<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20552
------------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
COMMISSION FILE NUMBER 1-4976
(COMPANY
LOGO) USL CAPITAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware
(STATE OF INCORPORATION)
733 Front Street
San Francisco, California
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
94-1360891
(I.R.S. EMPLOYER IDENTIFICATION NO.)
94111
(ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (415) 627-9000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS
8 3/4% Senior Notes due 2001
NAME OF EACH EXCHANGE ON WHICH REGISTERED
American Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. NA
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
As of March 1, 1994, the Registrant had outstanding 10 shares of Common
Stock, all of which were owned by Ford Holdings, Inc.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION
J(1)(a) AND (b), AND IS THEREFORE FILING THIS FORM 10-K WITH REDUCED DISCLOSURE
FORMAT.
PAGE 1 OF 111 SEQUENTIALLY
NUMBERED PAGES. EXHIBIT
INDEX ON PAGE 43.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
PART I
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Item 1. Business.................................................................... 3
Item 2. Properties.................................................................. 13
Item 3. Legal Proceedings........................................................... 13
Item 4. Submission of Matters to a Vote of Security Holders*
PART II
Item 5. Market for the Company's Common Stock and Related Stockholder Matters....... 14
Item 6. Selected Financial Data*
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.................................................................. 14
Item 8. Financial Statements and Supplementary Data................................. 15
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.................................................................. 15
PART III
Item 10. Directors, Executive Officers, Promoters and Control Persons of the Company*
Item 11. Executive Compensation*
Item 12. Security Ownership of Certain Beneficial Owners and Management*
Item 13. Certain Relationships and Related Transactions*
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K............ 16
Signatures............................................................................ 19
Exhibits Index........................................................................ 43
</TABLE>
- ------------
* Not required under General Instruction J to Form 10-K.
2
<PAGE> 3
USL CAPITAL CORPORATION
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
PART I
ITEM L. BUSINESS
USL Capital Corporation (formerly United States Leasing International,
Inc.) ("Company"), the Registrant, provides financing to commercial and
governmental entities principally in the United States, including:
-Business Equipment Financing--leasing and financing of office and
other business and commercial equipment directly with customers and
through vendor programs;
-Transportation and Industrial Financing--leasing and financing of
large-balance transportation equipment (principally commercial
aircraft) and industrial and energy facilities;
-Fleet Services--leasing and managing of commercial automobile, van,
and light truck fleets;
-Municipal and Corporate Financing--financing of essential-use
equipment for state and local governments, purchasing of industrial
development and housing bonds, and investing in publicly-traded and
privately-placed preferred stocks and senior and subordinated debt of
public and private companies;
-Real Estate Financing--mortgage financing of income-producing real
estate, including apartments, office buildings, shopping centers, and
warehouses; and
-Rail Services--full-service leasing to industrial shippers and
railroads.
The Company, a Delaware corporation, is a wholly owned subsidiary of Ford
Holdings, Inc. ("Ford Holdings") since October 1, 1989, on which date all of the
Company's capital stock was transferred by Ford Motor Company ("Ford") to Ford
Holdings, a then newly formed Delaware corporation. All of the outstanding
common stock of Ford Holdings is owned directly or indirectly by Ford. The
Company was originally organized as a California corporation on October 1, 1956,
and was purchased by Ford on November 18, 1987. The Company changed its name to
USL Capital Corporation on November 12, 1993.
The mailing address of the Company's executive offices is 733 Front Street,
San Francisco, California 94111. The telephone number of such offices is (415)
627-9000.
3
<PAGE> 4
KEY DATA
The following table sets forth certain data with respect to the Company's
business for the periods ending on and as of the dates indicated.
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Summary financial data (millions)
Revenue.................................................... $ 564.5 $ 501.4 $ 500.2
Income before taxes........................................ 122.2 89.1 86.1
Net income................................................. 77.1 56.7 54.8
Additions to earning assets................................ 2,045.1 1,830.5 1,654.9
Total earning assets....................................... 4,606.6 3,584.5 2,727.2
Business unit earning assets (% of total)
Business Equipment Financing............................... 32% 39% 48%
Transportation and Industrial Financing.................... 24 21 16
Fleet Services............................................. 10 12 12
Municipal and Corporate Financing.......................... 16 10 9
Real Estate Financing...................................... 9 9 9
Rail Services.............................................. 9 9 6
------- ------- -------
Total.............................................. 100% 100% 100%
------- ------- -------
------- ------- -------
</TABLE>
BUSINESS UNITS
The Company operates exclusively in the commercial finance segment of the
financial services industry. The Company serves its commercial customers though
six business units, each of which is described in greater detail below.
Business Equipment Financing
Through its Business Equipment Financing unit, the Company finances, under
finance leases, conditional sale agreements, operating leases, and
collateralized loans, the acquisition and use of equipment for business,
professional, industrial, and governmental users throughout the United States.
The types of equipment financed include computers and computer peripherals,
super-computers, office equipment, office furnishings, telecommunications,
medical, transportation, manufacturing, and other kinds of equipment. This
financing is sometimes offered in conjunction with the manufacturer of the
equipment, but in other cases is provided directly to the end user of the
equipment. Financing transactions generally cover equipment having an aggregate
cost between $250,000 and $5 million, with an average transaction size of
approximately $600,000. These financing services are marketed through 19 offices
located throughout the United States.
The Company does not manufacture or sell under its own label any of the
equipment which it leases. It only purchases equipment which a particular lessee
has committed to lease, and does not take order positions or make purchases in
advance of such a binding agreement by a lessee to lease the equipment. All
lessees are obligated to maintain the equipment and reimburse the Company for
any taxes paid thereon. Any casualty losses of equipment are covered either by
insurance carried by the lessee as required under the lease or by lessee
self-insurance when the Company deems the lessee's credit to be satisfactory.
Upon the expiration of leases, the Company either renews the leases with the
lessees, sells the leased equipment to the lessees, or remarkets the equipment.
The Company also acquires from manufacturers pools of leases and their
underlying equipment. The manufacturers may retain an economic interest in the
successful operation of each pool and, in exchange, the manufacturers maintain
the equipment, remarket it after the expiration of the initial term of the
leases, and manage the relationship with the lessees. In other transactions, the
lessee is obligated to maintain the equipment and the Company manages the
relationship with the lessees, bills and collects, and remarkets the equipment.
4
<PAGE> 5
The Company also acquires equipment and related leases originated by other
lessors and, to a lesser extent by brokers, although the purchase of
broker-originated business has declined significantly over the past few years.
On the majority of such acquired transactions, the Company bills and collects,
manages the relationships with the lessees and remarkets the equipment.
The following table sets forth certain data with respect to the Business
Equipment Financing unit for the periods ending on and as of the dates
indicated.
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Summary financial data (millions)
Additions to earning assets................................ $ 622.2 $ 559.6 $ 685.5
Total earning assets....................................... 1,465.8 1,395.3 1,328.7
Type of earning assets (% of total)
Finance leases............................................. 83% 85% 75%
Operating leases........................................... 13 11 13
Other...................................................... 4 4 12
------- ------- -------
Total.............................................. 100% 100% 100%
------- ------- -------
------- ------- -------
</TABLE>
Transportation and Industrial Financing
Through its Transportation and Industrial Financing unit, the Company at
the present time principally owns, leases, finances and remarkets commercial
aircraft, and to a lesser extent leases and finances other types of
transportation, energy and industrial equipment and facilities. Aircraft, other
equipment and facilities are leased and financed under single investor finance
leases, leveraged leases, operating leases and collateralized loans. Under all
leases the lessee is responsible for all taxes, maintenance and insurance. The
majority of this business is acquired through investment bankers and lessee
advisors, and the balance through direct lessee contact.
The Company owns a 23% interest in, and through a wholly-owned subsidiary
is the general partner of, Airlease Ltd., a California Limited Partnership
("Airlease Ltd."). Assets were $114.0 million at December 31, 1993 compared with
$112.3 million at December 31, 1992. The limited partnership units are listed on
the New York Stock Exchange. Airlease Ltd. engages in the ownership and leasing
of commercial aircraft to airlines and a freight carrier.
At December 31, 1993, the Company's aggregate commercial aircraft earning
assets in this unit (including its interest in those aircraft owned by Airlease
Ltd.) were $911.2 million. Of the aircraft leased and financed by the Company at
December 31, 1993, 50% of the Company's aircraft earning assets were leased to
or financed for commercial airlines, with the remainder leased primarily to a
freight carrier and aircraft manufacturers. One aircraft is on lease to a
bankrupt airline which expects to emerge from bankruptcy in the summer of 1994.
Approximately 98% of the aircraft owned or financed by the Company (measured by
their book value) were in compliance with Stage III noise regulations (the most
stringent level) of the Aviation Safety and Capacity Act of 1990.
This business unit also manages a portfolio of leveraged leases, single
investor leases and loans in which Ford Credit holds an interest. These managed
leases cover rail cars and locomotives, electric power generation and other
facilities, marine vessels, and other types of assets. The business unit also
acts as agent for Trust Company for USL, Inc., a wholly owned subsidiary, which
is owner trustee for a portfolio of leveraged leases it arranged for outside
institutional investors prior to 1985. As the remarketing agent for these
institutional investors and Ford Credit, the Company participates in the
residual proceeds from the disposition of the equipment at the termination of
some of these leases.
5
<PAGE> 6
The following table sets forth certain data with respect to the
Transportation and Industrial Financing business unit for the periods ending on
and as of the dates indicated.
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------
1993 1992 1991
------- ------ ------
<S> <C> <C> <C>
Summary financial data (millions)
Additions to earning assets.................................. $ 320.7 $345.6 $270.9
Total earning assets......................................... 1,096.8 767.2 429.2
Type of Equipment (% of earning assets)
Stage III aircraft........................................... 81% 88% 83%
Stage II aircraft............................................ 1 3 6
Non-aircraft equipment....................................... 18 9 11
------- ------ ------
Total................................................ 100% 100% 100%
------- ------ ------
------- ------ ------
</TABLE>
Fleet Services
Through its Fleet Services unit, the Company is engaged in the leasing of
automotive, van, and light truck fleets for commercial purposes. Fleet Services
also provides management services for a substantial portion of its leased
vehicles, and for certain of the vehicles owned by its customers. These leasing
and management services are marketed to commercial customers through 12 offices
located throughout the United States. On December 31, 1993, the Company sold its
20% equity interest in AT&T Automotive Services, Inc. to AT&T Capital
Corporation and terminated its joint venture with AT&T Capital Corporation.
However, Fleet Services entered into a new long-term agreement under which it
continues to provide fleet management services for subsidiaries and affiliates
of American Telephone and Telegraph Company. At December 31, 1993, there were
approximately 14,000 vehicles for which the Company provided such services.
At December 31, 1993, Fleet Services had (in addition to the vehicles it
services for AT&T Capital Corporation) an aggregate of approximately 71,600
vehicles in fleets which it leased and managed or managed only, as compared with
approximately 71,500 vehicles at December 31, 1992.
Certain of Fleet Services' vehicles are leased under "open-end finance"
leases in which the Company bears no risk (other than the lessee's credit) on
the resale price of the vehicles at the expiration of the lease. The majority of
the vehicles are leased under "modified open-end" leases, in which the Company,
although not assured of full recovery of the vehicle's cost from rental and
resale proceeds, is at risk for a relatively small portion of such cost, which
portion is expected to be substantially below anticipated resale proceeds. Other
vehicles are leased under "closed-end" leases, in which the Company's full
recovery of the vehicle's cost from rental and resale proceeds is dependent upon
the Company's realization of anticipated residual value. Additionally, certain
of the closed-end leases (less than 9% of all leased vehicles at December 31,
1993) contain maintenance provisions which require that the Company bear the
maintenance expense for the leased vehicle in consideration of a higher lease
rate.
6
<PAGE> 7
The following table sets forth certain data with respect to the Fleet
Services business unit for the periods ending on and as of the dates indicated.
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Summary financial data (millions)
Additions to earning assets.................................... $385.9 $389.3 $329.4
Total earning assets*.......................................... 443.7 426.0 327.2
Type of earning assets (% of total)
Modified open-end leases....................................... 60% 48% 48%
Open-end finance leases........................................ 17 22 17
Closed-end leases.............................................. 7 11 14
Other.......................................................... 16 19 21
------ ------ ------
Total.................................................. 100% 100% 100%
------ ------ ------
------ ------ ------
</TABLE>
- ------------
* During 1993, approximately $103 million in earning assets were securitized and
sold, which together with earning assets securitized and sold in 1991 and
1992, resulted in a balance of such securitized assets at December 31, 1993 of
approximately $172 million, which are not included in total earning assets.
See Borrowing and Other Sources of Funds on page 13.
The increase in modified open-end leases reflects the shift to a lease
structure that is more attractive to the customer. This "modified" structure
permits, for 2-year contracts, operating lease treatment for the customers and
finance lease treatment for the Company.
Under substantially all leases, the lessee is obligated to provide
insurance against public liability and property damage, to reimburse the Company
for all taxes relating to the vehicles or the lease and, except in leases with a
maintenance provision, to maintain, at the lessee's expense, the vehicles in
good operating condition.
Management services are generally computerized and provide monthly cost
analyses of each vehicle in service, allowing customers' fleet operating costs
to be closely controlled. Programs are tailored to meet special customer needs
and many options are offered including, for example, guaranteed maintenance
programs, assistance in selection of automobile units, and analysis of insurance
coverage.
Municipal and Corporate Financing
Through its Municipal and Corporate Financing business, the Company
arranges and carries on its books municipal financings for state and local
governments of essential-use equipment. This business also invests in
publicly-traded and privately-placed preferred stocks and senior and
subordinated debt of public and private companies, principally utilities and
manufacturing companies. These securities are purchased, after extensive due
diligence by the Company, through investment banking intermediaries, either at
the initial offering or on the open market. Approximately 70% of these corporate
securities are currently rated at investment grade.
7
<PAGE> 8
The following table sets forth certain data with respect to the Municipal
and Corporate Financing business unit for the periods ending on and as of the
dates indicated.
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Summary financial data (millions)
Additions to earning assets.................................... $429.3 $291.4 $188.7
Total earning assets........................................... 743.0 363.1 242.2
Type of investments (% of earning assets)
Municipal
Bonds....................................................... 0% 0% 11%
Finance Leases.............................................. 9 10 7
Corporate
Preferred stock............................................. 65 69 67
Debt........................................................ 26 21 15
------ ------ ------
Total.................................................. 100% 100% 100%
------ ------ ------
------ ------ ------
</TABLE>
Real Estate Financing
Through four loan origination offices in its Real Estate Financing unit,
the Company provides first mortgage financing of income-producing real estate
including apartments, office buildings, shopping centers, and warehouses. This
real estate is geographically diversified throughout the United States. No
financing is provided for motels, hotels, raw land, or specialty properties.
Substantially all transactions are financings of three to five years, and none
is a construction loan. The loans provide funds for acquisitions or
refinancings, or are "bridge" financings between construction and permanent
loans. Prior to August 1990, substantially all of the transactions arranged by
this business were funded by and carried on the books of Ford Credit; the
Company continues to manage these transactions for Ford Credit. At December 31,
1993, the Company had commitments to fund additional first mortgage loans of
approximately $7.1 million. At such date, it also held title to a single
foreclosed property at a book value of $3.8 million, which it recovered on a
defaulted loan and for which additional tenants are actively being sought.
8
<PAGE> 9
The following table sets forth certain data with respect to the Real Estate
Financing business unit for the periods ending on and as of the dates indicated.
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Summary financial data (millions)
Additions to earning assets.................................... $143.6 $ 89.8 $132.0
Total earning assets........................................... 436.5 326.1 238.5
Type of property (% of earning assets)
Apartments..................................................... 53% 50% 53%
Offices........................................................ 29 30 29
Shopping Centers............................................... 16 17 18
Industrial..................................................... 2 3 0
------ ------ ------
Total.................................................. 100% 100% 100%
------ ------ ------
------ ------ ------
Location of property (% of earning assets)
Southwest...................................................... 37% 39% 26%
East........................................................... 26 20 25
West........................................................... 28 30 34
Midwest........................................................ 9 11 15
------ ------ ------
Total.................................................. 100% 100% 100%
------ ------ ------
------ ------ ------
</TABLE>
Rail Services
Through its Rail Services unit, the Company leases to industrial shippers
and railroads approximately 17,700 rail cars. Approximately 92% of all of these
cars are owned by the Company or leased to it under long-term leases. Of the
cars in the Company's fleet at December 31, 1993, 44% were leased out to the
Company's customers for terms of less than one year, 46% for terms of between
one and five years, and 8% for terms of over five years. Under substantially all
leases, the Company maintains and repairs the cars at its expense. As provided
in the rules of the American Association of Railroads, if a car is damaged or
destroyed on the line of any particular railroad, that railroad is obligated
either to repair the car or, if the car is destroyed, pay the car owner an
amount which reflects the car's type and age. Rail Services also manages 1,492
cars for others, including 1,290 cars for Ford affiliates.
The following table sets forth certain data with respect to the Rail
Services business unit for the periods ending on and as of the dates indicated.
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Summary financial data (millions)
Additions to earning assets.................................... $143.4 $154.5 $ 48.3
Total earning assets........................................... 421.8 301.7 156.3
Type of equipment (% of earning assets)
Hopper cars.................................................... 41% 46% 55%
Tank cars...................................................... 17 24 38
Flat cars...................................................... 14 1 1
Intermodal cars................................................ 9 14 3
Gondolas cars.................................................. 8 9 3
Box cars....................................................... 6 0 0
Other.......................................................... 5 6 0
------ ------ ------
Total.................................................. 100% 100% 100%
------ ------ ------
------ ------ ------
</TABLE>
9
<PAGE> 10
FINANCING ARRANGED AND MANAGED FOR FORD MOTOR CREDIT COMPANY
The Company manages certain commercial leasing and financing transactions
originated by and carried on the books of Ford Credit. In addition, a portion of
new Municipal and Corporate Financing and Transportation and Industrial
Financing transactions, including the major portion of leveraged leases, are
funded by and carried on the books of Ford Credit. Ford Credit reimburses the
Company for the Company's operating costs related to arranging and managing all
transactions funded by Ford Credit. All other transactions are funded by and
carried on the books of the Company.
MANAGEMENT OF FOREIGN AFFILIATES
The Company manages two affiliated corporations in the United Kingdom and
Australia that are owned by Ford. These two corporations are engaged in the
equipment financing business, which businesses are conducted substantially in
the same manner as the Company's businesses in the United States. These
affiliates fund their equipment acquisitions and pay their own operating
expenses. However, the Company guarantees the indebtedness of such affiliates,
which at December 31, 1993, was $77 million, of which $39 million, representing
the United Kingdom affiliate's indebtedness, was paid off in February 1994.
These corporations were wholly-owned subsidiaries of the Company prior to
October 1, 1989, on which date they were dividended to Ford. The company located
in the United Kingdom has entered into no new transactions since mid-1992 and is
being liquidated.
10
<PAGE> 11
GENERAL
Credit Loss Experience
The management of credit exposure is an important element of the Company's
business. The Company reviews the credit of all prospective customers, and
manages concentration exposures by customer, collateral type, and geographic
distribution. It establishes appropriate loss allowances based on the credit
characteristics and the loss experience for each type of business, and also
establishes additional reserves for specific transactions if it believes this
action is warranted. Delinquent receivables are reviewed by management monthly,
and are generally written down to expected realizable value when, in the opinion
of management, they become uncollectible or when they become more than 180 days
past due. Collection activities continue on accounts written off when management
believes such action is warranted.
The table below shows certain information on the Company's allowance for
doubtful accounts for the periods indicated.
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Allowance for doubtful accounts (millions)
Beginning balance.......................................... $ 39.9 $ 29.8 $ 25.2
Additions.................................................. 25.1 19.5 10.7
Deductions................................................. (9.8) (9.4) (6.1)
------- ------- -------
Ending balance............................................. $ 55.2 $ 39.9 $ 29.8
------- ------- -------
------- ------- -------
Percent of earning assets.................................... 1.2% 1.1% 1.1%
Total balances of accounts receivable over 90 days past due
at year end (millions)..................................... $ 44.3 $ 48.5 $ 22.6
Percent of earning assets.................................... 1.0% 1.4% 0.8%
Total earning assets (millions)
Investment in finance leases--net.......................... $2,364.1 $2,074.8 $1,462.5
Investment in operating leases--net........................ 694.7 557.8 492.1
Investment in leveraged leases---net....................... 190.5 3.9 0.0
Notes receivable........................................... 721.3 502.1 416.0
Investment in securities................................... 562.9 329.0 236.1
Inventory held for sale or lease........................... 54.8 97.2 100.3
Investments in associated companies........................ 18.3 19.7 20.2
------- ------- -------
Total.............................................. $4,606.6 $3,584.5 $2,727.2
------- ------- -------
------- ------- -------
</TABLE>
Additions to the allowance for doubtful accounts for 1993 increased by $5.6
million from 1992 primarily as a result of the increase in earning assets as
well as management's evaluation of the adequacy of the loss reserve. In
addition, write-offs (deductions) in 1993 increased $400,000 from 1992, the
largest single transaction being $2.7 million.
Additions to the allowance for doubtful accounts for 1992 increased by $8.8
million from 1991. This resulted primarily from a one-time reduction to the
allowance made in 1991 to recognize that the Business Equipment Financing unit
no longer engaged in small ticket leasing and unsecured lending, operations
which experienced higher credit losses. In addition, write-offs (deductions) in
1992 increased $3.3 million from 1991, the largest single transaction being $1.3
million.
Total balances of accounts receivable over 90 days past due at year end
1993 decreased $4.2 million over 1992, primarily because of improved collection
and workout activities as well as the write-down of several receivables which
were delinquent at December 31, 1992, and which management has since deemed to
be uncollectible. At December 31, 1993, accounts receivable over 90 days past
due consisted primarily of delinquent notes in the amount of $11.2 million and
$8.7 million, collateralized by an apartment complex and an office complex,
respectively, and a $6.0 million delinquent receivable from an airline,
collateralized by a DC-9-51 aircraft.
11
<PAGE> 12
Residual Policy
The establishment and realization of residual values on both finance and
operating leases are important elements of the Company's business. In general,
finance leases are non-cancelable leases in which the lease payments over the
term exceed the cost of the leased equipment plus financing and other expenses.
Operating leases are usually of a shorter term and the lease payments by
themselves are not sufficient to cover such cost and expenses. Full recovery of
equipment cost is dependent upon selling or re-leasing the equipment.
Residual values are established upon acquisition of the equipment based
upon the estimated value of the equipment at the time the Company expects to
dispose of the equipment under finance leases, and at the end of the equipment's
expected useful life under operating leases. Periodically, the Company reviews
its residual values, and if it determines there has been an other than temporary
impairment in value, adjustments are made which result in an immediate charge to
income and/or a reduction in earnings over the remaining term of the lease.
FINANCE LEASES. The following table shows, for each respective year, for
the Company's continuing businesses: (a) the aggregate sales proceeds and
renewal proceeds from sales of equipment subject to finance leases, and (b)
these proceeds as a percentage of the adjusted residual value of the equipment.
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31
-------------------------
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Business Equipment Financing
Amount (millions)................................................. $19.2 $49.2 $41.3
Percent........................................................... 138% 126% 132%
Transportation and Industrial Financing
Amount (millions)................................................. $11.1* $ 1.7 $ 6.2
Percent........................................................... 7,073%* 526% 906%
Total
Amount (millions)................................................. $30.3 $50.9 $47.5
Percent........................................................... 215% 129% 148%
</TABLE>
- ------------
* These amounts reflect proceeds received under a residual sharing agreement
arranged in 1972. The residual was carried on the Company's books at a nominal
amount.
OPERATING LEASES. The following table shows, for each respective year, for
the Company's continuing businesses: (a) the aggregate proceeds from sales of
equipment subject to operating leases, and (b) these proceeds as a percentage of
the net book value of the equipment sold.
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31
-------------------------
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Business Equipment Financing
Amount (millions)................................................. $ 6.9 $20.5 $ 9.6
Percent........................................................... 90% 111% 140%
Fleet Services
Amount (millions)................................................. $13.0 $16.4 $19.0
Percent........................................................... 116% 115% 105%
Other
Amount (millions)................................................. $ 4.1 $ 1.4 $ --
Percent........................................................... 196% 186% --
Total
Amount (millions)................................................. $24.0 $38.3 $28.6
Percent........................................................... 115% 115% 115%
</TABLE>
12
<PAGE> 13
Employees
The Company had 682 full time employees at December 31, 1993.
Competition
In all of its financing programs, the Company competes with other leasing
and finance companies, banks, lease brokers and investment banking firms who
arrange for the financing and leasing of equipment, and manufacturers and
vendors who sell, finance and lease their own products to customers.
Borrowing and Other Sources of Funds
The funds required to operate the Company's business are generated
internally from loan and lease payments and equipment sales, and externally from
medium-term debt, commercial paper, securitized financings, and bank borrowings.
