the Committee pursuant to the provisions of the Plan shall be final, binding and conclusive for all purposes and upon all persons and shall be given deference in any proceeding with respect thereto. The Committee may consult with legal counsel, who may be counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel.
SECTION 5.
STOCK SUBJECT TO PLAN
5.1 Number. The number of shares of Common Stock available for purchase under the Plan may not exceed 82,658.921 shares. Any shares of Common Stock purchased by a Participant under the Plan and then subsequently repurchased by the Company shall again be available for purchase under the Plan.
5.2 Adjustment. The aggregate number of shares of Common Stock available for purchase under the Plan under Section 5.1 shall be adjusted to reflect, as deemed equitable and appropriate by the Committee, (i) any stock dividend, stock split or reverse-split or share combination or division affecting the Common Stock, (ii) any recapitalization, reorganization or exchange of shares affecting the Common Stock, or (iii) any other similar event affecting the Common Stock.
SECTION 6.
PURCHASE OF COMMON STOCK
6.1 Purchase; Purchase Price. Participants shall have the opportunity to purchase shares of Common Stock at a purchase price equal to the Fair Market Value of such shares on the Purchase Date.
6.2 Payment / Other Agreements. The Committee shall establish procedures governing the purchase of the shares of Common Stock pursuant to the Plan. Unless otherwise determined by the Committee, Participants acquiring shares of Common Stock pursuant to the terms of the Plan shall be required to enter into the following agreements governing the acquisition of such shares: (i) a Subscription Agreement, (ii) the Stockholders Agreement and (iii) the Registration Rights Agreement. For the avoidance of doubt, such shares of Common Stock shall be subject to the terms of the Stockholders Agreement and the Registration Rights Agreement (including, without limitation, the right of the Company and the BDT Investor Group to repurchase such shares of Common Stock pursuant to the terms of the Stockholders Agreement).
SECTION 7.
AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN
The Committee may at its discretion at any time and from time to time alter, amend, suspend, or terminate the Plan in whole or in part. Unless earlier terminated pursuant to this Section 7, the Plan will terminate on August 31, 2025; provided that the termination shall have no effect on shares of Common Stock previously issued under the Plan.
SECTION 8.
AUTHORITY TO VARY TERMS OR ESTABLISH LOCAL JURISDICTION PLANS
The Committee may vary the terms of the Plan, or establish sub-plans under this Plan, to authorize the purchase of shares of Common Stock with different terms or features from those otherwise provided for in the Plan, if and to the extent the Committee determines necessary or appropriate to further the purposes of the Plan and to comply with applicable securities laws in a particular jurisdiction or provide terms appropriately suited for Participants in such jurisdiction in light of the tax laws of such jurisdiction while being as consistent as otherwise possible with the terms of the Plan; provided that this Section 8 shall not be deemed to authorize any increase in the number of Common Stock available for issuance under the Plan set forth in Section 5.1.
SECTION 9.
MISCELLANEOUS PROVISIONS
9.1 No Guarantee of Employment or Participation; No Additional Compensation for Loss of Rights Under Plan. Nothing in the Plan shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate any Participant’s employment, or other service relationship, at any time, nor confer upon any Participant any right to continue in the employ of, or to continue to provide services to, the Company or any Subsidiary. No Employee, Director or Other Service Provider shall have a right to be selected as a Participant, or, having been so selected, to receive any future awards or entitlements from the Company or any Subsidiary.
9.2 Indemnification. Each person who is or shall have been a member of the Board or the Committee (an “Indemnified Person”) shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by such Indemnified Person in connection with or resulting from any claim, action, suit or proceeding to which such Indemnified Person may be made a party or in which such Indemnified Person may be
involved by reason of any action taken or failure to act under the Plan or any option agreement and against and from any and all amounts paid by such Indemnified Person in settlement thereof, with the Company’s approval, or paid by such Indemnified Person in satisfaction of any judgment in any such action, suit or proceeding against such Indemnified Person; provided that, such Indemnified Person acted in good faith and in a manner such Indemnified Person reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal proceeding had no reasonable cause to believe his or her conduct was unlawful; provided further that, such Indemnified Person shall give the Company an opportunity, at its own expense, to handle and defend the same before such Indemnified Person undertakes to handle and defend it on such Indemnified Person’s own behalf. Expenses, including attorneys’ fees, incurred by an Indemnified Person in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Company. The foregoing right of indemnification shall not be exclusive and shall be independent of any other rights of indemnification to which such Indemnified Person may be entitled under the Company’s Articles of Incorporation or By-laws, by contract, as a matter of law or otherwise.
9.3 No Limitation on Compensation. Nothing in the Plan shall be construed to limit the right of the Company to establish other plans or to pay compensation to its employees or Directors in cash or property.
9.4 Governing Law. The Plan, and all agreements hereunder, shall be governed by and construed in accordance with the law of the State of Delaware, regardless of the law that might be applied under principles of conflict of laws.
9.5 Securities Law Compliance. Instruments evidencing the acquisition of Common Stock under the Plan may contain such provisions, not inconsistent with the Plan, as the Committee deems advisable to ensure compliance with all applicable securities laws, including a requirement that a Participant represent to the Company in writing that such Participant is acquiring such shares for such Participant’s own account for investment only and with no present intention to transfer, sell or otherwise dispose of such shares except such disposition by a legal representative as shall be required by will or the laws of any jurisdiction in winding up the estate of such Participant. Such shares shall be transferable only if the proposed transfer shall be permissible pursuant to the Plan and the Stockholders Agreement and if, in the opinion of counsel satisfactory to the Company, such transfer at such time will be in compliance with all applicable securities laws.
9.6 Freedom of Action. Nothing in the Plan or any agreement entered into pursuant to this Plan shall be construed as limiting or preventing the Company or any Subsidiary from taking any action with respect to the operation or conduct of its business that it deems appropriate or in its best interest.
9.7 No Fiduciary Relationship. Nothing contained in the Plan and no action taken pursuant to the Plan shall create or be construed to create a trust of any kind or any fiduciary relationship between the Company or any Subsidiary and any Participant or executor, administrator or other personal representative or designated beneficiary of such Participant, or any other persons.
9.8 Severability of Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provision had not been included.
9.9 Section 409A. This Plan and any Option agreement entered into pursuant to this Plan are intended to be exempt from or comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and shall be construed and interpreted in accordance with such intent.
FIRST AMENDMENT TO THE
ALH HOLDING INC. 2015 STOCK PURCHASE PLAN
This Amendment (“Amendment”) to the ALH Holding Inc. 2015 Stock Purchase Plan (the “Plan”) is effective as of June 1, 2016.
WHEREAS, ALH Holding Inc. (the “Company”) maintains the Plan; and
WHEREAS, under Section 7 of the Plan, the Plan may be amended by the Compensation Committee (the “Committee”) of the Company’s Board of Directors; and
WHEREAS, the Committee has (A) determined that it is in the best interest of the Company to increase the number of shares of common stock, par value $.01, of the Company (the “Common Stock”) reserved for issuance under Plan by transferring to the Plan some of the shares of Common Stock reserved for issuance under the ALH Holding, Inc. 2015 Stock Option Plan, and (B) adopted a resolution on June I, 2016, authorizing this Amendment, pursuant to which the number of shares reserved for issuance under the Plan will be increased.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Shares Reserved for Issuance. The first sentence of Section 5.1 of the Plan is hereby replaced with the following:
“The number of shares of Common Stock available for purchase
under the Plan may not exceed 92,058.921 shares.”
2. Other Provisions. Except as specifically amended hereby, all of the other terms and provisions of the Plan are hereby ratified and confirmed and shall continue to be in full force and effect in accordance with their respective terms on the date hereof. Capitalized terms used but not defined in this Amendment shall have the meanings assigned to them in the Plan.
3. Headings. The headings contained in this Amendment are for reference purposes only and shall not affect in any way the meaning or interpretation of this Amendment.
4. Choice of Law. This Amendment will be governed by and construed in accordance with the law of the State of Delaware, regardless of the law that might be applied under principles of conflict of laws.
******
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Company, has executed this amendment as of the date first written above.
| | | | | | | | |
| ALH HOLDING INC. |
| | |
| | |
| | |
| /s/ Jeffrey E. Thoms |
| Name: | Jeffrey E. Thoms |
| Title: | Treasurer and Secretary |
ALH Holding Inc.
NONQUALIFIED STOCK OPTION AGREEMENT
(Service and Performance Options)
NON-QUALIFIED STOCK OPTION AGREEMENT (the “Agreement”), dated as of [Date] between ALH Holding Inc., a Delaware corporation (the “Company”), and «Name» (the “Employee”), pursuant to the ALH Holding Inc. 2015 Stock Option Plan, as in effect and as amended from time to time (the “Plan”). Capitalized terms that are not defined herein shall have the meanings given to such terms in the Plan.
WHEREAS, the Committee approved the granting of options to purchase shares of its common stock, par value $.01 per share (the “Common Stock”), to certain key employees of the Company on February 4, 2021 (the “Grant Date”);
WHEREAS, the Company has adopted the Plan in order to effect such grants; and
WHEREAS, the Employee is a key employee as contemplated by the Plan, and the Committee determined that it is in the interest of the Company to grant these options to the Employee.
NOW, THEREFORE, in consideration of the premises and subject to the terms and conditions set forth herein and in the Plan, the parties hereto agree as follows:
1. Confirmation of Grant, Option Price.
(a) Confirmation of Grant. The Company hereby evidences and confirms the grant to the Employee, effective as of the Grant Date, of options to purchase from the Company [__________] shares of Common Stock, which shall become exercisable, if at all, as provided in Section 2(a) (the “Options”). Fifty-percent (50%) of the Options shall become exercisable, if at all, as provided in Section 2(a)(i) (the “Time-Based Options”), and fifty-percent (50%) of the Options shall become exercisable, if at all, as provided in Section 2(a)(ii) (the “Performance-Based Options”).
(b) Option Price. The Options shall have an option price of $1,177.26 per share (the “Option Price”), which is not less than the Fair Market Value per share of the Common Stock on the Grant Date.
(c) Options Subject to Plan and Stockholders Agreement. The Options granted pursuant to this Agreement are subject in all respects to the Plan and the Stockholders Agreement, all of the terms of which are made a part of and incorporated into this Agreement. By signing this Agreement, the Employee acknowledges that he has been provided a copy of the Plan and the Stockholders Agreement, and has had the opportunity to review such Plan and Stockholders Agreement.
(d) Character of Options. The Options granted hereunder are intended to be “nonqualified stock options” and are not intended to be “incentive stock options” within the meaning of section 422 of the Internal Revenue Code of 1986, as amended.
2. Vesting and Exercisability; Expiration, Etc.
(a) Vesting and Exercisability.
(i) Time-Based Options. Subject to the other terms and conditions of this Agreement, the Time-Based Options shall vest and become exercisable in five equal installments on each of the first five anniversaries of the Vesting Commencement Date, subject to the Employee’s continuous employment with the Company or a Subsidiary from the Grant Date to each applicable vesting date. For purposes of this Agreement, the “Vesting Commencement Date” shall be October 1, 2020.
(ii) Performance-Based Options. Subject to the other terms and conditions of this Agreement, the Performance-Based Options shall vest and become exercisable if (x) a Liquidity Event shall occur, (y) the Aggregate Share Value is equal to or greater than the Performance Vesting Value, and (z) BDT has received at least a 17.5% BDT IRR on its investment in the Company, with such vesting to occur upon the Liquidity Event.
(iii) Notwithstanding the foregoing (but subject to Section 4), any unvested portion of the Options shall become exercisable at the time and under the circumstances described in Section 5.
