<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 24, 1997
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
----------------
RYDER TRS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 7513 38-331-3542
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
INCORPORATION OR CODE NUMBER)
ORGANIZATION)
8669 NW 36TH STREET, MIAMI, FLORIDA 33166, (305) 500-4545
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
GERALD R. RIORDAN
PRESIDENT AND CHIEF OPERATING OFFICER
RYDER TRS, INC.
8669 NW 36TH STREET
MIAMI, FLORIDA 33166
(305) 500-4545
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
WITH A COPY TO:
CORNELIUS T. FINNEGAN III, ESQ.
WILLKIE FARR & GALLAGHER
ONE CITICORP CENTER
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022
(212) 821-8000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED OFFER TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT(1) PRICE FEE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10% Senior Subordinated
Notes due 2006........ $175,000,000 100% $175,000,000 $53,030.30
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
RYDER TRS, INC.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER LOCATION IN PROSPECTUS
-------------------- ----------------------
<S> <C>
1.Forepart of the Registration
Statement and Outside Front Forepart of the Registration Statement
Cover Page of Prospectus........ and Outside Front Cover Page of
Prospectus
2.Inside Front and Outside Back
Cover Pages of Prospectus....... Inside Front and Outside Back Cover
Pages of Prospectus
3.Risk Factors, Ratio of Earnings to
Fixed Charges and Other Risk Factors; Summary; Selected
Information..................... Historical and Pro Forma Financial
Information
4.Terms of the Transaction.......... Summary; Risk Factors; The Exchange
Offer; Description of Notes; Plan of
Distribution
5.Pro Forma Financial Information... Selected Historical and Pro Forma
Financial Information; Unaudited Pro
Forma Financial Information
6.Material Contracts with the
Company Being Acquired.......... Not Applicable
7.Additional Information Required
for Reoffering by Persons and Not Applicable
Parties Deemed to be
Underwriters....................
8.Interests of Named Experts and Legal Matters; Experts
Counsel.........................
9.Disclosure of Commission Position
on Indemnification for Not Applicable
Securities Act Liabilities......
10.Information with Respect to S-3 Not Applicable
Registrants.....................
11.Incorporation of Certain Not Applicable
Information by Reference........
12.Information with Respect to S-2 or Not Applicable
S-3 Registrants.................
13.Incorporation of Certain Not Applicable
Information by Reference........
14.Information with Respect to
Registrants Other than S-3 or S- Summary; Risk Factors; Capitalization;
2 Registrants................... Selected Historical and Pro Forma
Financial Information; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business; Financial Statements
15.Information with Respect to S-3 Not Applicable
Companies.......................
16.Information with Respect to S-2 or Not Applicable
S-3 Companies...................
17.Information with Respect to Not Applicable
Companies Other Than S-3 or S-2
Companies.......................
18.Information if Proxies, Consents
or Authorizations are to be Not Applicable
Solicited.......................
19.Information if Proxies, Consents
or Authorizations are not to be Summary; The Exchange Offer; Management;
Solicited or in an Exchange Ownership of Capital Stock; Description
Offer........................... of Notes
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JANUARY 24, 1997
PROSPECTUS
RYDER TRS, INC.
OFFER TO EXCHANGE $1,000 PRINCIPAL AMOUNT OF 10% SENIOR SUBORDINATED NOTES DUE
2006 FOR EACH $1,000 PRINCIPAL AMOUNT OF OUTSTANDING 10% SENIOR SUBORDINATED
NOTES DUE 2006.
Ryder TRS, Inc., a Delaware corporation (the "Company"), hereby offers to
exchange (the "Exchange Offer") up to $175,000,000 in aggregate principal
amount of its 10% Senior Subordinated Notes due 2006 (the "Exchange Notes") for
up to $175,000,000 in aggregate principal amount of its outstanding 10% Senior
Subordinated Notes due 2006 that were issued and sold in reliance upon an
exemption from registration under the Securities Act of 1933, as amended (the
"Senior Subordinated Notes" and, together with the Exchange Notes, the
"Notes").
The terms of the Exchange Notes will be the same in all respects (including
principal amount, interest rate, maturity and ranking) as the terms of the
Senior Subordinated Notes for which they may be exchanged pursuant to the
Exchange Offer, except that the Exchange Notes have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and therefore will
not be subject to certain restrictions on transfer applicable to the Senior
Subordinated Notes. The Exchange Notes will be issued under the indenture
governing the Senior Subordinated Notes and the Exchange Notes will not be
entitled to registration rights except under certain limited circumstances. The
Senior Subordinated Notes are, and the Exchange Notes will be, unsecured and,
prior to the Subordination Termination Date (as defined), will be subordinated
to all existing and future Senior Indebtedness (as defined) of the Company and
will be effectively subordinated to all obligations of the subsidiaries of the
Company. Prior to the Subordination Termination Date, the Notes will rank pari
passu with any future Senior Subordinated Indebtedness (as defined) of the
Company and will rank senior to all other subordinated indebtedness of the
Company. On and after the Subordination Termination Date, the Notes will
constitute Senior Indebtedness and will rank pari passu with all existing and
future Senior Indebtedness of the Company. The Indenture permits the Company to
incur additional indebtedness, including Senior Indebtedness, subject to
certain limitations. See "Description of Notes." As of October 16, 1996, on a
pro forma basis after giving effect to the Transactions (as defined), to the
issuance of the Senior Subordinated Notes and the application of the proceeds
therefrom, the Company would have had outstanding $312.0 million (exclusive of
unused commitments) in aggregate amount of Senior Indebtedness (all of which is
secured), no Senior Subordinated Indebtedness other than the Indebtedness
represented by the Notes and no indebtedness that is subordinate or junior in
right of payment to the indebtedness represented by the Notes. For a
description of the terms of the Exchange Notes, see "Description of the Notes."
There will be no cash proceeds to the Company from the Exchange Offer.
The Senior Subordinated Notes were originally issued and sold on November 25,
1996 in a transaction not registered under the Securities Act, in reliance upon
the exemption provided in Section 4(2) of the Securities Act and Rule 144A of
the Securities Act (the "Initial Offering"). Accordingly, the Senior
Subordinated Notes may not be reoffered, resold or otherwise pledged,
hypothecated or transferred in the United States unless so registered or unless
an applicable exemption from the registration requirements of the Securities
Act is available. Based upon interpretations provided to third parties by the
Staff (the "Staff") of the Securities and Exchange Commission (the
"Commission"), the Company believes that the Exchange Notes issued pursuant to
the
(continued on next page)
-----------
SEE "RISK FACTORS" BEGINNING ON PAGE 18 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1997
<PAGE>
(continued from previous page)
Exchange Offer in exchange for the Senior Subordinated Notes may be offered
for resale, resold and otherwise transferred by holders thereof (other than
any holder which is (i) an "affiliate" of the Company within the meaning of
the Securities Act (an "Affiliate"), (ii) a broker-dealer who acquired Senior
Subordinated Notes directly from the Company or (iii) a broker-dealer who
acquired Senior Subordinated Notes as a result of market-making or other
trading activities) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such Exchange Notes
are acquired in the ordinary course of such holders' business and such holders
have no arrangement with any person to participate in a distribution of such
Exchange Notes. Each broker-dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal that is filed as an exhibit to the Registration Statement of which
this Prospectus is a part (the "Letter of Transmittal") states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of
Exchange Notes received in exchange for Senior Subordinated Notes where such
Senior Subordinated Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date (as defined), it will
make this Prospectus available to any broker-dealer for use in connection with
any such resale. Any holder that cannot rely upon such interpretations must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction. See "Plan of
Distribution."
The Senior Subordinated Notes and the Exchange Notes constitute new issues
of securities with no established public trading market. The Company does not
intend to apply for listing of the Exchange Notes on any national securities
exchange or for their quotation through the National Association of Securities
Dealers Automated Quotation System. Therefore, there can be no assurance as to
the development or liquidity of any trading market for the Exchange Notes. Any
Senior Subordinated Notes not tendered and accepted in the Exchange Offer will
remain outstanding. To the extent that Senior Subordinated Notes are tendered
and accepted in the Exchange Offer, a holder's ability to sell untendered, and
tendered but unaccepted, Senior Subordinated Notes could be adversely
affected. Following consummation of the Exchange Offer, the holders of Senior
Subordinated Notes will continue to be subject to the existing restrictions on
transfer thereof and the Company will have no further obligation to such
holders to provide for the registration under the Securities Act of the Senior
Subordinated Notes except under certain limited circumstances. See "Senior
Subordinated Notes Registration Rights."
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Senior Subordinated Notes being tendered or accepted for exchange.
The Exchange Offer will expire at 5:00 p.m., New York City time, on ,
1997, unless extended (the "Expiration Date"). The date of acceptance for
exchange of the Senior Subordinated Notes (the "Exchange Date") will be the
first business day following the Expiration Date, upon surrender of the Senior
Subordinated Notes. Senior Subordinated Notes tendered pursuant to the
Exchange Offer may be withdrawn at any time prior to the Expiration Date;
otherwise such tenders are irrevocable.
2
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Registration Statement," which term shall include all amendments,
exhibits, annexes and schedules thereto) pursuant to the Securities Act, and
the rules and regulations promulgated thereunder, covering the Exchange Notes
being offered hereby. This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Statements made
in this Prospectus as to the contents of any contract, agreement or other
document referred to in the Registration Statement are not necessarily
complete. With respect to each such contract, agreement or other document
filed as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference.