The Company raises short-term debt financing through its established
commercial paper programs and raises long-term debt in the public market through
periodic offerings of medium-term notes and underwritten debt offerings. The
Company has committed bank lines of $1.19 billion with 23 banks, consisting of
$995 million under multi-year (principally five-year) credit agreements and $195
million under one-year agreements. Neither Ford nor Ford Holdings guarantees the
debt of the Company, although the Company's existing credit lines require that
Ford maintain at least a 75% direct or indirect ownership interest in the
Company. At present, the Company's profitability is not significantly related to
the business outlook for Ford and this situation is not expected to change in
the future.
In 1991 the Company securitized and sold approximately $212 million of its
vehicle leases by transferring such leases, without recourse to the Company, to
a wholly-owned subsidiary, which, in turn, sold the leases to an unrelated
cooperative corporation. Such wholly-owned subsidiary is a separate entity from
its parent company, USL Capital Corporation, whose assets are available first
and foremost to satisfy the claims of its creditors. As it has since 1991, the
Company intends periodically to securitize additional leases under this
arrangement to replace the run-off of principal in the leases initially
securitized. See Note 2 of Notes to Consolidated Financial Statements on page
27.
On April 30, 1992, the Company securitized and sold approximately $94
million in principal amount of receivables under lease-purchase agreements with
various state and local governments. These lease-purchase agreements were
purchased by the Company from Ford Credit, for whom they had been managed by the
Company. The Company then immediately transferred them to tax-exempt grantor
trusts, which issued tax-exempt asset-backed certificates to investors in a
public offering registered under the Securities Act of 1993 (Registration
Statement No. 33-45596). See Note 2 of Notes to Consolidated Financial
Statements on page 27.
ITEM 2. PROPERTIES
The Company owns no significant real property and leases all of its
offices. See Note 10 of Notes to Consolidated Financial Statements on page 32
for information as to rental obligations.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings, other than ordinary routine
litigation incidental to the business, to which the Company is a party or to
which its property is subject, nor are any such proceedings known to be
contemplated by governmental authorities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The information called for by this item has been omitted pursuant to
General Instruction J(2)(c).
13
<PAGE> 14
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
All outstanding shares of the Company's Common Stock are owned by Ford
Holdings, and therefore there is no market for such shares. In the fourth
quarter of 1989, the Company dividended to Ford the Company's ownership
interests in its Australian, United Kingdom, Canadian and German operations in
the aggregate amount of $19.9 million. Since such dividend, the Company has paid
no dividend nor made any other distribution to Ford, Ford Holdings or any other
Ford affiliate. Ford Holdings made a $30 million, a $5 million and a $40 million
capital contribution to the Company in 1991, 1992 and 1993, respectively. The
Company and Ford Holdings will, from time to time, determine the appropriate
capitalization for the Company, which will, in part, affect any future payment
of dividends to Ford Holdings or capital contributions to the Company.
ITEM 6. SELECTED FINANCIAL DATA
The information called for by this item has been omitted pursuant to
General Instruction J(2)(a).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Pursuant to General Instruction J(2)(a), the following narrative analysis
of the results of operations is presented in lieu of Management's Discussion and
Analysis of Financial Condition and Results of Operations.
RESULTS OF OPERATIONS
REVENUES, EXPENSES AND OPERATING PROFIT
<TABLE>
<CAPTION>
YEARS ENDED 1993 VS. 1992
DECEMBER 31 INCREASE/(DECREASE)
--------------------- ------------------
(IN THOUSANDS) 1993 1992 AMOUNT PERCENT
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Revenues........................................... $564,472 $501,420 $ 63,052 13%
-------- -------- --------
Expenses
Sales, administrative and general................ 70,352 63,250 7,102 11
Interest......................................... 189,942 154,157 35,785 23
Depreciation..................................... 131,100 159,324 (28,224) (18)
Other............................................ 50,907 35,638 15,269 43
-------- -------- --------
Total expenses........................... 442,301 412,369 29,932 7
-------- -------- --------
Operating Profit................................... $122,171 $ 89,051 $ 33,120 37%
-------- -------- -------- -------
-------- -------- -------- -------
</TABLE>
Revenues
Revenues increased $63.1 million, or 13% in 1993 compared with 1992
primarily as a result of a 30% increase in average earning assets partially
offset by a decrease in revenue yields relating to the general decline in
interest rates and a change in the mix of assets in the operating lease
portfolio. In addition, there was an increase of $10.1 million in the gain on
sale of residuals and equipment in the Transportation and Industrial Financing
business.
Expenses
Sales, administrative and general expenses increased $7.1 million, or 11%
in 1993, primarily reflecting the effects of the substantial increase in earning
assets.
Interest expense increased $35.8 million, or 23% in 1993, reflecting an
increase in average borrowings from $2.31 billion in 1992 to $3.15 billion in
1993 to finance earning assets. This increase was offset in part by a decline in
borrowing rates, which averaged 6.0% in 1993 compared with 6.6% in 1992.
14
<PAGE> 15
Depreciation expense on operating lease equipment decreased $28.2 million,
or 18% in 1993, although the average investment in operating lease equipment
increased 30% or $151 million. This increase in equipment primarily reflects the
addition of approximately $200 million in the Rail Services business, with an
average life of 16 years. The reduction in depreciation expense is the result of
the shift to the longer depreciable life rail car assets.
Other expenses increased $15.3 million, or 43%, due primarily to an $8.8
million increase in maintenance expense incurred by the Rail Services business
as a result of routine maintenance on a significantly larger fleet. There was
also an increase of $5.3 million in the provision for losses (see page 11 for
discussion of credit loss experience).
Operating Profit
Operating profit improved $33.1 million or 37% compared with 1992. The
improvement in operating results reflects the impact of higher earning assets.
Taxes on Income
Income taxes were 36.9% on income before taxes in 1993 compared with 32.8%
in 1992. See Note 9 of Notes to Consolidated Financial Statements on page 31 for
the principal reasons for differences from the normal statutory rates.
New Acccounting Standards
In November 1992, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 112, "Employers'
Accounting for Postemployment Benefits", which requires companies to account for
employee benefits on an accrual basis for periods when employees are no longer
actively employed but have not yet reached retirement. The effect on the
Company's financial statements was not material.
In May 1993, the FASB issued SFAS 114, "Accounting by Creditors for
Impairment of a Loan". The Standards requires that impaired loans be measured
based on the present value of expected future cash flows discounted at the
loan's effective interest rate. The Company does not plan to adopt this standard
until January 1, 1995 and the effect is not expected to be material.
In May 1993, the FASB issued SFAS 115, "Accounting for Certain Investments
in Debt and Equity Securities". The Standard establishes standards of financial
accounting and reporting for investments in equity securities (excluding those
accounted for under the equity method and investments in consolidated
subsidiaries) that have readily determinable fair values and for all investments
in debt securities. The Company has adopted this standard effective January 1,
1994, and the effect is not expected to be material.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data required by this Item are
listed in Item 14 of Part IV on page 16, are set forth in detail at the end of
this report, and are filed as part hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
15
<PAGE> 16
PART III
The information called for by Items 10, 11, 12 and 13 has been omitted
pursuant to General Instruction J(2)(c).
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The consolidated financial statements of the Company are included in
this report at the pages indicated.
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Management's Responsibility for Financial Statements...................... 20
Report of Independent Accountants......................................... 21
Consolidated Statements of Income for the periods ended December 31, 1993,
1992, and 1991.......................................................... 22
Consolidated Balance Sheets at December 31, 1993 and 1992................. 23
Consolidated Statements of Cash Flows for the periods ended December 31,
1993, 1992 and 1991..................................................... 24
Consolidated Statements of Changes in Shareholder's Equity for the periods
ended December 31, 1993, 1992 and 1991.................................. 25
Notes to Consolidated Financial Statements................................ 26
</TABLE>
(a) 2. Financial Statement Schedules
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C>
Schedule II --Amounts Receivable from Related Parties and Underwriters,
Promoters, and Employees other than Related Parties...... 37
Schedule V --Property, Plant and Equipment............................ 38
Schedule VI --Accumulated Depreciation, Depletion and Amortization of
Property, Plant and Equipment............................ 39
Schedule VIII --Valuation and Qualifying Accounts........................ 40
Schedule IX --Short-Term Notes Payable................................. 41
Schedule X --Supplementary Income Statement Information............... 42
</TABLE>
Financial statements and schedules other than those listed above are
omitted because the required information is included in the financial
statements or the notes thereto or because of the absence of conditions
under which they are required.
(a) 3. Exhibits required by Item 601 of Regulation S-K:
<TABLE>
<S> <C>
(3)A. Certificate of Incorporation of United States Leasing International, Inc.,
a Delaware Corporation filed with the Secretary of State of the State of
Delaware on August 15, 1986.
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C>
B. Agreement of Merger pursuant to which United States Leasing International,
Inc., a California corporation, merged into United States Leasing
International, Inc., a Delaware corporation, filed with the Secretary of
State of the State of Delaware on October 27, 1986.
C. Certificate of Amendment of Certificate of Incorporation of United States
Leasing International, Inc., pursuant to which United States Leasing
International, Inc. changed its name to USL Capital Corporation filed with
the Secretary of State of the State of Delaware on November 12, 1993.
D. Copy of Bylaws, as amended, through January 13, 1992, filed as Exhibit
(3)D. to the Company's Annual Report on Form 10-K for the year ended
December 31, 1991 is incorporated herein by this reference.
(4)A. Copy of Indenture dated as of January 15, 1986, between the Company and
the Chase Manhattan Bank (National Association), Trustee, including forms
of Debt Security and Medium-Term Note, filed as Exhibit (4)A. to the
Company's Annual Report on Form 10-K for the year ended December 31, 1991
is incorporated herein by this reference.
B. Supplemental Indenture dated as of October 27, 1986, between the Company
and the Chase Manhattan Bank (National Association), Trustee, filed on
November 22, 1988 as Exhibit 4.2 to the Company's Registration Statement
on Form S-3 (File No.33-25722).
C. Second Supplemental Indenture dated as of December 1, 1988 to Indenture
dated as of January 15, 1986, between the Company and the Chase Manhattan
Bank (National Association), Trustee, filed on November 22, 1988 as
Exhibit 4.3 to the Company's Registration Statement on Form S-3 (File
No.33-25722).
D. Copy of Indenture dated as of July 1, 1991, between the Company and The
First National Bank of Chicago, Trustee, including forms of Debt Security
and Medium Term Note, filed on July 15, 1991 as Exhibits 4.1, 4.2, 4.3
respectively, to the Company's Registration Statement on Form S-3 (File
No. 33-4165) is incorporated herein by this reference.
(10)A. Copy of Asset Purchase Agreement among USLI Fleet Financing, Inc., Asset
Securitization Cooperative Corporation, Canadian Imperial Bank of Commerce
and United States Leasing International, Inc., dated as of December 23,
1991, filed as Exhibit (10)A. to the Company's Annual Report on Form 10-K
for the year ended December 31, 1991 is incorporated herein by this
reference.
B. Copy of Purchase Agreement between United States Leasing International,
Inc. and USLI Fleet Financing, Inc., dated as of December 23, 1991, filed
as Exhibit (10)B. to the Company's Annual Report on Form 10-K for the year
ended December 31, 1990 is incorporated herein by this reference.
C. First and Second Amendments to Asset Purchase Agreement among USLI Fleet
Financing, Inc., Asset Securitization Cooperative Corporation, Canadian
Imperial Bank of Commerce and United States Leasing International, Inc.,
dated as of December 23, 1991.
D. First Amendment to Purchase Agreement between United States Leasing
International, Inc. and USLI Fleet Financing, Inc., dated as of December
23, 1991.
E. Copy of Lease Purchase Agreement dated as of April 1, 1992, between the
Company and Ford Motor Credit Company, filed as Exhibit 10(C) to the
Company's Annual Report on Form 10-K for the year ended December 31, 1992,
is incorporated herein by this reference.
F. Copy of Insurance and Indemnity Agreement dated April 1, 1992, among the
Company, Municipal Bond Investors Assurance Corporation and The Chase
Manhattan Bank, N.A., filed as Exhibit 10(D) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992, is incorporated
herein by this reference.
</TABLE>
17
<PAGE> 18
<TABLE>
<S> <C>
G. Copy of Standard Terms and Conditions of Pooling and Servicing Agreement,
dated as of April 1, 1992, between the Company and The Chase Manhattan
Bank, N.A., filed as Exhibit 10(E) to the Company's Annual Report on Form
10-K for the year ended December 31, 1992, is incorporated herein by this
reference.
H. Copies of Pooling and Servicing Agreements for Trusts A, B and C, dated as
of April 1, 1992, between the Company and The Chase Manhattan Bank, N.A.,
filed as Exhibit 10(F) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1992, is incorporated herein by this reference.
I. Copy of Seller's Limited Guaranty dated April 30, 1992, executed by the
Company in favor of Municipal Bond Investors Assurance Corporation, filed
as Exhibit 10(G) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1992, is incorporated herein by this reference.
(12) Computation of Ratio of Earnings to Fixed Charges.
(23) Consent of Independent Public Accountants (with respect to the Company's
current Registration Statement on Form S-3).
</TABLE>
The Company agrees to furnish to the Commission upon request a copy of
each instrument with respect to issues of long-term debt of the Company,
the authorized principal amount of which does not exceed 10% of the
total assets of the Company.
(b) Report on Form 8-K.
None.
18
<PAGE> 19
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OF THE SECURITIES EXCHANGE ACT
OF 1934, THE COMPANY HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED ON MARCH 28, 1994.
USL CAPITAL CORPORATION
(Registrant)
By: /s/ JAMES G. DUFF
James G. Duff,
Chairman and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE COMPANY
AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ----------------------------
<C> <S> <C>
(a) Principal Executive Officer
/s/ JAMES G. DUFF Chairman and Chief Executive March 28, 1994
James G. Duff Officer
(b) Principal Financial Officer:
/s/ GEORGE F. STALLOS Executive Vice President and March 28, 1994
George F. Stallos Chief Financial Officer
(c) Principal Accounting Officer:
/s/ ROBERT A. KEYES, JR. Corporate Controller March 28, 1994
Robert A. Keyes, Jr.
(d) Directors:
/s/ JAMES G. DUFF March 28, 1994
James G. Duff
/s/ TERRANCE F. MARRS March 28, 1994
Terrance F. Marrs
/s/ GEORGE F. STALLOS March 28, 1994
George F. Stallos
/s/ KENNETH WHIPPLE March 28, 1994
Kenneth Whipple
</TABLE>
19
<PAGE> 20
Letterhead of USL Capital Corporation
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
Management is responsible for the preparation of the Company's financial
statements and the other financial information in this report. This
responsibility includes maintaining the integrity and objectivity of the
financial records and the presentation of the Company's financial statements in
accordance with generally accepted accounting principles.
The Company maintains an internal control structure designed to provide,
among other things, reasonable assurance that its records include the
transactions of its operations in all material respects and to provide
protection against significant misuse or loss of Company assets. The internal
control structure is supported by careful selection and training of financial
management personnel, by written procedures that communicate the details of the
control structure to the Company's activities, by a staff of internal auditors
of Ford Motor Company who employ thorough auditing programs, and by the
Company's staff of operating control specialists who conduct reviews of
adherence to the Company's procedures and policies.
The Company's financial statements have been audited by Coopers & Lybrand,
independent certified public accountants. Their audit was conducted in
accordance with generally accepted auditing standards which include a review of
the Company's internal control structure to the extent deemed necessary for the
purposes of their audit. The Report of Independent Accountants appears on the
following page.
The Board of Directors is responsible for overseeing management's
fulfillment of its responsibilities in the preparation of financial statements
and the financial control of operations. The Board of Directors of Ford Motor
Company, through its Audit Committee, selects the independent accountants. The
independent accountants have full and free access to the Board to discuss their
audit work, the Company's internal controls, and financial reporting matters.
/s/ J.G. Duff
James G. Duff
Chairman & Chief Executive Officer
/s/ George F. Stallos
George F. Stallos
Executive Vice President
and Chief Financial Officer
20
<PAGE> 21
LETTERHEAD OF COOPERS & LYBRAND
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors,
USL Capital Corporation:
We have audited the consolidated financial statements and the financial
statement schedules of USL Capital Corporation and subsidiaries listed in Part
IV Item 14(a)1. and 2. of this Form 10-K. These financial statements and
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of USL Capital
Corporation and subsidiaries as of December 31, 1993 and 1992, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material respects,
the information required to be included therein.
/s/ Coopers & Lybrand
San Francisco, California
January 28, 1994
21
<PAGE> 22
USL CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
(IN THOUSANDS)
REVENUES................................................... $564,472 $501,420 $500,158
-------- -------- --------
EXPENSES
Sales, administrative and general........................ 70,352 63,250 65,959
Interest................................................. 189,942 154,157 147,027
Depreciation -- operating leases......................... 131,100 159,324 177,805
Other.................................................... 50,907 35,638 23,308
-------- -------- --------
Total expenses................................... 442,301 412,369 414,099
-------- -------- --------
Income before taxes on income and cumulative effect of
accounting change..................................... 122,171 89,051 86,059
Taxes on income.......................................... 45,119 29,228 31,270
-------- -------- --------
Income before cumulative effect of accounting change..... 77,052 59,823 54,789
Cumulative effect of accounting change................... -- (3,097) --
-------- -------- --------
NET INCOME............................................... $ 77,052 $ 56,726 $ 54,789
-------- -------- --------
-------- -------- --------
</TABLE>
See notes to consolidated financial statements.
22
<PAGE> 23
USL CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1993 1992
------------ ------------
(IN THOUSANDS, EXCEPT
SHARE AMOUNTS)
<S> <C> <C>
ASSETS
Cash and cash equivalents.......................................... $ 6,708 $ 5,001
Investment in finance leases -- net................................ 2,364,062 2,074,842
Notes receivable................................................... 721,257 502,103
Investment in operating leases -- net.............................. 694,737 557,813
Investment in leveraged leases..................................... 190,502 3,907
Investment in securities........................................... 562,873 329,044
Inventory held for sale or lease................................... 54,811 97,179
Other receivables.................................................. 18,296 22,241
Investment in associated companies................................. 18,357 19,659
Office equipment at cost less accumulated depreciation:
$17,125 and $14,877 at December 31, 1993 and 1992,
respectively..................................................... 8,386 7,643
Other assets....................................................... 21,981 24,785
Goodwill less accumulated amortization:
$36,176 and $30,632 at December 31, 1993 and 1992,
respectively..................................................... 189,239 195,082
------------ ------------
Total assets............................................. $4,851,209 $3,839,299
------------ ------------
------------ ------------
LIABILITIES
Short-term notes payable........................................... $ 985,277 $1,063,380
Accounts payable................................................... 65,643 82,712
Payable to Ford and affiliates..................................... 79,490 75,028
Accrued liabilities and lease deposits............................. 120,416 105,151
Deferred taxes on income........................................... 314,505 209,175
Long-term debt..................................................... 2,548,250 1,683,277
------------ ------------
Total liabilities........................................ 4,113,581 3,218,723
------------ ------------
Commitments (Note 10).............................................. -- --
SHAREHOLDER'S EQUITY
Common stock, $1 par value, authorized: 10,000 shares;
outstanding: 10 shares........................................... * *
Additional capital................................................. 521,425 481,425
Retained earnings.................................................. 216,203 139,151
------------ ------------
Total shareholder's equity............................... 737,628 620,576
------------ ------------
Total liabilities and shareholder's equity............... $4,851,209 $3,839,299
------------ ------------
------------ ------------
</TABLE>
- ---------------
* Less than $1,000
See notes to consolidated financial statements.
23
<PAGE> 24
USL CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1993 1992 1991
----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Net cash flow from operating activities:
Income from operations............................ $ 77,052 $ 56,726 $ 54,789
Noncash expenses, revenues, losses, and gains
included in income:
Cumulative effect of accounting change......... -- 5,002 --
Depreciation and amortization.................. 154,322 180,745 198,252
Deferred taxes on income....................... 112,719 57,273 62,097
Provision for losses........................... 24,752 19,439 9,034
Accrued interest income on notes receivable
added to the principal balance............... -- (565) --
Net increase in advances from Ford and
affiliates................................... 4,462 58,035 31,120
Increase/(decrease) in accounts payable........ (17,082) (6,182) 7,931
Increase in accrued liabilities and lease
deposits..................................... 8,773 18,541 517
(Increase)/decrease in other receivables....... (14,691) 741 (3,043)
Other.......................................... 1,357 1,776 2,816
----------- ----------- -----------
Net cash flow from operating activities... 351,664 391,531 363,513
----------- ----------- -----------
Cash flows from investing activities:
Recovery of equipment costs and residual
interests...................................... 622,364 488,165 451,677
Proceeds from sale of finance receivables......... 103,006 175,779 211,461
Cost of equipment acquired for lease.............. (1,446,217) (1,453,248) (1,245,298)
Notes receivable investments...................... (317,969) (212,678) (241,186)
Collections on notes receivable investments....... 121,238 63,045 57,019
Purchase of investment securities................. (280,812) (164,510) (168,317)
Sale of investment securities..................... 40,123 69,526 13,267
Increase in deferred initial direct costs......... (10,867) (17,418) (15,665)
Office equipment purchased........................ (5,118) (1,359) (2,262)
Investment in associated companies................ (73) (41) (52)
Other............................................. (1,896) (9,561) (11,105)
----------- ----------- -----------
Net cash used by investing activities..... (1,176,221) (1,062,300) (950,461)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from long-term borrowings................ 1,125,145 646,625 1,020,427
Long-term debt repaid............................. (260,778) (268,204) (245,024)
Net increase/(decrease) in short-term
borrowings..................................... (78,103) 273,096 (224,946)
Capital contribution from Ford Holdings........... 40,000 5,000 30,000
----------- ----------- -----------
Net cash provided by financing
activities.............................. 826,264 656,517 580,457
----------- ----------- -----------
Increase/(decrease) in cash and cash equivalents.... 1,707 (14,252) (6,491)
Cash and cash equivalents at beginning of period.... 5,001 19,253 25,744
----------- ----------- -----------
Cash and cash equivalents at end of period.......... $ 6,708 $ 5,001 $ 19,253
----------- ----------- -----------
----------- ----------- -----------
Supplemental schedule of cash flow information:
lnterest paid..................................... $ 356,829 $ 153,691 $ 138,208
Income taxes paid................................. 250 604 920
Supplemental schedule of noncash investing and financial activities:
During 1992, provisions of some notes receivable investments permitted accrued
interest in the amount of $565 to be added to the principal balance.
</TABLE>
See notes to consolidated financial statements.
24
<PAGE> 25
USL CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
TOTAL
COMMON ADDITIONAL RETAINED SHAREHOLDER'S
STOCK CAPITAL EARNINGS EQUITY
-------- ---------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at January 1, 1991.................... $ * $ 446,425 $ 27,636 $ 474,061
Capital contributions....................... 30,000 30,000
Net income.................................. 54,789 54,789
-------- ---------- -------- -------------
Balance at December 31, 1991.................. * 476,425 82,425 558,850
Capital contributions....................... 5,000 5,000
Net income.................................. 56,726 56,726
-------- ---------- -------- -------------
Balance at December 31, 1992.................. * 481,425 139,151 620,576
Capital contributions....................... 40,000 40,000
Net income.................................. 77,052 77,052
-------- ---------- -------- -------------
Balance at December 31, 1993.................. $ * $ 521,425 $216,203 $ 737,628
-------- ---------- -------- -------------
-------- ---------- -------- -------------
</TABLE>
- ---------------
* Less than $1,000
See notes to consolidated financial statements.
25
<PAGE> 26
USL CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
Consolidation -- The consolidated financial statements include USL Capital
Corporation ("Company") and all of its majority-owned subsidiaries. Investments
in partnerships and 50%-or-less owned associated companies are accounted for on
the equity method. Refer to Item 1. Business "Consolidation and Sale of
Subsidiaries." All material intercompany balances and transactions are
eliminated. Certain amounts have been reclassified to conform to the 1993
presentation.
In October 1989, all of the Company's outstanding capital stock was
acquired by Ford Holdings, Inc. ("Ford Holdings") from Ford Motor Company
("Ford"). The acquisition by Ford in 1987 was accounted for as a purchase. The
unamortized balance of the excess of the purchase price paid by Ford over the
fair value of identifiable net assets acquired is shown as goodwill on the
Company's books.
Cash and Cash Equivalents -- Cash and cash equivalents consist of highly
liquid investments with a maturity of three months or less at the time of
purchase. Outstanding checks ($21,582,000 at December 31, 1993 and $22,660,000
at December 31, 1992) are reclassified to Accounts Payable. For Cash and Cash
Equivalents, the carrying amount is stated at fair value.
Finance Leases -- At lease commencement, the Company records the lease
receivable, estimated residual value of the leased equipment, and unearned lease
income. Initial direct costs are deferred as part of the investment and
amortized over the lease term. Unearned lease income is recognized as revenue
over the lease term so as to approximate a level rate of return on the net
investment. Residual values, which are reviewed periodically, represent the
estimated amount to be received at lease termination from the disposition of
leased equipment.