(b) Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below:
“Aggregate Share Value” means the aggregate amount of cash and the fair market value of Marketable Securities received by BDT in respect of the BDT Shares in connection with any Liquidity Event, which (to the extent applicable to the calculation therefor) shall be determined assuming that all Options issued under the Plan and outstanding and “in the money” at the date of the Liquidity Event (but excluding Options (including, without limitation, Options granted hereunder) which by their terms lapse and are canceled without payment therefor in conjunction with the occurrence of such Liquidity Event or are “out of the money”) are exercised for cash immediately prior to the Liquidity Event and that any “in the money” securities convertible or exchangeable into, and all such other warrants, options and other rights exercisable for, shares of Common Stock are so exchanged or converted immediately prior to the Liquidity Event. Aggregate Share Value shall also include any cash or the fair market value of Marketable Securities received by BDT in respect of the BDT Shares following the Grant Date and prior to such Liquidity Event, including, but not limited to, BDT’s receipt of cash or Marketable Securities in consideration for the sale of BDT Shares or receipt of any cash dividend with respect to BDT Shares by BDT following the Grant Date. Notwithstanding the foregoing, in the event of a Liquidity Event that does not constitute a Change in Control, the Aggregate Share Value shall be calculated by taking the aggregate amount of cash and the fair market value of Marketable Securities received by BDT with respect to each BDT Share in the
Liquidity Event and multiplying that amount by the number of BDT Shares owned by BDT immediately prior to the Liquidity Event. For the avoidance of doubt, (x) the purpose of the foregoing is to treat a Liquidity Event that does not constitute a Change in Control as a full exit by BDT for purposes of calculating the Aggregate Share Value and (y) any payment to BDT in respect of shares of preferred stock in the Company held by it shall not be taken into account in calculating the return to BDT for purposes of determining vesting of Performance-Based Options. Notwithstanding anything herein to the contrary, the portion of the Aggregate Share Value received in conjunction with the Liquidity Event shall in all events be determined by the Committee in good faith using an enterprise valuation multiple equal to the greater of (i) 12x the consolidated earnings before interest, taxes, depreciation and amortization of the Company for the preceding four fiscal quarters, or (ii) the enterprise valuation implied by such Liquidity Event.
“BDT Deemed Investment Amount” means the product of (x) $1,177.26 times (y) the aggregate number of BDT Shares owned by BDT as of the Vesting Commencement Date. The BDT Deemed Investment Amount shall be increased in the event that BDT makes any further investment in the equity securities of the Company following the Vesting Commencement Date in such manner as determined by the Committee to be necessary or appropriate to avoid enlarging or reducing the rights of the Company and of the Employee hereunder.
“BDT IRR” means the internal rate of return of BDT in respect of the BDT Shares determined as of the date of the Liquidity Event, measured in the aggregate from the Vesting Commencement Date through the date of the Liquidity Event and calculated with respect to the BDT Deemed Investment Amount. The BDT IRR shall be calculated as commonly and ordinarily computed and shall take into account the amount and timing of (i) all cash dividends and distributions to BDT in respect of the BDT Shares, (ii) all cash proceeds from the sale or other disposition of the BDT Shares, (iii) the fair market value, as determined in good faith by the Committee, of any Marketable Securities received by BDT in respect of the BDT Shares and (iv) if applicable, any increase in the BDT Deemed Investment Amount, in each case following the Vesting Commencement Date. Notwithstanding anything herein to the contrary, the BDT IRR shall in all events be determined by the Committee in good faith using an enterprise valuation multiple equal to the greater of (i) 12x the consolidated earnings before interest, taxes, depreciation and amortization of the Company for the preceding four fiscal quarters, or (ii) the enterprise valuation implied by such Liquidity Event.
“BDT Shares” means the number of shares of Common Stock of the Company beneficially owned by BDT, including shares of Common Stock subject to warrants to purchase such shares, as of the Vesting Commencement Date, together with all purchases or other acquisitions by BDT of Common Stock occurring after the Vesting Commencement Date.
“Performance Vesting Value” means the product of (i) 2 times (ii) the BDT Deemed Investment Amount.
(c) Normal Expiration Date. Unless the Options earlier terminate in accordance with Sections 2, 4 or 5, the Options shall terminate on the tenth anniversary of the
Vesting Commencement Date (the “Normal Expiration Date”). Once Options have become exercisable pursuant to this Section 2, such Options may be exercised, subject to the provisions hereof and the provisions of the Stockholder Agreement, at any time and from time to time until the Normal Expiration Date.
(d) Calculations. All calculations required or contemplated by this Section 2 shall be made in the sole determination of the Committee in good faith and shall be final and binding on the Company and the Employee.
3. Method of Exercise and Payment.
All or part of the exercisable Options may be exercised by the Employee upon (a) the Employee’s written notice to the Company of exercise, (b) the Employee’s payment of the Option Price in full at the time of exercise (i) in cash or cash equivalents, (ii) in unencumbered shares of Common Stock owned by the Employee or which are deliverable to the Employee upon the exercise of the Options and in each case having a Fair Market Value on the date of exercise equal to such Option Price, (iii) in a combination of cash and Common Stock or (iv) in accordance with such procedures or in such other form as the Committee shall from time to time determine and (c) if such Options are exercised prior to a Public Offering, the Employee’s execution of the Stockholders Agreement and the Registration Rights Agreement (if not otherwise already a party thereto) in order to become a party to such agreements with respect to the shares of Common Stock issuable upon the exercise of such Options. As soon as practicable after receipt of a written exercise notice and payment in full of the exercise price of any exercisable Options in accordance with this Section 4 and, if applicable, receipt of evidence of the Employee’s execution of the Stockholders Agreement and Registration Rights Agreement in accordance with this Section 3, but subject to Section 5 below, the Company shall deliver to the Employee the shares of Common Stock acquired upon the exercise thereof (in, at the option of the Company, certificated or book-entry form), registered in the name of the Employee, provided that, if the Company, in its sole discretion, shall determine that, under applicable securities laws, any certificates issued under this Section 3 must bear a legend restricting the transfer of such Common Stock, such certificates shall bear the appropriate legend.
4. Termination of Employment.
(a) Termination of Employment other than for Cause. Unless the Committee determines to provide longer post-termination exercise periods, (i) in the event that the Employee’s employment with the Company or any Subsidiary terminates for any reason other than a termination by reason of the Employee’s death, Disability or Retirement (each, a “Special Termination”) or a termination for Cause, any Options held by the Employee which are exercisable at the date of the Employee’s termination of employment shall be exercisable at any time up until the 60th day following the Employee’s termination of employment (or, in the event that the Employee dies after terminating his employment, but within the period during which the Options would otherwise be exercisable hereunder, the 120th day after the date of the Employee’s death) or the Normal Expiration Date of the Options, whichever period is shorter, and (ii) in the event that the Employee’s employment with the Company or any Subsidiary terminates by reason of a Special Termination, any Options held by the Employee that are
exercisable as of the date of such Special Termination may be exercised by the Employee or the Employee’s beneficiary as designated in accordance with Section 8, or if no such beneficiary is named, by the Employee’s estate, at any time prior to one (1) year following the Employee’s termination of employment or the Normal Expiration Date of the Options, whichever period is shorter. Unless otherwise determined by the Committee, any Options held by the Employee which are not then exercisable at the time of the Employee’s termination of employment shall terminate and be canceled immediately upon such termination of employment.
(b) Termination for Cause. Unless otherwise determined by the Committee, in the event that the Employee’s employment with the Company or any Subsidiary is terminated for Cause, all Options held by the Employee, whether or not then exercisable, shall terminate and be canceled immediately upon such termination of employment.
(c) Committee Discretion. Notwithstanding anything else contained herein to the contrary, the Committee may at any time extend the post-termination exercise period of all or any portion of the Options up to and including, but not beyond, the Normal Expiration Date of such Options.
5. Change in Control.
(a) Accelerated Vesting and Payment. Unless the Committee shall otherwise determine in the manner set forth in Section 5(b), in the event of a Change in Control, each outstanding Time-Based Option (regardless of whether such Option is at such time otherwise exercisable) and each outstanding Performance-Based Option that is exercisable or would become exercisable upon the occurrence of such Change in Control shall be canceled in exchange for a payment in cash of an amount equal to the excess, if any, of the Change in Control Price over the Option Price.
(b) Alternative Options. Notwithstanding Section 5(a), no cancellation, cash settlement or other payment shall occur with respect to any Option in connection with a Change in Control if the Committee reasonably determines in good faith, prior to the occurrence of such Change in Control, that such Option shall be honored or assumed, or new rights substituted therefor (such honored, assumed or substituted Option being hereinafter referred to as an “Alternative Option”) by the new employer, provided that any such Alternative Option must:
(i) provide that such Options are fully vested and exercisable;
(ii) provide the Employee that held such Option with other rights and entitlements substantially equivalent to or better than the rights, terms and conditions applicable under such Option; and
(iii) have substantially equivalent economic value to such Option (determined at the time of the Change in Control).
(c) Limitation on Benefits. Notwithstanding anything contained in the Plan to the contrary, the acceleration of vesting of the Option or the settlement thereof shall not be limited by the application of Section 280G of the Code.
6. Tax Withholding.
Whenever Common Stock is to be issued pursuant to the exercise of an Option or any cash payment is to be made hereunder, the Company or any Subsidiary shall have the power to withhold, or require the Employee to remit to the Company or such Subsidiary, an amount (in cash or in shares of Common Stock otherwise deliverable to the Employee upon Option exercise, at the election of the Employee) sufficient to satisfy the statutory minimum federal, state, and local withholding tax requirements relating to such transaction.
7. Nontransferability of Awards.
No Options granted hereby may be sold, transferred, pledged, assigned, encumbered or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or, on such terms and conditions as the Committee shall establish, to a Permitted Transferee. All rights with respect to Options granted to the Employee hereunder shall be exercisable during his lifetime only by such Employee or, if permitted by the Committee, a Permitted Transferee. Following the Employee’s death, all rights with respect to Options that were exercisable at the time of the Employee’s death and have not terminated shall be exercised by his designated beneficiary, his estate or, if permitted by the Committee, a Permitted Transferee.
8. Beneficiary Designation.
The Employee may from time to time name any beneficiary or beneficiaries (who may be named contingently or successively) by whom any right under the Plan and this Agreement is to be exercised in case of his death. Each designation will revoke all prior designations by the Employee, shall be in a form reasonably prescribed by the Committee, and will be effective only when filed by the Employee in writing with the Committee during his lifetime. If no beneficiary is named, or if a named beneficiary does not survive the Employee, Section 9.2 of the Plan shall determine who may exercise the Employee’s rights under the Plan.
9. Adjustment in Capitalization.
The aggregate number of shares of Common Stock subject to outstanding Option grants, the respective Option exercise prices and/or vesting criteria applicable to outstanding Options, shall be proportionately adjusted to reflect, as deemed equitable and appropriate by the Committee any Adjustment Event. All determinations and calculations required under this Section 9 shall be made in the sole discretion of the Committee.
10. Requirements of Law.
The issuance of shares of Common Stock pursuant to the Options shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. No shares of Common Stock shall be issued upon exercise of any Options granted hereunder, if such exercise would result in a violation of applicable law, including the U.S. federal securities laws and any applicable state or foreign securities laws.
11. No Guarantee of Employment.
Nothing in this Agreement shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate the Employee’s employment at any time, or confer upon the Employee any right to continue in the employ of the Company or any Subsidiary.
12. No Rights as Stockholder.
Except as otherwise required by law, the Employee shall not have any rights as a stockholder with respect to any shares of Common Stock covered by the Options granted hereby until such time as the shares of Common Stock issuable upon exercise of such Options have been so issued. Notwithstanding anything else contained herein to the contrary, the exercise of any portion of the Options conveyed hereby is expressly conditioned upon the Employee becoming a party (if not already a party) to the Stockholders Agreement and the Registration Rights Agreement with respect to any shares of Common Stock to be acquired upon such exercise, and the Employee hereby acknowledges that the Employee and such shares will be subject to the terms of the Stockholders Agreement and the Registration Rights Agreement (including, without limitation, the right of the Company and the BDT Investor Group to repurchase such shares of Common Stock pursuant to the terms of the Stockholders Agreement).
13. Restrictions on Sale Upon Public Offering.
Except as otherwise provided in the Registration Rights Agreement, the Employee agrees that, in the event that the Company files a registration statement under the Act with respect to a public offering of any shares of its capital stock, the Employee will not effect any sale or distribution of any shares of the Common Stock including, but not limited to, pursuant to Rule 144 under the Act, within seven days prior to and 180 days (or such shorter period as the managing underwriter for any underwritten offering may agree) after the effective date of the registration statement relating to such registration (the “Trigger Date”), except as part of such registration or unless, in the case of a sale or distribution not involving a public offering, the transferee agrees in writing to be subject to this Section 13; provided that, with respect to any shelf registration statement on Form S-3, the Trigger Date shall be the pricing of any offering made under such registration statement and the Employee agrees to execute a customary holdback agreement with the underwriters for any such public offering.