Upon consummation of the Exchange Offer, the Company will become subject to
the periodic reporting and other informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Periodic reports, proxy
statements and other information filed by the Company with the Commission may
be inspected at the public reference facilities maintained by the Commission
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, or at its
regional offices located at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center,
Suite 1300, New York, New York 10048. Copies of such material can be obtained
from the Company upon request.
The Company is required by the terms of the indenture dated as of November
25, 1996 between the Company and The Bank of New York, as trustee (the
"Trustee"), under which the Senior Subordinated Notes were issued, and under
which the Exchange Notes are to be issued (the "Indenture"), to furnish the
Trustee and the holders of the Notes with annual reports containing
consolidated financial statements audited by its independent certified public
accountants, with quarterly reports containing unaudited condensed
consolidated financial statements for each of the first three quarters of each
fiscal year and with current reports on Form 8-K.
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE EXCHANGE OFFER COVERED BY THIS PROSPECTUS. IF GIVEN OR
MADE SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE EXCHANGE NOTES IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATIONS THAT
THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
FOR NEW HAMPSHIRE RESIDENTS ONLY
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE UNIFORM
SECURITIES ACT WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER
RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT, NOR THE
FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A
TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE
MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON,
SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY
PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT
WITH THE PROVISIONS OF THIS PARAGRAPH.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY................................................................... 7
The Company............................................................... 7
Company Overview........................................................ 7
Business Strategy....................................................... 8
The Acquisition, Financings and Related Transactions...................... 9
Sources and Uses of Funds for the Transactions.......................... 10
The Financings.......................................................... 10
The Exchange Offer........................................................ 11
Terms of the Notes........................................................ 13
Risk Factors.............................................................. 15
Summary Historical and Pro Forma Financial Information.................... 16
Notes to Summary Historical and Pro Forma Financial Information .......... 17
RISK FACTORS.............................................................. 18
Consequences of Exchange and Failure to Exchange........................ 18
Substantial Leverage and Ability to Service Indebtedness................ 18
Subordination of Notes; Asset Encumbrance............................... 19
Limitations on Access to Cash Flow and Assets of Leasco................. 20
Restrictive Loan Covenants.............................................. 20
Risks Arising from Acquisition.......................................... 21
Highly Competitive Industry............................................. 21
Dependence on Dealers................................................... 22
Dependence on Key Personnel............................................. 22
Controlling Shareholder................................................. 22
Change of Control....................................................... 22
Regulation.............................................................. 22
Environmental Matters................................................... 23
Fraudulent Conveyance Considerations.................................... 23
Absence of Public Market; Restrictions on Transfer...................... 24
USE OF PROCEEDS........................................................... 24
THE EXCHANGE OFFER........................................................ 25
Purpose of the Exchange Offer........................................... 25
Terms of the Exchange................................................... 25
Expiration Date; Extensions; Termination; Amendments.................... 26
How to Tender........................................................... 27
Terms and Conditions of the Letter of Transmittal....................... 28
Withdrawal Rights....................................................... 29
Acceptance of Senior Subordinated Notes for Exchange; Delivery of
Exchange Notes......................................................... 29
Conditions to the Exchange Offer........................................ 30
Exchange Agent.......................................................... 30
Solicitation of Tenders; Expenses....................................... 31
Appraisal Rights........................................................ 31
Federal Income Tax Consequences......................................... 31
Other................................................................... 31
CAPITALIZATION............................................................ 33
SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION................... 34
UNAUDITED PRO FORMA FINANCIAL INFORMATION................................. 38
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS............................................................... 45
General................................................................. 45
Certain Pro Forma Effects of the Transactions........................... 46
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Results of Operations.................................................... 47
Seasonality.............................................................. 51
Inflation................................................................ 51
Liquidity and Capital Resources.......................................... 51
Accounting Pronouncements................................................ 52
THE ACQUISITION............................................................ 53
BUSINESS................................................................... 54
General.................................................................. 54
Industry Overview........................................................ 55
Business Strategy........................................................ 56
Products and Services.................................................... 57
Truck Rentals............................................................ 57
Management Information Systems........................................... 58
Sales, Marketing and Advertising......................................... 59
Maintenance.............................................................. 59
Vehicle Acquisition and Disposition...................................... 60
Operations............................................................... 60
Dealer Network........................................................... 61
Competition.............................................................. 61
Employees................................................................ 61
Facilities............................................................... 62
Intellectual Property.................................................... 62
Insurance................................................................ 62
Governmental Regulation and Environmental Matters........................ 62
Legal Proceedings........................................................ 63
MANAGEMENT................................................................. 64
Executive Officers and Directors......................................... 64
Compensation of Directors................................................ 65
Summary Compensation Table............................................... 66
RSI Option Grants in the Last Fiscal Year................................ 66
Aggregated RSI Option Exercises in the Last Fiscal Year and Fiscal Year
End Option Values....................................................... 66
Company Stock Purchase and Option Plans.................................. 67
OWNERSHIP OF CAPITAL STOCK................................................. 67
Shareholders' Agreement.................................................. 68
CERTAIN TRANSACTIONS....................................................... 68
Management Agreement with Questor Management............................. 68
Agreement with Jay Alix & Associates, Inc. for Management Consulting
Services................................................................ 69
Other Transactions with Affiliates....................................... 69
RELATIONSHIPS WITH THE SELLER.............................................. 69
Non-Competition Covenants................................................ 69
Dealer and Cooperation Arrangements...................................... 70
Service Agreements....................................................... 70
Intellectual Property.................................................... 71
LEASCO AND PROPOSED SECURITIZATION......................................... 72
DESCRIPTION OF SENIOR BANK FACILITIES...................................... 73
DESCRIPTION OF NOTES....................................................... 75
General.................................................................. 75
Terms of the Notes....................................................... 76
Optional Redemption...................................................... 76
Selection................................................................ 77
Ranking.................................................................. 77
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Change of Control......................................................... 79
Certain Covenants......................................................... 81
Merger and Consolidation.................................................. 87
Defaults.................................................................. 87
Amendments and Waivers.................................................... 89
Transfer and Exchange..................................................... 89
Defeasance................................................................ 90
Concerning the Trustee.................................................... 90
Governing Law............................................................. 90
Certain Definitions....................................................... 90
BOOK-ENTRY; DELIVERY AND FORM............................................... 102
SENIOR SUBORDINATED NOTES REGISTRATION RIGHTS............................... 103
PLAN OF DISTRIBUTION........................................................ 106
LEGAL MATTERS............................................................... 106
EXPERTS..................................................................... 107
INDEX TO FINANCIAL STATEMENTS............................................... F-1
</TABLE>
6
<PAGE>
SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information, financial statements and notes
thereto included elsewhere in this Prospectus. As used in this Prospectus,
unless the context otherwise requires, the term the "Company" refers (i) for
periods prior to the Acquisition (as defined), to the Consumer Truck Rental
Division (the "Division") of Ryder Truck Rental, Inc. ("RTR"), a subsidiary of
Ryder System, Inc. ("RSI"), as such Division was constituted prior to the
Acquisition, and (ii) for periods after the Acquisition, to Ryder TRS, Inc. and
(unless the context otherwise requires) its subsidiaries as constituted after
giving effect to the Acquisition. RTR and RSI are sometimes referred to herein
together or individually as "Seller." Ryder(R) is a registered trademark of RSI
and is used throughout this Prospectus pursuant to a license. Unless otherwise
noted, all market data presented in this Prospectus is based on Company
research or studies commissioned by the Company and conducted by third parties.
THE COMPANY
COMPANY OVERVIEW
The Company is the second largest provider of truck rentals and related
moving supplies and services to the consumer and light commercial markets in
the United States, with a fleet of approximately 32,200 trucks. The Company
rents trucks, towing equipment and accessory equipment, and sells liability-
limiting products and moving supplies to consumers and commercial customers
through its nationwide network of approximately 4,400 dealers. The average age
of the Company's trucks is 34 months, which is considerably younger than that
of its principal competitor. The Company has an approximate 30% share of the
estimated $1.3 billion consumer truck rental market and an approximate 28%
share of the estimated $520 million light commercial truck rental market, based
on 1995 revenues. The Company's revenues and EBITDA grew at compound annual
rates of 8.6% and 18.1%, respectively, from 1992 through 1995. Over the same
period, EBITDA margins increased from 20.0% to 25.7%. For the period January 1,
1996 to October 16, 1996, the Company generated total revenues of $439.8
million and EBITDA of $115.4 million.
The Company rents trucks primarily to consumers who are moving to new
household locations. These customers generally rent trucks from one Ryder
location and return them either to the same location (a "local" rental) or to a
different location (a "one-way" rental). Revenues from consumer rentals
accounted for approximately 74% of the Company's total truck rental revenues in
1995, of which one-way revenues represented 70% and local revenues represented
30%. The Company has focused on the one-way segment because it is generally
more profitable, generates higher revenues per day and capitalizes on the
competitive advantages provided by the Company's state-of-the-art yield
management system as well as its modern and dependable fleet. The Company has
an approximate 34% share of the consumer one-way market and an approximate 22%
share of the consumer local market, based on 1995 revenues.
In addition to serving the consumer market, the Company rents trucks,
primarily on a local basis, to businesses for a wide range of light commercial
uses. Commercial customers range from small local businesses, such as florists,
package delivery companies and local private moving companies, to large
national companies that rent Ryder trucks primarily for the transportation and
delivery of inventory and packages. Revenues from light commercial rentals
accounted for approximately 26% of the Company's total truck rental revenues in
1995. The light commercial segment complements the Company's consumer rental
business by enabling the Company to improve utilization of its trucks on
weekdays, when consumer demand is typically lower than it is on weekends.