Operating Leases -- Lease contracts that do not meet the criteria of
finance leases are accounted for as operating leases. Rental equipment is
recorded at cost and depreciated over its useful life or lease term to an
estimated salvage or residual value (10 to 30 years for railroad cars and 3 to 7
years for other equipment), primarily on a straight-line basis.
Leveraged Leases -- Leveraged lease assets acquired by the Company are
financed primarily through nonrecourse loans from third-party debt participants.
These loans are secured by the lessee's rental obligations and the leased
property. Unearned income is recognized over the lease term at a constant
after-tax rate of return on the net investment in the lease in those periods in
which the net investment is positive. Unguaranteed estimated residual values are
principally based on independent appraisals of the estimated values of the
assets remaining at the expiration of the lease.
Investment in Securities -- Investments in securities consist principally
of debt securities (preferred stock, corporate and Municipal bonds) which are
recorded at amortized cost because the Company has the ability to hold such
securities until maturity and presently has this intention. See Note 6 for
additional information on the fair value of securities.
Goodwill -- Goodwill, arising principally from the acquisition by Ford, is
being amortized on the straight-line method over 40 years (1993, $5,643,000;
1992, $5,643,000; 1991, $5,643,000).
Taxes on Income and Tax Credits -- Since the transfer of ownership of the
Company by Ford to Ford Holdings in 1989, the Company has been included in the
consolidated federal income tax return of Ford Holdings and continues to be
included in the combined state income tax returns of Ford, except in those
states where the Company is required to file separate returns. Income taxes,
including the federal alternative minimum tax, if any, are allocated by Ford
Holdings based on the Company's effect on taxes paid by the group. Deferred
income tax liabilities give effect to temporary differences between financial
statement and tax return amounts based upon enacted tax rates in effect for the
future periods when such differences are expected to reverse.
26
<PAGE> 27
NOTE 2 -- INVESTMENT IN FINANCE LEASES
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1993 1992
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Receivable in installments........................ $3,264,170 $ 2,889,715
Residual value.................................... 297,139 261,622
Allowance for doubtful accounts................... (28,768) (22,361)
Unearned lease income............................. (1,191,499) (1,079,921)
Deferred initial direct costs..................... 23,020 25,787
------------ ------------
Net investment.................................... $2,364,062 $ 2,074,842
------------ ------------
------------ ------------
</TABLE>
Finance lease receivables at December 31, 1993 are due in installments as
follows (in thousands): 1994, $751,956; 1995, $547,200; 1996, $327,429; 1997,
$228,880; 1998, $161,459 and thereafter, $1,247,246. Receivables of $6.9 million
serve as collateral to long-term debt.
In December 1991, U.S. Fleet Financing ("USFF") , a wholly owned subsidiary
of the Company, sold a portfolio of finance leases for proceeds of $211.5
million. During 1992 and 1993, additional leases were sold for proceeds of $79.9
million and $103.0 million, respectively, to replace the run-off of principal in
the leases initially securitized. The sale agreement provides recourse to the
assets of USFF, $35.7 million at December 31, 1993, for any uncollectible
receivables in the portfolio. USFF is a separate entity from its parent company,
USL Capital Corporation, and its assets will be available first and foremost to
satisfy the claims of its creditors. An allowance of $772,000 has been provided
on the books of USFF for estimated losses on the sold receivables. The agreement
provides that the Company will service the lease receivables for the purchaser.
At December 31, 1993, $171.6 million of net investment in the leases serviced by
the Company was outstanding.
In April 1992, the Company sold a portfolio of municipal finance leases for
proceeds of $95.1 million. The sale agreement provides the buyers with limited
recourse against the Company, $3.0 million at December 31, 1993, for any
uncollectible receivables in the portfolio. An allowance of $26,000 has been
provided for estimated losses on the sold receivables. The agreement provides
that the Company will service the lease receivables for the purchaser. At
December 31, 1993, $19.3 million of net investment in the leases serviced by the
Company was outstanding.
NOTE 3 -- INVESTMENT IN OPERATING LEASES
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1993 1992
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Equipment cost:
Automotive....................................... $ 155,600 $ 219,316
EDP, peripheral and word processing.............. 139,972 114,338
Copiers.......................................... 151,886 133,790
Rail............................................. 463,395 322,495
Aircraft......................................... 46,420 40,356
Office furniture................................. 24,440 15,773
Manufacturing and industrial equipment........... 24,423 8,493
Other............................................ 34,644 17,256
------------ ------------
Total equipment cost............................. 1,040,780 871,817
Accumulated depreciation........................... (352,516) (323,398)
Rentals receivable................................. 9,757 11,999
Allowance for doubtful accounts.................... (3,284) (2,605)
------------ ------------
Net investment..................................... $ 694,737 $ 557,813
------------ ------------
------------ ------------
</TABLE>
27
<PAGE> 28
NOTE 3 -- INVESTMENT IN OPERATING LEASES (CONTINUED)
Initial lease terms of rental equipment range from one month to 8.5 years.
Future minimum rentals on operating leases at December 31, 1993 are due in
installments as follows (in thousands): 1994, $182,026; 1995, $95,430; 1996,
$66,666; 1997, $27,137; 1998, $15,337 and thereafter, $25,358.
Minimum future rentals do not include contingent rentals that may be
received under certain rail car leases, because of use in excess of specified
amounts. Contingent rentals (in thousands) received were $8,170 in 1993, $2,454
in 1992 and $2,033 in 1991. The increase in 1993 is the result of the large
expansion of the Rail Services fleet (see Item 1. Business "Business Units").
NOTE 4 -- INVESTMENT IN LEVERAGED LEASES
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1993 1992
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Rentals receivable (net of principal and interest
on nonrecourse debt)............................ $ 259,243 $ 102
Estimated residual values......................... 69,837 4,598
Allowance for doubtful accounts................... (1,661) --
Unearned income................................... (137,331) (793)
Deferred initial direct costs..................... 414 --
------------- -------------
Investment in leveraged leases.................... 190,502 3,907
Less deferred income taxes arising from leveraged
leases.......................................... (23,571) (86)
------------- -------------
Net investment.................................... $ 166,931 $ 3,821
------------- -------------
------------- -------------
</TABLE>
A summary of the components of income from leveraged leases were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1993 1992
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Income before taxes on income..................... $ 6,898 $ 110
Taxes on income................................... 2,692 42
------------- -------------
Income from leveraged leases...................... $ 4,206 $ 68
------------- -------------
------------- -------------
</TABLE>
NOTE 5 -- NOTES RECEIVABLE
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1993 1992
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Principal......................................... $ 731,641 $ 502,748
Interest.......................................... 1,898 6,890
Deferred initial direct costs..................... 906 1,277
Allowance for doubtful accounts................... (13,188) (8,812)
------------- -------------
Net............................................... $ 721,257 $ 502,103
------------- -------------
------------- -------------
</TABLE>
At December 31, 1993, $609.6 million of principal was collateralized by
equipment, real estate, and other assets. The weighted average interest rate at
December 31, 1993 was 8.1%. Notes receivable are due in subsequent years as
follows (in thousands): 1994, $96,792; 1995, $101,230; 1996, $114,867; 1997,
$98,383; 1998, $142,069; and thereafter, $178,300.
The fair value of loans is estimated by either discounting the future cash
flows using the current rates at which similar loans would be made to borrowers
with similar credit ratings and for the same remaining maturities, or dealer
quotes. At December 31, 1993, the estimated fair values of the Company's Notes
Receivable were $727.4 million.
28
<PAGE> 29
NOTE 6 -- INVESTMENT IN SECURITIES
At December 31, 1993 and 1992 the amortized cost and estimated fair value
of investment in securities were as follows:
<TABLE>
<CAPTION>
1993
-----------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Debt Securities issued by the U.S. Government
and agencies.................................. $ 0 $ 0 $ 0 $ 0
Corporate Securities............................ 559,765 18,488 8,324 569,929
--------- ---------- ---------- ---------
Debt Securities................................. 559,765 18,488 8,324 569,929
Equity Securities............................... 10,736 0 0 10,736
--------- ---------- ---------- ---------
Total Securities................................ 570,501 $ 18,488 $ 8,324 $ 580,665
---------- ---------- ---------
---------- ---------- ---------
Allowance for doubtful accounts................. (7,628)
---------
Net Investment.................................. $ 562,873
---------
---------
</TABLE>
<TABLE>
<CAPTION>
1992
-----------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Debt Securities issued by the U.S. Government
and agencies.................................. $ 113 $ 13 $ 0 $ 126
Corporate Securities............................ 322,818 9,458 4,237 328,039
--------- ---------- ---------- ---------
Debt Securities................................. 322,931 9,471 4,237 328,165
Equity Securities............................... 12,223 2,913 1,219 13,917
--------- ---------- ---------- ---------
Total Securities................................ 335,154 $ 12,384 $5,456 $ 342,082
---------- ---------- ---------
---------- ---------- ---------
Allowance for doubtful accounts................. (6,110)
---------
Net investment.................................. $ 329,044
---------
---------
</TABLE>
The amortized cost and estimated fair value of debt securities at December
31, 1993 and 1992 by contractual maturity are shown below.
<TABLE>
<CAPTION>
1993 1992
----------------------- -----------------------
ESTIMATED ESTIMATED
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
--------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Due in one year or less $ 6,866 $ 6,854 $ 6,811 $ 6,855
Due after one year through five years 66,403 69,071 55,032 56,920
Due after five years through ten years 133,328 139,131 148,007 148,683
Due after ten years 353,168 354,873 113,081 115,707
--------- --------- --------- ---------
Total $ 559,765 $ 569,929 $ 322,931 $ 328,165
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Expected maturities will differ from contractual maturities because
borrowers may have the right to call or pre-pay obligations with or without call
or pre-payment penalties, and the Company may have the option to redeem or
convert securities prior to redemption.
In 1993 proceeds from the sale of investments in debt securities (in
thousands) were $58,251, resulting in a gross gain of $4,888. In 1992, proceeds
(in thousands) were $44,253, resulting in a gross gain of $2,195.
The fair value of the investment in debt and equity securities is estimated
primarily by market and dealer quotes. If a quoted market price is not
available, fair value is estimated using quoted market prices for similar
securities. Debt securities are also valued using the discounted future cash
flows based upon current rates of similar debt instruments traded, when a market
quote or market quote of a similar investment is not available.
29
<PAGE> 30
NOTE 7 -- SHORT-TERM NOTES PAYABLE
Short-term notes payable consist entirely of commercial paper. The balance
outstanding at December 31, 1993 had an average maturity of 10 days. The Company
has committed credit lines, wherein it may borrow up to $1.19 billion at
floating rates which approximate prime. A commitment fee of 1/8% to 1/4% is
paid on the unused portion of these credit lines. These lines contain certain
provisions related to (a) continuing Ford ownership; (b) limitations on liens;
and (c) limitations on activities and indebtedness of subsidiaries. There were
no borrowings outstanding on these lines at December 31, 1993.
For short-term notes payable, the carrying amount approximates fair value
because of the short maturity of these instruments.
NOTE 8 -- LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1993 1992
------------ ------------
<S> <C> <C>
(IN THOUSANDS)
Collateralized:
6.3% to 8.3% due through 1994.................... $ 6,957
6.6% to 9.5% due through 1994.................... $ 7,622
Capital lease obligations.......................... -- 209
Senior:
3.3% to 9.9% due through 2011.................... 2,541,293
3.4% to 9.9% due through 2011.................... 1,675,446
------------ ------------
Total.................................... $2,548,250 $1,683,277
------------ ------------
------------ ------------
</TABLE>
Payments required on long-term debt are (in thousands): 1994, $386,422;
1995, $323,165; 1996, $357,310; 1997, $197,351; 1998, $192,393; and thereafter,
$1,091,609. Average interest rates on collateralized and senior debt outstanding
at December 31, 1993 were 6.3% and 6.7%, respectively.
Rates currently available to the Company for debt with similar terms and
remaining maturities are used to estimate fair value of existing debt. At
December 31, 1993, the estimated fair value of the Company's long-term debt,
collateralized and senior, was $2.451 billion.
It is the Company's policy to follow a strategy of match funding all
financing, and as such, the Company believes that the change in the fair market
value of its debt would be off-set by a corresponding increase in the estimated
fair value of its investment in leases. See Note 13 for information concerning
interest rate swap agreements.
30
<PAGE> 31
NOTE 9 -- TAXES ON INCOME
The Company uses the liability method of accounting for income taxes
pursuant to SFAS No. 109. The Company adopted the liability method in 1987 in
accordance with SFAS No. 96, which was subsequently superseded by SFAS No. 109.
The adoption of SFAS No. 109 at the beginning of 1992 had no effect on net
income in that year.
The provision for taxes on income includes:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred:
United States............................ $ 95,891 $ 60,484 $ 48,679
State.................................... 16,828 (3,211) 13,418
Foreign.................................. -- -- --
-------- -------- --------
Total deferred................... 112,719 57,273 62,097
-------- -------- --------
Current:
United States............................ (58,858) (37,682) (22,910)
State.................................... (8,927) 7,216 (7,917)
Foreign.................................. 185 516 --
-------- -------- --------
Total current.................... (67,600) (29,950) (30,827)
-------- -------- --------
Total............................ $ 45,119 $ 27,323 $ 31,270
-------- -------- --------
-------- -------- --------
Shown as:
Taxes on income.......................... $ 45,119 $ 29,228 $ 31,270
Cumulative effect of accounting change... -- (1,905) --
-------- -------- --------
$ 45,119 $ 27,323 $ 31,270
-------- -------- --------
-------- -------- --------
</TABLE>
Deferred income taxes, on a SFAS No. 109 basis, reflect the estimated
future tax effect of temporary differences between the amount of assets and
liabilities for financial reporting purposes and such amounts as measured by tax
laws and regulations. The components of deferred income tax assets and
liabilities as of December 31, 1993 and 1992 were as follows:
<TABLE>
<CAPTION>
1993 1992
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax liability
Leasing transactions................................. $276,710 $175,655
Notes payable........................................ 79,107 67,925
Other................................................ 5,436 1,974
-------- --------
361,253 245,554
-------- --------
Deferred tax asset
Allowance for credit losses.......................... 17,290 15,316
Employee benefit plans............................... 6,802 7,798
State Net Operating Loss carry forwards.............. 21,773 12,887
Other................................................ 883 378
-------- --------
46,748 36,379
-------- --------
Net deferred taxes..................................... $314,505 $209,175
-------- --------
-------- --------
</TABLE>
State Net Operating Loss carry forwards will be recovered in future periods
as an offset to future state tax liabilities in accordance with the Company's
tax sharing agreement with Ford Holdings.
31
<PAGE> 32
NOTE 9 -- TAXES ON INCOME (CONTINUED)
Deferred income taxes for 1991 were derived using the guidelines in SFAS
No. 96. Under SFAS No. 96, deferred income taxes are the result of temporary
differences in the financial reporting and tax bases of assets and liabilities.
The source of the changes in deferred taxes were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1991
------------------
(IN THOUSANDS)
<S> <C>
Temporary differences in recognizing revenue and depreciation
expense on leases............................................. $ 50,803
Temporary differences in recognizing sales, administrative and
general expenses.............................................. 30
State tax provision in excess of current state taxes............ 11,264
----------
Total................................................. $ 62,097
----------
----------
</TABLE>
The provision for taxes on income differs from the normal statutory rate
for the following reasons:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
----------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Normal U.S. tax rate....................................... 35.0% 34.0% 34.0%
State taxes, less U.S. tax benefit......................... 6.5 3.9 4.2
Goodwill................................................... 4.6 2.1 2.2
Income taxed at reduced rates.............................. (9.3) (7.8) (3.5)
Other -- net............................................... .1 .6 (.6)
---- ---- ----
Provision for taxes........................................ 36.9% 32.8% 36.3%
---- ---- ----
---- ---- ----
</TABLE>
The deferred tax assets and liabilities were restated effective January 1,
1993 to reflect the increase of the U.S. Corporate Tax Rate to 35% from 34%,
resulting in additional tax provision of $5.6 million.
At December 31, 1993, investment tax credit carry forwards of approximately
$600,000 are available to reduce future federal income tax liabilities and
expire between 1997 and 1999 if not utilized.
Federal income taxes payable to Ford Holdings (in thousands) were: $15,466
at December 31, 1993 and $2,700 at December 31, 1992.
NOTE 10 -- COMMITMENTS
The Company leases office facilities and equipment under operating leases.
The equipment leased by the Company is for sublease to end-user lessees under
operating leases of various terms. New leases are arranged when the equipment is
returned to the Company. Rental expense (in thousands) for all operating leases
was $11,574 in 1993, $12,626 in 1992, and $14,353 in 1991; and sublease income
was $6,129, $6,169 and $8,859, respectively. Future minimum rentals (excluding
executory costs) and related sublease income under operating leases that have
non-cancelable lease terms in excess of one year as of December 31, 1993 are:
<TABLE>
<CAPTION>
OFFICE RENTAL SUBLEASE NET
FACILITIES EQUIPMENT INCOME RENTALS
---------- --------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
1994............................................... $ 3,300 $ 4,415 $ 4,474 $ 3,241
1995............................................... 2,904 4,405 2,712 4,597
1996............................................... 2,511 4,412 2,317 4,606
1997............................................... 2,467 3,980 1,390 5,057
1998............................................... 2,337 3,980 965 5,352
Thereafter......................................... 14,410 2,422 175 16,657
---------- --------- -------- -------
Total.................................... $ 27,929 $23,614 $ 12,033 $39,510
---------- --------- -------- -------
---------- --------- -------- -------
</TABLE>
32
<PAGE> 33
NOTE 11 -- PENSIONS
The Company sponsors a defined contribution retirement plan comprising a
profit sharing part and a deferred compensation part which covers substantially
all of its employees. Under the profit sharing part, contributions are
determined as a percent (12.6%) of each covered participant's qualified
earnings, minus the Old Age, Survivors, and Disability Insurance portion of
social security taxes paid for the participant by the Company. Profit sharing
cost represents contributions minus the unvested amounts of terminated
participants. Under the deferred compensation part, contributions (cost) are
determined as 75 cents per dollar of deferred compensation for the first 3
percent of a participant's compensation and 25 cents per dollar for the next 3
percent, up to 6 percent of a participant's compensation. The total cost of the
retirement plan (in thousands) amounted to $3,500 in 1993, $3,700 in 1992, and
$4,400 in 1991.
NOTE 12 -- TRANSACTIONS WITH AFFILIATED COMPANIES
The Company provides administrative services for Ford Credit and other Ford
affiliates, for which the Company is reimbursed. Ford also provides
administrative services to the Company, for which Ford is reimbursed. The
Company believes that these arrangements, which are not covered by any formal
agreement between the Company, Ford Credit and Ford or its affiliates, are
mutually beneficial. Assessments for services by the Company to Ford Credit and
other affiliates were (in thousands): 1993, $12,423; 1992, $11,781; 1991,
$13,553; and assessments by Ford to the Company were $2,280, $2,776, and $2,566,
respectively.
In 1989, the Company leased office space from Ford Motor Land Development
Corporation, a subsidiary of Ford. The lease, with a term of five years plus an
extension of an additional five years, is classified as an operating lease. The
base rent (in thousands) for the initial five year lease term amounts to $2,204,
plus 22% of the operating expenses and property taxes related to the building.
Rent expense (in thousands) amounted to $701 in 1993, $731 in 1992, and $823 in
1991. Beginning in 1991, a portion of the leased office space was subleased to
several divisions of Ford Motor Company. Sublease income, which includes amounts
for leasehold improvements and furniture and fixtures, (in thousands) amounted
to $1,013 in 1993, $716 in 1992 and $438 in 1991.
In 1992, the Company purchased equipment and the remaining payments under
an existing operating lease agreement due from Ford. The revenue earned during
the remaining operating lease term in 1992 amounted to $8.1 million. The
corresponding depreciation of the asset during the period was $7.5 million. In
December 1992 the lease with Ford was renewed with upgraded equipment, purchased
for $28.2 million, and classified as a finance lease with an initial lease term
of 42 months. The revenue earned under the finance lease was $2.2 million in
1993 and $198,000 in 1992.
A 1991 agreement with Ford provides for payments by Ford to the Company of
broker fees for the negotiation and arrangement of leases for Ford. Such fees
(in thousands) were $2,546 in 1993, $1,514 in 1992 and $1,794 in 1991.
The Company receives fees for the management of rail cars for Ford Credit.
Such fees (in thousands) were $294 in 1993, $145 in 1992, and $130 in 1991.
In 1993 and 1992, Ford Holdings made capital contributions to the Company
of $40 million and $5 million, respectively.
The Company acts as general partner to a limited partnership, in which it
has a 23% equity interest. In addition, the Company had a nominal investment
interest and acted as general partner to three limited partnerships which were
liquidated in 1991. In accordance with the limited partnership agreements, the
Company receives fees and other compensation for services provided. Such amounts
earned were as follows (in thousands): 1993, $774; 1992, $770; and 1991, $1,042.
33
<PAGE> 34
NOTE 12 -- TRANSACTIONS WITH AFFILIATED COMPANIES (CONTINUED)
The Company, in partnership with AT&T Capital Corporation, leased vehicles
to subsidiaries and affiliates of American Telephone and Telegraph Company. In
such arrangements, the Company provided the services of accounting, purchasing,
collections and fleet management, as well as providing loans to an affiliate.
Fees received (in thousands) were $326 in 1993, $276 in 1992, and $326 in 1991.
Notes receivable and interest income, respectively, (in thousands) were: 1993,
$0 and $407; 1992, $11,060 and $409; and 1991, $11,281 and $728. The Company
sold its equity interest in the partnership in December, 1993, but continues to
provide operational services.
NOTE 13 -- FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Company enters into certain transactions that can give rise to
financial instruments with off-balance-sheet risk. The following information
pertains to those financial instruments held at December 31, 1993.
The Company has entered into arrangements to manage exposure to
fluctuations in interest rates. These arrangements primarily include interest
rate swap agreements. Interest rate swap agreements involve the exchange of
interest obligations on fixed and floating interest rate debt without the
exchange of the underlying principal amounts. The agreements generally mature at
the time the related debt matures. The differential paid or received on interest
rate swap agreements is recognized as an adjustment to interest expense over the
life of the agreements. Notional amounts are used to express the volume of
interest rate swap agreements. The notional amounts do not represent cash flows
and are not subject to risk of loss. In the unlikely event that a counterparty
fails to meet the terms of an interest rate swap agreement, the Company's
exposure is limited to the interest rate differential. The fair value of
interest rate swaps (used for hedging purposes) is the estimated amount that the
Company would receive or pay to terminate the swap agreements at the reporting
date, taking into account current interest rates and current credit-worthiness
of the swap counterparties. At December 31, 1993, the Company had 95 interest
rates swaps, of which 22 swaps were in a net receivable position with a notional
principal amount of $629.9 million and 73 swaps in a net payable position with a
notional principal amount of $1.3 billion. It would cost the Company $43.6
million to terminate the swaps in a net payable position and the Company would
receive $45.3 million to terminate the swaps in a net receivable position.
The Company has issued financial guarantees in support of lines of credit
and lease/sublease transactions entered into by two affiliates of Ford. These
affiliates, located in the United Kingdom and Australia, were previously
subsidiaries of the Company, which retains management responsibility for their
operations. The lines of credit have various expiration dates through 1994, and
the sublease transactions extend through 1994. At December 31, 1993, the
financial guarantees issued totaled $197 million for the United Kingdom, and $61
million for Australia. At December 31, 1993, the outstanding balances subject to
such guarantees were $39 million for the United Kingdom, and $38 million for
Australia. The disclosed amount of the guarantees is a reasonable estimate of
the market value as it represents the cost to satisfy the guarantees. (See Item
1. Business "Management of Foreign Affiliates".)
Additionally, under several of the Company's domestic lease transactions,
it guaranteed under certain conditions that the lessor or lender will receive
additional rents of specified amounts after the original lease terms expire. The
expiration dates are between 1996 and 2001. At December 31, 1993, such
guarantees totaled $17 million. The Company has not provided collateral or other
security to support financial instruments with credit risk.
The Company has also entered into several commitment agreements with third
parties contemplating possible first mortgage loans and equipment leases. The
interest rates on the first mortgage loan commitments average prime or Libor
plus 3.98% and they have various expiration dates through 1998. At December 31,
1993, such commitments totaled approximately $95 million. The disclosed amount
of the commitments is a reasonable estimate of the market value, as all
financing rates are floating until funding.
The Company has entered into a variety of other financial agreements which
contain potential risk of loss. These agreements include interest rate swap
spread contracts and revolving loan commitments. Neither the amounts of these
agreements, fair value, nor the potential risk of loss was considered to be
significant at December 31, 1993.
34
<PAGE> 35
NOTE 14 -- CONCENTRATIONS OF CREDIT RISK
The Company controls its credit risk through credit standards, limits on
exposure, and monitoring the financial condition of other parties. The lease,
note and investment portfolios are well diversified, consisting of more than 75
industries.