14. Restrictive Covenants; Clawback.
(a) The Employee acknowledges that, in the course of the Employee’s employment with the Company and its Subsidiaries, the Employee has and shall become familiar with the Company's and its Subsidiaries’ trade secrets and with other confidential information concerning the Company and its Subsidiaries. Therefore, while the Employee is employed with the Company and its Subsidiaries and for two (2) years thereafter, the Employee shall not directly or indirectly own any interest in, manage, control, participate in, consult with, render services for, or in any manner engage in any business competing with the businesses of the Company or its Subsidiaries, as such businesses are conducted during the course of the Employee’s employment or upon the Employee’s termination, or any expansion of such businesses as contemplated by the business plans of the Company or any of its Subsidiaries as of such dates, within any geographical area in which the Company or its Subsidiaries engage or plan to engage in such businesses. Nothing herein shall prohibit the Employee from being a passive owner of not more than 2% of the outstanding stock of any class of a corporation which is publicly traded, so long as the Employee has no active participation in the business of such corporation.
(b) Without limiting the generality of the remedies available to the Company or any Subsidiary under any provision to which the Employee and the Company or any Subsidiary are or become parties relating to preservation of confidential information, noncompetition, nonsolicitation or other, similar restrictive covenants, including those set forth above (collectively, the “Restrictive Covenants”), if the Employee materially breaches any Restrictive Covenant, the Employee shall, at the election of the Company: (i) forfeit any then-outstanding Options (whether vested or unvested); (ii) sell any shares of Common Stock acquired on exercise of the Options and then owned by the Employee to the Company at a price per share equal to the lower of the Option Price or their then Fair Market Value; and/or (iii) pay to the Company in cash any net after-tax gain the Employee realized in connection with the exercise of the Options (and/or sale of Common Stock underlying the Options). These rights of forfeiture and recoupment are in addition to any other remedies the Company may have against the Employee for the Employee’s breach of the Restrictive Covenants. The Employee’s obligations under this Section 14 shall be cumulative (but not duplicative, nor operate to extend the length of any such obligations) of any similar obligations the Employee has under any other agreement with the Company or any Subsidiary.
15. Interpretation; Construction.
Any determination, interpretation or action made or taken (including any failure to make any determination or interpretation, or take any other action) by the Committee under or pursuant to this Agreement shall be final and conclusive on all persons affected hereby. Except as otherwise expressly provided in the Plan, in the event of a conflict between any term of this Agreement and the terms of the Plan, the terms of the Plan shall control.
16. Amendments.
(a) In General. The Committee may, at its sole discretion, at any time and from time to time alter or amend this Agreement and the terms and conditions of any Options in whole or in part, including without limitation, amending the criteria for vesting and exercisability set forth in Section 2 hereof, substituting alternative vesting and exercisability criteria and imposing certain blackout periods on Options, provided, however, that such alteration, amendment, suspension or termination shall preserve the before- and after-tax economic value, and vesting and exercisability, as determined by the Committee in its sole good faith discretion, of any previously granted Option. The Company shall give written notice to the Employee of any such alteration or amendment of this Agreement as promptly as practicable after the adoption thereof. This Agreement may also be amended by a writing signed by both the Company and the Employee.
(b) Public Offering. Unless otherwise determined by the Committee, in the event of a Public Offering, the Committee shall amend this Agreement to provide for (i) subject to Section 16(a) above, the substitution of the exercisability criteria set forth in Section 2(b) with criteria based on stock price and (ii) the imposition of certain blackout periods, in each case, as the Committee shall determine to be appropriate; provided, however that such amendments shall preserve the economic value, and vesting and exercisability, as determined by the Committee in its sole good faith discretion.
17. Miscellaneous.
(a) Notices. All notices, requests, demands, letters, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered personally, (ii) mailed, certified or registered mail with postage prepaid, (iii) sent by next-day or overnight mail or delivery, or (iv) sent by fax, as follows:
(i) If to the Company, to it:
Alliance Laundry Systems LLC
Shepard Street, P.O. Box 990
Ripon, Wisconsin 54971-0990
Attention: General Counsel
Fax: (920) 748-4334
with a copy to:
BDT Capital Partners, LLC
401 North Michigan Avenue, Suite 3100
Chicago, Illinois 60611
Attention: General Counsel
Fax: (312) 832-1701
(ii) If to the Employee, to the Employee’s last known home address, or to such other person or address as any party shall specify by notice in writing to the Company. All such notices, requests, demands, letters, waivers and other communications shall be deemed to have been received (w) if by personal delivery on the day after such delivery, (x) if by certified or registered mail, on the fifth business day after the mailing thereof, (y) if by next-day or overnight mail or delivery, on the day delivered, or (z) if by fax, on the day delivered, provided that such delivery is confirmed.
(b) Binding Effect; Benefits. This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.
(c) Waiver. Either party hereto may by written notice to the other (i) extend the time for the performance of any of the obligations or other actions of the other under this Agreement, (ii) waive compliance with any of the conditions or covenants of the other contained in this Agreement and (iii) waive or modify performance of any of the obligations of the other under this Agreement. Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of either party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained herein. The waiver by either party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by either party to exercise any right or privilege hereunder shall be deemed a waiver of such party’s rights or privileges hereunder or shall be deemed a waiver of such party’s rights to exercise the same at any subsequent time or times hereunder.
(d) Applicable Law. This Agreement shall be governed by and construed in accordance with the law of the State of Delaware, regardless of the law that might be applied under principles of conflict of laws.
(e) Section and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
(f) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.
18. Certain Definitions.
(a) BDT. “BDT” shall mean the BDT Investor Group, as defined in the Plan.
(b) Direct Listing. “Direct Listing” shall mean the direct listing of equity securities of the Company or any Subsidiary on a national securities exchange.
(c) Employment. References to “employment” used in this Agreement shall have the meaning ascribed to such term in Section 6.11 of the Plan.
(d) Liquidity Event. “Liquidity Event” shall mean any of a Change in Control, Public Offering, SPAC Transaction or Direct Listing.
(e) SPAC Transaction. “SPAC Transaction” shall mean the consummation of a merger of the Company or any Subsidiary with, or the acquisition of the Company or any Subsidiary (or of Company or Subsidiary securities) by, a publicly-traded special purpose acquisition company (the “SPAC”) following which the securities of the SPAC are listed on a national securities exchange (“SPAC Transaction”).
[Signature Page Follows]
IN WITNESS WHEREOF, the Company and the Employee have duly executed this Agreement as of the date first above written.
ALH HOLDING INC.
By: ______________________________
Name: Mike Schoeb
Title: CEO
[Signature Page to Non-Qualified Stock Option Agreement]
EMPLOYEE
______________________________
«Name»
[Signature Page to Non-Qualified Stock Option Agreement]
Exhibit 10.23
Execution Version
ALLIANCE LAUNDRY SYSTEMS LLC
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT (“Agreement”) is made as of November 39, 2015 by and between Alliance Laundry Systems LLC, a Delaware limited liability company (the “Company”), and Michael D. Schoeb (“Executive”). Any capitalized terms used herein and otherwise not defined shall have the meanings assigned to them in Section 10 hereof,
WHEREAS, Executive and the Company previously entered into an Employment Agreement as of January 17, 2012 (the “Prior Agreement”) pursuant to which Executive and the Company agreed that Executive would serve as Chief Executive Officer and President of the Company subject to the terms and conditions set forth therein; and
WHEREAS, Executive and the Company intend hereby to amend the Prior Agreement to clarify certain of the rights and obligations of the parties relating to the relocation of Executive to the Company’s headquarters and certain ancillary tax matters, and to amend and restate the Prior Agreement as provided herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Employment, The Company shall employ Executive, and Executive hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement for the period beginning on the date hereof and ending as provided in Section 4 hereof (the “Employment Period”).
2. Position and Duties.
a. During the Employment Period, Executive shall serve as the Chief Executive Officer and President of the Company and shall have the normal duties, responsibilities and authority of a Chief Executive Officer and President, subject to the overall discretion and authority of the Board.
b. Executive shall report to the Board, and Executive shall devote his best efforts and his full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and civic affairs of the Company and its Subsidiaries. Executive shall perform his duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner.
3. Base Salary and Benefits.
a. During the Employment Period, Executive shall receive an initial base salary of $662,435 per annum, or such other higher rate as the Board may designate from time to time (the “Base Salary”), which shall be payable in regular installments in accordance with the Company’s general payroll practices and shall be subject to customary withholding. In addition, during the Employment Period, Executive shall be eligible to participate in all of the Company’s
employee benefit programs for which senior executive employees of the Company and its Subsidiaries are generally eligible, and Executive shall be entitled to five (5) weeks of paid vacation each year, In the event that all Company salaried personnel compensation is reduced, Executive’s base salary will also be subject to a reduction in the same manner as other Company salaried personnel; otherwise Executive’s base salary shall not be reduced during the Employment Period.
b. The Company shall reimburse Executive for all reasonable expenses incurred by him in the course of performing his duties under this Agreement which are consistent with the Company’s policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to the Company’s requirements with respect to reporting and documentation of such expenses.
c. In addition to the Base Salary, Executive shall have the opportunity to earn an annual bonus (the “Annual Bonus”) for each fiscal year during the Employment Period. With respect to each fiscal year, Executive’s target Annual Bonus shall equal 100% of his Base Salary as in effect on April 1 of the fiscal year for which the Annual Bonus is earned. The Annual Bonus amount payable with respect to a fiscal year shall be determined by the Compensation Committee of the Board (the “Committee”) in its sole discretion, and shall be based on the Committee’s determination of the level of attainment by the Company and Executive of applicable performance goals with respect to the applicable fiscal year. Performance goals with respect to a fiscal year shall be established by the Committee following reasonable consultation with Executive. Any Annual Bonus to be paid to Executive shall be paid at such time as the Company generally pays such bonuses to its senior executives and in no event later than March 15th following the calendar year in which the fiscal year shall end.
d. The Company shall provide the use of the Company’s private plane for personal use by the Executive for up to twenty-five (25) flight hours per year, the timing and use of such flight hours to be determined in good faith between the Board and the Executive.
4. Term:
a. The Employment Period shall last for a period of five (5) years from the date of this Agreement and shall automatically be renewed and extended on the same terms and conditions set forth herein for additional two-year periods thereafter, unless the Company or Executive gives the other party written notice of election not to renew the Employment Period at least 60 days prior to any such renewal date. Notwithstanding the preceding sentence, (i) the Employment Period shall terminate prior to such date upon Executive’s resignation with or without Good Reason, death or permanent disability or permanent incapacity (as determined by the Board in its good faith judgment) and (ii) the Employment Period may be terminated by the Company at any time prior to such date for Cause (as defined below) or without Cause. The Executive may terminate his employment hereunder for Good Reason by (A) providing notice to the Company specifying in reasonable detail the condition giving rise to the Good Reason no later than the thirtieth (30th) day following the date that the Executive knew or should have known (after reasonable inquiry) of the occurrence of that condition; (B) providing the Company a period of ninety (90) days to cure (if curable) the condition so specified in the notice and (C) terminating his employment for Good Reason within thirty (30) days following earlier of (x) the
expiration of the period to cure if the Company fails to cure the condition and (y) the date that the Company informs Executive that it will not cure the condition and that it is waiving it’s right to a period of ninety (90) days to cure such condition.
b. If the Employment Period is terminated by the Executive for Good Reason, the Company without Cause, and as a result of which Executive is no longer employed by the Company, Executive shall be entitled to receive (i) an aggregate amount equal to two (2) times the sum of (A) his Base Salary in effect immediately prior to his termination and (B) an amount equal to the amount of Executive’s Annual Bonus for the fiscal year immediately preceding the fiscal year during which the Employment Period is terminated, in each case payable in equal regular installments over a period of 24 months starting on the first payroll date after the 45th day following the date of the termination of the Employment Period, subject to the release requirement set forth below in this paragraph 4(b), in accordance with the Company’s general payroll practices and subject to customary withholding, (ii) his Annual Bonus that he would have earned, had the Employment Period not terminated, for the fiscal year in which Executive is terminated, pro rated according to the number of days which passed in such fiscal year prior to Executive’s termination under this paragraph 4(b), payable in the customary manner of the Company, and (iii) Company-paid continuation of Executive’s (and the spouse and unemancipated children of Executive) medical, dental and health benefits for such 24 month period, as such benefits are in effect from time to time and subject to the same deductibles, co-payment arrangements, active employee monthly contributions and similar limitations as in effect for senior executive employees of the Company generally. Notwithstanding any other provision of this Agreement, no severance pay shall become payable under this paragraph 4(b) unless and until the Executive executes a general release in form and substance satisfactory to the Company within thirty (30) days following the date of the termination of the Employment Period and such release has become irrevocable, in which case the first installment of the severance pay paid on the first payroll date after the 45th day following the date of termination of the Employment Period shall include any installments that would have been paid had the installments started on the first day following the date of the termination of the Employment Period. Notwithstanding anything in this Agreement to the contrary, the Company shall have no obligation to pay any amounts payable under this paragraph 4(b) during such times as Executive is in breach of Sections 5, 6 or 7 hereof.
c. If the Employment Period is terminated by the Company for Cause, is terminated due to the death, permanent disability or permanent incapacity of Executive, is voluntarily terminated by the Executive (other than for Good Reason) or Executive elects not to renew the Employment Period pursuant to the terms of paragraph 4(a) above, and as a result Executive is no longer employed by the Company, Executive (or his legal heirs in the case of death) shall be entitled to receive his Base Salary through the date of termination, such Base Salary being payable in the same manner as if Executive had not been terminated. Executive’s right to fringe benefits and bonuses hereunder (if any) shall cease upon such termination for Cause, resignation or election of non-renewal by Executive.
d. In the event of a termination of Executive’s employment for any reason, Executive shall not be required to seek other employment; in addition, subject to the last sentence of paragraph 4(b), no amount payable under Section 4 of this Agreement shall be
reduced by any compensation earned by Executive as a result of employment by another employer after such termination of employment with the Company.
