EXHIBIT 10.5
COINMACH SERVICE CORP.
(a Delaware corporation)
Income Deposit Securities
(IDSs)
and
11% Senior Secured Notes due 2024
PURCHASE AGREEMENT
Dated: November 19,
2004
COINMACH SERVICE CORP.
(a Delaware corporation)
18,333,333 Income Deposit Securities
Each Representing One Share of
Class A Common Stock, par value $0.01 per share, and
$6.14 Principal Amount of 11% Senior Secured Notes due
2024
and
$20,000,000.06 Aggregate Principal Amount of 11%
Senior Secured Notes due 2024
PURCHASE AGREEMENT
November 19, 2004
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
as Representative of the several Underwriters
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
Coinmach Service
Corp., a Delaware corporation (the “ Company ”),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated (“ Merrill
Lynch ”) and each of the other Underwriters named in
Schedule A hereto (collectively, the “
Underwriters ”, which term shall also include any
underwriter substituted as hereinafter provided in Section 10
hereof), for whom Merrill Lynch is acting as representative (in
such capacity, the “ Representative ”), with
respect to the issue and sale by the Company and the purchase by
the Underwriters, acting severally and not jointly, of (i) an
aggregate of 18,333,333 Income Deposit Securities (“
IDSs ”), representing an aggregate of 18,333,333
shares of the Company’s Class A common stock, par value
$0.01 per share (the “ Common Stock ”), and
$112,566,664.62 aggregate principal amount of the Company’s
11% Senior Secured Notes due 2024 (the “ IDS Notes
”), and (ii) an additional $20,000,000.06 aggregate
principal amount of the Company’s 11% Senior Secured Notes
due 2024 (the “ Third Party Notes ” and,
together with the IDS Notes, the “ Notes ”), in
each case as set forth in Schedule A hereto, and with respect
to the grant by the Company to the Underwriters, acting severally
and not jointly, of the option described in Section 2(b) hereof to
purchase all or any part of an additional 2,749,999 IDSs to cover
over-allotments, if any. The Notes will initially be fully and
unconditionally guaranteed on a senior secured basis (the “
Guarantee ” and, together with the Notes, the “
Note Securities ”) by Coinmach Laundry Corporation, a
Delaware corporation (“ Laundry Corp. ” and,
together with any future guarantor, the “ Guarantors
”). Each IDS represents one share of Class A Common
Stock and $6.14 principal amount of the IDS Notes. Unless the
context otherwise requires, the 18,333,333 IDSs (the “
Initial Securities ”) to be purchased by the
Underwriters on the Closing Time (as defined in Section 2(c)
hereof) and all or any part of the 2,749,999 IDSs subject to the
option described in Section 2(b) hereof (the “ Option
Securities ”) are hereinafter called, collectively with
the Common Stock and the Note Securities, the “
Securities ”.
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The
Note Securities will be issued pursuant to an indenture to be dated
as of November 24, 2004 (the “ Indenture ”)
between the Company, the Guarantors and The Bank of New York, as
trustee (in such capacity, the “ Trustee ”) and
as collateral agent (in such capacity, the “ Collateral
Agent ”).
The
Notes will be secured by a first priority lien on substantially all
of the existing and future assets of the Company, including,
without limitation, (a) an intercompany note (the “
Intercompany Note ”) issued by Coinmach Corporation
(“ Coinmach Corp. ”) to the Company,
(b) the guarantees of the Intercompany Note (the “
Intercompany Note Guarantees ” and, together with the
Intercompany Note, the “ Intercompany Note Obligations
”) by certain subsidiaries of Coinmach Corp., (c) 100%
of the capital stock Laundry Corp. and (d) 100% of the common
stock of Appliance Warehouse of America, Inc., a Delaware
corporation (“ AWA ”) (collectively, the “
Company Collateral ”). The Guarantee by Laundry Corp.
will be secured by a first priority lien on substantially all of
the existing and future assets of Laundry Corp., other than the
capital stock of Coinmach Corp., which will be subject to a second
priority lien (collectively, the “ Laundry Corp.