A significant portion of the Company's business activity is with customers
and businesses located in California. As of December 31, 1993, the Company's net
finance and operating leases, notes receivable and investments in California
totaled approximately $700 million. There were no other significant regional,
industrial or group concentrations at December 31, 1993.
The Company generally requires the leased asset to serve as collateral for
the lease. The collateral consists principally of autos, computers and
peripherals, office furnishings, copiers, rail cars and aircraft. Notes
receivable are collateralized by first mortgages on real estate or equipment.
Investments are not collateralized.
NOTE 15 -- POSTRETIREMENT BENEFITS
The Company sponsors defined benefit postretirement health care plans that
provide medical and life insurance coverage to retirees and their dependents.
The cost of retiree and dependent medical coverage is shared between the Company
and the retiree. The life insurance plan is noncontributory. The accounting for
the health care plan anticipates future cost-sharing changes to the written plan
that are consistent with the Company's past practice. The Company defines a
maximum amount (or "cap") that it will contribute toward the health benefits of
each retiree. This cap is redetermined annually, and is based on the individual
retiree's number of dependents. The Company has a history of increasing this
cap. Over the last seven years the aggregate increase in the cap approximates
the average increase in the underlying premium costs of the program. This
valuation assumed that in future years the Company will continue to increase the
cap at the average rate of increase of the underlying cost of the retiree
benefit program. However, benefits and eligibility rules may be modified by the
Company from time to time.
The following table sets forth the plans' combined funded status reconciled
with the amount shown in the Company's statement of financial position at
December 31:
ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION
<TABLE>
<CAPTION>
1993 1992
------- -------
(IN THOUSANDS)
<S> <C> <C>
Retirees................................................. $(2,167) $(1,822)
Fully eligible plan participants......................... (572) (411)
Other active plan participants........................... (3,119) (3,542)
------- -------
(5,858) (5,775)
Plan assets at fair value................................ 0 0
------- -------
Accumulated postretirement benefit obligation in excess
of plan assets......................................... (5,858) (5,775)
Unrecognized net (gain)/loss from past experience
different from that assumed and from changes in
assumptions............................................ (694) 23
------- -------
(Accrued)/prepaid postretirement benefit cost............ $(6,552) $(5,752)
------- -------
------- -------
</TABLE>
The Company's postretirement plans are underfunded; the accumulated
postretirement benefit obligation and plan assets for the plan at December 31,
1993 (in thousands) are $5,858 and $0, respectively.
35
<PAGE> 36
NOTE 15 -- POSTRETIREMENT BENEFITS (CONTINUED)
NET PERIODIC POSTRETIREMENT BENEFIT COST INCLUDED THE FOLLOWING COMPONENTS:
<TABLE>
<CAPTION>
1993 1992
---- ------
(IN THOUSANDS)
<S> <C> <C>
Service cost -- benefits attributed to service during the
period.................................................... $429 $ 429
Interest cost on accumulated postretirement benefit
obligation................................................ 484 444
Actual return on plan assets................................ 0 0
Net amortization and deferral............................... 0 0
Recognition of transition obligation........................ -- 5,002
---- ------
Net periodic postretirement benefit cost.................... $913 $5,875
---- ------
---- ------
Assumption: Discount rate at year-end....................... 7.5% 8.5%
</TABLE>
For measurement purposes, 12 percent and 8 percent annual rates of increase
in the per capita cost of postretirement medical benefits were assumed for 1993
for the under age 65 indemnity and HMO and over age 65 indemnity plans,
respectively; the rates were assumed to decrease gradually to 5.5 percent for
2006 and remain at that level thereafter. The comparable rates assumed for 1992
were 14 percent and 9 percent for the under age 65 indemnity and HMO and over
age 65 indemnity plans, respectively. The health care cost trend rate assumption
has a significant effect on the amounts reported. To illustrate, increasing the
assumed health care cost trend rates by one percentage point in each year would
increase the accumulated postretirement benefit obligation as of December 31,
1993 by $477,000 and the aggregate of the service and interest cost components
of net periodic postretirement benefit cost for the year then ended by $159,000.
36
<PAGE> 37
SCHEDULE II
USL CAPITAL CORPORATION AND SUBSIDIARY COMPANIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D(1) COLUMN E
<S> <C> <C> <C> <C> <C>
BALANCE BALANCE RECEIVABLE
RECEIVABLE AT END OF PERIOD
AT BEGINNING DEDUCTIONS -- -----------------------
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTIONS CURRENT NOT CURRENT
- ---------------------------------------------- ------------ ----------- ------------ ------- -----------
(IN THOUSANDS)
YEAR ENDED DECEMBER 31, 1993
James G. Duff, President & CEO,
USL Capital Corporation*.................... $153 $153 $ 0
John Hause, Vice President, Treasurer,
USL Capital Corporation*.................... 120 120 0
John Pettipher, President,
Transportation and Industrial Financing*.... 100 75 25
Floyd Robinson, President,
Business Equipment Financing*............... 100 100
Raymond L. Smith, President,
Fleet Services*............................. $ 160 160
George F. Stallos, Executive Vice President &
CFO,
USL Capital Corporation*.................... 274 274
Eugene Wojciechowski, Director,
Information Systems,
USL Capital Corporation*.................... 131 131
YEAR ENDED DECEMBER 31, 1992
James G. Duff, Chairman & CEO,
USL Capital Corporation*.................... $200 $ 153 $200 $ 153
David Ellis, Vice President,
Transportation & Industrial Financing*...... 104 104 0
John Hause,Vice President, Treasurer,
USL Capital Corporation*.................... 120 120
Peter Jones, President,
Rail Services*.............................. 108 13 95
John Pettipher, President,
Transportation & Industrial Financing*...... 170 70 100
Floyd Robinson, President,
Business Equipment Financing*............... 100 100
Joseph M.Willett, Jr., Retired Executive
Vice President,
USL Capital Corporation*.................... 235 235 0
YEAR ENDED DECEMBER 31, 1991
William Burke, Executive Vice President,
Business Equipment Financing*............... $ 164 $ 164
James G. Duff, Chairman & CEO,
USL Capital Corporation*.................... $200 200
David Ellis, Senior Vice President,
Portfolio, Management*...................... 104 104
Peter Jones, Managing Director,
U.S. Leasing, Ltd.*......................... 107 150 $149 108
John Pettipher, President,
Transportation & Industrial Financing*...... 170 170
Joseph M.Willett, Jr., Executive Vice
President,
USL Capital Corporation*.................... 235 235
</TABLE>
- ---------------
* Real estate loans for relocated employees, collateralized by first mortgages.
Amounts are due 1996-1998 and carry interest at 5.41% to 9.65%.
Column D(2) has been omitted as the answer is "none."
37
<PAGE> 38
SCHEDULE V
USL CAPITAL CORPORATION AND SUBSIDIARY COMPANIES
PROPERTY, PLANT, AND EQUIPMENT
<TABLE>
<CAPTION>
COLUMN B COLUMN E COLUMN F
------------ COLUMN C ---------- ----------
COLUMN A BALANCE --------- COLUMN D OTHER BALANCE
- -------------------------------------- AT BEGINNING ADDITIONS ----------- ADD- AT END
CLASSIFICATION OF PERIOD AT COST RETIREMENTS (DEDUCT) OF PERIOD
- -------------------------------------- ------------ --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)
YEAR ENDED DECEMBER 31, 1993
Office Equipment -- Owned............. $ 21,830 $ 5,118 $ 2,127 $ 24,821
Rental Equipment -- Owned............. 921,416 309,095 186,084 $694(1) 1,045,121
Office Equipment -- Capital Leases.... 690 690
YEAR ENDED DECEMBER 31, 1992
Office Equipment -- Owned............. $ 21,448 $ 1,359 $ 977 $ 21,830
Rental Equipment -- Owned............. 859,967 294,551 234,006 $800(1) 921,416
104(2)
Office Equipment -- Capital Leases.... 989 299 690
YEAR ENDED DECEMBER 31, 1991
Office Equipment -- Owned............. $ 19,713 $ 2,262 $ 538 $ 11(2) $ 21,448
Rental Equipment -- Owned............. 897,614 210,830 248,963 427(1) 859,967
59(2)
Office Equipment -- Capital Leases.... 989 989
</TABLE>
- ---------------
(1) Increase (decrease) in initial direct costs.
(2) Transfer or reclassifications.
38
<PAGE> 39
SCHEDULE VI
USL CAPITAL CORPORATION AND SUBSIDIARY COMPANIES
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT, AND
EQUIPMENT
<TABLE>
<CAPTION>
COLUMN B COLUMN C
---------- ---------- COLUMN E COLUMN F
BALANCE ADDITIONS -------- ---------
COLUMN A AT CHARGED TO COLUMN D OTHER- BALANCE
- ------------------------------------ BEGINNING COST AND ----------- ADD AT END
CLASSIFICATION OF PERIOD EXPENSES RETIREMENTS (DEDUCT) OF PERIOD
- ------------------------------------ ---------- ---------- ----------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993
Office Equipment -- Owned........... $ 14,273 $ 4,273 $ 2,111 $ 16,435
Rental Equipment -- Owned........... 362,578 131,100 136,762 $(2,084 )(1) 354,832
Office Equipment -- Capital
Leases............................ 604 86 690
YEAR ENDED DECEMBER 31, 1992
Office Equipment -- Owned........... $ 11,741 $ 3,485 $ 953 $ 14,273
Rental Equipment -- Owned........... 367,240 159,324 164,159 $ 173 (1) 362,578
Office Equipment -- Capital
Leases............................ 785 117 298 604
YEAR ENDED DECEMBER 31, 1991
Office Equipment -- Owned........... $ 8,666 $ 3,488 $ 411 $ (2 )(1) $ 11,741
Rental Equipment -- Owned........... 348,021 177,805 158,584 (2 )(1) 367,240
Office Equipment -- Capital
Leases............................ 622 163 785
</TABLE>
- ---------------
(1) Transfer or reclassifications.
39
<PAGE> 40
SCHEDULE VIII
USL CAPITAL CORPORATION AND SUBSIDIARY COMPANIES
VALUATIONS AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN C
-------------------
COLUMN B ADDITIONS COLUMN E
------------ CHARGED TO ---------
COLUMN A BALANCE ------------------- COLUMN D BALANCE
- ------------------------------------------- AT BEGINNING COST AND OTHER ------------ AT END
CLASSIFICATION OF PERIOD EXPENSE ACCOUNTS (DEDUCTIONS) OF PERIOD
- ------------------------------------------- ------------ -------- -------- ------------ ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993
Allowance for Doubtful Accounts............ $ 39,888 $24,752 $384(1) $9,813(2) $55,211
Allowance for Losses(3).................... 359 51 308
YEAR ENDED DECEMBER 31, 1992
Allowance for Doubtful Accounts............ $ 29,799 $19,375 $163(5) $9,449(2) $39,888
Allowance for Losses(3).................... 1,182 64 887(2) 359
Allowance for Unrealizable Residuals(4).... 210 210(2) 0
YEAR ENDED DECEMBER 31, 1991
Allowance for Doubtful Accounts............ $ 25,182 $10,394 $273(5) $6,050(2) $29,799
Allowance for Losses(3).................... 2,622 (1,360 ) 80(2) 1,182
Allowance for Unrealizable Residuals(4).... 335 125(2) 210
</TABLE>
- ---------------
(1) Reclassification
(2) Write-offs, net of recoveries.
(3) Principally included in "Other receivables" caption on the balance sheet.
(4) Included in "Residual value" caption on the balance sheet, the purpose for
which relates to equipment casualties and lessee defaults.
(5) Represents balance of purchased portfolio.
40
<PAGE> 41
SCHEDULE IX
USL CAPITAL CORPORATION AND SUBSIDIARY COMPANIES
SHORT-TERM NOTES PAYABLE
<TABLE>
<CAPTION>
COLUMN D COLUMN E COLUMN F
COLUMN C ----------- ----------- ----------
COLUMN B -------- MAXIMUM AVERAGE WEIGHTED
COLUMN A ---------- WEIGHTED AMOUNT AMOUNT AVERAGE
- ---------------------------------------- BALANCE AVERAGE OUTSTANDING OUTSTANDING RATE
CATEGORY OF AGGREGATE AT END INTEREST DURING THE DURING THE DURING THE
SHORT-TERM BORROWINGS OF PERIOD RATE(1) PERIOD PERIOD(2) PERIOD(3)
- ---------------------------------------- ---------- -------- ----------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993
Bank and Other Borrowings............... $ -- -- $ -- $ -- --
Commercial Paper........................ 985,277 4.6% 1,259,391 1,101,556 4.1%
----------
Total......................... $ 985,277
----------
----------
YEAR ENDED DECEMBER 31, 1992
Bank and Other Borrowings............... $ -- -- $ -- $ -- --
Commercial Paper........................ 1,063,380 4.9% 1,160,953 981,789 4.6%
----------
Total......................... $1,063,380
----------
----------
YEAR ENDED DECEMBER 31, 1991
Bank and Other Borrowings............... $ -- -- $ 358 $ 55 8.8%
Commercial Paper........................ 790,137 6.8% 1,017,803 909,155 7.2%
----------
Total......................... $ 790,137
----------
----------
</TABLE>
- ---------------
(1) The weighted average interest rate was based on rates and borrowings at the
end of the period after giving effect to interest rate exchange agreements.
These agreements, which expire through 2005, had the effect of fixing
interest rates on $292.1 million of debt at rates ranging from 5.66% to
9.46%.
(2) The average amount outstanding was based on the balances at the beginning of
the period and each month-end divided by 13.
(3) The weighted average interest rate during the period was computed by
dividing actual interest expense by the average short-term debt outstanding
during the period and after giving effect to interest rate exchange
agreements.
41
<PAGE> 42
SCHEDULE X
USL CAPITAL CORPORATION AND SUBSIDIARY COMPANIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
COLUMN B
--------------------------
CHARGED TO COST AND
EXPENSES
--------------------------
COLUMN A YEARS ENDED DECEMBER 31
- ------------------------------------------------------------------- --------------------------
ITEM 1993 1992 1991
------- ------- ------
<S> <C> <C> <C>
(IN THOUSANDS)
Maintenance and repairs............................................ $21,071 $10,445 $7,086
Depreciation and amortization of intangible assets, pre-operating
costs and similar deferrals...................................... 6,503 6,413 6,433
Taxes, other than payroll and income taxes......................... * * *
Royalties.......................................................... * * *
Advertising costs.................................................. * * *
</TABLE>
- ---------------
* Less than 1% of total revenues.
42
<PAGE> 43
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
COMMISSION FILE NUMBER 1-4976
USL CAPITAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware
(STATE OF INCORPORATION)
733 Front Street
San Francisco, California
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
94-1360891
(I.R.S. EMPLOYER IDENTIFICATION NO.)
94111
(ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (415) 627-9000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
47
<PAGE> 44
EXHIBITS INDEX
<TABLE>
<CAPTION>
PAGE
-----
<C> <S> <C>
(3)A. Certificate of Incorporation of United States Leasing International,
Inc., a Delaware Corporation filed with the Secretary of State of
the State of Delaware on August 15, 1986............................ 48
B. Agreement of Merger pursuant to which United States Leasing
International, Inc., a California corporation, merged into United
States Leasing International, Inc., a Delaware corporation filed
with the Secretary of State of the State of Delaware on October 27,
1986................................................................ 62
C. Certificate of Amendment of Certificate of Incorporation of United
States Leasing International, Inc., pursuant to which United States
Leasing International, Inc. changed its name to USL Capital
Corporation filed with the Secretary of State of the State of
Delaware on November 12, 1993....................................... 71
D. Copy of Bylaws, as amended, through January 13, 1992, filed as
Exhibit (3)D. to the Company's Annual Report on Form 10-K for the
year ended December 31, 1991 is incorporated herein by this
reference........................................................... *
(4)A. Copy of Indenture dated as of January 15, 1986, between the Company
and the Chase Manhattan Bank (National Association), Trustee,
including forms of Debt Security and Medium Term Note, filed as
Exhibit (4)A. to the Company's Annual Report on Form 10-K for the
year ended December 31, 1991 is incorporated herein by this
reference........................................................... *
B. Supplemental Indenture dated as of October 27, 1986, between the
Company and the Chase Manhattan Bank (National Association),
Trustee, filed on November 22, 1988 as Exhibit 4.2 to the Company's
Registration Statement on Form S-3 (File No.33-25722)............... 73
C. Second Supplemental Indenture dated as of December 1, 1988 to
Indenture dated as of January 15, 1986, between the Company and the
Chase Manhattan Bank (National Association), Trustee, filed on
November 22, 1988 as Exhibit 4.3 to the Company's Registration
Statement on Form S-3 (File No.33-25722)............................ 76
D. Copy of Indenture dated as of July 1, 1991, between the Company and
The First National Bank of Chicago, Trustee, including forms of Debt
Security and Medium Term Note, filed on July 15, 1991 as Exhibits
4.1, 4.2, 4.3 respectively, to the Company's Registration Statement
on Form S-3 (File No. 33-4165) is incorporated herein by this
reference........................................................... *
(10)A. Copy of Asset Purchase Agreement among USLI Fleet Financing, Inc.,
Asset Securitization Cooperative Corporation, Canadian Imperial Bank
of Commerce and United States Leasing International, Inc., dated as
of December 23, 1991, filed as Exhibit 10(A). to the Company's
Annual Report on Form 10-K for the year ended December 31, 1991 is
incorporated herein by this reference............................... *
B. Copy of Purchase Agreement between United States Leasing
International, Inc. and USLI Fleet Financing, Inc., dated as of
December 23, 1991, filed as Exhibit 10(B). to the Company's Annual
Report on Form 10-K for the year ended December 31, 1991 is
incorporated herein by this reference............................... *
C. First and Second Amendments to Asset Purchase Agreement among USLI
Fleet Financing, Inc., Asset Securitization Cooperative Corporation,
Canadian Imperial Bank of Commerce and United States Leasing
International, Inc., dated as of December 23, 1991.................. 88
D. First Amendment to Purchase Agreement between United States Leasing
International, Inc. and USLI Fleet Financing, Inc., dated as of
December 23, 1991................................................... 110
</TABLE>
43
<PAGE> 45
<TABLE>
<CAPTION>
PAGE
-----
<C> <S> <C>
E. Copy of Lease Purchase Agreement dated as of April 1, 1992, between
the Company and Ford Motor Credit Company, filed as Exhibit 10(C) to
the Company's Annual Report on Form 10-K for the year ended December
31, 1992, is incorporated herein by this reference.................. *
F. Copy of Insurance and Indemnity Agreement dated April 1, 1992, among
the Company, Municipal Bond Investors Assurance Corporation and The
Chase Manhattan Bank, N.A., filed as Exhibit 10(D) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992, is
incorporated herein by this reference............................... *
G. Copy of Standard Terms and Conditions of Pooling and Servicing
Agreement, dated as of April 1, 1992, between the Company and The
Chase Manhattan Bank, N.A., filed as Exhibit 10(E) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992, is
incorporated herein by this reference............................... *
H. Copies of Pooling and Servicing Agreements for Trusts A, B and C,
dated as of April 1, 1992, between the Company and The Chase
Manhattan Bank, N.A., filed as Exhibit 10(F) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992, is
incorporated herein by this reference............................... *
I. Copy of Seller's Limited Guaranty dated April 30, 1992, executed by
the Company in favor of Municipal Bond Investors Assurance
Corporation, filed as Exhibit 10(G) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992, is incorporated
herein by this reference............................................ *
(12) Computation of Ratio of Earnings to Fixed Charges................... 45
(23) Consent of Independent Public Accountants (with respect to the
Company's current Registration Statement on Form S-3)............... 46
</TABLE>
- ------------
* Incorporated by Reference.
44
<PAGE> 1
Exhibit 3(A)
PAGE I
LETTERHEAD OF THE SECRETARY OF STATE OF DELAWARE
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF UNITED STATES LEASING INTERNATIONAL, INC. FILED IN THIS OFFICE
ON THE FIFTEENTH DAY OF AUGUST, A.D. 1986, AT 10:01 O'CLOCK A.M.
/s/ Michael Harkins,
Secretary of State
AUTHENTICATION: 10915938
736227044 DATE: 08/15/1986
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
UNITED STATES LEASING INTERNATIONAL, INC.
a Delaware Corporation
ARTICLE ONE
The name of the corporation is United States Leasing International,
Inc.
ARTICLE TWO
The address of the registered office of the corporation in the State
of Delaware is 1209 Orange Street in the City of Wilmington, County of New
Castle. The name of the registered agent of the corporation at such address is
The Corporation Trust Company.
ARTICLE THREE
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 of the State of Delaware.
ARTICLE FOUR
The total number of shares of stock which the corporation shall have
authority to issue is 20,000,000 shares, consisting of 19,000,000 shares of
Common Stock having a par value of $1.00 per share and 1,000,000 shares of
Preferred Stock having a par value of $1.00 per share.
The board of directors of the corporation is authorized, subject to
limitations prescribed by law and the provisions of this Article Four, to
provide for the issuance of the shares of Preferred Stock in series, and by
filing a certificate pursuant to the applicable law of the State of Delaware,
to establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers preferences and rights of the shares
of each such series and the qualifications, limitations or restrictions
thereof.
The number of authorized shares of Preferred Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the Common Stock, without a
vote of the holders of the Preferred Stock, or of any series thereof, unless a
vote of any such holders is required pursuant to the certificate of
certificates establishing the series of Preferred Stock.
<PAGE> 3
ARTICLE FIVE
The business and affairs of the corporation shall be managed by the
board of directors. The exact number of directors shall be fixed from time to
time by, or in the manner provided in, the bylaws of the corporation and may be
increased or decreased as therein provided. Directors of the corporation need
not be elected by ballot unless required by the bylaws. The Board of Directors
is authorized to adopt, amend or repeal the bylaws.
ARTICLE SIX
Notwithstanding that no vote may be permitted or required by law or by
any other Article hereof or by any resolution or resolutions of the Board of
Directors providing for any series of Preferred Stock adopted pursuant to the
provisions of Article Four hereof or by any agreement between the corporation
and any national securities exchange or otherwise, the vote of the stockholders
of the corporation which shall be required to approve any Business Combination
(as hereinafter defined) shall be as set forth in this Article Six.
(a) In addition to any affirmative vote required by law
or any other provision hereof or any resolution or resolutions of the
Board of Directors providing for any series of Preferred Stock adopted
pursuant to the provisions of Article Four hereof, and except as
otherwise expressly provided in paragraph (b) of this Article Six,
none of the following transactions shall be consummated unless and
until such transaction shall have been approved by the affirmative
vote of the holders of at least 75 percent of the combined voting
power of the outstanding shares of stock of all classes and series of
the corporation entitled to vote generally in the election of
directors ("Voting Stock"):
(1) any merger or consolidation of the
corporation with (i) any corporation which is an
Interested Stockholder (as hereinafter defined) or
(ii) any other corporation which after such merger or
consolidation would be an Interested Stockholder (as
hereinafter defined); or
(2) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or
a series of transactions) to or with any Interested
Stockholder of (i) all or substantially all the
assets of the corporation or (ii) assets of the
corporation or any Subsidiary (as hereinafter
defined) or Subsidiaries having in the aggregate a
Fair Market Value (as hereinafter defined) in an
amount which is more than 10 percent of the total
value of the assets of the corporation and its
consolidated Subsidiaries as reflected on the most
recent Balance Sheet (as hereinafter defined) of
<PAGE> 4
the corporation; or
(3) any merger or consolidation of any Subsidiary
or Subsidiaries having in the aggregate assets with a
Fair Market Value as of the Announcement Date (as
hereinafter defined) in an amount which is more than
10 percent of the total value of the assets of the
corporation and its consolidated Subsidiaries as
reflected on the most recent Balance Sheet of the
corporation with (i) any corporation which is an
Interested Stockholder or (ii) any other corporation
which after such merger or consolidation would be an
Interested Stockholder; or
(4) the issuance or transfer by the corporation
or any Subsidiary (in one transaction or a series of
transactions) to an Interested Stockholder of any
securities of the corporation or any Subsidiary in
exchange for cash, securities or other property (or a
combination thereof) having an aggregate Fair Market
Value as of the Announcement Date of $25,000,000 or
more, other than the issuance of securities upon the
conversion or exchange of securities of the
corporation or in exchange for securities of any
Subsidiary which were acquired by an Interested
Stockholder from the corporation or a Subsidiary in a
Business Combination (as hereinafter defined) which
was approved by a vote of the stockholders pursuant
to this Article Six; or
(5) any reclassification of any securities of the
corporation (including any reverse stock split), any
recapitalization of the capital stock of the
corporation, any merger or consolidation of the
corporation with or into any of its Subsidiaries, or
any other transaction (whether or not with or
involving any Interested Stockholder), which has the
effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any
class of stock or series thereof of the corporation
or of any Subsidiary directly or indirectly
Beneficially Owned (as hereinafter defined) by any
Interested Stockholder, or as a result of which the
stockholders of the corporation would cease to be
stockholders of a corporation incorporated under the
laws of the State of Delaware having, as part of its
certificate of incorporation, provisions to the same
effect as this Article Six and the provisions of
Article Eight of this Certificate of Incorporation
relating to amendments or changes to this Article
Six.