5. Confidential Information. Executive acknowledges that the information, observations and data obtained by him while employed by the Company and its Subsidiaries concerning the business or affairs of the Company, or its predecessor, or any other Subsidiary (“Confidential Information”) are the property of the Company or such Subsidiary. Therefore, Executive agrees that he shall not disclose to any unauthorized person or use for his own purposes any Confidential Information without the prior written consent of the Board, unless and to the extent that the aforementioned matters become generally known to and available for use by the public other than as a result of Executive’s acts or omissions. Executive shall deliver to the Company at the termination of the Employment Period, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes, print outs and software and other documents and data (and copies thereof) relating to the Confidential Information, Work Product (as defined below) or the business of the Company or any Subsidiary which he may then possess or have under his control.
6. Inventions and Patents. Executive acknowledges that all inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (whether or not patentable) which relate to the Company’s or any of its Subsidiaries’ actual or anticipated business, research and development or existing or future products or services and which are conceived, developed or made by Executive while employed by the Company or its predecessor and its Subsidiaries (“Work Product”) belong to the Company or such Subsidiary. Executive shall promptly disclose such Work Product to the Board and perform all actions reasonably requested by the Board (whether during or after the Employment Period) to establish and confirm such ownership (including, without limitation, assignments, consents, powers of attorney and other instruments).
7. Non-Compete, Non-Solicitation, Mutual Non-Disparagement.
a. In further consideration of the compensation to be paid to Executive under Sections 3 and 4 hereunder, Executive acknowledges that in the course of his employment with the Company he has and shall become familiar, with the Company’s trade secrets and with other Confidential Information concerning the Company and its predecessors and its Subsidiaries and that his services have been and shall be of special, unique and extraordinary value to the Company and its Subsidiaries. Therefore, Executive agrees that, during the Employment Period and for two (2) years thereafter (the “Noncompete Period”), he shall not directly or indirectly own any interest in, manage, control, participate in, consult with, render services for, or in any manner engage in any business competing with the businesses of the Company or its Subsidiaries, as such businesses exist or are in process on the date of the termination of Executive’s employment, within any geographical area in which the Company or its Subsidiaries engage or plan to engage in such businesses. Nothing herein shall prohibit Executive from being a passive owner of not more than 2% of the outstanding stock of any class of a corporation which is publicly traded, so long as Executive has no active participation in the business of such corporation.
b. During the Noncompete Period, Executive shall not directly or indirectly through another entity (i) induce or attempt to induce any employee, agent or independent contractor of the Company or any Subsidiary (collectively, “Restricted Person”) to leave the employ or service of the Company or such Subsidiary, or in any way interfere with the relationship between the Company or any Subsidiary and such Restricted Person, (ii) hire any person who was Restricted Person at any time during the Employment Period or (iii) induce or attempt to induce any customer, supplier, licensee, licensor, franchisee or other business relation of the Company or any Subsidiary to cease doing business with the Company or such Subsidiary, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and the Company or any Subsidiary (including, without limitation, making any negative statements or communications about the Company or its Subsidiaries). Notwithstanding the foregoing, subsections (b)(i) and (b)(ii) shall not apply to (1) the solicitation of Restricted Persons pursuant to a blanket solicitation not specifically targeted at any Restricted Person, or (2) to the Executive serving, with the prior written consent of the Board, as a reference at the request of a Restricted Person; and provided further that subsections (b)(i) and (b)(ii) shall not apply to the solicitation or attempted solicitation by the Executive of a non-natural independent contractor that provides business, office, or similar services to multiple service providers (e.g., Ernst & Young, FedEx, Staples, etc.) so long as the Executive does not encourage or cause such independent contractor to terminate or diminish its business relationship with the Company.
c. The Executive shall not, at any time during or following the Employment Period, make statements or representations, or otherwise communicate, directly or, if undertaken at the direction of the Executive, indirectly, in writing, orally, or otherwise, or take any action which, directly or indirectly, disparages the Company, its Affiliates, or their respective officers, shareholders, directors, employees, advisors, businesses or reputations. Notwithstanding the foregoing, nothing in this Agreement shall preclude the Executive from making truthful statements that are required by applicable law, regulation or legal process.
d. The Company agrees that, during and following the Employment Period, it shall use reasonable best efforts to cause its directors and executive officers (and directors and executive officers of its Affiliates, for so long as such entities are Affiliates), on behalf of the Company or any of its Affiliates, to refrain from making statements or representations, or otherwise communicating (including by way of a press release issued by the Company or its Affiliates), directly or, if undertaken at the direction of any such persons, indirectly, in writing, orally, or otherwise, or taking any action which, directly or indirectly, disparages the Executive. Notwithstanding the foregoing, nothing in this Agreement shall preclude any directors or executive officers of the Company or any of its Affiliates from making truthful statements that are required by applicable law, regulation or legal process.
e. Notwithstanding anything in this Agreement to the contrary, the Executive’s obligations under Section 7(a) shall be suspended if the Company’s obligations under paragraph 4(b) are past due by ten (10) business days; provided, however, that if the Company pays any delinquent obligations owed under paragraph 4(b), the Executive shall once again be subject to this Section 7 as if his obligations hereunder had never been suspended.
8. Enforcement. If, at the time of enforcement of Sections 5, 6 or 7 of this Agreement, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope of geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area. Because Executive’s services are unique and because Executive has access to Confidential Information and Work Product, the parties hereto agree that money damages would not be an adequate remedy for any breach of this Agreement. Therefore, in the event a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of the provisions hereof (without posting a bond or other security). In addition, in the event of an alleged breach or violation by Executive of Section 7, the Noncompete Period shall be tolled until such breach or violation has duly been cured. Executive agrees that the restrictions contained in Section 7 are reasonable, but are subject to the severability provisions in this Section 8 and in Section 13 hereof.
9. Representations. Executive hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms. Executive hereby acknowledges and represents that he has consulted with independent legal counsel regarding his rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein.
10. Definitions:
“Affiliate” means any person or entity directly or indirectly controlling, controlled by or under common control with the Company, where control may be by management authority, equity interest, contract, or debt or other financing.
“Board” shall mean the Company’s board of directors.
“Cause” shall mean (i) the commission of a felony or the commission of any act or omission involving moral turpitude, dishonesty, disloyalty or fraud, (ii) conduct tending to bring the Company or any of its Subsidiaries into public disgrace or disrepute, (iii) gross negligence or willful misconduct with respect to the Company or any of its Subsidiaries, (iv) failure to accept and cooperate with actions and initiatives assigned to the Executive by the Board, (v) any breach of this Agreement or equity award agreement between Executive and the Company or (vi) Executive or any member of his family shall engage in any Restricted Activity, without the prior written approval of the Board.
“Good Reason” shall mean, if occurring without the Executive’s express written consent:
a. a material diminution in the Executive’s position, duties, responsibilities, or reporting requirements from those held and/or assigned to the Executive as of the date of this Agreement, or the assignment of duties materially inconsistent with the Executive’s position or status with the Company;
b. a material reduction in Base Salary (except as contemplated under Section 3 hereunder) or the target Annual Bonus as set forth in Section 3 hereof;
c. a relocation of Executive’s principal work location by more than 50 miles (it being understood, for the avoidance of doubt, that business-related travel shall not constitute a relocation); or
d. a material breach by the Company of its obligations under this Agreement or any equity award agreement with the Executive.
Provided, that any determination of Good Reason shall be made pursuant to the provisions of Section 4(a).
“Person” means an individual or a corporation, partnership, limited liability company, trust, unincorporated organization, association or other entity.
“Restricted Activity” shall mean directly or indirectly owning any interest in, managing, controlling, participating in, consulting with, rendering services for, or in any manner engaging in any business with any customer, supplier, competitor or other person having a business relation with the Company or any of its Subsidiaries; provided however that the term “Restricted Activity” shall not include passive ownership of not more than 2% of the outstanding stock of any class of a corporation which is publicly traded, so long as Executive has no active participation in the business of that corporation.
“Subsidiaries” shall mean the entity of which the securities having a majority of the voting power in electing directors are, at the time of determination, owned by the Company, directly or through one or more Subsidiaries.
11. Survival. Sections 3 through 20 shall survive and continue in full in accordance with their terms notwithstanding any termination of the Employment Period.
12. Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:
Notices to Executive:
Michael D. Schoeb
c/o the most recent address
on file at the Company
Notices to the Company:
Alliance Laundry Systems LLC
Shepard Street, P.O. Box 990
Ripon, Wisconsin 54971-0990
Fax: (920) 748-4334
Attn: Secretary
With a copy to:
BDT Capital Partners, LLC
401 North Michigan Avenue, Suite 3100
Chicago, Illinois 60611
Attention: General Counsel
Facsimile: (312) 832-1707
or such other addresses or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered or mailed.
13. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.
14. Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. Any rights of Executive hereunder shall be in addition to any rights Executive may otherwise have under benefit plans or agreements of the Company to which he is a party or in which he is a participant, including, but not limited to, any Company sponsored employee benefit plans. Provisions of this Agreement shall not in any way abrogate Executive’s rights under such other plans and agreements.
15. No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.
16. Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.
17. Successors and Assigns. This Agreement is intended to bind and insure to the benefit of and be enforceable by Executive, the Company and their respective heirs, successors
and assigns, except that Executive may not assign his rights or delegate his obligations hereunder without the prior written consent of the Company.
18. Choice of Law/Disputes/Resolution.
a. All issues and questions concerning the construction, validity; enforcement and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of Wisconsin, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Wisconsin or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Wisconsin. Resolution of any and all disputes arising from or in connection with this Agreement, whether based on contract, tort, or otherwise (collectively, "Disputes”), shall be exclusively governed by and settled in accordance with the provisions of this Section, except for suits for injunctive relief pursuant to Section 8 hereof, which may be prosecuted and defended as set forth therein.
b. The parties hereto shall use all reasonable efforts to settle all Disputes without resorting to arbitration. If any Dispute remains unsettled, a party hereto may commence proceedings hereunder by delivering a written notice from one to the other such party (the “Demand”) providing reasonable description of the Dispute to the others and expressly requesting arbitration hereunder, which arbitration shall be final, conclusive and binding upon the parties, their successors and assigns.
c. The arbitration shall be conducted in Chicago, Illinois by three arbitrators acting by majority vote (the “Panel”) appointed pursuant to the commercial arbitration rules of the American Arbitration Association, as amended from time to time (the “AAA Rules”). If an arbitrator so selected becomes unable to serve, his or her successors shall be similarly selected or appointed. The arbitration shall be conducted pursuant to the AAA Rules. Notwithstanding the foregoing: (i) each party shall provide to the other, of all documents which a party intends to present in such hearing; and (ii) each party shall be allowed to conduct reasonable discovery through written requests for information, document requests, requests for stipulation of fact and depositions, the nature and extent of which discovery shall be determined by the parties; provided that if the parties cannot agree on the terms of such discovery, the nature and extent thereof shall be determined by the Panel which shall take into account the needs of the parties and the desirability of making discovery expeditious and cost effective. The award shall be in writing and shall specify the factual and legal basis for the award. The parties hereto agree that monetary damages may be inadequate and that any party by whom this Agreement is enforceable shall be entitled to seek specific performance of the arbitrators’ decision from a court of competent jurisdiction, in addition to any other appropriate relief or remedy; provided that no claimed or actual breach of any provision of this Agreement that survives the execution hereof shall be cause for rescission of this Agreement, the only remedies shall be claims for damages that were approximately caused by the breach, or specific performance. Any arbitration award shall be binding and enforceable against the parties hereto and judgment may be entered thereon in any court of competent jurisdiction.