The Company supplements its truck rental business with a range of other
products and services. The Company rents automobile towing equipment and other
moving accessories such as hand trucks and furniture
7
<PAGE>
pads and sells moving supplies such as boxes, tape and packing materials. The
Company also offers customers a range of liability-limiting products such as
physical damage waivers, personal accident and cargo protection and
supplemental liability protection. These accessory products enhance the
Company's appeal to consumers by offering customers "one-stop" moving services.
The Company derives important competitive advantages from its proprietary
one-way yield management system, which has enabled the Company to increase
fleet utilization and optimize pricing for one-way transactions and thereby
increase profitability and return on assets. The one-way yield management
system was rolled out to the Company's dealers through its proprietary point-
of-sale (the "POS") system in the early 1990's. Management believes that the
Company is the only national truck rental company to have sophisticated POS
computers at every dealer location. The yield management system is designed to
optimize fleet utilization and revenue per vehicle by renting the greatest
number of vehicles each day at the best possible rates. This system determines
the optimal price for each one-way transaction, based on forecasted demand,
vehicle availability, existing reservations, operating costs and competitors'
pricing in each market. In addition, the system enables the Company to offer
its one-way customers a wide range of pricing alternatives to increase
utilization during off-peak periods and position its trucks for the most
profitable peak period rentals. The yield management system has assisted the
Company in increasing utilization and annual revenue per truck (including
accessory rentals and product sales) from 36% and $12,797 in 1991 to 42% and
$15,424 in 1995. For the nine-month period ended September 30, 1996,
utilization has increased to 44%.
In addition to automating the customer reservation process and providing the
dealers with pricing information, the Company's POS system provides all of its
dealers with valuable information on the location, mileage and maintenance
status of each truck available in a specific market. Furthermore, the POS
system is integrated with the Company's management information systems,
providing management with access to operational and financial information,
which is updated at least daily, concerning the Company's performance at all
levels, including the individual dealer.
BUSINESS STRATEGY
The Company's strategy for achieving continued growth in revenues,
profitability and fleet utilization includes: (i) achieving cost reductions and
improving return on capital; (ii) expanding yield management capabilities;
(iii) increasing sales of rental-related products; (iv) enhancing marketing and
advertising efforts; and (v) improving customer service and conversion rates.
Achieve Cost Reductions and Improve Return on Capital. Management believes
that opportunities exist to implement approximately $10 million to $20 million
of continuing annual cost savings over the next several years by streamlining
general and administrative processes, reducing telecommunications costs,
improving insurance claims processing, creating operational efficiencies
through MIS initiatives and more effectively managing maintenance procedures.
In addition, through better utilization of the fleet, the Company anticipates
reducing its average operating fleet to approximately 31,000 trucks for 1997,
resulting in lower interest expense and reduced ongoing capital expenditure
requirements.
Expand Yield Management Capabilities. Management believes that an effective
way to maximize profitability and return on assets is to optimize utilization
by renting the greatest number of vehicles each day at the best possible rates.
Management believes that the Company's one-way yield management system is the
most extensive and advanced in the industry and is largely responsible for the
increase in fleet utilization from 36% in 1991 (the period immediately
preceding the rollout of the one-way yield management system) to 42% in 1995.
The Company is in the process of enhancing this system by implementing a
complementary local yield management system, which is expected to be available
on-line through the POS system to each dealer in 1997. This system will apply
to the Company's local consumer and light commercial business the same
principles that
8
<PAGE>
the Company has successfully used to more efficiently manage its one-way
business. Local rental prices will be updated daily based on forecasted demand,
vehicle availability, existing reservations, operating costs and competitors'
pricing in each market. Management believes that the Company will be the only
major participant in the industry using sophisticated yield management
techniques to price and manage one-way and local transactions. This should not
only result in an increase in local consumer and light commercial market share
but also enable the Company to allocate its fleet more efficiently between the
local and one-way segments, thus further improving overall fleet utilization
and profitability.
Increase Sales of Rental-Related Products. Management believes that there are
significant opportunities to increase revenues and profitability through
greater sales of liability-limiting products and moving supplies. For example,
less than 60% of the Company's consumer customers purchased liability-limiting
products in 1995, even though most consumers are not covered for truck rentals
under traditional personal automobile insurance policies. In addition, less
than one-third of the Company's dealers actively participate in the Company-
sponsored moving supplies program. The Company intends to increase the quality
and frequency of dealer training to improve the marketing and merchandising of
liability-limiting products and moving supplies and to increase the number of
dealers that participate in the Company-sponsored moving supplies program. The
Company will also consider implementing a new dealer compensation structure to
provide better incentives for dealers to sell these products.
Enhance Marketing and Advertising Efforts. As an independent entity, the
Company will be able to focus marketing and advertising programs specifically
on the consumer and light commercial markets. Such marketing efforts will
capitalize on the Company's competitive advantages, featuring the unique
benefits of its modern, comfortable and reliable fleet. Management believes
that these enhanced marketing activities should not only increase the Company's
share of the truck rental market but also attract additional customers from the
owned/borrowed market.
Improve Customer Service and Conversion Rate. Management believes that there
is a significant opportunity to increase the percentage of customer inquiries
that result in booked reservations, referred to as the conversion rate.
Telephone inquiries placed to the 1-800-GO-RYDER number are handled both by
professional customer service agents and by dealers. In general, professional
customer service agents tend to achieve higher conversion rates than dealers.
The Company will seek to provide professional customer service agents with more
accurate information on the location and availability of vehicles, enabling
these professional agents to process a higher percentage of calls placed to the
1-800-GO-RYDER number. Management also believes that there is broad disparity
in the quality of individual dealers' handling of telephone inquiries.
Management will seek to increase the quality and frequency of dealer training
in customer service in an effort to increase the conversion rate for those
calls that are placed directly to the dealers.
The Company's principal executive office is located at 8669 NW 36th Street,
Miami, Florida, 33166. The Company's telephone number is (305) 500-4545.
THE ACQUISITION, FINANCINGS AND RELATED TRANSACTIONS
On October 17, 1996 (the "Acquisition Closing Date"), pursuant to an Asset
and Stock Purchase Agreement (together with related agreements, the
"Acquisition Agreements"), the Company acquired from RTR substantially all of
the assets of the Division, other than approximately 32,200 trucks used in the
business conducted by the Division (the "Business"), and RCTR, Inc., a special
purpose subsidiary of the Company ("Leasco"), acquired such trucks. The
aggregate cash purchase price for all of the assets acquired was $579.4 million
(subject to provisions for post-closing adjustment). Leasco was formed by the
Company to facilitate
9
<PAGE>
transfers to one entity of ownership of and legal title to the trucks and to be
the issuer of securities in the proposed securitized financing referred to
below. Leasco leases the trucks to the Company pursuant to a Master Motor
Vehicle Lease Agreement. See "Leasco and Proposed Securitization."
Financing for such acquisition (the "Acquisition"), and for related fees and
expenses, consisted of (i) $123.0 million of equity capital provided by Questor
Partners Fund, L.P. and Questor Side-by-Side Partners, L.P. (collectively,
"Questor") and certain other investors; (ii) $350.0 million of term loans (the
"Term Facility") and $31.0 million of revolving loans (the "Revolving Credit
Facility") borrowed under a $500.0 million senior secured credit facility among
the Company, the lenders named therein, The Chase Manhattan Bank ("Chase"), as
administrative agent, and Citicorp, U.S.A., Inc., as documentation agent and
collateral agent (the "Senior Bank Facilities"); and (iii) $100.0 million of
loans borrowed under a senior subordinated loan facility among the Company, the
lenders named therein and Chase, as administrative agent (the "Senior
Subordinated Credit Facility"). The Acquisition, the financing thereof (not
including the Initial Offering) and the payment of related transaction fees and
expenses are referred to herein as the "Transactions."
In connection with the Acquisition, the Company entered into various
agreements with the Seller, including agreements regarding dealer
relationships, competition, vehicle maintenance, use of intellectual property,
sales of used trucks, administrative services and management information
systems support. See "Relationships with the Seller."
SOURCES AND USES OF FUNDS FOR THE TRANSACTIONS
<TABLE>
<CAPTION>
AMOUNT
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
SOURCES:
Senior Bank Facilities:
Revolving Credit Facility(1)........................ $ 31,000
Term Facility....................................... 350,000
Senior Subordinated Credit Facility................... 100,000
Equity Proceeds....................................... 123,000
--------
Total Sources..................................... $604,000
========
USES:
Purchase Price of the Acquisition..................... $579,400
Excess Cash at Closing................................ 400
Transaction Fees and Expenses......................... 24,200
--------
Total Uses........................................ $604,000
========
</TABLE>
- --------
(1) Borrowings of up to $150.0 million under the Revolving Credit Facility are
available for working capital and general corporate purposes, including up
to $50.0 million for letters of credit ($12.5 million of which were issued
on the Acquisition Closing Date). After giving effect to the Transactions,
the Initial Offering, the application of proceeds therefrom and borrowing
base limitations, the Company's unused availability under the Revolving
Credit Facility totaled approximately $102.0 million. See "Description of
Senior Bank Facilities."