Collateral ” and together with the Company Collateral,
the “ Collateral ”). The lien on the capital
stock of Coinmach Corp. will be subordinated, pursuant to the
Intercreditor Agreement, to the lien of the Agent (as defined
below) under the Credit Facility (as defined below). At the Closing
Time, the Company will deliver to the Collateral Agent, pursuant to
the terms of the Indenture and the Security Agreement (as defined
below), financing statements (the “ Financing
Statements ”) listing each of the Company and Laundry
Corp. as a debtor and the Collateral Agent as secured party and
covering the Collateral under the security agreement among the
Collateral Agent (on its own behalf and on behalf of the Trustee
and the holders of Notes), Laundry Corp. and the Company (the
“ Security Agreement ”). In addition, the
Company and Laundry Corp., as pledgors, and the Collateral Agent
will enter into the pledge agreement to be dated as of the Closing
Time (the “ Pledge Agreement ” and, together
with the Financing Statements, the Security Agreement and the
Intercreditor Agreement, the “ Collateral Documents
”). The Collateral Documents will provide for the filing,
recordation, indexing and other action as specified therein with
respect to the perfection of the liens on the Collateral. In
addition, the capital stock of Coinmach Corp. will be subject to a
first priority lien pursuant to Coinmach Corp.’s amended
senior secured credit facility (as amended through the Closing
Time, the “ Credit Facility ”) dated as of
January 25, 2002 among Coinmach Corp., Deutsche Bank Trust
Company Americas, as administrative agent (the “ Agent
”) and the lenders party thereto from time to time (the
“ Lenders ”) and the other persons party thereto
from time to time. The agreement relating to the sharing of such
capital stock and the proceeds thereof among the Collateral Agent
(on its own behalf and on behalf of the Trustee and the holders of
Notes) and the Agent (on its own behalf and on behalf of the
Lenders) will be contained in a certain intercreditor agreement
(the “ Intercreditor Agreement ”) to be dated as
of the Closing Time among Laundry Corp., the Collateral Agent and
the Agent.
The
Company understands that the Underwriters propose to make a public
offering of the Initial Securities and Third Party Notes as soon as
the Representative deems advisable after this Agreement has been
executed and delivered.
The
Company has filed with the Securities and Exchange Commission (the
“ Commission ”) a registration statement on
Form S-1 (No. 333-114421), including the related
preliminary prospectus or prospectuses, covering the registration
of the Securities under the Securities Act of 1933, as amended (the
“ 1933 Act ”). Promptly after execution and
delivery of this Agreement, the Company will prepare and file a
prospectus in accordance with the provisions of Rule 430A
(“ Rule 430A ”) of the rules and
regulations of the Commission under the 1933 Act (the “
1933 Act Regulations ”) and paragraph (b) of
Rule 424 (“ Rule 424(b) ”) of the 1933
Act Regulations. The information included in such prospectus that
was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration
statement at the time it became effective pursuant to paragraph
(b) of Rule 430A is referred to as “
Rule 430A Information .” Each prospectus used
before such registration statement became effective,
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and any prospectus that omitted
the Rule 430A Information, that was used after such
effectiveness and prior to the execution and delivery of this
Agreement, is herein called a “ preliminary prospectus
.” Such registration statement, including the exhibits and
any schedules thereto, at the time it became effective, and
including the Rule 430A Information, is herein called the
“ Registration Statement .” Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein referred to as the “ Rule 462(b)
Registration Statement ,” and after such filing the term
“ Registration Statement ” shall include the
Rule 462(b) Registration Statement. The final prospectus in the
form first furnished to the Underwriters for use in connection with
the offering of the Securities is herein called the “
Prospectus .” For purposes of this Agreement, all
references to the Registration Statement, any preliminary
prospectus, the Prospectus or any amendment or supplement to any of
the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system (“ EDGAR ”).
In
connection with this offering, the Company will consummate certain
restructuring transactions as described in the preliminary
prospectus under “Summary—Summary of the
Transactions”, “Use of Proceeds” and “The
Transactions” (collectively, the “ Related
Transactions ”). The primary agreements relating to the
Related Transactions are listed on Schedule D hereto
(collectively with the Collateral Documents, the “ Related
Transaction Documents ”).
SECTION 1.
Representations and Warranties .
(a)
Representations and Warranties by the Company and Laundry
Corp. Each of the Company and Laundry Corp. represents and
warrants to each Underwriter as of the date hereof, as of the
Closing Time, and as of each Date of Delivery (if any) referred to
in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) Compliance
with Registration Requirements . Each of the Registration
Statement and any Rule 462(b) Registration Statement and any
post-effective amendment thereto has become effective under the
1933 Act, and no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration Statement or
any post-effective amendment thereto has been issued under the 1933
Act, and no proceedings for that purpose have been instituted or
are pending or, to the knowledge of the Company, are contemplated
by the Commission, and any request on the part of the Commission
for additional information has been complied with.
At the respective
times the Registration Statement, any Rule 462(b) Registration
Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities
are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any
amendments and supplements thereto, but excluding for the purposes
of this representation the exhibits thereto, complied and will
comply in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations and did not and will not contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading. Neither the Prospectus nor any
amendments or supplements thereto, at the time the Prospectus or
any such amendment or supplement was issued and at the Closing Time
(and, if any Option Securities are purchased, at the Date of
Delivery), included or will include an untrue statement of a
material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
representations and warranties in this subsection shall not apply
to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through
Merrill Lynch expressly for use in the
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Registration Statement (or any amendment
thereto) or the Prospectus (or any amendment or supplement
thereto).