19. Expenses. Each party will pay their own costs and expenses (including court costs, fees of arbitration proceedings, and reasonable attorneys’ fees) incurred as a result of any
claim, action or proceeding arising out of, or challenging the validity or enforceability of, this Agreement or any provision hereof; provided, however, that if the Executive prevails in any such claim, action or proceeding, the Company shall pay the Executive’s cost and expenses related thereto and provided, further, that the non-prevailing party in any such claim, action or proceeding shall be responsible for the Panel’s (if any) fees and expenses.
20. Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Executive, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.
21. Relocation Conditions. The Company acknowledges and agrees that Executive’s relocation from Executive’s prior residence in Wausau, Wisconsin (the “Prior Residence”) to a primary residence within 50 miles of Ripon, Wisconsin has been completed notwithstanding that the Prior Residence has not yet been sold. With respect to the Prior Residence:
a. In the event the gross sale proceeds (as set forth in the contract of sale) to Executive from the sale of the Prior Residence are less than Executive’s cost basis in the Prior Residence (which cost basis has been previously agreed between the parties), the Company shall reimburse Executive for an amount (the “Loss Payment”) equal to the difference between (x) such gross sale proceeds and (y) such cost basis. Such payment will be paid within ten (10) days following the date of sale.
b. From the date of this Agreement through the date of sale of the Prior Residence, the Company shall reimburse Executive an amount equal to the interest on either (x) the mortgage on the Prior Residence or (y) the indebtedness on Executive’s current residence, whichever is less.
c. In order to facilitate the sale of the Prior Residence and to maintain the property so as to minimize the amount of the Loss Payment, the Company shall bear (or, if paid by Executive, reimburse) the cost of (x) customary and ordinary course landscaping of the Prior Residence, (y) utilities (gas, electric, water and heat) of the Prior Residence and (z) all other reasonable incidental expenses related to the upkeep and sale of the Prior Residence, in each case from the date of this Agreement through the date of sale of the Prior Residence.
d. At the same time that the Loss Payment is paid, the Company shall provide Executive with an additional gross-up payment (an “Additional Payment”) such that, after payment of Federal, state and local taxes on such additional payment, Executive retains an amount of cash equal to the Loss Payment. An Additional Payment shall also be paid with respect to the amounts specified in paragraphs (b) and (c), to be paid at the same time that the amounts in such paragraphs are paid.
e. The Company and Executive will cooperate with each other with respect to the sale of the Prior Residence. Without limiting the generality of the immediately preceding sentence, Executive will consult with the Company as to any offer of purchase for the Prior Residence that he receives prior to determining whether to accept or reject such offer or to make a counteroffer thereto.
22. Headings. The headings and captions in this Agreement are for convenience only and in no way define or describe the scope or content of any provision of this Agreement.
23. Applicability of Section 409A of the Code.
a. It is intended that this Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended and the Treasury Regulations and IRS guidance thereunder (collectively referred to as “Section 409A”). Notwithstanding anything to the contrary, this Agreement shall, to the maximum extent possible, be administered, interpreted and construed in a manner consistent with Section 409A. To the extent that any reimbursement, fringe benefit or other, similar plan or arrangement in which the Executive participates during the Employment Period or thereafter provides for a “deferral of compensation” within the meaning of Section 409A of the Code, including but not limited to any reimbursement pursuant to Sections 3(b), 19 or 21 hereof, (a) the amount of expenses eligible for reimbursement provided to the Executive during any calendar year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to the Executive in any other calendar year, (b) the reimbursements for expenses for which the Executive is entitled to be reimbursed shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred, (c) the right to payment or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit and (d) the reimbursements shall be made pursuant to objectively determinable and nondiscretionary Company policies and procedures regarding such reimbursement of expenses. If and to the extent required to comply with Section 409A, no payment or benefit required to be paid under this Agreement on account of termination of the Executive’s employment shall be made unless and until the Executive incurs a “separation from service” within the meaning of Section 409A. All rights to payments and benefits under this Agreement shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A. If any paragraph of this Agreement provides for payment within a time period, the determination of when such payment shall be made shall be solely in the discretion of the Company.
b. If Executive is deemed on the date of his termination of employment to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B), then with regard to any payment that is considered deferred compensation under Section 409A payable (whether under the Employment Agreement or otherwise) on account of a “separation from service,” such payment or benefit shall be made or provided at the date which is the earlier of (i) the expiration of the six (6) month period measured from the date of such “separation from service” of Executive, and (ii) the date of Executive’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this paragraph (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due shall be paid or provided in accordance with the normal payment dates specified for them.
24. Golden Parachute Tax Provisions.
a. The Company and the Executive shall use commercially reasonable and good faith efforts to avoid all, or any portion, of any payments or benefits provided under this
Agreement or otherwise, either alone or together with other payments or benefits that the Executive receives or is entitled to receive from the Company or an Affiliate, constituting an “excess parachute payment” within the meaning of Section 280G Code, including by seeking a vote of stockholders of the Company, as applicable, in a manner and form that is intended to comply with the stockholder approval procedures set forth in Section 28OG(b)(5)(B) of the Code and the regulations thereunder.
b. Notwithstanding the foregoing Section 24(a), in the event that Company undergoes a change in control (as determined under Section 280G of the Code) at or after the time that it (or any Affiliate that would be treated, together with the Company, as a single corporation under Section 280G of the Code) has stock that is readily tradable on an established securities market (within the meaning of Section 280G of the Code and the regulations thereunder) and all, or any portion, of the payments or benefits provided under this Agreement, either alone or together with other payments or benefits which the Executive receives or is entitled to receive from the Company or one of their respective Affiliates, would constitute an “excess parachute payment” within the meaning of Section 280G of the Code, the following provisions shall apply: the Executive shall be entitled to receive (A) an amount limited so that no portion thereof shall fail to be tax deductible under Section 280G of the Code (the “Limited Amount”), or (B) if the amount otherwise payable hereunder or otherwise (without regard to clause (A)) reduced by all taxes applicable thereto (including, for the avoidance of doubt, the excise tax imposed by Section 4999 of the Code) would be greater than the Limited Amount reduced by all taxes applicable thereto, the amount otherwise payable hereunder.
c. The determination as to whether and to what extent payments under this Agreement or otherwise are required to be reduced in accordance with Sections 24(a) or (b) above shall be made at the Company’s expense by the Accountants. In the event that any payments under this Agreement or otherwise are required to be reduced as described in this Section 24(c), the adjustment will be made, first, by reducing the severance, if any, due to the Executive pursuant to Section 4(b); and second, if additional reductions are necessary, by reducing the medical, dental and health benefits due to the Executive under Section 4(b). In the event that there has been any underpayment or overpayment under this Agreement or otherwise as determined by the Accountants, the amount of such underpayment or overpayment shall forthwith be paid to the Executive or refunded to the Company, as the case may be, with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. For purposes of this Section 24(c), the term “Accountants” means the independent public accounting firm most recently serving as the Company’s outside auditors or such other accounting or benefits consulting group or firm as selected by the Company.
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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first written above.
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| ALLIANCE LAUNDRY SYSTEMS LLC |
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| By: | /s/ Scott L. Spiller | |
| Its: | Vice President | |
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| /s/ MICHAEL D. SCHOEB | |
| MICHAEL D. SCHOEB | |
Exhibit 10.24
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Alliance Laundry Systems LLC PO Box 990, Shepard Street Ripon, WI 54971, USA T | +1 920 748 3121 F | +1 920 748 4564 www.alliancelaundry.com |
May 7, 2023 (revised)
Justin Blount
900 E Silver Spring Dr,
Milwaukee, WI 53217-5235
Re: Offer of Employment
Dear Justin:
On behalf of Alliance Laundry Systems, I am pleased to offer you the position of President & Chief Operating Officer, reporting to Mike Schoeb, Chief Executive Officer. The details of the offer are as follows:
•Your employment with Alliance Laundry Systems will commence on June 12, 2023 or another mutually agreed upon date.
•Should you accept our offer, your annual base salary will be $525,000. This is an exempt position that is paid monthly. You will be eligible for your next salary increase consideration in April 2024, based on performance.
•You will participate in the Company Metric Bonus Program with a bonus target of 60% of your base salary. For 2023 plan year, you will be eligible for full year participation in the Program with a guaranteed 50% payout.
•With Board approval you will be eligible to receive a grant in our stock option program valued at $5,000,000. 50% will be options which will vest over a 5-year period with 20% vesting each year and 50% of the options are performance based which will vest upon achieving targets as determined by the BOD (17% IRR/ 2.2 MoM).
•You will receive a sign-on bonus of $100,000 less deductions and withholdings as required, to be paid the first pay period following 30 days of employment. If you voluntarily leave or are terminated “for cause” within 12 months of your start date, you will owe the Company 100% of this amount.
•You will receive an additional bonus of $100,000 less deductions and withholdings as required, following the 1-year anniversary of your employment. Eligibility is contingent upon you being employed on the anniversary date. If you voluntarily leave or are terminated “for cause” within 12 months of the 1-year anniversary date, you will owe the Company 100% of this amount.
•You will be provided with the required IT equipment, such as a computer, monitor and keyboard; and will be reimbursed for standard office supplies. Additionally, you will be eligible for a monthly stipend of $100 to offset the cost of home internet/mobile phone. Eligibility is subject to annual review and/or at the time of job change.
•You will be eligible for 5 weeks, or 200 hours of vacation which will be prorated for the remainder of 2023. Additional weeks of vacation will be earned when your total years of service with Alliance Laundry Systems qualify you.
•You will be entitled to paid holidays according to the Company holiday policy. The 2023 Company holidays are New Year’s Day, Good Friday, Memorial Day, Tuesday following Memorial Day, Independence Day, Labor Day, Thanksgiving, Friday after Thanksgiving, Christmas Day, Tuesday following Christmas Day, the Friday before New Year’s Eve.
•You will also be eligible for the other Company benefit programs as outlined in the enclosed benefit summary.
•If on the 3-year anniversary of your start date, you are still active COO due to Mike Schoeb continuing to hold the CEO position, you will be eligible for the following:
•Additional grant in stock option program valued at $2,000,000
•Additional lump sum bonus of $250,000
•If an employment separation is initiated by Alliance for any reason other than for cause, you will receive the following severance benefits after signing appropriate release agreement:
•Twelve (12) months of severance pay
•Twelve (12) months medical and dental continuation (if actively participating in medical and/or dental plan at time of separation).
•Bonus for the year in which the separation occurs, prorated based on months actively employed during the plan year, will be paid in March the following year.
•This offer is contingent on you providing proof of your ability to work in the United States under the provisions of the Immigration & Reform Control act and your successful passing of Alliance Laundry Systems’ pre-employment screening process. This process includes, but is not limited to, a criminal background check and a company-sponsored drug screen at a facility selected by the Company.
•As a condition of this offer, you will be required to execute and return to Human Resources a non-compete and non-solicitation agreement.
•It is also a condition of employment that you read and become familiar with the enclosed Alliance Laundry Systems’ Code of Business Conduct and Ethics and acknowledge by signing the acknowledgement form electronically.
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Alliance Laundry Systems LLC PO Box 990, Shepard Street Ripon, WI 54971, USA T | +1 920 748 3121 F | +1 920 748 4564 www.alliancelaundry.com |
As part of our Company Policy, I am required to notify you that employees are employed at the will of the Company and are subject to termination at any time, for any reason, with or without cause or notice. At the same time, such employees may terminate their employment at any time for any reason.
This is an exciting time here at Alliance Laundry Systems - we look forward to you joining the team! To indicate your acceptance of this offer, please electronically sign and print a copy for your records by Monday, May 8, 2023. If you have any questions regarding the benefit programs or any of the points discussed above, please give me a call at 920-540-3995.
Sincerely,
Amanda Kopetsky
Vice President – Global Human Resources
Enclosures – Code of Business Conduct and Ethics
Summary of Benefits
Non-Compete and Non-Solicitation Agreement
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| Offer Accepted: | /s/ Justin Blount | |
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| May 9, 2023 | |
Exhibit 10.25
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Alliance Laundry Systems LLC PO Box 990, Shepard Street Ripon, WI 54971, USA T | +1 920 748 3121 F | +1 920 748 4564 www.alliancelaundry.com |
~CONFIDENTIAL~
December 17, 2024
Bob Calver
Bob.calver@alliancels.com
Re: Interim Assignment Recognition & Retention
As the search continues for the CFO for Alliance, I want to express my continued appreciation for your dedication to providing interim leadership. I acknowledge that the continuation of the search and the uncertainty of how it will impact you has been stressful. In recognition of your leadership of our Finance & Accounting team, the contributions towards our IPO readiness, and as an incentive that you remain employed with the Company following a potential IPO I want to extend the following to you:
Recognition of Interim Contributions:
•2024 Bonus: For the 2024 Metric Bonus Plan year, to participate in the Company Metric Bonus Program with a bonus target of 40% of your base salary
•Options: Pending Board approval, you will be granted $500,000 in additional stock options.