THE FINANCINGS
The Company used the net proceeds from the Initial Offering, approximately
$169.0 million after deducting discounts and fees and expenses incurred in
connection therewith, to repay (i) the aggregate principal amount outstanding
under the Senior Subordinated Credit Facility and (ii) approximately $69.0
million of indebtedness outstanding under the Term Facility. See "The
Acquisition" and "Use of Proceeds."
10
<PAGE>
The Company intends to refinance a portion of the Senior Bank Facilities with
the proceeds of a financing consisting of an asset-backed program based on the
truck rental fleet to be effected by Leasco (the "Securitization"). The
proceeds of the Securitization will be used to (i) retire the remaining
outstanding balance of the Term Facility and (ii) reduce amounts outstanding
and commitments under the Revolving Credit Facility. There can be no assurance
that Leasco will be able to effect the proposed Securitization or that it will
be able to effect the Securitization on terms acceptable to Leasco or the
Company. The Company anticipates that following the Securitization it will
retain a smaller revolving credit facility to meet short term working capital
needs. See "Leasco and Proposed Securitization." On the first date (but not
earlier than January 1, 1998) as of which (i) the Securitization has been
consummated, (ii) any consents required under the Senior Bank Facilities in
connection with the transaction contemplated by this sentence shall have been
obtained and (iii) no default or event of default shall have occurred and be
continuing under the Senior Bank Facilities, the subordination provisions of
the Notes will terminate and cease to be effective with respect to any
indebtedness, whenever incurred, and the Notes will constitute Senior
Indebtedness of the Company. The date as of which the subordination provisions
of the Notes shall terminate and cease to be effective in accordance with the
foregoing provisions is referred to herein as the "Subordination Termination
Date." See "Description of Notes--Ranking."
THE EXCHANGE OFFER
The Exchange Offer.......... The Company is offering to exchange up to
$175,000,000 aggregate principal amount of 10%
Senior Subordinated Notes due 2006 (the "Exchange
Notes") for up to $175,000,000 aggregate
principal amount of its outstanding 10% Senior
Subordinated Notes due 2006 that were issued and
sold on November 25, 1996 in reliance upon an
exemption from registration under the Securities
Act (the "Senior Subordinated Notes"). The terms
of the Exchange Notes will be substantially
identical in all respects (including principal
amount, interest rate, maturity and ranking) to
the terms of the Senior Subordinated Notes for
which they may be exchanged pursuant to the
Exchange Offer, except that the Exchange Notes
have been registered under the Securities Act and
therefore will not be subject to certain
restrictions on transfer except as provided
herein (see "The Exchange Offer--Terms of the
Exchange" and "--Terms and Conditions of the
Letter of Transmittal") and will not be entitled
to registration rights except under certain
limited circumstances.
Exchange Notes issued pursuant to the Exchange
Offer in exchange for the Senior Subordinated
Notes may be offered for resale, resold and
otherwise transferred by holders thereof (other
than any holder which is (i) an Affiliate, (ii) a
broker dealer who acquired Senior Subordinated
Notes directly from the Company or (iii) a broker
dealer who acquired Senior Subordinated Notes as
a result of market making or other trading
activities) without compliance with the
registration and prospectus delivery provisions
of the Securities Act except as provided herein
and provided that such Exchange Notes are
acquired in the ordinary course of such holders'
business and such holders have no arrangement
with any person to participate in a distribution
of such Exchange Notes.
11
<PAGE>
Minimum Condition........... The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Senior
Subordinated Notes being tendered for exchange.
Expiration Date............. The Exchange Offer will expire at 5:00 p.m., New
York City time, on [ ], 1997 unless extended
(the "Expiration Date").
Exchange Date............... The first date of acceptance for exchange for the
Senior Subordinated Notes will be the first
business day following the Expiration Date.
Conditions to the Exchange The obligation of the Company to consummate the
Offer...................... Exchange Offer is subject to certain conditions.
See "The Exchange Offer--Conditions to the
Exchange Offer." The Company reserves the right
to terminate or amend the Exchange Offer at any
time prior to the Expiration Date upon the
occurrence of any such condition.
Withdrawal Rights........... Tenders may be withdrawn at any time prior to the
Expiration Date. Any Senior Subordinated Notes
not accepted for any reason will be returned
without expense to the tendering holders thereof
as promptly as practicable after the expiration
or termination of the Exchange Offer.
Procedures for Tendering
Senior Subordinated See "The Exchange Offer--How to Tender."
Notes......................
Federal Income Tax The exchange of Senior Subordinated Notes for
Consequences............... Exchange Notes by holders should not constitute
an exchange for federal income tax purposes, and
U.S. holders should not realize any gain or loss
upon receipt of Exchange Notes. See "The Exchange
Offer--Federal Income Tax Consequences."
Effect on Holders of Senior
Subordinated Notes......... As a result of the making of this Exchange Offer,
and upon acceptance for exchange of all validly
tendered Senior Subordinated Notes pursuant to
the terms of this Exchange Offer, the Company
will have fulfilled covenants contained in the
terms of the Senior Subordinated Notes and the
Exchange and Registration Rights Agreement (the
"Exchange and Registration Rights Agreement")
dated November 25, 1996 between the Company and
Chase Securities Inc. as initial purchaser (the
"Initial Purchaser") and, accordingly, the
holders of the Senior Subordinated Notes will
have no further registration or other rights
under the Exchange and Registration Rights
Agreement, except under certain limited
circumstances. See "Senior Subordinated Notes
Registration Rights." Holders of the Senior
Subordinated Notes who do not tender their Senior
Subordinated Notes in the Exchange Offer will
continue to hold such Senior Subordinated Notes
and will be entitled to all the rights and
limitations applicable thereto under the
Indenture. All untendered, and tendered but
unaccepted, Senior Subordinated Notes will
continue to be subject to the restrictions on
transfer provided for in the Senior Subordinated
Notes and the
12
<PAGE>
Indenture. To the extent that Senior Subordinated
Notes are tendered and accepted in the Exchange
Offer, the trading market, if any, for the Senior
Subordinated Notes could be adversely affected.
See "Risk Factors--Consequences of Exchange and
Failure to Exchange."
TERMS OF THE NOTES
The Exchange Offer applies to $175,000,000 aggregate principal amount of the
Senior Subordinated Notes. The form and terms of the Exchange Notes are the
same as the form and terms of the Senior Subordinated Notes except that the
Exchange Notes have been registered under the Securities Act and, therefore,
will not bear legends restricting the transfer thereof. The Exchange Notes will
evidence the same debt as the Senior Subordinated Notes and will be entitled to
the benefits of the Indenture. See "Description of the Notes."
Notes Offered............... $175,000,000 aggregate principal amount of 10%
Senior Subordinated Notes due 2006.
Maturity Date............... December 1, 2006.
Interest Payment Dates...... June 1 and December 1 of each year, commencing on
June 1, 1997.
Sinking Fund................ None.
Optional Redemption......... Except as described below, the Company may not
redeem the Notes prior to December 1, 2001. On or
after such date, the Company may redeem the
Notes, in whole or in part, at the redemption
prices set forth herein together with accrued and
unpaid interest, if any, to the date of
redemption. In addition, at any time and from
time to time on or prior to December 1, 1999, the
Company, at its option, may redeem up to 33 1/3%
of the original aggregate principal amount of the
Notes with the net cash proceeds of one or more
Public Equity Offerings (as defined) by the
Company following which there is a Public Market
(as defined), at a redemption price equal to 110%
of the principal amount of the Notes to be
redeemed, together with accrued and unpaid
interest, if any, to the date of redemption,
provided that at least 66 2/3% of the original
aggregate principal amount of the Notes remains
outstanding immediately after each such
redemption. See "Description of Notes--Optional
Redemption."
Change of Control........... Upon the occurrence of a Change of Control (i)
the Company will have the option, at any time
prior to December 1, 2001, to redeem the Notes in
whole at a redemption price equal to 100% of the
principal amount thereof plus the Applicable
Premium (as defined), together with accrued and
unpaid interest, if any, to the date of
redemption, and (ii) if the Company does not so
redeem the Notes or if such Change of Control
occurs on or after December 1, 2001, each holder
will have the right to require the Company to
make an offer to repurchase the Notes held by
such holder at a price equal to 101% of the
principal amount thereof, together with accrued
and unpaid interest, if any, to the date of
repurchase. See "Description of Notes--Change of
Control."
13
<PAGE>
Subsidiary Guarantees....... The subsidiaries of the Company (the "Existing
Subsidiaries"), other than Leasco, have
guaranteed the Company's obligations under the
Senior Bank Facilities. If any of the Existing
Subsidiaries, other than Leasco, and any
subsequently acquired or organized domestic
subsidiary (other than any subsidiary of Leasco)
or, to the extent that no adverse tax
consequences would result, foreign subsidiary of
the Company becomes a Significant Subsidiary (as
such term is defined in Rule 1-02 under
Regulation S-X ("Regulation S-X") promulgated by
the Commission, the Company will be required to
cause such Significant Subsidiary to guarantee
the Notes on an unsecured, senior subordinated
basis prior to the Subordination Termination Date
(as defined), and on a senior basis thereafter.
At the request of the agents or the lenders under
the Senior Bank Facilities, the Company will be
required to cause Leasco to guarantee the
obligations of the Company under the Senior Bank
Facilities, and to grant security interests in,
and liens on, Leasco's assets as security for
such guarantee, if the Securitization has not
been consummated on or prior to July 17, 1997. If
Leasco does so guarantee the Senior Bank
Facilities, the Company will be required to cause
Leasco and the other subsidiaries of the Company
to guarantee the Notes on an unsecured, senior
subordinated basis. See "Leasco and Proposed
Securitization," "Description of Senior Bank
Facilities" and "Description of Notes--Future
Note Guarantors."