Each preliminary
prospectus and the prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus
delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(ii)
Independent Accountants . The accountants who certified the
financial statements and supporting schedules included in the
Registration Statement are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(iii) Financial
Statements . The financial statements included in the
Registration Statement and the Prospectus, together with the
related schedules and notes, present fairly the financial position
of the Company and its consolidated subsidiaries at the dates
indicated and the statement of operations, stockholders’
equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified; said financial statements
have been prepared in conformity with generally accepted accounting
principles (“ GAAP ”) applied on a consistent
basis throughout the periods involved. The supporting schedules
included in the Registration Statement present fairly in accordance
with GAAP the information required to be stated therein. The
selected financial data and the summary financial information
included in the Prospectus present fairly the information shown
therein and have been compiled on a basis consistent with that of
the audited financial statements included in the Registration
Statement. The pro forma financial statements and the related notes
thereto included in the Registration Statement and the Prospectus
present fairly the information shown therein, have been prepared in
accordance with the Commission’s rules and guidelines with
respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used
in the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(iv) No
Material Adverse Change in Business . Since the respective
dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein,
(A) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the
ordinary course of business (a “ Material Adverse
Effect ”), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than
those in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one
enterprise, and (C) there has been no dividend or distribution
of any kind declared, paid or made by the Company on any class of
its capital stock.
(v) Good
Standing of the Company . The Company has been duly organized
and is validly existing as a corporation in good standing under the
laws of the State of Delaware and has corporate power and authority
to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and
perform its obligations under this Agreement and the Related
Transaction Documents; and the Company is duly qualified as a
foreign corporation to transact business and is in good standing in
each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or
the
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conduct of business, except where the failure so
to qualify or to be in good standing would not, individually or in
the aggregate, reasonably be expected to result in a Material
Adverse Effect.
(vi) Good
Standing of Subsidiaries . Laundry Corp. and each
“significant subsidiary” of the Company (as such term
is defined in Rule 1-02 of Regulation S-X, including,
without limitation, Laundry Corp., Coinmach Corp., AWA and Super
Laundry Equipment Corp., a New York corporation) (each, a “
Subsidiary ” and collectively, the “
Subsidiaries ”) has been duly organized and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus and is duly qualified
as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property
or the conduct of business, except where the failure so to qualify
or to be in good standing would not reasonably be expected to
result in a Material Adverse Effect; except as otherwise disclosed
in the Registration Statement, all of the issued and outstanding
capital stock of each such Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by
the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim
or equity; none of the outstanding shares of capital stock of any
Subsidiary was issued in violation of the preemptive or similar
rights of any securityholder of such Subsidiary. The only
subsidiaries of the Company are (a) the subsidiaries listed on
Exhibit 21 to the Registration Statement and (b) certain other
subsidiaries which, considered in the aggregate as a single
Subsidiary, do not constitute a “significant
subsidiary” as defined in Rule 1-02 of
Regulation S-X.
(vii)
Capitalization . The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus in
the column entitled “Actual” under the caption
“Capitalization” (except for subsequent issuances, if
any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectus
or pursuant to the exercise of convertible securities or options
referred to in the Prospectus). The shares of issued and
outstanding capital stock (including, without limitation, the
Common Stock) of the Company have been duly authorized and validly
issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock (including, without limitation,
the Common Stock) of the Company was issued in violation of the
preemptive or other similar rights of any securityholder of the
Company.
(viii)
Authorization of Agreement . This Agreement has been duly
authorized, executed and delivered by each of the Company and
Laundry Corp.
(ix)
Authorization and Enforceability of the Securities . The
Securities have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and
delivered by the Company and Laundry Corp., as applicable, pursuant
to this Agreement against payment of the consideration set forth
herein, will be validly issued, fully paid and non-assessable and
will constitute valid and binding obligations of the Company and
Laundry Corp., as applicable, enforceable against the Company and
Laundry Corp., as applicable, in accordance with their terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers) reorganization, moratorium or similar laws
affecting enforcement of creditors’ rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a
proceeding in equity or at law); no holder of the Securities will
be subject to personal liability by reason of being such a holder;
and the issuance of the Securities is not subject to the preemptive
or other similar rights of any securityholder of the
Company.