•Non-Selection Payment: If you are not selected as the CFO of the Company, you will receive a one-time payment of $100,000, payable within thirty (30) days after the appointment of a CFO. This replaces the $50,000 committed to in the original assignment letter
.
•Assignment Bonus: No change to the assignment bonus. That will continue to be $10,000 monthly through the appointment of the CFO.
Retention:
•IPO Success Payment: Upon the successful completion of an IPO by the Company, you will receive a one-time payment of $100,000, payable within thirty (30) days following the IPO date.
•Twelve-Month Post-IPO Payment: Provided you remain in continuous employment with the Company for twelve (12) months following the successful IPO, you will receive an additional one-time payment of $100,000, payable within thirty (30) days after the twelve-month anniversary of the IPO.
Conditions for Payment
•All payments are subject to required deductions and withholdings.
•If you are selected as CFO, you forfeit the non-selection payment and both retention payments.
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Alliance Laundry Systems LLC PO Box 990, Shepard Street Ripon, WI 54971, USA T | +1 920 748 3121 F | +1 920 748 4564 www.alliancelaundry.com |
•If you voluntarily resign or are terminated for cause (i.e. code of conduct violation, misconduct, fraud) before any corresponding payment date, you forfeit the right to receive the unpaid portion of any retention payments.
•You agree that you will keep the terms of this letter agreement confidential, and will not disclose its terms to any person, other than your immediate family or professional advisers (who also must keep the terms of this letter agreement confidential).
Severance
•In case of employment separation initiated by Alliance for any reason other than for cause, you will receive the following severance benefits (contingent upon signing separation & release agreement): This replaces prior agreement of six months from 2022 transfer to US.
•12 months of severance pay.
•Metric bonus for the portion of year worked prior to separation, payable in March the following year.
•For the year in which separation occurs, professional tax preparation services will be provided to prepare your home country income tax return and US income tax return if both are required.
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| | | Agreed: | |
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| | | /s/ Bob Calver | |
| | | Name: Bob Calver |
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| Approved by: | | | | |
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| /s/ Michael Schoeb | | | | |
| Name: Mike Schoeb | | | |
| Title: CEO | | | |
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| /s/ Amanda Kopetsky | | | | |
| Name: Amanda Kopetsky | | | |
| Title: VP – Global HR | | | |
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| Alliance Laundry Systems LLC PO Box 990, Shepard Street Ripon, WI 54971, USA T | +1 920 748 3121 F | +1 920 748 4564 www.alliancelaundry.com |
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| December 17, 2024 |
Craig Dakauskas
2671 Del Mar Dr
Gulf Breeze, FL 32563
Re: Separation Agreement and Release (rev: April 11, 2025)
Dear Craig,
This letter sets forth terms of the Separation Agreement and Release (the “Agreement”) being offered by Alliance Laundry Systems LLC (“Alliance”) in connection with your separation from employment with Alliance. The last day of your employment with Alliance is March 31, 2025 (the “Separation Date”).
As noted below, you have twenty-one (21) days from the date of this letter to accept this Agreement. If you accept the terms of this Agreement, Alliance will provide the severance pay and benefits set forth below. If you decide not to accept this Agreement, you will not receive the severance pay and benefits set forth below. Regardless of whether you sign this Agreement, you will receive your regular base wages and your current benefits through the Separation Date, and if required by applicable state law, you will receive pay for any paid time off that you have accrued but not used through the Separation Date.
(1) Severance Pay and Benefits. If you sign this Agreement (and do not thereafter revoke it), in consideration of your undertakings under this Agreement and subject to your compliance with the terms of this Agreement, Alliance will provide you the following severance pay and benefits:
(A) Alliance will pay severance pay to you by continuing to pay your regular base salary for the period from the Separation Date through September 30, 2025, minus applicable withholdings, with such pay to be paid in accordance with Alliance’s normal payroll practices, and commencing on the first regularly scheduled pay date following the expiration of the seven day (7) revocation period set forth below.
(B) Alliance will pay you a prorated bonus of $35,000.00 for the first quarter of 2025, minus applicable withholdings. This payment will be made in a lump sum on October 03, 2025.
(C) Alliance will pay you the amount of $30,000, minus applicable withholdings, which may be used by you to purchase medical insurance through a COBRA election or for any other purpose of your choice. This payment will be made in a lump sum not later than the first regularly scheduled pay date following the expiration of the seven-day (7) revocation period set forth below.
(D) Stock Option Amendments. The Compensation Committee of the Board of the Company has approved changes to the Employee’s Non-Qualified Stock Option
Agreements dated April 1, 2019 and January 1, 2022. Concurrently with the execution of this Agreement, the Employee and the Company will enter into amendments to each of the Non-Qualified Stock Option Agreements, each substantially the form attached hereto as Exhibit A.
(E) Stock: The Company shall have six (6) months and 5 business days to exercise its option to repurchase your shares of Common Stock, as described in Section 2 of the Stockholders Agreement. The remainder of the Stockholders Agreement shall remain in full force and effect.
(F) Alliance will permit you, and your guests, to use the corporate jet up to a total of five (5) hours of flight time at no cost to you or your guests (subject to required taxation). The use of the jet must occur prior to January 01, 2026.
(G) For at least 90 days following the Separation Date, Alliance will sublease to you, upon fair market terms, your current office located in Gulf Breeze, Florida.
(2) Release and Other Commitments. In exchange for the severance pay and benefits provided under this Agreement, you agree as follows:
(A) You hereby release and forever discharge ALH Holding, Inc., and Alliance, and all of their affiliated entities, predecessors and successors, and all past, present and future officers, directors, agents, employees, shareholders, attorneys, executors, employee benefit plans, insurers, assigns and other representatives of any kind (collectively, the “Released Parties”) of and from any and all claims, contracts, judgments and expenses (including attorneys’ fees and costs of any kind), whether known or unknown, which you have or may have against the Released Parties, or any of them, for or by reason of any transaction, occurrence, matter, event, cause or thing whatsoever which has occurred prior to or on the date of this Agreement. This release includes, but is not limited to (i) claims arising under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act of 1990, the Civil Rights Act of 1991, the Employee Retirement Income Security Act of 1974, the Equal Pay Act, the Family and Medical Leave Act of 1993, the Fair Labor Standards Act, the National Labor Relations Act, the Occupational Safety and Health Act, wage and hour laws, wage payment laws, all applicable state employment laws, and/or any other law (including without limitation any federal, state or local statute, common law, code, ordinance, rule or regulation); (ii) claims based on breach of contract (express or implied), tort, personal injury, misrepresentation, discrimination, failure to accommodate, retaliation, harassment, defamation, invasion of privacy or wrongful discharge; (iii) claims for bonuses, payments or benefits under any bonus or incentive plans or fringe benefit programs or policies; and (iv) any other claims arising out of or connected with your employment with or the separation of your employment from Alliance. This release and discharge do not release claims for unemployment compensation or worker’s compensation benefits or other claims that cannot be released by law. Further, and notwithstanding language to the contrary in this Section (2)(A), this release and discharge does not release any existing or future claims or rights (of any kind) under or related to the Commercial Lease between Coin Laundry Equipment Company,
Inc. and Alliance Laundry Systems Distribution LLC, dated May 01, 2024 for the lease of the real property commonly known as 1626 Tradewinds Drive, Gulf Breeze, Florida.
(B) Nothing in this Agreement (i) interferes with your right or responsibility to give testimony under oath or to make statements or otherwise provide information to a government agency; (ii) prohibits you from filing a charge or complaint with, making a report to, participating in any investigation or proceeding conducted by, or otherwise cooperating with, the U.S. Equal Employment Opportunity Commission (“EEOC”), the National Labor Relations Board (“NLRB”), the Occupational Safety and Health Administration (“OSHA”), the Securities and Exchange Commission (“SEC”), or any other federal, state or local government agency or commission; or (iii) prohibits you from making other disclosures that are protected under the whistleblower provisions of any federal, state or local law. However, by executing this Agreement, you are waiving and completely disclaiming any right to a remedy or to recover any benefits or monetary awards in connection with any action (whether brought by you, the EEOC, the NLRB, OSHA, any other government agency, or any other person or entity) arising out of or based on any transaction, occurrence, matter, event, cause or thing whatsoever which has occurred prior to or on the date of this Agreement. Notwithstanding this Paragraph, nothing contained in this Agreement shall impede your ability to report possible federal securities violations to the SEC and other governmental agencies (i) without Alliance’s approval and (ii) without having to forfeit or forego any resulting whistleblower awards. Further, and notwithstanding language to the contrary in this Section (2)(B), this release and discharge does not release your claims or rights (of any kind) under or related to the Carveouts.
(C) You acknowledge and agree that, as of the date on which you sign this Agreement, (i) there are no pending complaints, charges or lawsuits filed by you against Alliance or any of the Released Parties; and (ii) you have no knowledge of any facts or circumstances that would give rise to any allegation of wrongdoing of any type by any of the Released Parties that would provide a basis for reporting any violation, filing any claim or complaint, or making any disclosure, to any government agency. You further acknowledge and agree that you are the sole and lawful owner of all right, title and interest in and to all matters released under this Agreement, and that you have not assigned or transferred, or purported to assign or transfer, any of such released matters to any other person or entity. Notwithstanding language to the contrary in this Section (2)(C), this release and discharge does not release your claims or rights (of any kind) under or related to the Carveouts.
(D) By executing this Agreement, you acknowledge you have not suffered an unreported workplace injury in connection with your employment.
(E) You agree that you have returned to Alliance all of its property which you possess or over which you have control, including, but not limited to, all records, files, credit cards, keys, cellular telephones, customer lists and information, and electronically encoded information such as computer drives, all passwords and/or access codes to such Alliance property and all copies of such Alliance property.
(F) You agree not to make any negative or disparaging statements or remarks to the media or others regarding any products or services of Alliance or any affiliated entity at
any time. In addition, you agree not to engage at any time in any form of conduct or make any statements or remarks that disparage, criticize, or otherwise impair the reputation of Alliance or any of the Released Parties. For purposes of this paragraph, “statements or remarks” shall include, but are not limited to, statements or remarks made verbally, in writing, electronically or otherwise.
(G) With respect to Alliance’s Trade Secrets and Confidential Information (each defined below), you acknowledge that Alliance has created and maintains at great expense strategic plans, methods, products, procedures, processes, techniques, financial information, customer and supplier lists, pricing policies, pricing and cost information, and other similar confidential and proprietary information that is not generally known outside the Company (collectively “Confidential Information”). Confidential Information also includes information received by Alliance from others which Alliance has an obligation to treat as confidential, including all information obtained in connection with customer engagements. You agree that until the sooner of (i) two (2) years from the Separation Date or (ii) the Confidential Information becomes generally available to the public through no fault of yours or any other person under a duty of confidentiality to Alliance, you shall not, directly or indirectly, in any capacity, use or disclose, or cause to be used or disclosed, in any geographic territory in which such use or disclosure could harm Alliance's existing or potential business interests, any Confidential Information.
With respect to any of Alliance’s Confidential Information that constitutes a trade secret under applicable law (“Trade Secret”), you agree not to directly or indirectly use or disclose any such information for as long as the information remains a Trade Secret under applicable law. Nothing in this Agreement shall limit or supersede any common law, statutory or other protections of Trade Secrets where such protections provide Alliance with greater rights or protections for a longer duration than provided in this Agreement. With respect to the disclosure of a Trade Secret and in accordance with 18 U.S.C. § 1833, you shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a Trade Secret that (i) is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, provided that, the information is disclosed solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding filed under seal so that it is not disclosed to the public. You are further notified that if you file a lawsuit for retaliation by Alliance for reporting a suspected violation of law, you may disclose Alliance’s Trade Secrets to your attorney and use the Trade Secret information in the court proceeding, provided that, you file any document containing the Trade Secret under seal so that it is not disclosed to the public, and does not disclose the Trade Secret, except pursuant to court order.