<PAGE> 5
The term "Business Combination" as used in this Article Six
shall mean any transaction or proposed transaction which is referred
to in any one or more of the foregoing subparagraphs (1) through (6)
of this paragraph (a) of this Article Six.
(b) The provisions of paragraph (a) of this Article Six
shall not be applicable to any particular Business Combination, and
such Business Combination shall require only such vote of
stockholders, if any, as is required by law and any other Article
hereof or by the terms of any resolution or resolutions of the Board
of Directors providing for any series of Preferred Stock adopted
pursuant to the provisions of Article Four hereof or any agreement
between the corpora- tion and any national securities exchanges or
otherwise, if such Business Combination shall have been approved by a
Majority of the Board of Directors, determined pursuant to
subparagraph (c)(11) of this Article Six, or if all the conditions
specified in each of the following subparagraphs (1), (2), (3), (4)
and (5) are satisfied:
(1) the transaction or transactions constituting
the Business Combination shall provide for a consideration per
share to be received by all holders of shares of Common Stock
in exchange for all of their shares of Common Stock, and the
aggregate amount of the cash and the Fair Market Value as of
the date of the consummation of the Business Combination of
any consideration other than cash to be received per share by
holders of Common Stock in such Business Combination, shall be
at least equal to the higher of the following:
(i) if the Announcement Date of such
Business Combination is within five years of the
Determination Date (as hereinafter defined) in
respect of the Interested Stockholder involved in
such Business Combination, the higher, if applicable,
of (A) the highest per share price (including any
brokerage commissions, dealer manager compensation,
transfer taxes, soliciting dealers' fees and
advertising, printing and legal expenses) paid by
such Interested Stockholder for any shares of Common
Stock which are or were at any time within such
five-year period Beneficially owned by such
Interested Stockholder, and were acquired by it at
any time within such five-year period, or (B) the
price per share equal to the Fair Market Value per
share of Common Stock on the Announcement Date of
such Business Combination multiplied by the ratio of
(x) the price determined pursuant to the foregoing
clause (A), to (y) the average of the Fair Market
Values of a share of Common Stock over each trading
day in the period of 90 days prior to such
Determination Date, or
<PAGE> 6
(ii) the average of the Fair Market
Values of a share of Common Stock over each trading
day in the period of 90 days prior to the
Announcement Date of such Business Combination;
provided, however, that the prices referred to in the
foregoing clauses (i)(A), (i)(B) and (ii) of this subparagraph
(1) shall be adjusted to reflect fairly any stock dividend,
stock split, reverse stock split, combination of shares,
recapitalization, reorganization or similar event affecting
the number of shares of Common Stock outstanding and the
market price per share of outstanding shares of Common Stock
which has occurred after the date as of which such price is
determined; and
(2) the holders of shares of Common Stock and of
any other class or series of Voting Stock shall have the
right, at their option, to receive payment in cash of the
consideration to be received by holders of shares of Common
Stock or of any other class or series of Voting Stock in the
Business Combination, if cash were previously paid by the
Interested Stockholder involved in such Business Combination
in order to acquire any shares of Common Stock within the
five-year period immediately prior to the Announcement Date;
and
(3) after the Determination Date in respect of
the Interested Stockholder involved in such Business
Combination and prior to the consummation of such Business
Combination:
(i) except as approved by a Majority of
the Board of Directors, determined pursuant to
subparagraph (c)(11) of this Article Six, there shall
have been no failure to declare and have available
for payment at the regular dates therefor the full
amount of any dividends (whether or not cumulative)
accrued on any series of Preferred Stock or any other
class of stock or series thereof having a preference
over the Common Stock as to dividends; and
(ii) there shall have been (A) no
reduction in the annual rate of dividends paid on the
Common Stock (except as necessary to reflect any
split or subdivision of the Common Stock), except as
approved by a Majority of the Board of Directors,
determined pursuant to subparagraph (c)(11) of this
Article Six, and (B) an increase in such annual rate
of dividends (as necessary to prevent any such
reduction) in the event of any reclassification
(including any reverse stock split or combination of
shares), recapitalization, reorganization or any
similar transaction which has the effect of
<PAGE> 7
reducing the number of outstanding shares of the Common Stock,
unless the failure so to increase such annual rate is
approved by a Majority of Board of Directors, determined
pursuant to subparagraph (c)(11) of this Article Six; and
(4) the Determination Date in respect of the
Interested Stockholder involved in such Business Combination,
such Interested Stockholder shall not have received the
benefit, directly or indirectly (except as a stockholder of
the corporation, in proportion to its stockholding), of any
loans, advances, guarantees or similar financial assistance
(collectively, "Financial Assistance") provided by the
corporation, whether in anticipation of or in connection with
such Business Combination or otherwise, unless the transaction
constituting the Business Combination shall provide for a
consideration to be received by the holders of shares of
Common Stock in exchange for all of their shares of Common
Stock in an amount equal to the amount required under the
foregoing subparagraph (1) plus the total amount of the Fair
Market Value of all such Financial Assistance; and
(5) a proxy or information statement describing
the proposed Business Combination and complying with
requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (or any
subsequent provisions replacing such Act, rules or
regulations) shall, at the corporation's expense, be mailed to
stockholders of the corporation at least 30 days prior to the
consummation of such Business Combination (whether or not such
proxy or information statement is required to be mailed
pursuant to such Act, rules or regulations or subsequent
provisions), and the Disinterested Directors, if there are any
at the time, shall have been provided a reasonable opportunity
to state their views therein with respect to such proposed
Business Combination and to include therewith an opinion of an
independent investment banker selected by a Majority of the
Board of Directors, determined pursuant to subparagraph
(c)(11) of this Article Six, with respect to such Business
Combination.
(c) For the purposes of this Article Six:
(1) An "Affiliate" of a person shall mean any
person who, directly or indirectly, controls, is controlled by
or is under common control with such person.
(2) "Announcement Date" with respect to any
Business Combination means the date on which the proposal of
such Business Combination is first publicly announced.
<PAGE> 8
(3) An "Associate" means (i) with respect to a
corporation or association, any officer or director thereof or
of a subsidiary thereof, (ii) with respect to a partnership,
any general partner thereof or any limited partner thereof
having a 10 percent ownership interest in such partnership,
(iii) with respect to a business trust, any officer or trustee
thereof or of any subsidiary thereof, (iv) with respect to any
other trust or an estate, any trustee, executor or similar
fiduciary and any person who has a substantial interest as a
beneficiary of such trust or estate, (v) with respect to a
natural person, the spouses and children thereof and any other
relative thereof or of the spouse thereof who has the same
home, and (vi) any Affiliate of any such person.
(4) "Balance Sheet" as of any particular time
means the most recent, publicly available consolidated balance
sheet of the corporation and its consolidated subsidiaries
audited by the corporation's independent public accountants.
(5) A person shall be a "Beneficial Owner" of, or
have "Beneficial Ownership" of or "Beneficially Own", any
Voting Stock over which such person or any of its Affiliates
or Associates, directly or indirectly, through any contract,
arrangement, understanding or relationship, has or shares or,
upon the exercise of any conversion right, exchange right,
warrant, option or similar interest (whether or not then
exercisable) would have or share, either (i) voting power
(including the power to vote or to direct the voting) of such
security or (ii) investment power (including the power to
dispose or direct the disposition) of such security. For the
purposes of determining whether a person is an Interested
Stockholder, the number of shares of Voting Stock deemed to be
outstanding shall include any shares BeneficiallY Owned by
such person even though not actually outstanding, but shall
not include any other shares of Voting Stock which are not
outstanding but which may be issuable to other persons
pursuant to any agreement, arrangement or understanding, or
upon exercise of any conversion right, exchange right,
warrant, option or similar interest.
(6) "Consolidated Transaction Reporting System"
means the system of reporting securities information operated
under the authority of Rule lla3-1 under the Securities
Exchange Act of 1934, as amended, as such rule may from time
to time be amended, and any successor rule or rules.
(7) "Determination Date" in respect of an
Interested Stockholder means the date on which such Interested
<PAGE> 9
Shareholder first became an Interested Stockholder.
(8) "Disinterested Director" for the purposes of
this Article Six means any member of the Board of Directors of
the corporation who is not an Affiliate or Associate of, and
was not directly or indirectly a nominee of, any Interested
Stockholder involved in such Business Combination or any
Affiliate or Associate of such Interested Stockholder and who
either (i) was a member of the Board of Directors prior to the
time that such Interested Stockholder became an Interested
Stockholder, or (ii) is a successor of a Disinterested
Director and was nominated to succeed a Disinterested Director
by a majority of the Disinterested Directors on the Board of
Directors at the time of his nomination. Any reference to
"Disinterested Directors" shall refer to a single
Disinterested Director if there be only one.
(9) "Fair Market Value" as of any particular date
means: (i) in the case of stock (including Voting Stock of the
corporation) which is traded on any securities exchange or in
the over-the-counter market, the average for the trading days
during the thirty-day period immediately preceding the date in
question of the closing sale price of such stock on the New
York Stock Exchange Composite Tape, or, if such stock is not
quoted on the Composite Tape, on the New York Stock Exchange,
or, if such stock is not listed on such Exchange, on the
principal United States securities exchange registered under
the Securities Exchange Act of 1934, as amended, on which such
stock is listed, or, if such stock is not listed on any such
exchange, of the last sales price at 4:00 p.m. reported in the
Consolidated Transaction Reporting System or, if such stock is
not so reported, the average of the highest reported bid and
the lowest reported asked quotations for a share of such stock
furnished by the National Association of Securities Dealers
Automated Quotation System or any successor quotation
reporting system or, if quotations are not available in such
system, as furnished by the National Quotation Bureau
Incorporated or any similar organization furnishing quotations
and, if no such quotations are available, the fair market
value on the date in question of a share of such stock as
determined by a majority of the Disinterested Directors in
good faith, and (ii) in the case of stock of any class or
series which is not traded on any securities exchange or in
the over-the-counter market or in the case of property other
than cash or stock or in the case of Financial Assistance, the
fair market value of such stock, property or Financial
Assistance, as the case may be, on the date in question as
determined by a Majority of the Board of Directors, determined
pursuant to
<PAGE> 10
subparagraph (c)(11) of this Article Six, in good faith.
(10) "Interested Stockholder" shall mean any
person, other than the corporation, any Subsidiary or any
employee benefit plan (or any trustee or fiduciary with
respect to any such plan-acting in such capacity) of the
corporation or any Subsidiary, who or which:
(i) is the Beneficial Owner, directly or
indirectly, of shares of Voting Stock which are
entitled to cast 20 percent or more of the total
votes which all of the then outstanding shares of
Voting Stock are entitled to cast in the election of
directors or is an Affiliate or Associate of any such
person, or
(ii) acts with any other person as a
partnership, limited partnership, syndicate, or other
group for the purpose of acquiring, holding or
disposing of securities of the corporation, and such
group is the Beneficial Owner, directly or
indirectly, of shares of Voting Stock which are
entitled to cast 20 percent or more of the total
votes which all of the then outstanding shares of
Voting Stock are entitled to cast in the election of
directors, and any reference to a particular
Interested Stockholder involved in a Business
Combination shall also refer to any Affiliate or
Associate thereof, any predecessor thereto and any
other person acting as a member of a partnership,
limited partnership, syndicate or group with such
particular Interested Stockholder within the meaning
of the foregoing clause (ii) of this subparagraph
(10).
(11) "Majority of the Board of Directors" for the
purposes of the Article Six shall mean a majority of the
directors excluding, however, all directors who are not
Disinterested Directors as defined by subparagraph (c)(8)
of this Article Six.
(12) a "person" shall mean any individual, firm,
corporation (which shall include a business trust),
partnership, joint venture, trust or estate, association or
other entity.
(13) "Subsidiary" in respect of the corporation
means any corporation or partnership of which a majority of
any class of its equity securities is owned, directly or
indirectly, by the corporation.
(d) A Majority of the Board of Directors as
determined pursuant to subparagraph (c)(11) of this
<PAGE> 11
Article Six, shall have the power and duty to determine, on the basis
of information known to them after reasonable inquiry, all facts
necessary to determine compliance with this Article Six, including,
without limitation: (i) whether a person is an Interested Stockholder,
(ii) the number of shares of Voting Stock Beneficially Owned by any
person, (iii) whether a person is an Affiliate or Associate of another
person, (iv) whether the requirements of paragraph (b) of this Article
Six have been met with respect to any Business Combination, (v)
whether two or more transactions constitute a "series of transactions"
for purposes of paragraph (a) of this Article Six, and (vi) whether
the assets which are the subject of any Business Combination have, or
the consideration to be received for the issuance or transfer of
securities by the corporation or any Subsidiary in any Business
Combination has, (A) an aggregate Fair Market Value of $25,000,000 or
more, or (B) represent in the aggregate more than 10% of the total
value of the assets of the corporation and its consolidated
Subsidiaries. The good faith determination of a Majority of the Board
of Directors as determined pursuant to subparagraph (c)(11) of this
Article Six, on such matters shall be conclusive and binding for all
purposes of this Article Six.
(e) Nothing contained in this Article Six shall
be construed to relieve any Interested Stockholder from an fiduciary
obligation imposed by law.
ARTICLE SEVEN
Any action required or permitted to be taken by the stockholders of
the corporation must be taken at a duly called annual or special meeting of
stockholders of the corporation and may not be effected by any consent in
writing by the stockholders.
ARTICLE EIGHT
(a) The corporation reserves the right at any time and
from time to time to amend, alter, change, or repeal any provisions
contained herein, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted, in
the manner now or hereafter prescribed by law, and all rights,
preferences, and privileges of whatsoever nature conferred upon
stockholders, directors, or any other persons whomsoever by or
pursuant to this Certificate of Incorporation in its present form or
as hereafter amended are granted subject to the right reserved in this
Article.
(b) In addition to any requirements of law and any other
provisions hereof or any resolution or resolutions of the Board of
Directors providing for any series of Preferred
<PAGE> 12
Stock adopted pursuant to Article Four hereof (and notwithstanding the
fact that approval by a lesser vote may be permitted by law, any other
provision hereof or any such resolution or resolutions), the
affirmative vote of the holders of 75 percent or more of the combined
voting power of the then outstanding shares of Voting Stock, voting
together as a single class, shall be required to amend, alter or
repeal, or adopt any provision inconsistent with, this Article Eight
or Articles Six or Seven hereof.
ARTICLE NINE
(a) Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he or she, or a person of
whom he or she is the legal representative, is or was a director or
officer of this corporation or is or was serving at the request of the
corporation as a director or officer of another
<PAGE> 13
corporation or of a
partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a
director or officer or in any other capacity while serving as a
director or officer shall be indemnified and held harmless by the
corporation to the fullest extent authorized by the General
Corporation Law of the State of Delaware, as the same exists or may
hereafter be amended, (but, in the case of any such amendment, only to
the extent that such amendment permits the corporation to provide
broader indemnification rights than said law permitted the corporation
to provide prior to such amendment) against all expenses, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid to be paid in settlement)
reasonably incurred or suffered by such person in connection
therewith; provided, however, that the corporation shall indemnify any
such person seeking indemnity in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part
thereof) was authorized by the board of directors of the corporation.
Such right shall be a contract right and shall include the right to be
paid by the corporation expenses incurred in defending any such
proceeding in advance of its final disposition;provided, however,
that, the payment of such expenses incurred by a director or officer
in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of such
proceeding, shall be made only upon delivery to the
<PAGE> 14
Stock adopted pursuant to Article Four hereof (and notwithstanding the
fact that approval by a lesser vote may be permitted by law, any other
provision hereof or any such resolution or resolutions), the
affirmative vote of the holders of 75 percent or more of the combined
voting power of the then outstanding shares of Voting Stock, voting
together as a single class, shall be required to amend, alter or
repeal, or adopt any provision inconsistent with, this Article Eight
or Articles Six or Seven hereof.
ARTICLE NINE
(a) Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he or she, or a person of
whom he or she is the legal representative, is or was a director or
officer of this corporation or is or was serving at the request of the
corporation as a director or officer of another corporation or of a
partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a
director or officer or in any other capacity while serving as a
director or officer shall be indemnified and held harmless by the
corporation to the fullest extent authorized by the General
Corporation Law of the State of Delaware, as the same exists or may
hereafter be amended, (but, in the case of any such amendment, only to
the extent that such amendment permits the corporation to provide
broader indemnification rights than said law permitted the corporation
to provide prior to such amendment) against all expenses, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid to be paid in settlement)
reasonably incurred or suffered by such person in connection
therewith; provided, however, that the corporation shall indemnify any
such person seeking indemnity in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part
thereof) was authorized by the board of directors of the corporation.
Such right shall be a contract right and shall include the right to be
paid by the corporation expenses incurred in defending any such
proceeding in advance of its final disposition;provided, however,
that, the payment of such expenses incurred by a director or officer
in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of such
proceeding, shall be made only upon delivery to the corporation 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
<PAGE> 15
be indemnified under this Article Nine or otherwise.
(b) If a claim under paragraph (a) of this Article Nine
is not paid in full by the corporation within ninety days after a
written claim has been received by the corporation, the claimant may
at any time thereafter bring suit against the corporation to recover
the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred
in defending any proceeding in advance of its final disposition
whether the required undertaking has been tendered to the corporation)
that the claimant has not met the standards of conduct which make it
permissible under the General Corporation Law of the State of Delaware
for the corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the corporation.
Neither the failure of the corporation (including its board of
directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because
he or she has met the applicable standard of conduct set forth in said
law, nor an actual determination by the corporation (including its
board of directors, independent legal counsel, or its stockholders)
that the claimant had not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the
claimant had not met the applicable standard of conduct.
(c) The rights conferred on any person by paragraphs (a)
and (b) of this Article Nine shall not be exclusive of any other right
which such person may have or hereafter acquire under any statute,
provision of this Certificate of Incorporation, bylaw, agreement, vote
of stockholders or disinterested directors or otherwise.
(d) The corporation may maintain insurance, at its
expense, to protect itself and any such director or officer of the
corporation or of another corporation, partnership, joint venture,
trust or other enterprise against any such 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 of the State of Delaware.
(e) The corporation may enter into individual agreements
with its directors, officers, employees and agents, and the directors,
officers, employees and agents of its subsidiaries, pursuant to which
agreements the corporation shall indemnify such persons as provided in
this Article Nine and as not otherwise prohibited by law. Such
agreements shall be upon such terms and conditions as the
<PAGE> 16
board of directors shall approve.
ARTICLE TEN
A director of this corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation
Law of the State of Delaware, or (iv) for any transaction from which the
director derived an improper personal benefit.
ARTICLE ELEVEN
The powers of the incorporator are to terminate upon the filing of
this Certificate of Incorporation. The names and mailing addresses of the
persons who are to serve as the initial directors of the corporation until the
first annual meeting of stockholders or until their successors are elected and
qualified are:
Name Mailing Address
D. E. Mundell 733 Front Street, San Francisco, California 94111
Peter Mezey 733 Front Street, San Francisco, California 94111
Frank B. Smith 733 Front Street, San Francisco, California 94111
ARTICLE TWELVE
The incorporator is Peter Mezey, whose mailing address is 733 Front
Street, San Francisco, CA 94111.
I, the undersigned, being the incorporator, for the purpose of forming
a corporation under the laws of the State of Delaware do make, file and record
this Certificate of Incorporation, do certify that the facts herein stated are
true, and accordingly, have hereto set my hand and seal this 13th day of
August, 1986.
/s/ Peter Mezey,
Incorporator
<PAGE> 1
EXHIBIT 3(B)
Page 1
LETTERHEAD OF THE SECRETARY OF STATE OF DELAWARE
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AGREEMENT OF MERGER OF "UNITED STATES LEASING INTERNATIONAL, INC." A
CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF CALIFORNIA,
MERGING WITH AND INTO "UNITED STATES LEASING INTERNATIONAL, INC.", A
CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE
UNDER THE NAME OF "UNITED STATES LEASING INTERNATIONAL, INC." AS RECEIVED AND
FILED IN THIS OFFICE THE TWENTY-SEVENTH DAY OF OCTOBER, A.D. 1986, AT 1 O'CLOCK
P.M.
AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CORPORATION SHALL
BE GOVERNED BY LAWS OF THE STATE OF DELAWARE.
/s/ MICHAEL HARKINS,
SECRETARY OF STATE
AUTHENTICATION: 0989529
736300063 DATE: 10/28/1986
<PAGE> 2
EXHIBIT 3(B)
LETTERHEAD OF THE SECRETARY OF STATE OF THE STATE OF CALIFORNIA
STATE OF CALIFORNIA
OFFICE OF THE SECRETARY OF STATE
CORPORATION DIVISION
I, MARCH FONG EU, Secretary of State of the State of California,
hereby certify:
That the annexed transcript has been compared with the corporate
record on file in this office, of which it purports to be a copy, and that same
is full, true and correct.
IN WITNESS WHEREOF, I execute this certificate and affix the Great
Seal of the State of California this
OCT 27 1986
/s/ March Fong Eu,
Secretary of State
<PAGE> 3
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER ("Merger Agreement") is made and entered into
as of October 24, 1986 by and between UNITED STATES LEASING INTERNATIONAL,
INC., a California corporation ("USLICalifornia"), and UNITED STATES LEASING
INTERNATIONAL, INC., a Delaware corporation ("USLI-Delaware").
WITNESSETH:
WHEREAS, USLI-Delaware is a corporation duly organized and existing
under the laws of the State of Delaware;
WHEREAS, USLI-California is a corporation duly organized and existing
under the laws of the State of California;
WHEREAS, on the date of this Merger Agreement, USLI-Delaware has
authority to issue 19,000,000 shares of common stock, par value $1.00 per share
(the "Delaware common stock"), of which 10 shares are issued and outstanding
and owned by USLI-California, and 1,000,000 shares of preferred stock, par
value $1.00 per share, none of which have been issued or are outstanding;
WHEREAS, on the date of this Merger Agreement USLI-California has
authority to issue 19,000,000 shares of common stock, par value $1.00 per share
(the "California common stock"), of which 7,338,251 shares are issued and
outstanding, and 1,000,000 shares of preferred stock, par value $1.00 per
share, none of which have been issued or are outstanding;
WHEREAS, the respective Boards of Directors of USLI-Delaware and
USLI-California have determined that, for the purpose of effecting the
reincorporation of USLI-California in the State of Delaware, it is advisable
and to the advantage of such corporations and their stockholders that
USLI-California merge with and into USLI-Delaware upon the terms and conditions
herein provided; and
WHEREAS, the respective Boards of Directors of USLI-Delaware and
USLI-California have approved this Merger Agreement and the Board of Directors
of USLI-Delaware and USLI-California have directed that this Merger Agreement
be submitted to a vote of their stockholders;
NOW, THEREFORE, in consideration of the mutual agreements and
covenants set forth herein, USLI-California and USLI-Delaware hereby agree to
merge as follows:
(1) Merger. USLI-California shall be merged with and
into USLI-Delaware, and USLI-Delaware shall survive the merger (the
"Merger"), effective upon the date when this Merger Agreement is made
effective in accordance with applicable law (the "Effective Date").
<PAGE> 4
(2) Directors and officers and Governing Documents. The
directors and officers of USLI-Delaware shall be the same upon the
Effective Date as they are immediately prior thereto. The Certificate
of Incorporation of USLI-Delaware, as in effect on the Effective Date,
shall continue to be the Certificate of Incorporation of USLI-Delaware
as the surviving corporation without change or amendment until further
amended in accordance with the provisions thereof and applicable laws.
The Bylaws of USLI-Delaware as amended and in effect on the Effective
Date, shall continue to be the Bylaws of USLI-Delaware, as the
surviving corporation without change or amendment until further
amended in accordance with the provisions thereof and applicable laws.
(3) Succession. On the Effective Date, USLI-Delaware
shall succeed to USLI-California in the manner of and as more fully
set forth in Section 259 of the General Corporation Law of the State
of Delaware.
(4) Further Assurances. From time to time, as and when
required by USLI-Delaware or by its successors and assigns, there
shall be executed and delivered on behalf of USLI-California such
deeds and other instruments, and there shall be taken or caused to be
taken by it such further and other action, as shall be appropriate or
necessary in order to vest, perfect or confirm, of record or
otherwise, in USLI-Delaware the title to and possession of all the
property, interests, assets, rights, privileges, immunities, powers,
franchises and authority of USLI-California, and otherwise to carry
out the purposes of this Merger Agreement, and the officers and
directors of USLI-Delaware are fully authorized in the name and on
behalf of USLI-California or otherwise to take any and all such action
and to execute and deliver any and all such deeds and other
instruments.
(5) Common Stock of USLI-California. Upon the Effective
Date, by virtue of the Merger and without any action on the part of
the holder thereof, each share of California common stock outstanding
immediately prior thereto shall be changed and converted into one
fully paid and non-assessable share of Delaware common stock.