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(x)
Authorization and Enforceability of the Indenture . The
Indenture has been duly authorized by the Company and Laundry Corp.
and meets the standards and requirements for qualification under
the United States Trust Indenture Act of 1939, as amended (the
“ 1939 Act ”), and the rules and regulations of
the Commission applicable to an indenture that is qualified
thereunder, and, when executed and delivered by the Company,
Laundry Corp. and the Trustee, will constitute a valid and binding
agreement of the Company and Laundry Corp. enforceable against the
Company and Laundry Corp. in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors’ rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law).
(xi)
Authorization and Enforceability of the Note Securities .
The Note Securities have been duly authorized and, at the Closing
Time, will have been duly executed by the Company and Laundry
Corp., as applicable, and, when duly authenticated, issued and
delivered in the manner provided for in the Indenture and delivered
against payment of the purchase price therefor as provided in this
Agreement, will constitute valid and binding obligations of the
Company and Laundry Corp., as applicable, enforceable against the
Company and Laundry Corp. in accordance with their terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers) reorganization, moratorium or similar laws affecting
enforcement of creditors’ rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law), and will be in the form contemplated by, and
entitled to the benefits of, the Indenture.
(xii)
Authorization and Enforceability of the Intercompany Note
Obligations . The Intercompany Note and Intercompany Note
Guarantees have been duly authorized and, at the Closing Time, will
have been duly executed by Coinmach Corp. and each of the
guarantors under the Intercompany Guarantees (the “
Intercompany Note Guarantors ”), as applicable, and,
when authenticated, issued and delivered to the Company, will
constitute valid and binding obligations of Coinmach Corp. and the
Intercompany Note Guarantors, as applicable, enforceable against
Coinmach Corp. and the Intercompany Note Guarantors, as applicable,
in accordance with their terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers)
reorganization, moratorium or similar laws affecting enforcement of
creditors’ rights generally and except as enforcement thereof
is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at
law).
(xiii)
Authorization of the Related Transaction Documents . The
Related Transaction Documents have been duly authorized (to the
extent a party thereto) by the Company and its subsidiaries, as
applicable, and when executed and delivered (to the extent a party
thereto) by the Company and its subsidiaries (assuming the due
authorization, execution and delivery by each of the other parties
thereto), will constitute valid and legally binding agreements of
the Company and its subsidiaries (to the extent a party thereto),
enforceable against them in accordance with their terms, in each
case, to the extent the Company or such subsidiary is a party
thereto, and except that the enforcement thereof may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting the
enforcement of creditors’ rights generally and by general
equitable principles.
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(xiv)
Description of the Securities, the Indenture and the
Intercompany Note Obligations . The Securities, the Indenture
and the Intercompany Note Obligations will conform in all material
respects to the statements relating thereto contained in the
Prospectus.
(xv) Copies of
Related Transaction Documents . The Company has delivered to
the Representative a true and correct copy of each of the Related
Transaction Documents that have been executed and delivered prior
to the date of this Agreement and each other Related Transaction
Document in the form substantially as it will be executed and
delivered on or prior to the Closing Time, together with all
schedules and exhibits thereto, and as of the date hereof there
have been no material amendments, alterations, modifications or
waivers of any of the provisions of any of the Related Transaction
Documents since their date of execution or from the form in which
such Related Transaction Documents have been delivered to the
Representative. The Related Transaction Documents conform, in all
material respects, with the descriptions thereof in the
Registration Statement or the Prospectus.
(xvi) Absence
of Defaults and Conflicts . Neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company or
any of its subsidiaries is subject (collectively, “
Agreements and Instruments ”) except for such defaults
that would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement, the Indenture, the
Securities, the Intercompany Note Obligations and the Related
Transaction Documents and any other agreement or instrument entered
into or issued or to be entered into or issued by the Company in
connection with the transactions contemplated hereby or thereby or
in the Prospectus and the consummation of the transactions
contemplated herein and in the Registration Statement (including
the issuance and sale of the Securities and the use of the proceeds
from the sale of the Securities as described in the Prospectus
under the caption “Use of Proceeds”) and compliance by
the Company with its obligations hereunder have been duly
authorized by all necessary corporate action and do not and will
not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default
or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries
pursuant to, the Agreements and Instruments except for
(a) with respect to liens, charges or encumbrances, the liens
in favor of the Collateral Agent contemplated by the Collateral
Documents and (b) such conflicts, breaches, defaults or
Repayments Events or liens, charges or encumbrances that,
individually or in the aggregate, would not reasonably be expected
to result in a Material Adverse Effect, nor will such action result
in any violation of the provisions of the charter or by-laws of the
Company or any of its subsidiaries or, except such violations that,
individually or in the aggregate, would not reasonably be expected
to result in a Material Adverse Effect, any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their assets, properties or operations. As
used herein, a “ Repayment Event ” means any
event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such
holder’s behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by
the Company or any of its subsidiaries.