(H) Nothing contained in this Agreement shall preclude you from providing truthful information pursuant to subpoena or other legal process. If you receive a subpoena or are subject to any legal obligation, you agree to provide written notice to Alliance enclosing a copy of the subpoena and/or any other document identifying the legal obligation sufficiently in advance of any such disclosure (but no later than ten (10) days after receiving notice of a legal obligation to disclose Confidential Information) to permit Alliance to contest the disclosure or seek protection of the disclosure of such information. In addition, nothing in this Agreement restricts your right to request or receive legal
advice from counsel of your choice or report or disclose information about unlawful acts in the workplace, including but not limited to sexual harassment.
(I) Following the Separation Date and until September 30, 2025, you shall cooperate with Alliance, as Alliance may reasonably request (no more than five hours in a month), to assist in matters pertaining to duties and responsibilities you had during your employment; provided, however, you shall cooperate with Alliance, as reasonably requested (which may exceed five hours in a month), through and after September 30, 2025 for depositions and litigation matters pertaining to your duties and responsibilities, including, specifically: giving truthful statements, information, and/or testimony in connection with any investigation, action, or proceeding with respect to which you may have knowledge, information, or expertise. Alliance agrees to reimburse you for all costs and expenses incurred by you related to your assistance under this Section (2)(I), including for reasonable travel expenses.
(J) For twelve (12) months immediately after the Separation Date, you shall not directly or indirectly, whether on your own or on behalf of any third party:
(i) Solicit business from any person or entity who is an Active Customer (as defined below) for the purpose of providing products or services that are the same as or substantially similar to, and are competitive with, the products or services with which you were involved in providing to such Active Customer during the last twelve (12) months of your employment with Alliance (the “Reference Period”).
(ii) Request or advise any Active Customer to withdraw, curtail or cancel any business relationship with Alliance. “Active Customer” shall mean any customer of Alliance that received any products or services supplied by or on behalf of Alliance, and with which you had material business contact, during the Reference Period.
(iii) Induce any manager or sales employee with whom you had material business contact during the Reference Period to leave the employ of Alliance for the purpose of having such person provide services to any business that competes with the business of Alliance within the territory in which Alliance conducts its business, and where such services are substantially similar to the services such person provided to Alliance during the Reference Period. Provided, it shall not be deemed an inducement or violation of this paragraph for you to hire any manager or sales employee if such person is no longer employed (and has not been for a period of 12 months) with Alliance at the time you directly solicited such person for hire or if the person responded to a general advertisement for employment with you.
(iv) For twelve (12) months immediately after the Separation Date, you shall not sell, distribute, or service Commercial Laundry equipment or provide any consulting, managerial, operational or other similar service for any non-Alliance branded products or competitors in the geographic region where you have engaged in such activities on behalf of the Company in the twelve (12) months preceding the Separation Date, unless you obtain prior written consent from the
Company authorizing such activities. Notwithstanding language to the contrary in this Section (2)(J), Alliance acknowledges it is not a violation of this Section (2)(J), nor competition with Alliance, for you to own, operate, acquire, or start an entity or business that primarily focuses on coin laundry or routes so long as such entity or business is not located within fifty (50) miles of any coin laundry location owned by Alliance as of the Separation Date.
(K) You waive any right you may have to reinstatement with Alliance and agree not to apply for or otherwise seek employment at any time in the future with Alliance or any affiliated entity. In addition, you agree that Alliance, and its affiliated entities, are not to consider you for any employment or employ you at any time in the future.
(L) You agree not to engage in any illegal, harassing, intimidating, threatening or retaliatory conduct, action or behavior (whether in person or via telephone, mail, e-mail, the internet, or otherwise) at any time with respect to Alliance, its business and operations or any of its officers, directors, employees or agents.
(3) Miscellaneous.
(A) This Agreement constitutes the complete understanding between you and Alliance concerning the termination of your employment with Alliance; provided, however, this Agreement does not supersede or limit any post-employment obligations you owe Alliance under any other agreement;
(B) This Agreement can only be modified by a written document signed by both parties;
(C) Nothing in this Agreement shall be construed as an admission of wrongdoing or liability on the part of Alliance.
(D) The provisions of Paragraph 2 of this Agreement are severable. If any court of competent jurisdiction determines that any of the provisions of Paragraph 2 above are invalid or unenforceable, such invalidity or unenforceability shall have no effect on the other provisions of Paragraph 2 of this Agreement which shall remain valid, binding and enforceable and in full force and effect. A court of competent jurisdiction shall have the right to modify or reform any provision of Paragraph 2 determined to be invalid or unenforceable under applicable law.
(E) This Agreement and its interpretation shall be governed and construed in accordance with the laws of the State in which you worked as of the Separation Date.
(F) In the event that you breach any provision of this Agreement, you agree that Alliance shall be relieved of any further performance (including all additional payments) under this Agreement, recover any damages suffered as a result of such breach, and recover from you any reasonable attorneys’ fees and costs it incurs as a result of your breach. In addition, you agree that Alliance may seek injunctive or other equitable relief as a result of a breach by you of any provision of this Agreement.
(G) This Agreement may be executed by an electronic signature, which shall be deemed to be the same as an original signature.
(4) Acceptance and Revocation. You are hereby advised that (i) you have a period of twenty-one (21) days from the date of this letter to consider this Agreement; and (ii) you should consult with an attorney prior to signing it. If you do not accept this Agreement within said 21-day period, Alliance’s offer will expire and will no longer be available for acceptance.
To accept this Agreement, you must sign and date below and return the signed Agreement to Ms. Amanda Kopetsky, P.O. Box 990 Shepard Street, Ripon, Wisconsin 54971, either by mail or by e-mail at amanda.kopetsky@alliancels.com. For a period of seven (7) days following the execution of this Agreement, you may revoke this Agreement, and the Agreement shall not become effective or enforceable until this seven-day revocation period has expired. To be effective, any notice of revocation must be in writing and received within the foregoing seven-day revocation period.
If you have any questions, please contact Amanda Kopetsky at 1-920-540-3995.
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| Very truly yours, | |
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| Alliance Laundry Systems LLC | |
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| By: | /s/ Mike Schoeb | Apr 17,2025 |
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I agree with and accept the terms contained in
this Agreement and agree to be bound by them.
Dated this _____ day of _____________, 2025. | | Apr 22, 2025 |
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| /s/ Craig Dakauskas | |
| Craig Dakauskas | | | |
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| Alliance Laundry Systems LLC PO Box 990, Shepard Street Ripon, WI 54971, USA T | +1 920 748 3121 F | +1 920 748 4564 www.alliancelaundry.com |
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| December 31, 2024 |
Justin Blount
6576 Silver Beach N.
Cedar Grove, WI 53013
Re: Separation Agreement and Release (rev 1.9.2025)
Dear Justin,
This letter sets forth terms of the Separation Agreement and Release (the “Agreement”) being offered by Alliance Laundry Systems LLC (“Alliance”) in connection with your separation from employment with Alliance. The last day of your employment with Alliance is January 31, 2025 (the “Separation Date”).
As noted below, you have twenty-one (21) days from the date of this letter to accept this Agreement. If you accept the terms of this Agreement, Alliance will provide the severance pay and benefits set forth below. If you decide not to accept this Agreement, you will not receive the severance pay and benefits set forth below. Regardless of whether you sign this Agreement, you will receive your regular base wages and your current benefits through the Separation Date, and if required by applicable state law, you will receive pay for any paid time off that you have accrued but not used through the Separation Date.
(1)Severance Pay and Benefits. If you sign this Agreement (and do not thereafter revoke it), in consideration of your undertakings under this Agreement and subject to your compliance with the terms of this Agreement, Alliance will provide you the following severance pay and benefits:
(A) Alliance will pay severance pay to you by continuing to pay your regular base salary for the period from the Separation Date through January 31, 2026, minus applicable withholdings, with such pay to be paid in accordance with Alliance’s normal payroll practices, and commencing on the first regularly scheduled pay date following the expiration of the seven day (7) revocation period set forth below.
(B) Alliance will pay you the amount of $16,760, minus applicable withholdings, which may be used by you to purchase medical insurance through a COBRA election or for any other purpose of your choice. This payment will be made in a lump sum not later than the first regularly scheduled pay date following the expiration of the seven-day (7) revocation period set forth below.
(C) Pending approval by Alliance’s Compensation Committee, you shall be granted accelerated vesting, as of January 31, 2025, of your second-year time-based stock
options. These options would have otherwise vested in June 2025 (if actively employed on vesting date).
(D) You will remain eligible for any 2024 Bonus, payable in March 2025 after actual results are approved.
(2)Release and Other Commitments. In exchange for the severance pay and benefits provided under this Agreement, you agree as follows:
(A) You hereby release and forever discharge ALH Holding, Inc., and Alliance, and all of their affiliated entities, predecessors and successors, and all past, present and future officers, directors, agents, employees, shareholders, attorneys, executors, employee benefit plans, insurers, assigns and other representatives of any kind (collectively, the “Released Parties”) of and from any and all claims, contracts, judgments and expenses (including attorneys’ fees and costs of any kind), whether known or unknown, which you have or may have against the Released Parties, or any of them, for or by reason of any transaction, occurrence, matter, event, cause or thing whatsoever which has occurred prior to or on the date of this Agreement. This release includes, but is not limited to (i) claims arising under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act of 1990, the Civil Rights Act of 1991, the Employee Retirement Income Security Act of 1974, the Equal Pay Act, the Family and Medical Leave Act of 1993, the Fair Labor Standards Act, the National Labor Relations Act, the Occupational Safety and Health Act, wage and hour laws, wage payment laws, all applicable state employment laws, and/or any other law (including without limitation any federal, state or local statute, common law, code, ordinance, rule or regulation); (ii) claims based on breach of contract (express or implied), tort, personal injury, misrepresentation, discrimination, failure to accommodate, retaliation, harassment, defamation, invasion of privacy or wrongful discharge; (iii) claims for bonuses, payments or benefits under any bonus or incentive plans or fringe benefit programs or policies; and (iv) any other claims arising out of or connected with your employment with or the separation of your employment from Alliance. This release does not release claims for unemployment compensation or worker’s compensation benefits or other claims that cannot be released by law.
(B) Nothing in this Agreement (i) interferes with your right or responsibility to give testimony under oath or to make statements or otherwise provide information to a government agency; (ii) prohibits you from filing a charge or complaint with, making a report to, participating in any investigation or proceeding conducted by, or otherwise cooperating with, the U.S. Equal Employment Opportunity Commission (“EEOC”), the National Labor Relations Board (“NLRB”), the Occupational Safety and Health Administration (“OSHA”), the Securities and Exchange Commission (“SEC”), or any other federal, state or local government agency or commission; or (iii) prohibits you from making other disclosures that are protected under the whistleblower provisions of any federal, state or local law. However, by executing this Agreement, you are waiving and completely disclaiming any right to a remedy or to recover any benefits or monetary awards in connection with any action (whether brought by you, the EEOC, the NLRB, OSHA, any other government agency, or any other person or entity) arising out of or based on any transaction, occurrence, matter, event, cause or thing whatsoever which has occurred prior to or on the date of this Agreement. Notwithstanding this Paragraph,
nothing contained in this Agreement shall impede your ability to report possible federal securities violations to the SEC and other governmental agencies (i) without Alliance’s approval and (ii) without having to forfeit or forego any resulting whistleblower awards.
(C) You acknowledge and agree that, as of the date on which you sign this Agreement, (i) there are no pending complaints, charges or lawsuits filed by you against Alliance or any of the Released Parties; and (ii) you have no knowledge of any facts or circumstances that would give rise to any allegation of wrongdoing of any type by any of the Released Parties that would provide a basis for reporting any violation, filing any claim or complaint, or making any disclosure, to any government agency. You further acknowledge and agree that you are the sole and lawful owner of all right, title and interest in and to all matters released under this Agreement, and that you have not assigned or transferred, or purported to assign or transfer, any of such released matters to any other person or entity.
(D) By executing this Agreement, you acknowledge you have not suffered an unreported workplace injury in connection with your employment.
(E) You agree that you have returned to Alliance all of its property which you possess or over which you have control, including, but not limited to, all records, files, credit cards, keys, cellular telephones, customer lists and information, and electronically encoded information such as computer drives, all passwords and/or access codes to such Alliance property and all copies of such Alliance property.
(F) You agree not to make any negative or disparaging statements or remarks to the media or others regarding any products or services of Alliance or any affiliated entity at any time. In addition, you agree not to engage at any time in any form of conduct or make any statements or remarks that disparage, criticize, or otherwise impair the reputation of Alliance or any of the Released Parties. For purposes of this paragraph, “statements or remarks” shall include, but are not limited to, statements or remarks made verbally, in writing, electronically or otherwise.