Ranking..................... The Notes will be unsecured and, prior to the
Subordination Termination Date, will be
subordinated to all existing and future Senior
Indebtedness (as defined) of the Company and will
be effectively subordinated to all obligations of
the subsidiaries of the Company. Prior to the
Subordination Termination Date, the Notes will
rank pari passu with any future Senior
Subordinated Indebtedness (as defined) of the
Company and will rank senior to all other
subordinated indebtedness of the Company. On and
after the Subordination Termination Date, the
Notes will constitute Senior Indebtedness and
will rank pari passu with all existing and future
Senior Indebtedness of the Company if (i) any
required consents under the Senior Bank
Facilities shall have been obtained and (ii) no
default or event of default shall have occurred
and be continuing under the Senior Bank
Facilities. As of October 16, 1996, on a pro
forma basis after giving effect to the
Transactions, the Initial Offering and the
application of proceeds therefrom, the Company
would have had outstanding $312.0 million
(exclusive of unused commitments) of Senior
Indebtedness (all of which is secured), no Senior
Subordinated Indebtedness other than the
indebtedness represented by the Notes and no
indebtedness that is subordinate or junior in
right of payment to the indebtedness represented
by the Notes. See "Description of Notes--
Ranking."
Restrictive Covenants....... The indenture under which the Senior Subordinated
Notes were issued and the Exchange Notes will be
issued (the "Indenture")
14
<PAGE>
limits: (i) the incurrence of additional
indebtedness by the Company and its Restricted
Subsidiaries (as defined); (ii) the payment of
dividends on, and redemption of, capital stock of
the Company and its Restricted Subsidiaries and
the redemption of certain subordinated
obligations of the Company and its Restricted
Subsidiaries; (iii) investments; (iv) sales of
assets and Restricted Subsidiary stock; (v)
certain transactions with affiliates; (vi) the
sale or issuance of capital stock of Restricted
Subsidiaries; (vii) the creation of liens; (viii)
the lines of business in which the Company and
its Restricted Subsidiaries may operate; and (ix)
consolidations, mergers and transfers of all or
substantially all of the Company's assets. The
Indenture also prohibits certain restrictions on
distributions from Restricted Subsidiaries.
However, all of these limitations and
prohibitions are subject to a number of important
qualifications and exceptions. See "Description
of Notes--Certain Covenants" and "--Merger and
Consolidation."
RISK FACTORS
Holders of Senior Subordinated Notes should carefully consider the matters
set forth under the caption "Risk Factors" prior to making a decision with
respect to the Exchange Offer. See "Risk Factors."
15
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
The following table sets forth summary historical financial and other data of
the Company for each of the four years in the period ended December 31, 1995,
the nine months ended September 30, 1995 and the period January 1, 1996 through
October 16, 1996 (which is the day prior to the Acquisition Closing Date), and
certain pro forma financial and other data for the year ended December 31, 1995
and the period January 1, 1996 through October 16, 1996. The pro forma
financial data gives effect to the Transactions, the Initial Offering and the
application of the proceeds therefrom, as if they had occurred on January 1,
1995 for statement of operations data purposes and October 16, 1996 for balance
sheet data purposes. The historical financial information for each of the years
ended December 31, 1994 and 1995 and for the period January 1, 1996 through
October 16, 1996 has been derived from the audited combined financial
statements of the Company. Such combined financial statements have been audited
by KPMG Peat Marwick LLP and are included elsewhere herein. The historical
financial information for each of the years ended December 31, 1992 and 1993
and for the nine months ended September 30, 1995 is unaudited but, in the
opinion of management, includes all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of such information.
The pro forma information does not purport to represent what the Company's
results would have actually been if the Transactions, the Initial Offering and
the application of the proceeds therefrom had occurred at the dates indicated,
nor does such information purport to project the results of the Company for any
future period. The summary financial information should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations," "Selected Historical and Pro Forma Financial Information,"
"Unaudited Pro Forma Financial Information" and the Combined Financial
Statements of the Company and the notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS JANUARY 1, 1996
ENDED THROUGH
YEAR ENDED DECEMBER 31, SEPTEMBER 30, OCTOBER 16,
--------------------------------------------------- ------------- ---------------------
PRO FORMA PRO FORMA
1992 1993 1994 1995 1995 1995 1996 1996
-------- -------- -------- -------- --------- ------------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $426,365 $479,927 $549,633 $546,721 $546,721 $417,682 $439,779 $439,779
Operating income(a)..... 6,010 24,612 45,467 36,573 22,095 26,119 31,107(b) 19,645(b)
Interest expense(c)..... 20,590 20,049 24,256 29,663 44,927 22,558 20,291 35,568
Net earnings (loss)..... (9,100) 2,480 12,309 3,602 (14,243)(d) 1,748 5,822 (10,221)
OTHER FINANCIAL DATA:
EBITDA(e)............... $ 85,291 $109,462 $135,580 $140,507 $139,657 $102,026 $115,366 $114,693
EBITDA margin........... 20.0% 22.8% 24.7% 25.7% 25.5% 24.4% 26.2% 26.1%
Adjusted EBITDA(f)...... $ 85,291 $109,462 $135,580 $146,877 $146,027 $107,195 $117,257 $116,584
Adjusted EBITDA margin.. 20.0% 22.8% 24.7% 26.9% 26.7% 25.7% 26.7% 26.5%
Cash interest
expense(g)............. $ 20,590 $ 20,049 $ 24,256 $ 29,663 $ 42,310 $ 22,558 $ 20,291 $ 33,496
Ratio of Adjusted EBITDA
to cash interest
expense................ 4.1x 5.5x 5.6x 5.0x 3.5x 4.8x 5.8x 3.5x
Ratio of earnings to
fixed charges(h)....... (h) 1.2x 1.8x 1.2x (h) 1.1x 1.5x (h)
Capital
expenditures(i)........ $180,912 $195,675 $191,925 $223,749 $223,749 $208,609 $ 69,228 $ 69,228
Proceeds from disposi-
tion of trucks......... 45,484 50,215 50,030 72,211 72,211 50,395 45,428 45,428
FLEET DATA:
Number of trucks pur-
chased................. 8,500(j) 8,011 7,442 8,468 8,468 8,467 2,515 2,515
Number of trucks sold... 6,384 6,530 5,883 7,603 7,603 5,282 4,187 4,187
Average operating
fleet(k)............... 30,270 31,078 32,814 34,110 34,110 34,302 31,874 31,874
Utilization(l)(q)....... 37.9% 39.8% 44.1% 41.8% 41.8% 41.2% 44.4% 44.4%
Average age in months
(end of period)(q)..... 35 32 31 29 29 28 34 34
Average number of
dealers(q)............. 4,563 4,477 4,765 5,031 5,031 4,986 4,622(m) 4,622(m)
BALANCE SHEET DATA (END
OF PERIOD):
Revenue earning
equipment(n)........... $383,400 $448,949 $503,643 $547,365 -- $587,054 $490,661 $539,459
Total assets............ 430,376 506,501 575,933 629,817 -- 654,007 555,267 612,333
Total debt(o)........... -- -- -- -- -- -- -- 487,000
Total shareholders'
equity(o).............. 297,060 369,464 412,058 490,437 -- 501,148 408,560 119,931(p)
</TABLE>
See Notes to Summary Historical and Pro Forma Financial Information
16
<PAGE>
NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
(a) Operating income reflects restructuring and other charges of $6.4 million,
$5.2 million and $1.9 million for the year ended December 31, 1995 (actual
and pro forma), the nine months ended September 30, 1995 and the period
January 1, 1996 through October 16, 1996 (actual and pro forma),
respectively. In the third quarter of 1995, the Company consolidated its 20
administrative locations into two area centers. As a result, the Company
incurred restructuring and other charges for lease termination, employee
severance and employee relocation costs. In 1996, additional consolidating
and restructuring actions were taken by the Seller which impacted the
Company; these actions included management and staff reductions and
elimination of the company-owned car benefit program.
(b) Effective January 1, 1996, the Company changed the estimated useful lives
and residual values used to calculate depreciation expense on certain types
of trucks in order to better reflect recent experience. This accounting
change was treated as a change in estimate and accounted for on a
prospective basis from January 1, 1996. As a result of this change,
depreciation expense was decreased by approximately $6.0 million for the
period January 1, 1996 through October 16, 1996 (actual and pro forma).
(c) Historical interest expense consists of interest on advances from RSI.
(d) Excludes the write-off of deferred financing costs ($3.1 million, net of
related income tax benefit) associated with the repayment of the Senior
Subordinated Credit Facility and a portion of the Term Facility with the
proceeds of the Initial Offering.
(e) EBITDA represents earnings before interest expense, income taxes,
depreciation (net of gains) and amortization. EBITDA does not include gains
on the disposition of trucks. The Company includes information concerning
EBITDA because it is used by certain investors as a measure of the
Company's ability to service and/or incur debt. EBITDA should not be
considered in isolation or as a substitute for net income or cash flows
from operating activities presented in accordance with generally accepted
accounting principles or as a measure of a company's profitability or
liquidity.
(f) Adjusted EBITDA represents EBITDA plus restructuring and other charges.
(g) Cash interest expense represents interest expense exclusive of amortization
of deferred financing costs.