(6) Stock Certificates. On and after the Effective Date,
all of the outstanding certificates which prior to that time
represented shares of California common stock shall be deemed for all
purposes to evidence ownership of and to represent the shares of
Delaware common stock into which the shares of California common stock
represented by such certificates have been converted as herein
provided. The registered owner on the books and records of
USLI-Delaware or its transfer agent of any such outstanding stock
certificate shall, until such certificate shall have been surrendered
for transfer or otherwise accounted for to USLI-Delaware or its
transfer agent, have and be entitled to exercise any voting
<PAGE> 5
and other rights with respect to and to receive any dividend and other
distributions upon the shares of Delaware common stock evidenced by such
outstanding certificate as above provided.
(7) Options. Forthwith upon the Effective Date, each
outstanding option to purchase shares of California common stock
granted under the Stock Option Plans (the "Plans") of USLI-California
shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into and become an option to purchase
the same number of shares of Delaware common stock at the same option
price per share as in effect on the Effective Date and upon the same
terms and subject to the same conditions as set forth in said Plans or
option agreement. A number of shares of Delaware common stock shall
be reserved for purposes of said Plans equal to the number of shares
of California common stock so reserved as of the Effective Date. As
of the Effective Date, USLI-Delaware hereby assumes all obligations of
USLI-California under said Plans and the outstanding options of
portions thereof granted pursuant to said Plans.
(8) Other Employee Benefit Plans. As of the Effective
Date, USLI-Delaware hereby assumes all obligations of USLI-California
under any and all employee benefit plans in effect as of said date or
with respect to which employee rights or accrued benefits are
outstanding as of said date.
(9) Indenture. As of the Effective Date, USLI-Delaware
hereby assumes all obligations of USLI-California under that certain
Indenture dated as of January 15, 1986 between USLICalifornia and The
Chase Manhattan Bank (National Association) including, without
limitation, the due and punctual payment of the principal of (and
premium, if any) and interest on all securities issued thereunder.
(10) Other Agreements. As of the Effective Date,
USLIDelaware hereby assumes all of the obligations of USLI-California
under all agreements to which USLI-California is a party or by which
it is bound.
(11) Common Stock of USLI-Delaware. Forthwith upon the
Effective Date, the ten (10) shares of Delaware common stock presently
issued and outstanding in the name of USLI-California shall be
cancelled and retired and resume the status of authorized and unissued
shares of Delaware common stock, and no shares of Delaware common
stock or other securities of USLI-Delaware shall be issued in respect
thereof.
(12) Covenants of USLI-Delaware. USLI-Delaware covenants
and agrees that it will on or before the Effective Date:
<PAGE> 6
(a) Qualify to do business as a foreign
corporation in the State of California, and in connection
therewith irrevocably appoint an agent for service of process
as required under the provisions of Section 2105 of the
California Corporations Code.
(b) File any and all documents with the
California Franchise Tax Board necessary to the assumption by
USLI- Delaware of all of the franchise tax liabilities of
USLI-California.
(13) Book Entries. As of the Effective Date, entries
shall be made upon the books of USLI-Delaware in accordance with the
following:
(a) The assets and liabilities of USLI-California
shall be recorded at the amounts at which they were carried on
the books of USLI-California immediately prior to the
Effective Date, with appropriate adjustments to reflect the
retirement of the ten (10) shares of Delaware common stock
presently issued and outstanding.
(b) There shall be credited to the common stock
account of USLI-Delaware, which amount shall constitute the
capital of USLI-Delaware, the aggregate amount of the par
value of all shares of Delaware common stock resulting from
the conversion of the outstanding California common stock
pursuant to the Merger.
(c) There shall be credited to the capital
surplus account of USLI-Delaware the aggregate of the amounts
shown in the common stock and capital surplus accounts of
USLI-California immediately prior to the Effective Date, less
the amount credited to the common stock account of
USLI-Delaware pursuant to Paragraph (b) above.
(d) There shall be credited to the retained
earnings account of USLI-Delaware an amount equal to that
carried in the retained earnings account of USLI-California
immediately prior to the Effective Date.
(14) Amendment. At any time before or after approval and
adoption by the stockholders of USLI-California, this Merger Agreement
may be amended in any manner (except that Paragraph (5) or any of the
other principal terms may not be amended without the approval of the
stockholders of USLI-California) as may be determined in the judgment
of the respective Boards of Directors of USLI-Delaware and
USLI-California to be necessary, desirable or expedient in order to
clarify the intention of the parties hereto or to effect or facilitate
the purposes and intent of this Merger Agreement.
(15) Abandonment. At any time before the Effective Date,
this Merger Agreement may be terminated and the Merger
<PAGE> 7
may be abandoned by the Board of Directors of either USLI-California or
USLI-Delaware or both, notwithstanding approval of this Merger
Agreement by the stockholders of USLI-Delaware or the stockholders of
USLI-California or both.
(16) Counterparts. In order to facilitate the filing and
recording of this Merger Agreement, the same may be executed in any
number of counterparts, each of which shall be deemed to be an
original.
IN WITNESS WHEREOF, this Merger Agreement, having first been duly
approved by resolution of the Board of Directors of USLIDelaware and
USLI-California, is hereby executed on behalf of each said two corporations by
their respective officers thereunto duly authorized.
UNITED STATES LEASING INTERNATIONAL, INC.,
a Delaware corporation
By /S/ D.E. Mundell, President
and Chief Executive Officer
ATTEST:
/S/ Peter Mezey, Secretary
UNITED STATES LEASING INTERNATIONAL, INC.,
a California corporation
(Corporate Seal) By: /S/ D.E. Mundell, President
and Chief Executive Officer
ATTEST:
/S/ Peter Mezey, Secretary
<PAGE> 8
CERTIFICATE OF THE SECRETARY
OF UNITED STATES LEASING INTERNATIONAL, INC.
Peter Mezey, Secretary of United States Leasing International, Inc. a
Delaware corporation ("USLI-Delaware"), do hereby certify, as such Secretary,
in accordance with the General Corporation Law of the State of Delaware, that
the Agreement of Merger to which this Certificate is attached, after having
been first duly approved, adopted and executed by USLI-Delaware and United
States Leasing International, Inc., a California corporation, was duly
submitted to the sole stockholder of USLI-Delaware at a special meeting of
stockholders called for the purpose of acting on said Agreement of Merger,
notice of the time, place and purpose of said meeting having been waived by the
sole shareholder of USLI-Delaware, and that at said meeting the Agreement of
Merger was considered and a vote taken for its adoption or rejection and that
at said meeting all of the outstanding shares of USLI-Delaware entitled to vote
thereon were voted for the adoption of said Agreement of Merger and that
thereby said Agreement of Merger was at said meeting duly adopted as the act of
the stockholders of USLI-Delaware and as the agreement and act of
USLI-Delaware.
IN WITNESS WHEREOF, the undersigned has executed this certificate as
of this 24th day of October 1986.
/S/ Peter Mezey
Secretary of USLI-Delaware
<PAGE> 9
CERTIFICATE OF THE SECRETARY
OF UNITED STATES LEASING INTERNATIONAL, INC.
I, Peter Mezey, Secretary of United States Leasing International,
Inc., a California corporation ("USLI-California"). do hereby certify, as such
Secretary. in accordance with the General Corporation Law of the State of
Delaware, that the Agreement of Merger to which this Certificate is attached,
after having been first duly approved. adopted and executed by USLI-California
and United States Leasing International, Inc., A Delaware corporation, was duly
submitted to the stockholders of USLI-California at a meeting of stockholders
called for the purpose of acting on said Agreement of Merger after due notice
of the time, place and purpose of said meeting was mailed to each holder of
common stock of USLI-California at his address as it appears on the records of
USLI-California in the manner provided under the provisions of Section 601 of
the California Corporations Code, and that at said meeting the Agreement of
Merger was considered and a vote taken for its adoption or rejection and that
at said meeting a majority of the outstanding common stock of USLI-California
entitled to vote thereon was voted for the adoption of said Agreement of Merger
and that thereby said Agreement of Merger was at said meeting duly adopted as
the act of the stockholders of USLI-California and as the agreement and act of
USLI-California.
IN WITNESS WHEREOF, the undersigned has executed this certificate and
affixed the corporate seal as of this 24th day of October, 1986.
(Corporate Seal)
/S/ Peter Mezey
Secretary of USLI-California
<PAGE> 1
EXHIBIT 3(C)
LETTERHEAD OF THE SECRETARY OF STATE OF DELAWARE
Page 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
I, William T. Quillen, Secretary of State of the State of Delaware, do
hereby certify the attached is a true and correct copy of the Certificate of
Amendment of "United States Leasing International, Inc.," filed in this office
on the Twelfth day of November, A.D. 1993, at 10 o'clock a.m.
A certified copy of this Certificate has been forwarded to New Castle County
Recorder of Deeds for recording.
/s/ William T. Quillen,
Secretary of State
AUTHENTICATION: 4144102
733316034 DATE: 11/12/93
<PAGE> 2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
UNITED STATES LEASING INTERNATIONAL, INC. (the "Company"), a corporation
organized and existing under and by virtue of the General Corporation Law of
the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That by action of the Board of Directors by unanimous written consent
on November 10, 1993, resolutions were adopted setting forth proposed
amendments ("Amendments") of the Certificate of Incorporation of the Company,
declaring the Amendments to be advisable and calling a meeting of the sole
stockholder of the Company for consideration of the Amendments. The
resolutions setting forth the proposed amendments are as follows:
RESOLVED that the Certificate of Incorporation of the Company be amended by
striking Article One in its entirety and replacing it with:
"ARTICLE ONE
The name of the corporation is USL Capital Corporation."
RESOLVED, that the Certificate of Incorporation of the Company be amended by
striking Article Seven in its entirety.
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a
special meeting of the stockholders of the Company was duly called and held,
and notice thereof was waived in accordance with Section 229 of the General
Corporation Law of the State of Delaware, at which meeting the necessary
number of shares as required by statute were voted in favor of the Amendments.
THIRD: That the Amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Company has caused this Certificate to be signed by
J.G. Duff, its Chairman and Chief Executive Officer, and Peter Mezey, its
Secretary, this 11th day of November, 1993.
By: /s/ J.G. Duff
Chairman and Chief Executive Officer
ATTEST: /s/ Peter Mezey, Secretary
<PAGE> 3
Exhibit (4)B
UNITED STATES LEASING INTERNATIONAL, INC.
to
The Chase Manhattan Bank (National Association),
Trustee
SUPPLEMENTAL
INDENTURE
Dated as of October 27, 1986
<PAGE> 4
THIS FIRST SUPPLEMENTAL INDENTURE, dated of October 27, 1986, between
UNITED STATES LEASING INTERNATIONAL, INC., a corporation duly organized and
existing under the laws of the State of Delaware (hereinafter called the
"Corporation"), and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), Trustee, a
national banking association duly organized and existing under the laws of the
United States (hereinafter called the "Trustee").
WITNESSETH:
WHEREAS, United States Leasing International, Inc., has heretofore
executed and delivered to the Trustee a certain Indenture, dated as of January
15, 1986 (hereinafter called the (Indenture), providing for the issuance from
time to time of one or more series of Securities (such terms and all other
capitalized terms used but not defined in this First Supplemental Indenture
having the meanings assigned them in the Indenture);
WHEREAS, the Corporation is the surviving corporation of a merger
which became effective on October 27, 1986 (the "Merger") in which United
States Leasing International, Inc., a California corporation
("USLI-California"), which executed the Indenture, merged into the Corporation,
whereupon, pursuant to tho Agreement of Merger entered into as of October 24,
1986 between the Corporation and USLI-California, the Corporation assumed all
of the obligations of USLI-California under the Indenture including, without
limitation, the due and punctual payment of the principal of (and premium, if
any) and interest on all securities issued thereunder.
WHEREAS, the Corporation is required and has requested the Trustee to
join with it in the execution and delivery of this First Supplemental Indenture
in order to comply with the Indenture as set forth herein;
WHEREAS, Section 901(1) of the Indenture provides that a supplemental
indenture may be entered into by the Corporation and the Trustee without the
consent of any Security holders to evidence the succession of another
corporation to the Corporation, and the assumption by any such successor of the
covenants of the corporation herein and in the Securities;
WHEREAS, pursuant to section 903 and section 801(3) of the Indenture,
the Corporation has furnished the Trustee with an Opinion of Counse1 and an
Officers' Certificate complying with the requirements of Sections 903 and
801(3) of the Indenture, stating that all conditions precedent provided for in
the Indenture with respect to the entering into of this First Supplemental
Indenture have been complied with; and
WHEREAS, all things necessary to make this First Supplemental
Indenture a valid agreement of the Corporation and the Trustee and a valid
amendment of and supplement to the Indenture have been done.
<PAGE> 5
WHEREAS, all things necessary pursuant to Section 801 of the Indenture
to make effective the assumption by the Corporation of the obligations of
USLI-California under the Indenture have been accomplished.
NOW THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
In consideration of the promises and of the purchase of the Securities
by the holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of the respective holders from time to time of the
Securities as follows:
1. That any and all references to "United States Leasing
International, Inc., a California corporation" shall be amended to read "United
States Leasing International, Inc., a Delaware Corporation".
2. That the Corporation does hereby assume the due and punctual
payment of the principal of (and premium, if any) and interest on all of the
Securities and the performance of every covenant of the Indenture and this
First Supplemental Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.
UNITED STATES LEASING INTERNATIONAL, INC.
By: /s/ Frank B. Smith
Senior Vice President
By: /S/ Peter Mezey
Senior Vice President
Attest: /s/ Joanne L. Miller
Assistant Secretary
(SEAL)
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By: /s/ Frederick W. Clark
Vice President
Attest: /s/ R.J. Halleran
Assistant Secretary
(SEAL)
<PAGE> 1
Exhibit (4)C
UNITED STATES LEASING INTERNATIONAL, INC.
to
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION),
Trustee
SECOND
SUPPLEMENTAL
INDENTURE
Dated as of December 1, 1988
<PAGE> 2
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of December 1,
1988, is entered into between UNITED STATES LEASING INTERNATIONAL, INC., a
corporation duly organized and existing under the laws of the State of Delaware
(hereinafter called the "Corporation"), and THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), Trustee, a national banking association duly organized and
existing under the laws of the United States (hereinafter called the
"Trustee").
WITNESSETH:
WHEREAS, United States Leasing International, Inc., has
heretofore executed and delivered to the Trustee a certain Indenture, dated as
of January 15, 1986, as supplemented by the First Supplemental Indenture dated
as of October 27, 1986 (hereinafter called the "Indenture"), providing for the
issuance from time to time of one or more series of Securities (such terms and
all other capitalized terms used but not defined in this Second Supplemental
Indenture having the meanings assigned them in the Indenture);
WHEREAS, the Corporation desires and has requested the Trustee
to join with it in the execution and delivery of this Second Supplemental
Indenture in order to amend the Indenture as set forth herein;
WHEREAS, Section 901(4) of the Indenture provides that a
supplemental indenture may be entered into by the Corporation and the Trustee
without the consent of any Securityholders to add to, change or eliminate any
of the provisions of the Indenture which addition, change or elimination shall
not materially adversely affect the interests of the holders of the Securities
Outstanding;
WHEREAS, the Corporation has furnished the Trustee with an
Opinion of Counsel complying with the requirements of Sections 903 of the
Indenture and stating that all conditions precedent provided for in the
Indenture with respect to the entering into of this Second Supplemental
Indenture have been complied with; and
WHEREAS, all things have been done which are necessary to make
this Second Supplemental Indenture a valid agreement of the Corporation and the
Trustee and a valid amendment of and supplement to the Indenture.
NOW THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
In consideration of the premises and of the purchase of the
Securities by the holders thereof, it is mutually covenanted and agreed for the
equal and proportionate benefit of the respective holders from time to time of
the Securities that the Indenture shall be amended with respect to each series
of Securities issued after the date hereof as follows:
<PAGE> 3
1. Section 101 of the Indenture is hereby amended to add
the following definitions:
"'Designated Currency' has the meaning specified in Section
312.
'Dollar' or '$' means the coin or currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts.
'ECU' means the European Currency Unit as defined and revised
from time to time by the Council of the European Communities.
'European Communities' means the European Economic Community,
the European Coal and Steel Community and the European Atomic Energy Community.
'Exchange Rate' shall have the meaning specified as
contemplated in Section 301.
'Exchange Rate Agent' shall have the meaning specified as
contemplated in Section 301.
'Exchange Rate Officer's Certificate', with respect to any
date for the payment of principal of (and premium, if any) and interest on any
series of Securities, means a certificate setting forth the applicable Exchange
Rate and the amounts payable in Dollars and Foreign Currencies in respect of
the principal of (and premium, if any) and interest on Securities denominated
in ECU, and other composite currency or Foreign Currency, and signed by the
Chairman of the Board, the President, the Treasurer or any Assistant Treasurer
of the Company or the Exchange Rate Agent appointed pursuant to Section 301 and
delivered to the Trustee.
'Foreign Currency' means a currency issued by the government
of any country other than the United States of America.
'London Banking Day' means any day on which dealings in
deposits in Dollars are transacted in the London interbank market.
'U.S. Government Obligations' means direct obligations of the
United States for the timely payment of which its full faith and credit is
pledged, or obligations of a person controlled or supervised by and acting as
an agency or instrumentality of the United States the timely payment of which
is unconditionally guaranteed as a full faith and credit obligation by the
United States."
2. Section 101 of the Indenture is hereby amended to
change the definition of "Business Day" to read as follows:
"'Business Day' means, except as may otherwise be specified
pursuant to Section 301 for Securities of any series,
<PAGE> 4
any day, other than a Saturday or Sunday, that meets each of the
following applicable requirements: the day is (a) not a day on which banking
institutions are authorized or required by law or regulation to be closed in
(i) The City of New York, or (ii) with respect to the payment of any
Securities, the place where such Securities is presented for payment, and (b)
if the Security is denominated in a Specified Currency other than Dollars, (i)
not a day on which banking institutions are authorized or required by law or
regulation to close in the financial center of the country issuing the
Specified Currency (which, in the case of ECU, shall be London and Luxembourg
City, Luxembourg) and (ii) a day on which banking institutions in such
financial center are carrying out transactions in such Specified Currency, and
(c) with respect to Securities bearing interest at a rate determined by
reference to the London interbank offered rate, a London Banking Day."
3. The second paragraph of Section 301 of the Indenture
is hereby amended to delete the "and" at the end of subparagraph (11); to
delete the period and insert "; and" at the end of subparagraph (12) and to add
the following subparagraphs after subparagraph (12):
"13) the currency or currencies of denomination of
the Securities of any series, which may be in Dollars, any Foreign Currency or
any composite currency, including but not limited to the ECU, and, if any such
currency of denomination is a composite currency other than the ECU, the agency
or organization, if any, responsible for overseeing such composite currency;
14) the currency or currencies in which payment
of the principal of (and premium, if any) and interest on the Securities will
be made, the currency or currencies, if any, in which payment of the principal
of (and premium, if any) or the interest on Securities, at the election of each
of the Holders thereof, may also be payable and the periods within which and
the terms and conditions upon which such election is to be made and the
Exchange Rate and Exchange Rate Agent;
15) if the amount of payments of principal of
(and premium, if any) or interest on the Securities of the series may be
determined with reference to an index based on a currency or currencies other
than that in which the Securities are denominated or designated to be payable,
the manner in which such amounts shall be determined;
16) if payments of principal of (and premium, if
any) or interest on the Securities of the series are to be made in a Foreign
Currency other than the currency in which such Securities are denominated, the
manner in which the Exchange Rate with respect to such payments shall be
determined; and
17) the terms and conditions, if any, pursuant to
which the Company's obligations under this Indenture may be terminated through
the deposit of money or U.S. Government
<PAGE> 5
Obligations as provided in Article 14."
4. Article III of the Indenture is hereby amended by adding a
Section 311 which shall read in full as follows:
"SECTION 311. Judgments.
The Corporation may provide, pursuant to Section 301, for the
Securities of any series that (a) the obligation, if any, of the Corporation to
pay the principal of (and premium, if any) and interest on the Securities of
any series in a Foreign Currency, composite currency or Dollars (the
"Designated Currency") as may be specified pursuant to Section 301 is of the
essence and agrees that, to the fullest extent possible under applicable law
and except as may otherwise be specified as contemplated in Section 301,
judgments in respect of such Securities shall be given in the Designated
Currency; (b) the obligation of the Corporation to make payments in the
Designated Currency of the principal of (and premium, if any) and interest on
such Securities shall, notwithstanding any payment in any other currency
(whether pursuant to a judgment or otherwise), be discharged only to the extent
of the amount in the Designated Currency that the Holder receiving such payment
may, in accordance with normal banking procedures, purchase with the sum paid
in such other currency (after any premium and cost of exchange) in the country
of issue of the Designated Currency in the case of Foreign Currency or Dollars
or in the international banking community in the case of a composite currency
on the Business Day immediately following the day on which such Holder receives
such payment; (c) if the amount in the Designated Currency that may be so
purchased for any reason falls short of the amount originally due, the
Corporation shall pay such additional amounts as may be necessary to compensate
for such shortfall; and (d) any obligation of the Corporation not discharged by
such payment shall be due as a separate and independent obligation and, until
discharged as provided herein, shall continue in full force and effect."
5. Section 506 of the Indenture is hereby amended by
restating the second subparagraph thereof to read in full as follows:
"SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities, in respect
of which or for the benefit of which such money has been collected ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Securities for principal (and premium, if any) and interest,
respectively. The Holders of each series of Securities denominated in ECU, any
other composite currency or a Foreign Currency and any matured coupons relating
thereto shall be entitled to receive a ratable portion of the amount determined
by the Exchange Rate Agent by converting the principal amount Outstanding of
such series of Securities and matured but unpaid interest on such series of
Securities in the currency in which
<PAGE> 6
such series of Securities is denominated into Dollars at the Exchange
Rate as of the date of declaration of acceleration of the Maturity of the
Securities."
6. Section 1005(a) of the Indenture is hereby amended by
deleting the "and" at the end of subparagraph ('9) and all of subparagraph (10)
and by adding the following:
"(10) any lease of Property, real or personal, in
which the Corporation is the lessee other than a lease that is a part of a sale
and leaseback transaction not entered into in the ordinary course of business;
(11) the rights of set-off and banker's liens and
similar rights granted or confirmed to holders of Indebtedness of the
Corporation;
(12) Liens on any Property, tangible or
intangible, real or personal, existing at the time of acquisition of such
Property (including acquisition through merger or consolidation);
(13) exclusive of any other Lien permitted in
subsections (1) through (12) of this Section 1005(a), other Liens, provided
that the outstanding aggregate principal amount of the Indebtedness of the
Company secured by all such other Liens shall not at any time exceed an amount
equal to 5% of the total assets of the Corporation and its consolidated
Subsidiaries after deducting their intangible assets, all determined on a
consolidated basis in accordance with generally accepted accounting principles,
consistently applied; and
(14) any extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole or in part, of any
Lien or Liens referred to in subsections (1) through (13) of this Section
1005(a); provided, however, that such extension, renewal or replacement Lien
shall be limited to all or a part of the same Property that secured the Lien or
Liens extended, renewed or replaced (plus improvements on such property)."
7. A new Article Fourteen is hereby added to the
Indenture which shall read in full as follows:
"ARTICLE FOURTEEN
Defeasance and Covenant Defeasance
Section 1401. Applicability of Article; Corporation's Option to Effect
Defeasance or Covenant Defeasance.
If the Corporation elects, pursuant to Section 301, to permit the
application of either or both of (a) defeasance of the
<PAGE> 7
Securities of a series under Section 1402 or (b) covenant defeasance of the
Securities of a series under Section 1403, then the provision of such Section
or Sections, as the case may be, together with the other provisions of this
Article Fourteen, shall be applicable to the Securities of such series, and
the Corporation may at its option by Board Resolution, at any time, with
respect to the Securities of such series, elect to have either Section 1402
(if applicable) or Section 1403 (if applicable) be applied to the Outstanding
Securities of such series upon compliance with the conditions set forth below
in this Article Fourteen.
Section 1402. Defeasance and Discharge.
Upon the Corporation's exercise of its option to effect a
defeasance of the Securities of a series pursuant to this Section, the
Corporation shall be deemed to have been discharged from its obligations with
respect to the Outstanding Securities of such series on the date the conditions
set forth below are satisfied (hereinafter, "defeasance"). For this purpose,
such defeasance means that the Corporation shall be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding Securities of
such series and to have satisfied all its other obligations under such
Securities and this Indenture insofar as such Securities are concerned (and the
Trustee, at the expense of the Corporation, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of Holders of
Outstanding Securities of such series to receive, solely from the trust fund
described in Section 1404 and as more fully set forth in such Section, payments
in respect of the principal of and any premium and interest on such Securities
when such payments are due, (B) the Corporation's obligations with respect to
such Securities under Sections 304, 305, 306, 1002 and 1003, (C) the rights,
powers, trusts, duties, and immunities of the Trustee hereunder and (D) this
Article Fourteen. Subject to compliance with this Article Fourteen, the
Corporation may exercise its option under this Section 1402 notwithstanding the
prior exercise of its option under Section 1403 with respect to the Securities
of such series.