(G) With respect to Alliance’s Trade Secrets and Confidential Information (each defined below), you acknowledge that Alliance has created and maintains at great expense strategic plans, methods, products, procedures, processes, techniques, financial information, customer and supplier lists, pricing policies, pricing and cost information, and other similar confidential and proprietary information that is not generally known outside the Company (collectively “Confidential Information”). Confidential Information also includes information received by Alliance from others which Alliance has an obligation to treat as confidential, including all information obtained in connection with customer engagements. You agree that until the sooner of (i) two (2) years from the Separation Date or (ii) the Confidential Information becomes generally available to the public through no fault of yours or any other person under a duty of confidentiality to Alliance, you shall not, directly or indirectly, in any capacity, use or disclose, or cause to be used or disclosed, in any geographic territory in which such use or disclosure could harm Alliance's existing or potential business interests, any Confidential Information.
With respect to any of Alliance’s Confidential Information that constitutes a trade secret under applicable law (“Trade Secret”), you agree not to directly or indirectly use or
disclose any such information for as long as the information remains a Trade Secret under applicable law. Nothing in this Agreement shall limit or supersede any common law, statutory or other protections of Trade Secrets where such protections provide Alliance with greater rights or protections for a longer duration than provided in this Agreement. With respect to the disclosure of a Trade Secret and in accordance with 18 U.S.C. § 1833, you shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a Trade Secret that (i) is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, provided that, the information is disclosed solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding filed under seal so that it is not disclosed to the public. You are further notified that if you file a lawsuit for retaliation by Alliance for reporting a suspected violation of law, you may disclose Alliance’s Trade Secrets to your attorney and use the Trade Secret information in the court proceeding, provided that, you file any document containing the Trade Secret under seal so that it is not disclosed to the public, and does not disclose the Trade Secret, except pursuant to court order.
(H) Nothing contained in this Agreement shall preclude you from providing truthful information pursuant to subpoena or other legal process. If you receive a subpoena or are subject to any legal obligation, you agree to provide written notice to Alliance enclosing a copy of the subpoena and/or any other document identifying the legal obligation sufficiently in advance of any such disclosure (but no later than ten (10) days after receiving notice of a legal obligation to disclose Confidential Information) to permit Alliance to contest the disclosure or seek protection of the disclosure of such information. In addition, nothing in this Agreement restricts your right to request or receive legal advice from counsel of your choice or report or disclose information about unlawful acts in the workplace, including but not limited to sexual harassment.
(I) Following the Separation Date, you shall cooperate with Alliance, as Alliance may reasonably request, to assist in matters pertaining to duties and responsibilities you had during your employment, including, but not limited to, giving truthful statements, information, and/or testimony in connection with any investigation, action, or proceeding with respect to which you may have knowledge, information, or expertise.
(J) For twelve (12) months immediately after the Separation Date, you shall not directly or indirectly, whether on your own or on behalf of any third party:
(i) Solicit business from any person or entity who is an Active Customer (as defined below) for the purpose of providing products or services that are the same as or substantially similar to, and are competitive with, the products or services with which you were involved in providing to such Active Customer during the last twelve (12) months of your employment with Alliance (the “Reference Period”).
(ii) Request or advise any Active Customer to withdraw, curtail or cancel any business relationship with Alliance. “Active Customer” shall mean any customer of Alliance that received any products or services supplied by or on behalf of Alliance, and with which you had material business contact, during the Reference Period.
(iii) Induce any manager or sales employee with whom you had material business contact during the Reference Period to leave the employ of Alliance for the purpose of having such person provide services to any business that competes with the business of Alliance within the territory in which Alliance conducts its business, and where such services are substantially similar to the services such person provided to Alliance during the Reference Period.
(K) You waive any right you may have to reinstatement with Alliance and agree not to apply for or otherwise seek employment at any time in the future with Alliance or any affiliated entity. In addition, you agree that Alliance, and its affiliated entities, are not to consider you for any employment or employ you at any time in the future.
(L) You agree not to engage in any illegal, harassing, intimidating, threatening or retaliatory conduct, action or behavior (whether in person or via telephone, mail, e-mail, the internet, or otherwise) at any time with respect to Alliance, its business and operations or any of its officers, directors, employees or agents.
(3)Miscellaneous.
(A) This Agreement constitutes the complete understanding between you and Alliance concerning the termination of your employment with Alliance; provided, however, this Agreement does not supersede or limit any post-employment obligations you owe Alliance under any other agreement;
(B) This Agreement can only be modified by a written document signed by both parties;
(C) Nothing in this Agreement shall be construed as an admission of wrongdoing or liability on the part of Alliance.
(D) The provisions of Paragraph 2 of this Agreement are severable. If any court of competent jurisdiction determines that any of the provisions of Paragraph 2 above are invalid or unenforceable, such invalidity or unenforceability shall have no effect on the other provisions of Paragraph 2 of this Agreement which shall remain valid, binding and enforceable and in full force and effect. A court of competent jurisdiction shall have the right to modify or reform any provision of Paragraph 2 determined to be invalid or unenforceable under applicable law.
(E) This Agreement and its interpretation shall be governed and construed in accordance with the laws of the State in which you worked as of the Separation Date.
(F) In the event that you breach any provision of this Agreement, you agree that Alliance shall be relieved of any further performance (including all additional payments) under this Agreement, recover any damages suffered as a result of such breach, and recover from you any reasonable attorneys’ fees and costs it incurs as a result of your breach. In addition, you agree that Alliance may seek injunctive or other equitable relief as a result of a breach by you of any provision of this Agreement.
(G) This Agreement may be executed by an electronic signature, which shall be deemed to be the same as an original signature.
(4)Acceptance and Revocation. You are hereby advised that (i) you have a period of twenty-one (21) days from the date of this letter to consider this Agreement; and (ii) you should consult with an attorney prior to signing it. If you do not accept this Agreement within said 21-day period, Alliance’s offer will expire and will no longer be available for acceptance.
To accept this Agreement, you must sign and date below and return the signed Agreement to Ms. Amanda Kopetsky, P.O. Box 990 Shepard Street, Ripon, Wisconsin 54971, either by mail or by e-mail at amanda.kopetsky@alliancels.com. For a period of seven (7) days following the execution of this Agreement, you may revoke this Agreement, and the Agreement shall not become effective or enforceable until this seven-day revocation period has expired. To be effective, any notice of revocation must be in writing and received within the foregoing seven-day revocation period.
If you have any questions, please contact Amanda Kopetsky at 1-920-748-1651.
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| Very truly yours, | |
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| Alliance Laundry Systems LLC | |
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| By: | /s/ Amanda Kopetsky | |
| | amanda.kopetsky@alliancels.com |
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I agree with and accept the terms contained in this Agreement and agree to be bound by them. Dated this _____ 01/28/2025 _____________, 2025. | | |
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| /s/ Justin Blount | |
| justin.blount@alliancels.com | | |
| Justin Blount | | |
SECOND AMENDMENT TO ALLIANCE LAUNDRY HOLDINGS INC.
2015 STOCK OPTION PLAN
This Second Amendment (“Amendment”) to the Alliance Laundry Holdings Inc. 2015 Stock Option Plan (the “Plan”) is entered into on behalf of the Compensation Committee of the Board of Directors of Alliance Laundry Holdings Inc. (the “Committee”) as of August 29, 2025 (the “Execution Date”). Capitalized terms not defined in this Amendment shall have the meanings assigned to them in the Plan.
PRELIMINARY STATEMENTS
1. Alliance Laundry Holdings Inc. adopted the Plan on August 31, 2015, which, pursuant to its terms, would automatically expire on August 31, 2025 (the “Expiration Date”) unless terminated sooner.
2. Pursuant to Section 8.1 of the Plan, the Committee has the discretion to amend the terms of the Plan.
3. The Committee desires to amend the terms of the Plan to provide for the extension of the Expiration Date by an additional one-year period.
TERMS
1. Effective Date. The Committee approved this Amendment to the Plan and the terms contained herein by unanimous written consent in lieu of a meeting on August 29, 2025 (the “Effective Date”).
2. As of the Effective Date, Section 9.16 of the Plan is replaced with the following:
“Term of Plan. This Plan shall be effective as of the Effective Date and shall expire on the eleventh anniversary of such date (except as to Options outstanding on that date), unless sooner terminated pursuant to Section 8.”
3. Except as specifically modified by this Amendment, all other terms and conditions of the Plan are hereby ratified and reaffirmed and shall remain in full force and effect.
The undersigned, executing on behalf of the Committee, hereto has executed this Amendment as of the Execution Date to be effective as of the Effective Date.
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| /s/ Robert L. Verigan |
| Robert L. Verigan |
SECOND AMENDMENT TO ALLIANCE LAUNDRY HOLDINGS INC.
2015 STOCK PURCHASE PLAN
This Second Amendment (“Amendment”) to the Alliance Laundry Holdings Inc. 2015 Stock Purchase Plan (the “Plan”) is entered into on behalf of the Compensation Committee of the Board of Directors of Alliance Laundry Holdings Inc. (the “Committee”) as of August 29, 2025 (the “Execution Date”). Capitalized terms not defined in this Amendment shall have the meanings assigned to them in the Plan.
PRELIMINARY STATEMENTS
1. Alliance Laundry Holdings Inc. adopted the Plan on August 31, 2015, which, pursuant to its terms, would automatically expire on August 31, 2025 (the “Expiration Date”) unless terminated sooner.
2. Pursuant to Section 7 of the Plan, the Committee has the discretion to amend the terms of
the Plan.
3. The Committee desires to amend the terms of the Plan to provide for the extension of the Expiration Date by an additional one-year period.
TERMS
1. Effective Date. The Committee approved this Amendment to the Plan and the terms contained herein by unanimous written consent in lieu of a meeting on August 29, 2025 (the “Effective Date”).
2. As of the Effective Date, Section 7 of the Plan is replaced with the following:
“The Committee may at its discretion at any time and from time to time, alter, amend, suspend, or terminate the Plan in whole or in part. Unless earlier terminated pursuant to this Section 7, the Plan will terminate on August 31, 2026; provided that the termination shall have no effect on shares of Common Stock previously issued under the Plan.”
3. Except as specifically modified by this Amendment, all other terms and conditions of the Plan are hereby ratified and reaffirmed and shall remain in full force and effect.
The undersigned, executing on behalf of the Committee, hereto has executed this Amendment as of the Execution Date to be effective as of the Effective Date.
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| /s/ Robert L. Verigan |
| Robert L. Verigan |
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| Entity Name | Jurisdiction |
| Alliance Laundry Holdings LLC | United States |
| Alliance Laundry Systems LLC | United States |
| Alliance Distribution Holdings Inc. | United States |
| Alliance Laundry Systems Distribution LLC | United States |
| Alliance DO Brasil Maquinas De Lavanderia Ltda. | Brazil |
| Alliance Laundry Holding S.a.r.l. | Luxembourg |
| Alliance Laundry CE s.r.o. | Czech Republic |
| Alliance Laundry Italy S.R.L. | Italy |
| Alliance Laundry (Netherlands) B.V. | Netherlands |
| Alliance Laundry BV | Belgium |
| Alliance Laundry Hong Kong Limited | Hong Kong |
| Alliance Laundry Equipment (Guangzhou) Ltd. | China |
| Alliance Laundry Systems Spain S.L. | Spain |
| Alliance Laundry France E.U.R.L. | France |
| Alliance Laundry Germany GmbH | Germany |
| Alliance Laundry Finance Ltd. | United Kingdom |
| Alliance Laundry SEA Pte. Ltd. | Singapore |
| Speed Queen Laundry Co Ltd. | China |
| Speed Queen Laundry (Thailand) Company Limited | Thailand |
| Alliance Laundry (Thailand) Company Limited | Thailand |
| Alliance Laundry Trade Receivables LLC | United States |
| Speed Queen Laundry LLC | United States |
| Speed Queen Laundry Franchise LLC | United States |
| Speed Queen Laundry Stores LLC | United States |
| Alliance Laundry Equipment Receivables 2015 LLC | United States |
| Alliance Laundry Equipment Receivables Trust 2015-A | United States |
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the reference to our firm under the caption "Experts" and to the use of our report on Alliance Laundry Holdings Inc. (formerly known as ALH Holding Inc.) dated July 29, 2025, in the Registration Statement (Form S-1) and related Prospectus of Alliance Laundry Holdings Inc. for the registration of shares of its common stock.
/s/ Ernst & Young LLP
Milwaukee, Wisconsin
September 12, 2025