(h) For the purpose of determining the ratio of earnings to fixed charges,
earnings consist of earnings (loss) before income taxes and fixed charges.
Fixed charges consist of interest expense, whether expensed or capitalized,
including amortization of deferred financing costs, and the portion of
rental expense considered to be interest (assumed to be one-third).
Earnings were insufficient to cover fixed charges for the year ended
December 31, 1992 and, on a pro forma basis, adjusted for the Transactions,
the Initial Offering and the application of the proceeds therefrom, for the
year ended December 31, 1995 and for the period January 1, 1996 through
October 16, 1996 by $14.6 million, $23.2 million and $16.6 million,
respectively.
(i) Capital expenditures for rental trucks totaled $171.1 million, $189.0
million, $182.0 million and $210.8 million for the years ended December 31,
1992, 1993, 1994 and 1995 (actual and pro forma) respectively, and $200.4
million and $62.9 million for the nine months ended September 30, 1995 and
for the period January 1, 1996 through October 16, 1996 (actual and pro
forma), respectively. Capital expenditures for the year ended December 31,
1995 includes $10.3 million to purchase approximately 1,200 trucks that
were added to the fleet in 1992 under operating leases.
(j) Includes approximately 1,500 trucks added to the fleet under operating
leases, of which approximately 1,200 were purchased in 1995.
(k) Average operating fleet includes those trucks undergoing maintenance and
excludes those trucks removed from the rental fleet for disposition.
(l) Utilization represents the total number of truck rental days generated by
the fleet for the period divided by the total number of calendar days which
were available for the average operating fleet for the period.
(m) At September 30, 1996, the Company had approximately 4,400 dealers.
(n) Revenue earning equipment consists of rental trucks, towing and other
rental equipment and tires in service.
(o) Historical shareholders' equity represents the investment by and interest-
bearing advances from RSI. See Combined Financial Statements and related
notes thereto.
(p) Includes the write-off of deferred financing costs ($3.1 million, net of
related income tax benefit) associated with the repayment of the Senior
Subordinated Credit Facility and a portion of the Term Facility with the
proceeds of the Initial Offering.
(q) Amounts for the period January 1, 1996 through October 16, 1996 (actual and
pro forma) are calculated as of September 30, 1996, the most recent date
for which these calculations are available.
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RISK FACTORS
In addition to the other information contained in this Prospectus, before
tendering their Senior Subordinated Notes for the Exchange Notes offered
hereby, holders of Senior Subordinated Notes should consider carefully the
following factors, which (other than "Consequences of Exchange and Failure to
Exchange") are generally applicable to the Senior Subordinated Notes as well
as the Exchange Notes:
CONSEQUENCES OF EXCHANGE AND FAILURE TO EXCHANGE
Holders of Senior Subordinated Notes who do not exchange their Senior
Subordinated Notes for Exchange Notes pursuant to the Exchange Offer will
continue to be subject to the restrictions on transfer of such Senior
Subordinated Notes as set forth in the legend thereon as a consequence of the
issuance of the Senior Subordinated Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Senior Subordinated
Notes may not be offered or sold unless registered under the Securities Act
and applicable state securities laws or pursuant to an exemption therefrom.
Except under certain limited circumstances, the Company does not intend to
register the Senior Subordinated Notes under the Securities Act. In addition,
any holder of Senior Subordinated Notes who tenders in the Exchange Offer for
the purpose of participating in a distribution of the Exchange Notes may be
deemed to have received restricted securities and, if so, will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. To the extent Senior
Subordinated Notes are tendered and accepted in the Exchange Offer, the
trading market, if any, for the Senior Subordinated Notes not tendered could
be adversely affected. See "The Exchange Offer" and "Senior Subordinated Notes
Registration Rights."
SUBSTANTIAL LEVERAGE AND ABILITY TO SERVICE INDEBTEDNESS
As a result of the Transactions and the Initial Offering, the Company is
highly leveraged. After giving pro forma effect, as of October 16 , 1996, to
the Transactions, the Initial Offering and the application of the proceeds
therefrom, the Company's indebtedness would have been $487.0 million and the
Company's shareholders' equity would have been $119.9 million. In addition,
subject to the restrictions in the Senior Bank Facilities and the Indenture,
the Company may incur additional indebtedness from time to time. The degree to
which the Company is leveraged could have important consequences to holders of
the Notes, including the following: (i) the Company's ability to obtain
additional financing for working capital, capital expenditures, acquisitions
or general corporate purposes may be limited; (ii) a substantial portion of
the Company's cash flow must be dedicated to the payment of interest on the
Notes and servicing its other existing indebtedness, thereby reducing the
funds available to the Company for other purposes; (iii) certain indebtedness
under the Senior Bank Facilities will be at variable rates of interest, which
will cause the Company to be vulnerable to increases in interest rates; (iv)
the Company may be hindered in its ability to adjust rapidly to changing
market conditions; and (v) the Company's substantial degree of leverage could
make it more vulnerable in the event of a downturn in general economic
conditions or in its business.
The Company's ability to pay interest on the Notes and to satisfy its other
debt obligations will depend upon its future operating performance, which will
be affected by prevailing economic conditions and financial, business and
other factors, certain of which are beyond its control. If the Company's cash
flow and capital resources are insufficient to fund its debt service
obligations, the Company may be forced to reduce or delay capital
expenditures, sell assets, obtain additional equity capital or restructure its
debt. There can be no assurance that the Company's cash flow and capital
resources will be sufficient for payment of its indebtedness in the future. In
the absence of such operating results and resources, the Company could face
substantial liquidity problems and might be required to dispose of material
assets or operations to meet its debt service and other obligations, and there
can be no assurance as to the timing of such sales or the proceeds that the
Company could realize therefrom.
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The rental trucks used by the Company in the Business are owned by Leasco
and leased by Leasco to the Company pursuant to a Master Motor Vehicle Lease
Agreement. Dividends or other distributions from Leasco could be required by
the Company in order to meet a portion of its debt service obligations and
other operating needs. See "--Limitations on Access to Cash Flow and Assets of
Leasco."
SUBORDINATION OF NOTES; ASSET ENCUMBRANCE
Prior to the Subordination Termination Date, the payment of principal of and
interest on, and any premium or other amounts owing in respect of, the Notes
will be subordinated to the prior payment in full of all existing and future
Senior Indebtedness of the Company, including all amounts owing or guaranteed
under the Senior Bank Facilities. Consequently, in the event of a bankruptcy,
liquidation, dissolution, reorganization or similar proceeding with respect to
the Company, prior to the Subordination Termination Date, assets of the
Company will be available to pay obligations on the Notes only after all
Senior Indebtedness of the Company has been paid in full, and there can be no
assurance that there will be sufficient assets to pay amounts due on any or
all of the Notes. On and after the Subordination Termination Date, the Notes
will constitute Senior Indebtedness and will rank pari passu with all existing
and future Senior Indebtedness of the Company. However, there can be no
assurance that the Subordination Termination Date will occur. In addition,
even if the Subordination Termination Date does occur, the Notes will be
structurally subordinated to the obligations incurred in connection with the
Securitization, which at least initially is expected to constitute
substantially all the indebtedness of the Company and its subsidiaries other
than the Notes.
Except under the circumstances discussed below, none of the Existing
Subsidiaries (including Leasco, the Company's special purpose subsidiary that
owns the trucks) will guarantee the Notes. The assets of Ryder TRS, Inc.
represented approximately 12.6% of the consolidated assets of the Company and
its subsidiaries at October 16, 1996 on a pro forma basis after giving effect
to the Transactions, the Initial Offering and the application of the proceeds
therefrom (subject to finalization of purchase price adjustment and asset
valuations). The Existing Subsidiaries, other than Leasco, have guaranteed the
Company's obligations under the Senior Bank Facilities. If any of the Existing
Subsidiaries, other than Leasco, and any subsequently acquired or organized
domestic subsidiary (other than a subsidiary of Leasco) or, to the extent that
no adverse tax consequences would result, foreign subsidiary of the Company
becomes a Significant Subsidiary (as such term is defined in Rule 1-02 under
Regulation S-X), the Company will be required to cause such Significant
Subsidiary to guarantee the Notes on an unsecured, senior subordinated basis
(prior to the Subordination Termination Date, and on a senior basis
thereafter). At the request of the agents or the lenders under the Senior Bank
Facilities, the Company may be required to cause Leasco to guarantee the
obligations of the Company under the Senior Bank Facilities, and to grant
security interests in, and liens on, Leasco's assets as security for such
guarantee, if the Securitization has not been consummated on or prior to July
17, 1997. If Leasco does so guarantee the Senior Bank Facilities, the Company
will be required to cause Leasco and the other subsidiaries of the Company to
guarantee the Notes (collectively, the "Guarantor Subsidiaries") on an
unsecured, senior subordinated basis. Payments in respect of any such
guarantee of the Notes would be subordinated to the prior payment in full of
all existing and future Senior Indebtedness of the respective Guarantor
Subsidiaries, including all amounts owing or guaranteed in respect of the
Senior Bank Facilities. Consequently, in the event of a bankruptcy,
liquidation, dissolution, reorganization or similar proceeding with respect to
a Guarantor Subsidiary, its assets would be available to pay obligations only
after the Senior Indebtedness of such Guarantor Subsidiary had been paid in
full, and there can be no assurance that there would be sufficient assets to
pay amounts due in respect of such Guarantor Subsidiary's guarantee of the
Notes.