Section 1403. Covenant Defeasance.
Upon the Corporation's exercise of its option to effect a
covenant defeasance of the Securities of a series pursuant to this Section, the
Corporation shall be released from its obligations under Section 1005 with
respect to the Outstanding Securities of such series on and after the date the
conditions set forth below are satisfied (hereinafter, covenant defeasance").
For this purpose, such covenant defeasance means that, with respect to the
Outstanding Securities of such series, the Corporation may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such Section, whether directly or indirectly by reason of any
reference
<PAGE> 8
elsewhere herein to any such Section or by reason of any reference in
any such Section to any other provision herein or in any other document, but
the remainder of this Indenture and such Securities shall be unaffected
thereby.
Section 1404. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 1402 or Section 1403 to the Outstanding Securities of a series:
(1) The Corporation shall irrevocably have
deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose of making the following
payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities, (A)
money in an amount, or (B) U.S. Government Obligations which
through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide,
not later than one day before the due date of any payment,
money in an amount, or (C) a combination thereof, sufficient,
in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and
which shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge, (i) the principal of and any
premium and each installment of principal of and any premium
and interest on the Outstanding Securities of such series on
the Stated Maturity of such principal or installment of
principal or interest; (ii) any mandatory sinking fund
payments or analogous payments applicable to the Outstanding
Securities of such series on the day on which such payments
are due and payable in accordance with the terms of this
Indenture and of such Securities and (iii) any amounts that
may be payable at the option of the Holder on any Repayment
Date;
(2) Such defeasance or covenant defeasance shall
not cause the Trustee for the Securities of such series to
have a conflicting interest as defined in Section 608 and for
purposes of the Trust Indenture Act with respect to any
securities of the Corporation;
(3) Such defeasance or covenant defeasance shall
not result in a breach or violation of, or constitute a
default under, this Indenture or any other agreement or
instrument to which the Corporation is a party or by which it
is bound;
(4) Such defeasance or covenant defeasance shall
not cause any Securities of such series then listed on any
registered national securities exchange under the
<PAGE> 9
Securities Exchange Act of 1934, as amended, to be delisted;
(5) In the case of an election under Section
1402, the Corporation shall have delivered to the Trustee an
Opinion of Counsel stating that (x) the Corporation has
received from, or there has been published by, the Internal
Revenue Service a ruling, or (y) since the date of this
Indenture there has been a change in the applicable Federal
income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the Holders of the
Outstanding Securities of such series will not recognize
income, gain or loss for Federal income tax purposes as a
result of such defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the
same times as would have been the case if such defeasance had
not occurred;
(6) In the case of an election under Section
1403, the Corporation shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the
Outstanding Securities of such series will not recognize
income, gain or loss for Federal income tax purposes as a
result of such covenant defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such covenant
defeasance had not occurred;
(7) Such defeasance or covenant defeasance shall
be effected in compliance with any additional terms,
conditions or limitations which may be imposed on the
Corporation in connection therewith pursuant to Section 301;
(8) The Corporation shall have delivered to the
trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent provided for
relating to either the defeasance under Section 1402 or the
covenant defeasance under Section 1403 (as the case may be)
have been complied with; and
(9) In the case of an election under Section
1402, no Event of Default or event which with notice or lapse
of time or both would become an Event of Default with respect
to the Securities of such series shall have occurred and be
continuing on the date of such deposit or at any time during
the period ending on the 91st day after the date of such
deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
<PAGE> 10
Section 1405. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section
1003, all money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee collectively,
for purposes of this Section 1405, the "Trustee") pursuant to Section 1404 in
respect of the Outstanding Securities of such series shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Corporation acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal and any premium and interest, but such money
need not be segregated from other funds except to the extent required by law.
The Corporation shall pay and indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 1404 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the Outstanding Securities of such
series.
Anything in this Article Fourteen to the contrary
notwithstanding, the Trustee shall deliver or pay to the Corporation from time
to time upon Corporation Request any money or U.S. Government Obligations held
by it as provided in Section 1404 which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof which would then be required to be deposited to effect an equivalent
defeasance or covenant defeasance.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.
UNITED STATES LEASING INTERNATIONAL,INC.
By: /s/ D.E. Mundell
By: /s/ Lynn K. Ducken
Attest: /s/ Kathleen H. Dunbar
Assistant Secretary
(SEAL)
<PAGE> 11
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
By: /s/ R.A. DeSorbo
Vice President
Attest: /s/ R.J. Halleran
Assistant Secretary
(SEAL)
STATE OF CALIFORNIA )
COUNTY OF SAN FRANCISCO ) ss.
On the 9th day of December, 1988, before me, a Notary Public in and
for said County and State, personally appeared D.E. Mundell, and L.K. Ducken,
known to me to be the Chairman and Vice President-Treasurer of United States
Leasing International, Inc., one of the corporations described in and which
executed the foregoing instrument, and known to me to be the persons who
executed the within instrument on behalf of United States Leasing
International, Inc.; that she knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; and that she acknowledged to
me that United States Leasing International, Inc. executed the within
instrument pursuant to its bylaws or a resolution of its board of directors.
Witness my hand and official seal.
/s/ Karen E. Billow
Notary Public in and for said County
and State
Serrated edges around the following text:
(STATE) Official Seal
(SEAL ) KAREN E. BILLOW
Notary Public - California
San Francisco County
My Commission Expires Mar. 8, 1992
<PAGE> 12
STATE OF NEW YORK )
CITY AND COUNTY OF NEW YORK ) ss.
On the 12th day of December 1988, before me, a Notary Public in and
for said County and State, Notary Public in and for said County and State,
personally appeared R.A. DeSorbo, known to me to be a Vice President of the
Chase Manhattan Bank (National Association), one of the corporations described
in and which executed the foregoing instrument, and known to me to be the
person who executed the within instrument on behalf of The Chase Manhattan Bank
(National Association); that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; and that he
acknowledged to me that The Chase manhattan Bank (National Association)
executed the within instrument pursuant to its bylaws or a resolution of its
board of directors.
Witness my hand and official seal.
/s/ Delia K. Benjamin
Notary Public in and for said County
and State
DELIA K. BENJAMIN
Notary Public, State of New York
No. 24-46596671
Qualified in Kings County
Certificate Filed in New York
Commission Expires April 30, 1989
<PAGE> 1
EXHIBIT 10(C)
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT dated as of June 30, 1992 (the
"Amendment") among USLI FLEET FINANCING, INC. (the "Seller"), ASSET
SECURITIZATION COOPERATIVE CORPORATION (the "Purchaser"), CANADIAN IMPERIAL
BANK OF COMMERCE, as agent (the "Servicing Agent") for the Purchaser, and
UNITED STATES LEASING INTERNATIONAL, INC., as collection agent (the "Collection
Agent").
WITNESSETH:
WHEREAS, the Seller, the Purchaser, the Servicing Agent and the Collection
Agent entered into that certain Asset Purchase Agreement dated as of December
23, 1991 (the "Purchase Agreement"), pursuant to which the Seller has sold
Assets, and may from time to time hereafter sell Assets, to the Purchaser; and
WHEREAS, the parties hereto desire to amend the Purchase Agreement in the
manner and on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto agree as follows:
I. DEFINITIONS.
Defined Terms. "Amendment Effective Date" means the first date on or after
June 30, 1992 on which the conditions precedent set forth in Section IV hereof
shall have been fulfilled or waived.
Unless otherwise defined herein, capitalized terms used herein shall have the
meanings assigned to them in the Purchase Agreement.
II. AMENDMENTS TO PURCHASE AGREEMENT.
1. Amendment to Section 1.01.
(a) The definition of "Affected Asset" in Section 1.01 of the Purchase
Agreement is hereby deleted in its entirety.
(b) The definition of "Affected Party" in Section 1.01 of the Purchase
Agreement is hereby amended by deleting the reference to "2.08(a)" therein and
substituting in replacement thereof a reference to "2.07(a)".
(c) The definition of "Commencement Date" in Section 1.01 of the Purchase
Agreement is hereby amended by deleting the reference to "5.01(w)" therein and
substituting in replacement
<PAGE> 2
thereof a reference to "3.02(d)".
(d) The definition of "Deferral Percentage Requirement" in Section 1.01 of the
Purchase Agreement is hereby amended to read in its entirety as follows:
"Deferral Percentage Requirement" means, for all Purchased Assets in the
aggregate, a percentage equal to the greater of (i) 7.5% (or such other
percentage as shall be agreed to by the Seller and the Purchaser), and (ii) a
fraction (expressed as a percentage) the numerator of which is (1) the
product of (a) $4,000,000 and (b) a fraction the numerator of which is the
Investment and the denominator of which is the sum of the Investment and the
"Investment" under the Secondary Purchase Agreement, and the denominator of
which is (2) an amount equal to the positive result of the Outstanding
Principal Balance of all Purchased Assets less the product of (a) $4,000,000
and (b) a fraction the numerator of which is the Investment and the
denominator of which is the sum of the Investment and the "Investment" under
the Secondary Purchase Agreement.
(e) The definition of "Deferred Percentage" in Section 1.01 of the Purchase
Agreement is hereby amended to read in its entirety as follows:
"Deferred Percentage" means, with respect to the transfer of the Assets to be
purchased on any Settlement Date pursuant to Section 2.01, that percentage
(not to exceed 100%) of the aggregate Outstanding Principal Balance of such
Assets, which, after taking into account such Purchase and the application of
Collections on such Settlement Date, will increase the aggregate of the
Deferred Balance of the Deferred Purchase Obligation for all Purchased Assets
and the "Deferred Balance" of the "Deferred Purchase Obligation" for all
"Purchased Assets" under the Secondary Purchase Agreement to the sum of (a)
the product of (i) the Deferral Percentage Requirement and (ii) the
Investment and (b) the product of (i) the "Deferral Percentage Requirement"
under the Secondary Purchase Agreement and (ii) the "Investment" under the
Secondary Purchase Agreement.
(f) The definition of "Index Rate" in Section 1.01 of the Purchase Agreement
is hereby amended by deleting the reference to "5.01(w)" therein and
substituting in replacement thereof a reference to "3.02(d)".
(g) The definition of "Notional Amount" in Section 1.01 of the Purchase
Agreement is hereby amended by deleting the reference to "5.01(w)" therein and
substituting in replacement
<PAGE> 3
thereof a reference to "3.02(d)".
(h) The definition of "Portfolio Pool" in Section 1.01 of the Purchase
Agreement is hereby amended to read in its entirety as follows:
"Portfolio Pool" means, at any time, a collective reference to each then
outstanding Asset which arose under a Contract covering one or more Purchased
Assets and/or one of more "Purchased Assets" under the Secondary Purchase
Agreement.
(i) The definition of "Rate Cap" in Section 1.01 of the Purchase Agreement is
hereby amended by deleting the reference to "5.01(w)" therein and substituting
in replacement thereof a reference to "3.02(d)".
(j) The definition of "Reference Banks" in Section 1.01 of the Purchase
Agreement is hereby deleted in its entirety.
(k) The definition of "Strike Rate" in Section 1.01 of the Purchase Agreement
is hereby amended by deleting the reference to "5.01(w)" therein and
substituting in replacement thereof a reference to "3.02(d)".
(l) Section 1.01 of the Purchase Agreement is hereby amended by adding the
following defined terms after the defined term "Strike Rate":
"Subordinated Interest" means each purchase by the Seller of an interest in
Purchased Assets pursuant to Section 10.01(b).
"Subordinated Interest Amount" has the meaning specified in Section 2.03(c).
2. Amendment to Section 2.03.
(a) Section 2.03(a) of the Purchase Agreement is hereby amended to read in
entirety as follows:
(a) Collections with respect to the Portfolio Pool received by the Collection
Agent shall be allocated among the Seller, the Company, the Purchaser and to
the Secondary Purchaser under the Secondary Purchase Agreement based on the
Collection Agent's reasonable best estimate, consistently applied, of the
appropriate allocation of such Collections.
(b) Section 2.03(c) of the Purchase Agreement is hereby amended to read in its
entirety as follows:
(c) As of the last day in each Settlement Period prior to the occurrence of
an Event of Termination, the
<PAGE> 4
following shall occur:
The amount of any payments received by the Collection Agent under any Rate
Cap plus the amount of Collections received during the related Settlement
Period with respect to Purchased Assets shall be allocated to the following
Persons and in the following order of priority: first, to the Collection
Agent in the amount of the Unpaid Advance Balance as of such date, second, to
the Purchaser in the amount of the Yield accrued through such Settlement
Period and not previously paid, third, to the Purchaser in the amount of the
Operating Expense Fee, the Program Fee, the Dealer Fee and other fees payable
to the Purchaser, if any, accrued through such Settlement Period and not
previously paid, fourth, to the Collection Agent in the amount of the
Collection Agent Fee accrued through such Settlement Period and not
previously paid, fifth, to the Purchaser to reduce the Investment in the
amount of the product of (a) the Deemed Collections which occurred during
such Settlement Period and (b) the Investment Multiplier, sixth, to the
Purchaser to reduce the Investment in the amount of any Indemnified Amounts
in accordance with provisions of Section 8.01 hereof accrued through such
Settlement Period and not previously paid, but only to the extent that such
Indemnified Amounts represent amounts which ordinarily would or should be
paid out of Collections and do not relate to a direct loss, claim, liability,
cost or expense incurred by the Purchaser, seventh, to the Purchaser to
reduce the Investment by the Principal Amortization Amount, eighth, if, the
allocation paid with respect to the corresponding "Settlement Period"
pursuant to clause seventh of Section 2.03(c) of the Secondary Purchase
Agreement is insufficient to reduce the "Investment" under the Secondary
Purchase Agreement by the "Principal Amortization Amount" under the Secondary
Purchase Agreement, to the Secondary Purchaser in an amount (the
"Subordinated Interest Amount") equal to the positive result of (i) the
"Principal Amortization Amount" under the Secondary Purchase Agreement less
(ii) the allocation paid pursuant to clause seventh of Section 2.03(c) of the
Secondary Purchase Agreement, such amount to be applied by the Secondary
Purchaser as the purchase price for the purchase by the Seller of a
"Subordinated Interest" in the "Purchased Assets" under the Secondary
Purchase Agreement in an amount equal to the Subordinated Interest Amount,
and ninth, the balance to the Seller. Amounts paid to the Seller pursuant to
clause ninth above shall not constitute payments in respect of Subordinated
Interest Amounts. Any amount received by the Purchaser pursuant to clause
eighth of Section 2.03(c) of the Secondary Purchase Agreement shall be
<PAGE> 5
applied for the purposes of this Agreement to reduce the Investment as if such
amount were paid to the Purchaser pursuant to clause seventh above.
Notwithstanding anything to the contrary contained herein, no application of
Collections or proceeds of a Rate Cap shall be made to the Seller unless,
after giving effect to the application of Collections and proceeds received
under any Rate Cap in accordance with the foregoing provisions of this Section
2.03(c), the Deferred Balance of the Deferred Purchase Obligation would be
equal to the greater of (i) 7.5% of the Investment, and (ii) the product of
(a) $4,000,000 and (b) a fraction the numerator of which is the Investment and
the denominator of which is the sum of the Investment and the "Investment"
under the Secondary Purchase Agreement.
(c) Section 2.03(e) of the Purchase Agreement is hereby amended by deleting
the word "this" in the second line thereof.
(d) The second sentence of Section 2.03(g) of the Purchase Agreement is hereby
amended to read in its entirety as follows:
Simultaneously with the reconveyances and deliveries contemplated by the
immediately preceding sentence, the Subordinated Interest, if any, in the
Purchased Assets shall be deemed to be extinguished, the Deferred Balance
shall be reduced to zero and the Purchaser shall take all actions reasonably
requested by the Seller in relation to such reconveyances and deliveries.
3. Amendment to Section 2.06.
(a) Section 2.06(a) of the Purchase Agreement is hereby amended to read in its
entirety as follows:
(a) If, on the last day of a Settlement Period, the sum of the Investment
and the "Investment" under the Secondary Purchase Agreement shall be equal to
or less than ten percent (10%) of the original Investment, the Seller shall
be entitled on the Settlement Date with respect to such Settlement Period to
repurchase from the Purchaser all Purchased Assets upon at least five (5)
Business Days' prior written notice to the Purchaser.
(b) The first sentence of Section 2.06(b) of the Purchase Agreement is hereby
amended by deleting the words "and" and "shall" before and after, respectively,
the number "(2)" and by adding to the end thereof the following:
, and (3) deem the Subordinated Interest, if any, in the Purchase Assets to
be extinguished.
<PAGE> 6
(c) Section 2.06(c) of the Purchase Agreement is hereby amended to read in its
entirety as follows:
(c) Upon (1) the Purchaser's receipt of the repurchase price of all Purchased
Assets, (2) the reduction of the Deferred Balance of the Deferred Purchase
Obligation to zero, and (3) the deemed extinguishment of the Subordinated
Interest, if any, in the Purchased Assets, all pursuant to paragraph (b)
above, the Purchaser shall reassign to the Seller the Purchased Assets,
without recourse, representation or warranty.
4. Amendment to Section 2.07. Section 2.07(a) of the Purchase Agreement is
hereby amended by deleting the word "or" at the end of paragraph (2) thereof
and deleting paragraph (3) thereof.
5. Amendment to Section 3.02.
(a) Paragraphs (iv), (v), (vi) and (vii) of clause (c) of Section 3.02 of the
Purchase Agreement are hereby amended to read in their entirety as follows:
(iv) after giving effect to any Purchase of Assets relating to an Obligor,
the sum of (a) the aggregate Outstanding Principal Balance of all Purchased
Assets and (b) the aggregate "Outstanding Principal Balance" of all
"Purchased Assets" under the Secondary Purchase Agreement, relating to such
Obligor does not exceed the product of (x) the Concentration Limit with
respect to such Obligor and (y) the sum of (a) the Investment and (b) the
"Investment" under the Secondary Purchase Agreement,
(v) after giving effect to any Purchase of Assets, no more than 5% of the
sum of (a) the aggregate Outstanding Principal Balance of all Purchased
Assets and (b) the aggregate "Outstanding Principal Balance" of all
"Purchased Assets" under the Secondary Purchase Agreement relate to Obligors
which are governments of any state in the United States of America or
subdivisions or agencies of any such state government,
(vi) after giving effect to any Purchase of Assets on any Settlement Date
and the application of all Collections on such Settlement Date in accordance
with Section 2.03, the sum of (a) the Deferred Balance of the Deferred
Purchase Obligation (after giving effect to any Deemed Collections made on
such day) and (b) the "Deferred Balance" of the "Deferred Purchase
Obligation" under the Secondary Purchase Agreement (after giving effect to
any "Deemed Collections" under the Secondary Purchase Agreement made on such
day) is not less than an amount equal to the sum of (1) the
<PAGE> 7
product of (i) the Deferral Percentage Requirement and (ii) the Investment and
(2) the product of (i) the "Deferral Percentage Requirement" under the
Secondary Purchase Agreement and (ii) the "Investment" under the Secondary
Purchase Agreement,
(vii) after giving effect to any Purchase of Assets, no more than 5% of the
sum of (a) the aggregate Outstanding Principal Balance of all Purchased
Assets and (b) the aggregate "Outstanding Principal Balance" of all
"Purchased Assets" under the Secondary Purchase Agreement relate to Vehicles
which do not constitute automobiles, vans or light-duty trucks, and
(viii) after giving effect to any Purchase, no more than (A) 6% of the sum
of (a) the aggregate Outstanding Principal Balance of all Purchased Assets
and (b) the aggregate "Outstanding Principal Balance" of all "Purchased
Assets" under the Secondary Purchase Agreement relate to Vehicles the
Contracts with respect to which provide for monthly payments with a
Depreciation Reserve (as defined in the related Contracts with respect to
such Vehicles) equal to less than 1.79856% of the Original Value (as defined
in the related Contracts with respect to such Vehicles), (B) 2% of the sum of
(a) the aggregate Outstanding Principal Balance of all Purchased Assets and
(b) the aggregate "Outstanding Principal Balance" of all "Purchased Assets"
under the Secondary Purchase Agreement relate to Vehicles the Contracts with
respect to which provide for monthly payments with a Depreciation Reserve (as
defined in the related Contracts with respect to the related Vehicles) equal
to less than 1.66667% of the Original Value (as defined in the related
Contracts with respect to such Vehicles) and (C) .5% of the sum of (a) the
aggregate Outstanding Principal Balance of all Purchased Assets and (b) the
aggregate "Outstanding Principal Balance" of all "Purchased Assets" under the
Secondary Purchase Agreement relate to Vehicles the Contracts with respect to
which provide for monthly payments with a Depreciation Reserve (as defined in
the related Contracts with respect to the related Vehicles) equal to less
than 1.3% of the Original Value (as defined in the related Contracts with
respect to such Vehicles),.
6. Amendment to Section 4.01. Section 4.01(c) of the Purchase Agreement is
hereby amended by deleting "[" and "]" on the fifth and sixth lines,
respectively, thereof.
7. Amendment to Section 5.01. Section 5.01(w) of the Purchase Agreement is
hereby amended to read in its entirety as follows:
<PAGE> 8
(w) Rate Caps. On each day that the Purchaser shall own any Purchased
Assets which provide for a fixed periodic rate of interest, there shall be in
place for the benefit of the Purchaser a Rate Cap provided by a financial
institution or institutions acceptable to the Servicing Agent (i) with a term
equal to the number of months remaining (based on historical repayment
patterns as applied to the Purchased Assets and reasonably adjusted in a
manner acceptable to the Purchaser and Seller as of such day) in the
amortization schedule of the Vehicle related to any such Purchased Asset with
the largest number of months remaining as of such day in any such Purchased
Asset's amortization schedule, (ii) based upon the Index Rate, (iii) based
upon the Notional Amount, and (iv) under which payments shall be obligated to
be made immediately following the Commencement Date on which the Index Rate
first equals or exceeds the Strike Rate, which Rate Cap shall provide for
monthly payments to the Purchaser in amounts equal to the product of (A) the
daily average excess of the Index Rate over the Strike Rate, (B) the Notional
Amount in effect from time to time and (C) the number of days elapsed since
the later of the Commencement Date and the date of the last payment under
such Rate Cap divided by 360.
8. Amendment to Section 6.01.
(a) Section 6.01 of the Purchase Agreement is hereby amended by adding the
words ", the Secondary Purchaser" after the word "Purchaser" on the eleventh,
fourteenth and the penultimate lines thereof.
9. Amendment to Section 6.02.
(a) The first sentence of Section 6.02(b) of the Purchase Agreement is hereby
to read in its entirety as follows:
The Collection Agent shall administer the Collections in respect of the
Portfolio Pool in accordance with the procedures described herein, in Section
2.03 of this Agreement and in the Secondary Purchase Agreement.
(b) Section 6.02(d) of the Purchase Agreement is hereby amended by adding the
words "the Secondary Purchaser," after the words "the Purchaser," on the second
line thereof.
(c) Section 6.02(e) of the Purchase Agreement is hereby amended to read in its
entirety as follows:
(e) The Collection Agent shall, as soon as practicable following receipt
thereof, turn over to the Seller and the Company, as the case may be, any
cash collections or other cash proceeds received with
<PAGE> 9
respect to Portfolio Pool Assets which do not constitute Purchased Assets or
"Purchased Assets" under the Secondary Purchase Agreement.
(d) Section 6.02(j) of the Purchase Agreement is hereby amended by deleting
the word "of" after the word "Company" on the third line thereof and
substituting in replacement thereof the word "or".
10. Amendment to Section 6.05. Section 6.05(a) of the Purchase Agreement is
hereby amended by adding the words "and the Secondary Purchaser" after the word
"Purchaser" in clause (ii) thereof.
11. Amendment to Section 7.01.
(a) The proviso in Section 7.01(d) of the Purchase Agreement is hereby amended
to read in its entirety as follows:
provided, however, that the occurrence of the event set forth in this Section
7.01(d) shall not constitute an Event of Termination if the sum of (a) the
aggregate Outstanding Principal Balance of the Purchased Assets and (b) the
aggregate "Outstanding Principal Balance" of all "Purchased Assets" under the
Secondary Purchase Agreement with respect to which such event occurs
constitute 1% or less of the sum of (a) the aggregate Outstanding Principal
Balance of all Purchased Assets and (b) the aggregate "Outstanding Principal
Balance" of all "Purchased Assets" under the Secondary Purchase Agreement;
or.
(b) Sections 7.01(m) and 7.01(n) of the Purchase Agreement are hereby amended
to read in their entirety as follows:
(m) the sum of (a) the aggregate Outstanding Principal Balance of all
Purchased Assets and (b) the aggregate "Outstanding Principal Balance" of all
"Purchased Assets" under the Secondary Purchase Agreement shall be less than
the sum of (d) the Investment, plus (e) the "Investment" under the Secondary
Purchase Agreement, plus (f) the greater of (i) 4% of the sum of (x) the
Investment and (y) the "Investment" under the Secondary Purchase Agreement,
and (ii) $4,000,000; or
(n) the sum of (a) the aggregate Net Sale Deficit and (b) the aggregate "Net
Sale Deficit" under the Secondary Purchase Agreement shall exceed 0.25% of
the sum of (c) the Investment and (d) the "Investment" under the Secondary
Purchase Agreement; or.