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(xvii) Absence
of Labor Dispute . No labor dispute with the employees of the
Company or any subsidiary exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing
or imminent labor disturbance by the employees of any of its or any
subsidiary’s principal suppliers, manufacturers, customers or
contractors, which, in either case, would reasonably be expected,
individually or in the aggregate, to result in a Material Adverse
Effect.
(xviii)
Taxes . The Company and its subsidiaries have timely filed
all federal, state, local and foreign tax returns that are required
to be filed or have duly requested extensions thereof and all such
tax returns are true, correct and complete, except to the extent
that any failure to file or request an extension, or any
incorrectness would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect. The
Company and its Subsidiaries have timely paid all taxes shown as
due on such filed tax returns (including any related assessments,
fines or penalties), except to the extent that any such taxes are
being contested in good faith and by appropriate proceedings, or to
the extent that any failure to pay would not reasonably be expected
to result in a Material Adverse Effect; and adequate charges,
accruals and reserves have been provided for in the financial
statements referred to in Section 1(a)(iii) above in
accordance with GAAP in respect of all federal, state, local and
foreign taxes for all periods as to which the tax liability of the
Company or any of its Subsidiaries has not been finally determined
or remains open to examination by applicable taxing authorities,
except to the extent that any failure to create adequate charges,
accruals and reserves would not reasonably be expected to result in
a Material Adverse Effect.
(xix) Internal
Controls . The Company and its subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management’s general or specific authorization,
(B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to
maintain accountability for assets, (C) access to assets is
permitted only in accordance with management’s general or
specific authorization and (D) the recorded accountability for
assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any
differences.
(xx)
Insurance . The Company and its subsidiaries carry or are
entitled to the benefits of insurance with financially sound and
reputable insurers in such amounts and covering such risks as in
the good faith judgment of the Board of Directors of the Company is
sufficient given the nature of the Company’s business as of
the date hereof, all of which insurance is duly in force and
effect.
(xxi) ERISA
. None of the Company or its subsidiaries has any material
liability for any prohibited transaction with respect to any
pension, profit sharing or other plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
(“ ERISA ”). None of the Company or any of its
subsidiaries maintains or has any obligation to contribute to or
otherwise has any liability with respect to any pension plan
subject to Title IV of ERISA. Each pension, profit sharing or other
plan that is subject to ERISA and which is maintained by the
Company or any subsidiary of the Company is in compliance in all
material respects with all applicable provisions of
ERISA.
(xxii)
Statistical and Market-Related Data . The statistical and
market-related data included in the Prospectus are based on or
derived from sources which the Company believes to be reliable and
accurate.
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(xxiii)
NASD . There are no affiliations with the National
Association of Securities Dealers, Inc. (the “ NASD
”) among the Company’s officers, directors or any
stockholder of the Company, except as disclosed in the Registration
Statement.
(xxiv) Absence
of Proceedings . There is no action, suit, proceeding, inquiry
or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the
Company or any subsidiary, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or that
would, individually or in the aggregate, be reasonably expected to
result in a Material Adverse Effect, or that would reasonably be
expected to materially and adversely affect the properties or
assets thereof or the consummation of the transactions contemplated
in this Agreement or in the Related Transaction Documents or the
performance by the Company of its obligations hereunder; the
aggregate of all pending legal or governmental proceedings to which
the Company or any subsidiary is a party or of which any of their
respective property or assets is the subject which are not
described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be
expected to result in a Material Adverse Effect.
(xxv) Accuracy
of Exhibits . There are no contracts or documents which are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto which have not been
so described and filed as required. Each contract or document that
is filed as an exhibit to the Registration Statement is a true and
complete copy of the contract or document that it purports to
be.
(xxvi)
Possession of Intellectual Property . The Company and its
subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, “ Intellectual
Property ”) necessary to carry on the business now
operated by them and described in the Registration Statement or
Prospectus, and neither the Company nor any of its subsidiaries has
received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect
the interest of the Company or any of its subsidiaries therein, and
which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy would,
individually or in the aggregate, result in a Material Adverse
Effect.
(xxvii) Absence
of Further Requirements . No filing with, or authorization,
approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is
necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or
sale of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement, the Indenture, the
Intercompany Note Obligations or the Related Transaction Documents,
except (A) such as have been already obtained, (B) such
as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the
Securities, and (C) the filing of the Financing Statements
with the Secretary of State of the State of Delaware.
(xxviii)
Absence of Manipulation . None of the Company, any affiliate
controlled by the Company within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act or, to the
knowledge of the Company, any other affiliate of the Company has
taken, nor will the
10
Company, any affiliate controlled by the Company
or, to the knowledge of the Company, any other affiliate of the
Company take, directly or indirectly, any action which is designed
to or which has constituted or which would be expected to cause or
result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities or the Common Stock or Notes underlying the
Securities.