The Indenture will permit the Company and the Guarantor Subsidiaries to
incur or have outstanding certain secured indebtedness, including indebtedness
under the Senior Bank Facilities, which is secured by pledges of all the
capital stock of the Guarantor Subsidiaries and security interests in, or
liens on, substantially all other tangible and intangible assets located in
the United States of the Company and the Guarantor Subsidiaries, other than
Leasco. The assets of Leasco (consisting of the rental truck fleet) would be
securitized or otherwise encumbered as part of the Securitization, but if the
Securitization has not been consummated on or prior to July 17, 1997, the
Company may be required to cause Leasco to grant security interests in, or
liens on, such assets to secure the Senior Bank Facilities. The Notes and the
guarantees issued in the circumstance referred to above are
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or will be unsecured and therefore do not have the benefit of any collateral.
Accordingly, if an event of default occurs under the Senior Bank Facilities,
the lenders thereunder will have a prior right to the assets of the Company
(and, in the circumstance referred to above, the assets of the Guarantor
Subsidiaries), and may foreclose upon such collateral to the exclusion of the
holders of the Notes, notwithstanding the existence of an event of default with
respect thereto. In such event, such assets would first be used to repay in
full amounts outstanding under the Senior Bank Facilities, resulting in all or
a portion of the Company's assets (and, in the circumstance referred to above,
the assets of the Guarantor Subsidiaries) being unavailable to satisfy the
claims of the holders of the Notes and other unsecured indebtedness.
LIMITATIONS ON ACCESS TO CASH FLOW AND ASSETS OF LEASCO
Except under the circumstances described in "--Subordination of Notes; Asset
Encumbrance," the Notes will not be guaranteed by or otherwise constitute an
obligation of Leasco. As a result, claims of the holders of the Notes will be
structurally subordinated to all indebtedness and other liabilities of Leasco.
Leasco's assets (consisting of the truck rental fleet) represented
approximately 87.4% of the consolidated assets of the Company and its
subsidiaries at October 16, 1996 on a pro forma basis after giving effect to
the Transactions, the Initial Offering and the application of the proceeds
therefrom (subject to finalization of purchase price adjustment and asset
valuations).
In addition, the Company's ability to gain access to the cash flow of Leasco
for the purpose of providing for payment of the principal of, premium, if any,
or interest on the Notes when due may be otherwise limited. Under the
certificate of incorporation of Leasco (the "Leasco Charter"), dividends or
advances from Leasco to the Company may be paid or made only with the
affirmative vote of all of the members of the Board of Directors of Leasco,
which must include the affirmative vote of the two independent directors of
Leasco. The Leasco Charter requires that there be at least two independent
directors, none of whom may be a stockholder, partner, customer or supplier of
Questor or any affiliate thereof, or may have certain other specified
relationships with Questor or any such affiliate. Each independent director
must have certain prior experience in serving as an independent director for
similar purposes.
Payment of dividends by Leasco will also be subject to restrictions under the
Delaware General Corporation Law, which generally limits payment of dividends
to specified surplus or net profits of a corporation, and is likely to be
subject to additional contractual restrictions in agreements relating to the
Securitization.
Although the Company's rental payments to Leasco will be substantial, a
majority of its revenues are expected to be retained by it to be applied to
debt service and other ongoing requirements. In addition, the rental payments
to Leasco are expected to be applied to meet interest costs and possibly other
expenses associated with the truck rental fleet. Accordingly, the Company
believes that its ability to service the Notes should not be materially
impaired by the Securitization. However, it is possible that the Securitization
will be structured, or other events could occur, such that dividends or other
distributions from Leasco could be required by the Company in order to meet a
portion of its debt service obligations and other operating needs. If the Board
of Directors of Leasco, or any independent director, should determine that
dividends should not be paid in the necessary amounts, or if such dividends
could not be paid as a result of statutory or contractual restrictions, the
Company's ability to pay interest on and principal of the Notes could be
adversely affected. See "Leasco and Proposed Securitization."
RESTRICTIVE LOAN COVENANTS
The Senior Bank Facilities include certain covenants that, among other
things, restrict the ability of the Company and its subsidiaries to: (i)
dispose of assets; (ii) incur additional indebtedness; (iii) incur guarantee
obligations; (iv) prepay other indebtedness or amend certain other debt
instruments; (v) pay dividends; (vi) create liens on assets; (vii) enter into
sale and leaseback transactions; (viii) make investments, loans or advances;
(ix) make acquisitions; (x) engage in mergers or consolidations; (xi) change
the business conducted by the Company; (xii) make capital expenditures; or
(xiii) engage in certain transactions with affiliates, and otherwise restrict
certain corporate activities. In addition, under the Senior Bank Facilities the
Company is required to comply with
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specified financial ratios and tests, including minimum interest coverage
ratios, maximum leverage ratios and minimum EBITDA requirements. There can be
no assurance that these requirements will be met in the future. If they are
not, the holders of the indebtedness under the Senior Bank Facilities would be
entitled to declare such indebtedness immediately due and payable. In
addition, the Securitization will impose certain restrictive covenants on
Leasco. See "Description of Senior Bank Facilities" and "Leasco and Proposed
Securitization."
RISKS ARISING FROM ACQUISITION
Dependence on the Seller. The Company has had no prior operating history,
and prior to the consummation of the Acquisition, the business of the Company
was conducted as a part of the business of the Seller. The Company is not able
to rely on the Seller for financial support or for other services, except as
provided in agreements entered into as part of the Acquisition. See "The
Acquisition."
The Company has entered into a number of such agreements, including
agreements relating to vehicle maintenance, sales of used trucks, management
information systems support and other administrative support services. In
addition, the Company and RTR have entered into a Dealer Agreement (the
"Dealer Agreement") under which RTR will act as a dealer for rental of a
portion of the Company's trucks. Each of these agreements contains
requirements for various ongoing payments of substantial amounts and other
obligations on the part of the Company. The loss of certain of the rights and
benefits provided under these arrangements prior to their scheduled
termination dates could have a material adverse effect on the Company's
business. See "Relationships with the Seller."
Risks Related to the Ryder Name. The Company obtained the right to use
certain Ryder trademarks under the terms of a Trademark License Agreement (the
"License Agreement") between RSI and the Company. The Company will not have
any right to use the Ryder trademarks after October 17, 2006 and must begin
using such trademarks in conjunction with a successor tradename and trademarks
after October 17, 2001. The Company believes that the Ryder trademarks enjoy
wide and favorable recognition among its customers, and the loss of these
trademarks (including any loss that could occur as a result of a failure of
the Company to comply with certain covenants in the License Agreement and with
the non-competition covenants contained in the Acquisition Agreements) could
have a material adverse effect on the Company's business. There can be no
assurance as to the effect on the Company's business of the transition to and
use of a new name. See "Relationships with the Seller--Intellectual Property."
Competition from the Seller. Under the terms of the Acquisition Agreements,
RTR has agreed, among other things, not to engage in the one-way truck rental
business at all or to engage in the local consumer truck rental business
through dealers, franchisees or other third party agents for a period of up to
twelve years. RTR continues to engage in competition with the Company in the
local consumer and commercial rental business through its fleet of trucks. The
Dealer Agreement does not require that RTR rent a Company truck for a local
rental before renting its own truck and therefore RTR will generally rent its
own trucks prior to a Company truck. The Acquisition Agreements do, however,
limit for a period of two years the number of light duty trucks (i.e., trucks
with gross vehicle weight of 16,000 pounds or less) that RTR may hold for
rental, provided that the Company supplies a specific number of trucks for
rental by the Seller's dealers under the Dealer Agreement during this time.
See "Relationships with the Seller--Non-Competition Covenants."
Under the terms of the Acquisition Agreements, during the term of the
License Agreement and under certain circumstances up to one year thereafter,
the Company may not engage in the long-term leasing business or the rental of
heavy duty trucks.
HIGHLY COMPETITIVE INDUSTRY
The truck rental industry is highly competitive and includes a number of
significant competitors. U-Haul International Inc. ("U-Haul") is the Company's
principal competitor with a greater market share and potentially greater
financial resources than the Company. Competition is generally based on price,
product quality, brand
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name recognition, service, convenience and availability. Competition could
adversely affect the Company's operating results by forcing it to reduce its
prices, incur additional costs or provide other services. The Seller will also
compete with the Company in certain segments of the Company's business. See
"Business--Competition" and "--Risks Arising from Acquisition--Competition
from the Seller."
DEPENDENCE ON DEALERS
The Company operates nationwide through approximately 4,400 dealers, of
which 4,060 are independent Ryder dealers and 340 are RTR dealers. The Company
is dependent on its dealer network to offer its truck rental services to the
public, and the growth and profitability of the Company depend in part upon
its relationship with its dealers. Dealer turnover was approximately 16% for
1995 and was as high as approximately 30% in 1990. There can be no assurance
that the Company will be able to successfully maintain existing dealerships or
to enter into relationships with qualified new dealers. The loss of a
significant number of dealers or the failure to replace dealers could have a
material adverse effect on the Company's business.
Independent dealerships consist primarily of auto parts retailers and
service suppliers, self storage centers, car rental locations and other
vehicle-related businesses that are owned by third parties. As a result, truck
rental services are not the primary business for independent dealers. There
can be no assurance that the independent dealers will concentrate sufficient
efforts on renting the Company's trucks, which could result in decreased
revenues for the Company.