12. Amendment to Section 9.04. Section 9.04 of the Purchase Agreement is
hereby amended by deleting the word "and"
<PAGE> 10
on the tenth line thereof and substituting in replacement thereof the word "or".
13. Amendment to Section 10.01.
(a) Section 10.01 of the Purchase Agreement is hereby amended by adding "(a)"
after the word "Assignment" on the first line thereof and by adding the
following after the first sentence thereof:
The Purchaser may assign to the Seller a Subordinated Interest in the
Purchased Assets, or part thereof, pursuant to paragraph (b) below.
(b) Section 10.01 of the Purchase Agreement is hereby amended by adding a
paragraph (b) as follows:
(b) If a payment is made to the Purchaser pursuant to clause eighth of
Section 2.03(c) of the Secondary Purchase Agreement, such payment shall be
applied by the Purchaser as a purchase by the Seller from the Purchaser
of a Subordinated Interest in an amount equal to the applicable
"Subordinated Interest Amount" under the Secondary Purchase Agreement.
Payments in respect of the Subordinated Interest shall be made only from
Collections; provided that no payments in respect of the Subordinated
Interest shall be made until the Investment and the "Investment" under the
Secondary Purchase Agreement shall be reduced to zero, the Yield for the
Purchased Assets and the "Yield" for the "Purchased Assets" under the
Secondary Purchase Agreement shall have been paid, and no amount shall be
owing to the Purchaser or to the Secondary Purchaser under the Secondary
Purchase Agreement. In the event that, notwithstanding the provisions of
the preceding sentence, the Seller shall receive any payment on account of
the Subordinated Interest at a time when payment is not permitted hereby,
such payment shall be held by the Seller in trust for the benefit of, and
shall be paid forthwith over and delivered to, the Purchaser or the
Secondary Purchaser, as the case may be, for application to reduce the
Investment or the "Investment" under the Secondary Purchase Agreement, pay
accrued and unpaid Yield or "Yield" under the Secondary Purchase Agreement,
or pay any other amount owing to the Purchaser or the Secondary Purchaser
under the Secondary Purchase Agreement.
14. Amendment to Section 10.02. Clause (iv) of Section 10.02 is hereby
amended by deleting the word "any" before the words "Purchaser" and "Secondary"
and substituting in replacement thereof the word "the".
<PAGE> 11
III. REPRESENTATIONS AND WARRANTIES.
The Seller hereby repeats and reaffirms as of the Amendment Effective Date the
representations and warranties of the Seller contained in the Purchase
Agreement with the same force and effect as though such representations and
warranties had been made as of the Amendment Effective Date; provided, that all
references in such representations and warranties to the Purchase Agreement
shall refer to the Purchase Agreement as amended by this Amendment.
IV. CONDITIONS PRECEDENT.
The occurrence of the Amendment Effective Date shall be subject to the
fulfillment of each of the following conditions:
(a) The Purchaser and the
Servicing Agent shall have received the favorable written opinions of counsel
for the Seller and the Collection Agent, in form and substance satisfactory
to the Purchaser and the Servicing Agent, as to such matters as the Servicing
Agent may reasonably request.
(b) All filings (including, without limitation, pursuant to the UCC) shall
have been accomplished with respect to this Amendment and the transactions
contemplated hereby in each jurisdiction as may be required or permitted by
law to establish, perfect, protect and preserve the Purchaser's interests in
the Purchased Assets and any giving or publication of notice or the taking of
any other action to such end (whether similar or dissimilar) required or
permitted by law shall have been given or taken. On or prior to the
Amendment Effective Date, the Servicing Agent shall have received
satisfactory evidence as to any such filing, recording, registration, giving
or publication of notice and/or other action so taken or made.
V. MISCELLANEOUS.
1. Agreement to Remain in Full Force and Effect. The Seller, the Purchaser,
the Servicing Agent and the Collection Agent hereby agree that, except as
amended hereby, the Purchase Agreement shall remain in full force and effect
and is hereby ratified, adopted and confirmed in all respects. All references
to the Purchase Agreement in any other agreement or document shall hereafter be
deemed to refer to the Purchase Agreement as amended hereby.
2. Execution in Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an
original, and all of which counterparts, when taken together, shall constitute
<PAGE> 12
but one and the same Amendment.
3. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
4. Severability of Provisions. Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the enforceability of
such provision in any other jurisdiction.
5. Captions. The captions in this Amendment are for convenience of reference
only and shall not define or limit any of the terms or provisions hereof.
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their representative
officers thereunder duly authorized, as of the date first
above written.
USLI FLEET FINANCING, INC.
By: /s/ Peter Mezey
Authorized Signatory
By: /s/ Robert A. Keyes, Jr.
Authorized Signatory
ASSET SECURITIZATION
COOPERATIVE CORPORATION
By: /s/ James Carson
Authorized Signatory
CANADIAN IMPERIAL BANK OF
COMMERCE, as Servicing Agent
By: /s/ Chris Beaudet
Authorized Signatory
UNITED STATES LEASING
INTERNATIONAL, INC., as
Collection Agent
By: /s/ Peter Mezey
Authorized Signatory
By: /s/ Robert A. Keyes, Jr.
Authorized Signatory
<PAGE> 14
EXHIBIT 10(C)
SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT
SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT dated as of December 16, 1993
(the "Amendment") among USLI FLEET FINANCING, INC. (the "Seller"), ASSET
SECURITIZATION COOPERATIVE CORPORATION (the "Purchaser"), CANADIAN IMPERIAL
BANK OF COMMERCE, as secondary purchaser (in such capacity, the "Secondary
Purchaser") and as agent (in such capacity, the "Servicing Agent") for the
Purchaser and the Secondary Purchaser, and USL CAPITAL CORPORATION, formerly
known as UNITED STATES LEASING INTERNATIONAL, INC. (the "Corporation").
WITNESSETH:
WHEREAS, the Seller, the Purchaser, the Servicing Agent and the Corporation
entered into that certain Asset Purchase Agreement dated as of December 23,
1991, as amended by the First Amendment to Asset Purchase Agreement dated as of
June 30, 1992 (the "Purchase Agreement"), pursuant to which the Seller has sold
Assets, and may from time to time hereafter sell Assets, to the Purchaser;
WHEREAS, the Seller, the Secondary Purchaser, the Servicing Agent and the
Corporation entered into that certain Asset Purchase Agreement dated as of
December 23, 1991 (the "Secondary Purchase Agreement"), pursuant to which the
Seller may from time to time hereafter sell Assets, to the Purchaser; and
WHEREAS, the parties hereto desire to amend the Purchase Agreement and the
Secondary Purchase Agreement in the manner and on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto agree as follows:
I. DEFINITIONS
1. Defined Terms.
"Amendment Effective Date" means the first date on or after December 22, 1993
on which the conditions precedent set forth in Section V hereof shall have been
fulfilled or waived.
Unless otherwise defined herein, capitalized terms used herein shall have the
meanings assigned to them in the Purchase Agreement and the Secondary Purchase
Agreement.
II. AMENDMENTS TO THE PURCHASE AGREEMENT.
1. Amendment to Section 1.01.
(a) The definition of "Concentration Limit" in Section
<PAGE> 15
1.01 of the Purchase Agreement is hereby amended to read in its
entirety as follows:
"Concentration Limit" means, at any time, for any Obligor, 2% or, if
applicable, the Special Concentration Limit for such Obligor; provided, that
in the case of an Obligor with any Affiliated Obligor, the Concentration
Limit shall be calculated as if such Obligor and such Affiliated Obligor are
one Obligor.
(b) Section 1.01 of the Purchase Agreement is hereby amended by adding the
following defined terms in the proper alphabetical position:
"Credit Facility" means each of the committed credit facilities (other than
Liquidity Facilities) provided to the Purchaser to support the timely payment
of the Purchaser's Notes or borrowings under the Liquidity Facilities.
"Special Concentration Limit" means, at any time, for any Obligor listed on
Schedule 2 (together with its Affiliated Obligors), the fraction, expressed as
a percentage, the numerator of which is the amount indicated opposite the name
of such Obligor and the denominator of which is the sum of (a) the Investment
and (b) the "Investment" of the Secondary Purchaser under the Secondary
Purchase Agreement; provided, that the Servicing Agent (acting upon the
instructions of the Purchaser) may, upon not less than twenty (20) Business
Days' notice to the Seller, change any Obligor or amount listed on Schedule 2.
2. Amendment to Section 2.01. The first sentence of Section 2.01(c) of the
Purchase Agreement is hereby amended in its entirety as follows:
The Expiration Date shall be June 10, 1994; provided, that the Expiration
Date shall be extended to December 16, 1994 upon written notification from
the Servicing Agent to the Seller of the receipt by the Servicing Agent of
(i) a certificate of the Secretary or Assistant Secretary of the Seller
certifying evidence of corporate authorization of the extension of the
Expiration Date to December 16, 1994 or a later date and (ii) an opinion of
counsel for the Seller, in form and substance satisfactory to the Purchaser
and the Servicing Agent; provided, further, that the Expiration Date may be
such earlier date as the Seller shall notify to the Servicing Agent and the
Purchaser by at least ten (10) Business Days prior written notice.
<PAGE> 16
3. Amendment to Section 2.04. Section 2.04(b) of the Purchase Agreement is
hereby amended by deleting the percentage ".50%" and substituting in
replacement thereof the percentage "10.35%"1.
4. Amendment to Section 5.01.
(a) Section 5.01(g) of the Purchase Agreement is hereby amended by adding to
the end thereof the following:
and to any financial institution under the Liquidity Facilities or the
Credit Facilities; provided, however, that the Purchaser shall not disclose
the identity of the Seller to any such financial institution without the
consent (which consent shall not be unreasonably withheld or delayed) of the
Seller.
(b) Section 5.01(o) of the Purchase Agreement is
hereby amended by adding to the end thereof the following:
and to any financial institution under the Liquidity Facilities or the
Credit Facilities; provided, however, that the Purchaser shall not disclose
the identity of the Seller to any such financial institution without the
prior consent (which consent shall not be unreasonably withheld of delayed)
of the Seller.
5. Amendment to Section 10.01.
(a) Section 10.01(a) of the Purchase Agreement is hereby amended by adding
the words "or Credit Facility" after the words "Liquidity Facility" at the end
of the first clause (i) thereof.
(b) the first clause (ii) of Section 10.01(a) of the Purchase Agreement is
hereby amended in its entirety as follows:
(ii) with the prior consent (which consent shall not be unreasonably
withheld or delayed) of the Seller, to any other entity which at the time of
such assignment has short-term debt ratings of A-l+ and P-1 from S&P and
Moody's, respectively (each such entity described in clause (i) and clause
(ii) above, an "Assignee").
(c) Section 10.01(a) of the Purchase Agreement is hereby amended by adding as
a new second sentence thereto the following:
The parties to this Agreement acknowledge that the Purchaser has assigned
and shall be permitted to continue to assign (without the Seller's consent)
<PAGE> 17
to Canadian Imperial Bank of Commerce, as collateral agent for the benefit of
the holder of any debt instruments issued by the Purchaser, a security
interest in all of the Purchaser's right, title and interest in and to, among
other things, this Agreement and the Purchased Assets.
6. Amendment to Section 12.03. Section 12.03(a) of the Purchase Agreement is
hereby amended by deleting the reference to "Article XI" therein and
substituting in replacement thereof a reference to "Article X".
7. Schedule 2. The Purchase Agreement is hereby amended by adding a new
Schedule 2 as set forth in Exhibit A hereto.
III. AMENDMENTS TO THE SECONDARY PURCHASE AGREEMENT.
1. Amendment to Section 1.01.
(a) The definition of "Concentration Limit in Section 1.01 of the Secondary
Purchase Agreement is hereby amended to read in its entirety as follows:
"Concentration Limit" means, at any time, for any Obligor, 2% or, if
applicable, the Special Concentration Limit for such Obligor; provided, that
in the case of an Obligor with any Affiliated Obligor, the Concentration
Limit shall be calculated as if such Obligor and such Affiliated Obligor are
one Obligor.
(b) The definition of "Investor Rate" in Section 1.01 of the Secondary
Purchase Agreement is hereby amended by deleting the percentage "0.60%" and
substituting in replacement thereof the percentage "0.50%".
(c) The definition of "Purchase Limit" in Section 1.01 of the Secondary
Purchase Agreement is hereby amended to read in its entirety as follows:
"Purchase Limit" means, at any time any determination thereof is to be
made, the lesser of (i) $100,000,000, or such lesser amount as shall be in
effect following any reduction pursuant to Section 2.01(b), and (ii) the
positive result, if any, of (x) $200,000,000, or such lesser amount as shall
be in effect following any reduction of such amount pursuant to Section
2.01(b) of the ASCC Purchase Agreement, less (y) the "Investment" of the
Purchaser under the ASCC Purchase Agreement at such time. References to the
unused portion of the Purchase Limit shall mean, at any time, the Purchase
Limit in effect at such time, less the Investment.
<PAGE> 18
(d) The definition of "Unutilized Commitment" in Section 1.01 of the
Secondary Purchase Agreement is hereby amended by deleting the dollar amount 11
180,000,0001' and substituting in replacement thereof the dollar amount
$165,000,000".
(e) Section 1.01 of the Secondary Purchase Agreement is hereby amended by
adding the following defined term after the defined term "Settlement Period":
"Special Concentration Limit" means, at any time, for any Obligor listed on
Schedule 2 (together with its Affiliated Obligors), the fraction, expressed
as a percentage, the numerator of which is the amount indicated opposite the
name of such Obligor and the denominator of which is the sum of (a) the
Investment and (b) the "Investment" of the Purchaser under the ASCC Purchase
Agreement; provided, that the Servicing Agent (acting upon the instructions
of the Secondary Purchaser) may, upon not less than twenty (20) Business
Days' notice to the Seller, change any Obligor or amount listed on Schedule
2.
2. Amendment to Section 2.01. The first sentence of Section 2.01(c) of the
Secondary Purchase Agreement is hereby amended in its entirety as follows:
The Expiration Date shall be June 10, 1994; provided, that the Expiration
Date shall be extended to December 16, 1994 upon written notification from
the Servicing Agent to the Seller of the receipt by the servicing Agent of
(i) a certificate of the Secretary or Assistant Secretary of the Seller
certifying evidence of corporate authorization of the extension of the
Expiration Date to December 16, 1994 or a later date and (ii) an opinion of
counsel for the Seller, in form and substance satisfactory to the Purchaser
and the Servicing Agent; provided, further, that the Expiration Date may be
such earlier date as the Seller shall notify to the Servicing Agent and the
Purchaser by at least ten (10) Business Days prior written notice.
3. Amendment to Section 2.04. Section 2.04 of the Secondary Purchase Agreement
is hereby amended by deleting the percentage ".50%" and substituting in
replacement thereof the percentage "0.30%".
4. Schedule 2. The Secondary Purchase Agreement is hereby amended by adding a
new Schedule 2 as set forth in Exhibit A hereto.
<PAGE> 19
IV. REPRESENTATIONS AND WARRANTIES.
1. The Seller hereby repeats and reaffirms as of the Amendment Effective Date
the representations and warranties of the Seller contained in the Purchase
Agreement, the Secondary Purchase Agreement and the Purchase Agreement dated as
of December 23, 1991, as amended (the "Corporation Agreement"), between the
Corporation and the Seller with the same force and effect as though such
representations and warranties had been made as of the Amendment Effective
Date; provided, that all references in such representations and warranties to
the Purchase Agreement and the Secondary Purchase Agreement shall refer to the
Purchase Agreement and the Secondary Purchase Agreement as amended by this
Amendment.
2. The Corporation hereby repeats and reaffirms as of the Amendment Effective
Date the representations and warranties of USLI contained in the Corporation
Agreement with the same force and effect as though such representations and
warranties had been made as of the Amendment Effective Date; provided, that all
references in such representations and warranties to the Purchase Agreement and
the Secondary Purchase Agreement shall refer to the Purchase Agreement and the
Secondary Purchase Agreement as amended by this Amendment.
V. CONDITIONS PRECEDENT
The occurrence of the Amendment Effective Date shall be subject to the
fulfillment of each of the following conditions:
(a) Except as otherwise consented to by the Servicing Agent in writing, each
of the Seller and the Corporation shall be in compliance with all the terms and
provisions set forth in the Purchase Agreement, the Secondary Purchase
Agreement and the Corporation Agreement, as the case may be, on its part to be
observed or performed; and no Event of Termination or Potential Event of
Termination shall have occurred and be continuing under the Purchase Agreement
or the Secondary Purchase Agreement.
(b) The representations and warranties on the part of the Seller and the
Corporation contained in Section IV of this Amendment shall be true and correct
as if made on and as of the Amendment Effective Date.
(c) The Purchaser and the Servicing Agent shall have received the favorable
written opinions of counsel for the Seller and the Corporation, in form and
substance satisfactory to the Purchaser and the Servicing Agent, as to such
matters as the Servicing Agent may reasonably request.
(d) The Seller and the Corporation shall deliver, or cause to be delivered,
to the Purchaser certificates of the Secretary or Assistant Secretary of the
Seller and the Corporation certifying (i) the names and true signatures of
their
<PAGE> 20
respective officers authorized to sign this Amendment and the other
documents to be delivered by them hereunder or in connection herewith, (ii)
evidence of corporate authorization of the transactions contemplated hereby,
(iii) the articles of incorporation (attached and appropriately certified by
the Secretary of State of the Seller's and the Corporation's jurisdiction of
incorporation) and the by- laws and all amendments thereto of the Seller and
the Corporation.
(e) All filings (including, without limitation, pursuant to the UCC) shall
have been accomplished with respect to this Amendment and the transactions
contemplated hereby in each jurisdiction as may be required or permitted by law
to establish, perfect, protect and preserve the Purchaser's and the Secondary
Purchaser's interests in the Purchased Assets and any giving or publication of
notice or the taking of any other action to such end (whether similar or
dissimilar) required or permitted by law shall have been given or taken. On or
prior to the Amendment Effective Date, the Servicing Agent shall have received
satisfactory evidence as to any such filing, recording, registration, giving or
publication of notice and/or other action so taken or made.
VI. MISCELLANEOUS.
1. Agreements to Remain in Full Force and Effect. On the Effective Date, all
references to "United States Leasing International, Inc." and "USLI" in each of
the Purchase Agreement, the Secondary Purchase Agreement and the Corporation
Agreement and all agreements entered into in connection therewith shall be
deemed to be "USL Capital Corporation" and "the Corporation". The Seller, the
Purchaser, the Servicing Agent and the Corporation hereby agree that, except as
amended hereby, each of the Purchase Agreement and the Secondary Purchase
Agreement shall remain in full force and effect and is hereby ratified, adopted
and confirmed in all respects. All references to the Purchase Agreement or the
Secondary Purchase Agreement in any other agreement or document shall hereafter
be deemed to refer to the Purchase Agreement or the Secondary Purchase
Agreement, as the case may be, as amended hereby.
2. Execution in Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an
original, and all of which counterparts, when taken together, shall constitute
but one and the same Amendment.
3. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
4. Severability of Provisions. Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective
<PAGE> 21
to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the enforceability of
such provision in any other jurisdiction.
5. Captions. The captions in this Amendment are for convenience of reference
only and shall not define or limit any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their representative officers thereunder duly authorized, as of the
date first above written.
USLI FLEET FINANCING, INC.
By: /s/ J.H. Hause
Authorized Signatory
By: /s/ G.F. Stallos
Authorized Signatory
ASSET SECURITIZATION
COOPERATIVE CORPORATION
By: /s/ Marsha Scheiner
Authorized Signatory
CANADIAN IMPERIAL BANK OF COMMERCE,
as Secondary Purchaser and as Servicing
Agent
By: /s/ Chris Beaudet
Authorized Signatory
USL CAPITAL CORPORATION,
formerly known as United States Leasing
International,Inc.
By: J.H. Hause
Authorized Signatory
<PAGE> 22
EXHIBIT A
Schedule 2
Special Concentration Limits
<TABLE>
<CAPTION>
Name of Obliger Amount
<S> <C>
McKesson $7,000,000
Diversey Corp. $6,000,000
Employers Insurance of Wassua $5,000,000
Fleming Companies $5,000,000
HM Anglo-American $5,000,000
Picker International $6,390,000
American Express $6,000,000
Cosmair, Inc. $6,000,000
Motion Industries, Inc. $4,500,000
</TABLE>
<PAGE> 1
EXHIBIT 10(D)
Amendment No. 1
to
Purchase Agreement
This Amendment No. 1 to Purchase Agreement dated as of December 23,
1991 (the "Purchase Agreement") between United States Leasing International,
Inc., a Delaware corporation ("Seller") and USLI Fleet Financing, Inc., a
Delaware Corporation ("Buyer") is entered into as of February 12, 1992.
The parties hereto agree as follows:
1. Section 2.02(b) is hereby amended by inserting at the end of
such subsection the following:
"or (iii) with respect to Purchases occurring in February and
March 1992, shares of Common Stock of Buyer or a combination
of shares of Common Stock and cash (payable in the manner set
forth in clause (i) above), in each case having a value equal
to the Fair Market Value of the Purchased Assets sold to Buyer
on such day.
2. Section 4.01(c) is amended by deleting the "(" appearing in
line 5 and the ")" appearing in line 6 and by inserting the following after the
word "which" in line 6:
"(other than the filings described in clause (ii))"
3. Except as set forth herein, all terms of the Purchase
Agreement shall remain in full force and effect. From and after the date
hereof, the term "Purchase Agreement" shall refer to the Purchase Agreement as
amended by this Amendment No. 1.
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.
UNITED STATES LEASING INTERNATIONAL, INC.
By: /s/
Name: Robert A. Keyez, Jr.
Title: Vice President
By: /s/
Name: Frank H. Mason
Title: Executive Vice President
USLI FLEET FINANCING, INC.
By: /s/
Name: Lynn K. Ducken
Title: Treasurer
By: /s/
Name: Frank H. Mason
Title: Executive Vice President
<PAGE> 2
Pursuant to the provisions of Section 5.01(p) of the Asset Purchase Agreement
amonq USLI Fleet Financing Inc. ("Seller"), Asset Securitization Cooperative
Corporation, Canadian Imperial Bank of Commerce ("CIBC"), as Servicing Agent
(the "Servicing Agent") and United States Leasing International, Inc. as
Collection Agent (the "Collection Agent") and pursuant to the provisions of
Section 5.01(p) of the Asset Purchase Agreement among Seller, CIBC as Secondary
Purchaser and as Servicing Agent and the Collection Agent, Asset Securitization
cooperative Corporation and CIBC as Servicing Agent and as Secondary Purchaser
hereby acknowledge receipt of the foregoing Amendment No. I to Purchase
Agreement and consent to Buyer entering into such Amendment No. 1.
Dated as of February 12, 1992.
CANADIAN IMPERIAL BANK OF COMMERCE,
as Servicing Agent and as Secondary
Purchaser
By:
Title:
ASSET SECURITIZATION COOPERATIVE
CORPORATION
By:
Title:
<PAGE> 1
EXHIBIT (12)
USL CAPITAL CORPORATION AND SUBSIDIARY COMPANIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
(UNAUDITED; DOLLARS IN THOUSANDS)
Earnings:
Income before taxes on income per
statement of income............... $122,171 $ 89,051 $ 86,059 $ 51,114 $ 32,123
Add (deduct)
Fixed charges.................. 193,806 158,444 151,811 124,289 147,909
Distribution and proceeds in
excess of (less than) net
income and foreign exchange
gains or losses of associated
companies.................... 272 601 292 519 837
-------- -------- -------- -------- --------
Income as adjusted.................. $316,249 $248,096 $238,162 $175,922 $180,869
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Fixed charges:
Interest on indebtedness including
amortization of debt issue costs
and discount or premium thereon... $189,942 $154,157 $147,027 $117,237 $140,361
Interest factor of annual
rentals(1)........................ 3,864 4,287 4,784 7,052 7,548
-------- -------- -------- -------- --------
Fixed charges....................... $193,806 $158,444 $151,811 $124,289 $147,909
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratio of earnings to fixed
charges........................... 1.63 1.57 1.57 1.42 1.22
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
- ---------------
(1) The interest portion of annual rentals is estimated to be one-third of such
rentals.
45
<PAGE> 1
EXHIBIT (23)
LETTERHEAD OF COOPERS & LYBRAND
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
USL Capital Corporation on Form S-3 (File No. 33-56196) of our report dated
January 28, 1994, on our audits of the consolidated financial statements and
financial statement schedules of USL Capital Corporation as of December 31, 1993
and 1992 and for the years ended December 31, 1993, 1992, and 1991, which report
is included in this Annual Report on Form 10-K.
/s/ Coopers & Lybrand
San Francisco, California
March 28, 1994
46