(xxix)
Possession of Licenses and Permits . The Company and its
subsidiaries possess such permits, licenses, approvals, consents
and other authorizations (collectively, “ Governmental
Licenses ”) issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct
the business now operated by them and described in the Registration
Statement or Prospectus, except where the failure so to possess
would not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect; the Company and its
subsidiaries are in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply
would not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except when the
invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not,
individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect; and neither the Company nor any of
its subsidiaries has received any notice of proceedings relating to
the revocation or modification of any such Governmental Licenses
which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would reasonably be
expected to result in a Material Adverse Effect.
(xxx) Title to
Property . The Company and its Subsidiaries have good and
marketable title to all real property owned by the Company and its
Subsidiaries and good title to all other properties owned by them,
in each case, free and clear of all mortgages, pledges, liens,
security interests, claims, restrictions or encumbrances of any
kind except such as (a) are described in the Prospectus,
(b) constitute Permitted Liens (as defined in the Indenture)
or (c) do not, individually or in the aggregate, materially
and adversely affect the value of such property and do not
interfere with the use made and proposed to be made of such
property by the Company or any of its Subsidiaries; and all of the
leases and subleases material to the business of the Company and
its subsidiaries, considered as one enterprise, and under which the
Company or any of its subsidiaries holds properties described in
the Prospectus, are in full force and effect, and neither the
Company nor any subsidiary has any notice of any claim of any sort
that has been asserted by anyone adverse to the rights of the
Company or any subsidiary under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the
Company or such subsidiary to the continued possession of the
leased or subleased premises under any such lease or sublease, in
each case, except as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse
Effect.
(xxxi)
Investment Company Act . The Company is not required, and
upon the issuance and sale of the Securities as herein contemplated
and the application of the net proceeds therefrom as described in
the Prospectus will not be required, to register as an
“investment company” under the Investment Company Act
of 1940, as amended (the “ 1940 Act
”).
(xxxii)
Environmental Laws . Except as described in the Registration
Statement or Prospectus and except as would not, individually or in
the aggregate, reasonably be expected to result in a Material
Adverse Effect, (A) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or
foreign statute, law, rule, regulation, ordinance, code or rule of
common law or any judicial or
11
administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment,
relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products, asbestos-containing materials or
mold (collectively, “ Hazardous Materials ”) or
to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials
(collectively, “ Environmental Laws ”),
(B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or, to the
Company’s knowledge, threatened administrative, regulatory or
judicial actions, suits, investigations or proceedings relating to
any Environmental Law against the Company or any of its
subsidiaries and (D) there are no events or circumstances that
would reasonably be expected to form the basis of an order for
clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting
the Company or any of its subsidiaries relating to Hazardous
Materials or any Environmental Laws.
(xxxiii)
Solvency . Immediately prior to and after the consummation
of the transactions contemplated by this Agreement and the Related
Transactions, (i) the fair value and present fair saleable
value of the assets of the Company and its subsidiaries taken as a
whole will exceed the sum of its stated liabilities and identified
contingent liabilities; and (ii) the Company and its
subsidiaries taken as a whole is not, nor will it be, after giving
effect to the execution, delivery and performance of this Agreement
and the Related Transaction Documents, and the consumma tion of the
transaction contemplated hereby and thereby, (a) left with
unreasonably small capital with which to carry on its business as
it is proposed to be conducted, (b) unable to pay its debts
(contingent or otherwise) as they mature or (c) otherwise
insolvent.
(xxxiv)
Security Interests . The Collateral Documents, once executed
and delivered in connection with the sale of the Securities, and
upon the proper filing and indexation of applicable Financing
Statements with the proper governmental authorities (together with
payment of the appropriate filing fees), will create valid and
perfected security interests in the personal property and fixtures
subject thereto in favor of the Collateral Agent on behalf of the
holders of the Notes, subject only to Permitted Liens (as defined
in the Indenture).
(xxxv)
Reorganization . Concurrently with or prior to the Closing
Time, Coinmach Holdings, LLC, a Delaware limited liability company
(“ Holdings ”) has exchanged (a) certain
shares of capital stock of Laundry Corp. for outstanding units of
Holdings in order to redeem such Holdings units, and (b) all
the remaining outstanding shares of capital stock of Laundry Corp
and all of the shares of non-voting common stock of AWA for shares
of Company’s Class B common stock, par value $0.01 per
share (such transactions collectively referred to as the “
Reorganization ”), such that, after giving effect to
the Reorganization, Laundry Corp. will be a direct wholly owned
subsidiary of the Company and AWA will be entirely owned by the
Company and Coinmach Corp.
(xxxvi)
Listing . The IDSs have been duly authorized for listing on
the American Stock Exchange, subject only to official notice of
issuance. A registration statement with respect to the IDSs has
been filed on Form 8-A pursuant to Section 12 of the 1934 Act,
which registration statement complies in all material respects with
the 1934 Act. The Company has taken no action designed to, or
likely to have the effect of, terminating the registration of the
Securities under the
12
1934
Act, nor has the Company received any notification that the
Commission is contemplating terminating such
registration.
(xxxvii)
Registration Rights . There are no persons with registration
rights or other similar rights to have any securities registered
under the 1933 Act pursuant to the Registration Statement or
otherwise registered by the Company under the 1933 Act.
(b)
Officer’s Certificates. Any certificate signed by any
officer of the Company or any of its subsidiaries delivered to the
Representative or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as
to the matters covered thereby.
SECTION 2. Sale
and Delivery to Underwriters; Closing .
(a)
Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions
herein set forth, the Company agrees to sell to each Underwriter,
severally and not jointly, and each Underwriter, severally and not
jointly, agrees to purchase from the Company, at the price per IDS
and per Third Party Note set forth in Schedule B, the number
of Initial Securities and Third Party Notes, in each case as set
forth in Schedule A opposite the name of such Underwriter,
plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b)
Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the
terms and conditions herein set forth, the Company hereby grants an
option to the Underwriters, severally and not jointly, to purchase
up to an additional 2,749,999 IDSs at the price per Option Security
set forth in Schedule B, plus an amount per Option Security
equal to accrued and unpaid interest with respect to the underlying
IDS Note. The option hereby granted will expire 30 days after
the date hereof and may be exercised in whole or in part from time
to time only for the purpose of covering over-allotments which may
be made in connection with the offering and distribution of the
Initial Securities upon notice by Merrill Lynch to the Company
setting forth the number of Option Securities as to which the
several Underwriters are then exercising the option and the time
and date of payment and delivery for such Option Securities. Any
such time and date of delivery (a “ Date of Delivery
”) shall be determined by Merrill Lynch, but shall not be
later than seven full business days after the exercise of said
option, nor in any event prior to the Closing Time. If the option
is exercised as to all or any portion of the Option Securities,
each of the Underwriters, acting severally and not jointly, will
purchase that proportion of the total number of Option Securities
then being purchased which the number of Initial Securities set
forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each
case to such adjustments as Merrill Lynch in its discretion shall
make to eliminate any sales or purchases of fractional
IDSs.
(c)
Payment. Payment of the purchase price for, and delivery of
certificates for, the Third Party Notes and the Initial Securities
shall be made at the offices of Mayer, Brown, Rowe & Maw LLP,
1675 Broadway, New York, New York 10019, or at such other place as
shall be agreed upon by the Representative and the Company, at 9:00
A.M. (Eastern time) on the third (fourth, if the pricing occurs
after 4:30 P.M. (Eastern time) on any given day) business day after
the date hereof (unless postponed in accordance with the provisions
of Section 10 hereof), or such other time not later than ten
business days after such date as shall be agreed upon by the
Representative and the Company (such time and date of payment and
delivery, the “ Closing Time ”).
In
addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for,
and delivery of certificates for, such Option Securities shall
be
13
made at the above-mentioned
offices, or at such other place as shall be agreed upon by the
Representative and the Company, on each Date of Delivery as
specified in the notice from the Representative to the
Company.
Payment shall be
made to the Company by wire transfer of immediately available funds
to a bank account designated in writing by the Company, against
delivery to the Representative for the respective accounts of the
Underwriters of certificates for the Securities to be purchased by
them. It is understood that each Underwriter has authorized the
Representative, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Third Party
Notes, the Initial Securities and the Option Securities, if any,
which it has agreed to purchase. Merrill Lynch, individually and
not as representative of the Underwriters, may (but shall not be
obligated to) make payment of the purchase price for the Third
Party Notes, the Initial Securities or the Option Securities, if
any, to be purchased by any Underwriter whose funds have not been
received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such
Underwriter from its obligations hereunder.
(d)
Denominations; Registration. Certificates for the Third
Party Notes (including the Guarantees thereof), the Initial
Securities and the Option Securities, if any, shall be in such
denominations and registered in such names as the Representative
may request in writing at least one full business day before the
Closing Time or the relevant Date of Delivery, as the case may be.
The certificates for the Third Party Notes (including the
Guarantees thereof), the Initial Securities and the Option
Securities, if any, will be made available for examination and
packaging by the Representative in The City of New York not later
than 10:00 A.M. (Eastern time) on the business day prior to
the Closing Time or the relevant Date of Delivery, as the case may
be.
SECTION 3.
Covenants of the Company . The Company covenants with each
Underwriter as follows:
(a)
Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b), will
comply with the requirements of Rule 430A and will notify the
Representative promptly, and confirm the notice in writing,
(i) when any post-effective amendment to the Registration
Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission
regarding the Registration Statement or otherwise relating to or in
connection with the proposed offering of the Securities,
(iii) of any request by the Commission for any amendment to
the Registration Statement or any amendment or supplement to the
Prospectus or for additional information, and (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of any order preventing or suspending
the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly
effect the filings necessary pursuant to Rule 424(b) and will take
such steps as it deems necessary to ascertain promptly whether the
form of prospectus transmitted for filing under Rule 424(b) was
received for filing by the Commission and, in the event that it was
not, it will promptly file such prospectus. The Company will use
commercially reasonable efforts to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the lifting
thereof at the earliest practicable moment.
(b)
Filing of Amendments. The Company will give the
Representative notice of its intention to file or prepare any
amendment to the Registration Statement (including any filing under
Rule 462(b)) or any amendment, supplement or revision to either the
prospectus included in the Registration Statement at the time it
became effective or to the Prospectus, will furnish the
Representative with copies of any such documents a reasonable
amount of time prior to such proposed filing or use, as the case
may be, and
14
will not file or use any such
document to which the Representative or counsel for the
Underwriters shall reasonably object.
(c)
Delivery of Registration Statements. The Company has
furnished or will deliver to the Representative and counsel for the
Underwriters, without charge, signed copies of the Registration
Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference
therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representative, without
charge, a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits)
for each of the Underwriters. The copies of the Registration
Statement and each amendment thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(d)
Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary
prospectus as such Underwriter reasonably requested, and the
Company hereby consents to the use of such copies for purposes
permitted by the 1933 Act. The Company will furnish to each
Underwriter, without charge, during the period when the Prospectus
is required to be delivered under the 1933 Act, such number of
copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any
amendments or supplements thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(e)
Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations so as to
permit the completion of the distribution of the Securities as
contemplated in this Agreement and in the Prospectus. If at any
time when a prospectus is required by the 1933 Act to be delivered
in connection with sales of the Securities, any event shall occur
or condition shall exist as a result of which it is necessary, in
the opinion of counsel for the Underwriters and counsel for the
Company, to amend the Registration Statement or amend or supplement
the Prospectus in order that the Prospectus will not include any
untrue statements of a material fact or omit to state a material
fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time
it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration
Statement or amend or supplement the Prospectus in order to comply
with the requirements of the 1933 Act or the 1933 Act Regulations,
the Company will, as soon as reasonably practicable, prepare and
file with the Commission, subject to Section 3(b), such
amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will
furnish to the Underwriters such number of copies of such amendment
or supplement as the Underwriters may reasonably
request.
(f) Blue
Sky Qualifications. The Company will use its commercially
reasonable efforts, in cooperation with the Underwriters, to
qualify the Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions as the
Representative may reasonably designate and to maintain such
qualifications in effect for a period of not less than one year
from the later of the effective date of the Registration Statement
and any Rule 462(b) Registration Statement; provided ,
however , that the Company shall not be obligated to file
any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself
to taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject.
(g)
Rule 158. The Company will timely file such reports
pursuant to the Securities Exchange Act of 1934 (the “
1934 Act ”) as are necessary in order to make
generally available to its securityholders
15
as soon as practicable an
earnings statement for the purposes of, and to provide the benefits
contemplated by, the last paragraph of Section 11(a) of the 1933
Act.
(h) Use
of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the
Prospectus under “Use of Proceeds.”
(i)
Listing. The Company will use its commercially reasonable
efforts to effect the listing of the IDSs on the American Stock
Exchange.
(j)
Restriction on Sale of Securities. Other than the sale of
Securities hereunder, during a period of 180 days from the
date of the Prospectus (the “ Lock-Up Period ”),
the Company will not, without the prior written consent of Merrill
Lynch, (i) 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 or otherwise transfer or dispose of any of the
Company’s IDSs, Common Stock, Note Securities or any similar
securities or any securities convertible into or exercisable or
exchangeable for IDSs, Common Stock, Note Securities or any similar
securities or file any registration statement under the 1933 Act
with respect to any of the foregoing (collectively, the “
Lock-Up Securities ”) or (ii) enter into any swap
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, whether any such swap or
transaction described in clause (i) or (ii) above is to
be settled by delivery of IDSs, common stock, debt securities or
any similar securities, in cash or otherwise. Anything to the
contrary notwithstanding, the fo
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