DEPENDENCE ON KEY PERSONNEL
The ability of the Company to maintain its competitive position will depend
to a significant degree upon its ability to continue to attract and maintain
highly qualified managerial, sales, marketing and maintenance personnel. There
can be no assurance that the Company will be able to continue to recruit and
retain such personnel. In particular, the Company will be dependent on its key
management personnel, and there can be no assurance that the loss of key
personnel would not have a material adverse effect on the Company's business.
CONTROLLING SHAREHOLDER
The Company is controlled by Questor, and Questor has the power to control
all matters submitted to the shareholders of the Company and to elect a
majority of the directors of the Company. See "Ownership of Capital Stock."
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, unless the Company redeems the
Notes, each holder of the Notes will have the right to require the Company to
purchase the Notes held by such holder at a price equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the
date of purchase. The occurrence of a Change of Control would constitute a
default under the Senior Bank Facilities. The Company's failure to repurchase
the Notes would result in a default under the Indenture. The inability to
repay the indebtedness under the Senior Bank Facilities, if accelerated, would
also constitute an event of default under the Indenture, which could have
adverse consequences to the Company and the holders of the Notes. In the event
of a Change of Control, there can be no assurance that the Company would have
sufficient assets to satisfy all of its obligations under the Senior Bank
Facilities and the Notes. See "Description of Senior Bank Facilities" and
"Description of Notes--Change of Control."
REGULATION
The Company is subject to various federal, state and local laws and
regulations, including those relating to the taxing and licensing of vehicles,
transportation and safety of vehicles, consumer protection, insurance,
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advertising, used vehicle sales, labor matters and environmental protection.
The Company is affected by changes, from time to time, in such laws and
regulations.
The Company offers for sale, in addition to the rental of trucks, certain
liability-limiting products relating to such rental, such as physical damage
waivers and limited damage waivers, pursuant to which the Company agrees to
waive its right to recovery from a renter for damage to the truck.
Approximately 8.0% and 10.0% of the Company's revenues in 1994 and 1995,
respectively, were generated from the sale of such liability-limiting
products. Certain states have enacted legislation, generally applicable to
automobile rentals, which limits the rates that may be charged for collision
damage waivers, limits potential customer liability for damage to rented
vehicles or restricts the sale of such waivers. In addition, Congress has from
time to time considered legislation to regulate the sale of collision damage
waivers by rental companies, but no such legislation has been enacted to date.
The adoption of additional state or federal legislation applicable to truck
rentals that would restrict the sale or limit the rates of collision damage
waivers or other liability-limiting products, or would limit potential
customer liability, could adversely affect sales of these products by the
Company.
ENVIRONMENTAL MATTERS
The Company and its operations are subject to various federal, state and
local environmental laws and regulations, including laws and regulations which
impose liability on responsible parties to remediate, or contribute to the
costs of remediating, sites at which petroleum products or hazardous wastes or
substances were disposed of or released, which may include sites operated by
the Company. These remediation requirements may be imposed without regard to
fault or legality at the time of the disposal or release. The Seller has
remediated contamination at one property pursuant to such remediation laws,
and there can be no assurance that contamination requiring remediation will
not be found in the future at other properties leased by the Company. The
Company also maintains aboveground storage tanks at one property for the
storage of petroleum products and performs light vehicle maintenance at some
of its leased properties, and asbestos-containing building materials may exist
in certain of its leased buildings. While the Seller has retained liability
with respect to environmental conditions existing prior to the date of the
Acquisition, whether discovered or undiscovered, there can be no assurance
that present or future activities undertaken by the Company will not result in
environmentally related expenditures for which the Company may be responsible.
FRAUDULENT CONVEYANCE CONSIDERATIONS
The incurrence by the Company of indebtedness such as the Notes to finance
or refinance the Acquisition may be subject to review under federal bankruptcy
law or relevant state fraudulent conveyance laws if a bankruptcy case or
lawsuit is commenced by or on behalf of unpaid creditors of the Company. Under
these laws, if a court were to find that, after giving effect to the sale of
the Notes and the application of the net proceeds therefrom, either (a) the
Company incurred such indebtedness with the intent of hindering, delaying or
defrauding creditors or (b) the Company received less than reasonably
equivalent value or consideration for incurring such indebtedness and (i) was
insolvent or was rendered insolvent by reason of such transactions, (ii) was
engaged in a business or transaction for which the assets remaining with the
Company constituted unreasonably small capital, or (iii) intended to incur, or
believed that it would incur, debts beyond its ability to pay as they matured,
such court might subordinate such indebtedness to presently existing and
future indebtedness of the Company or void the issuance of such indebtedness
and direct the repayment of any amounts paid thereunder to the creditors of
the Company, as the case may be, or take other action detrimental to the
holders of such indebtedness.
The measure of insolvency for purposes of determining whether a transfer is
avoidable as a fraudulent transfer varies depending upon the law of the
jurisdiction that is being applied. Generally, however, a debtor would be
considered insolvent if the sum of all its debts, including contingent
liabilities, were greater than the value of all of its assets at a fair
valuation, or if the present fair saleable value of the debtor's assets were
less than the amount required to repay its probable liability on its debts,
including contingent liabilities, as they become absolute and mature.
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To the extent that proceeds from the Initial Offering were used to
refinance the indebtedness incurred in connection with the Acquisition, a
court might find that the Company did not receive fair consideration or
reasonably equivalent value for the incurrence of the indebtedness represented
thereby. In addition, if a court were to find that any of the components of
the Transactions constituted a fraudulent transfer, to the extent that
proceeds from the Initial Offering were used to finance or refinance such
Transactions, a court might find that the Company did not receive fair
consideration or reasonably equivalent value for the incurrence of the
indebtedness represented by the Notes.
The Company believes that it received equivalent value at the time the
indebtedness under the Notes was incurred. In addition, after giving effect to
the consummation of the Transactions and the Initial Offering, the Company
does not: (i) believe that it was insolvent or rendered insolvent; (ii)
believe that it will be engaged in a business or transaction for which its
remaining assets constitute unreasonably small capital; or (iii) intend to
incur, or believe that it will incur, debts beyond its ability to pay as they
mature. These beliefs are based on the Company's analysis of internal cash
flow projections and estimated values of assets and liabilities of the Company
at the time of the Acquisition and the Initial Offering. There can be no
assurance, however, that a court passing on these issues would make the same
determination.
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFER
The Exchange Notes are new securities for which there presently is no
market. Although the Initial Purchaser has informed the Company that it
currently intends to make a market in the Exchange Notes, the Initial
Purchaser is not obligated to do so and any such market making may be
discontinued at any time without notice. In addition, such market making
activity may be limited during the pendency of the Exchange Offer.
Accordingly, there can be no assurance as to the development or liquidity of
any market for the Exchange Notes. The Company does not intend to apply for
listing of the Exchange Notes on any securities exchange or for quotation of
the Exchange Notes through the National Association of Securities Dealers
Automated Quotation System.
The Exchange Notes generally will be permitted to be resold or otherwise
transferred by each holder without the requirement of further registration.
The Exchange Offer will not be conditioned upon any minimum or maximum
aggregate principal amount of Senior Subordinated Notes being tendered for
exchange. In the case of non-exchanging holders of Senior Subordinated Notes,
no assurance can be given as to the liquidity of the trading market for the
Senior Subordinated Notes following the Exchange Offer. See "Plan of
Distribution."
The liquidity of, and trading market for, the Senior Subordinated Notes or
the Exchange Notes also may be adversely affected by general declines in the
market or by declines in the market for similar securities. Such declines may
adversely affect such liquidity and trading markets independent of the
financial performance of, and prospects for, the Company.
USE OF PROCEEDS
There will be no proceeds to the Company from the exchange pursuant to the
Exchange Offer. The Company used the net proceeds from the issuance of the
Senior Subordinated Notes, approximately $169.0 million after deducting
discounts and fees and expenses incurred in connection therewith, to repay the
aggregate principal amount outstanding under the Senior Subordinated Credit
Facility and approximately $69.0 million of indebtedness outstanding under the
Term Facility, the proceeds of each of which were used, together with certain
other funds, to pay the purchase price of the Acquisition and related fees and
expenses.
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The sole purpose of the Exchange Offer is to fulfill the obligations of the
Company with respect to the Exchange and Registration Rights Agreement.
The Senior Subordinated Notes were originally issued and sold on November
25, 1996 (the "Issue Date"). Such sales were not registered under the
Securities Act in reliance upon the exemption provided by Section 4(2) of the
Securities Act and Rule 144A under the Securities Act. In connection with the
sale of the Senior Subordinated Notes, the Company agreed to file with the
Commission a registration statement relating to an exchange offer (the
"Exchange Offer Registration Statement") pursuant to which senior subordinated
notes of the Company covered by such registration statement and containing the
same terms as the Senior Subordinated Notes, except as set forth in this
Prospectus, would be offered in exchange for Senior Subordinated Notes
tendered at the option of the holders thereof. Each broker-dealer that
receives Exchange Notes for its own account in exchange for Senior
Subordinated Notes, where such Senior Subordinated Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes.
If (a) prior to the consummation of the Exchange Offer, the Company
reasonably determines in good faith that (i) the Exchange Notes would not,
upon receipt, be tradeable by Holders that are not Affiliates without
restriction under the Securities Act and without material restriction under
applicable state securities laws or (ii) after conferring with counsel, the
Commission is unlikely to permit the consummation of the Exchange Offer within
165 days after the Issue Date, (b) for any other reason the Exchange Offer is
not consummated within 165 days of the Issue Date, (c) the Initial Purchaser
so requests with respect to Senior Subordinated Notes (i) purchased by it from
the Company on the Issue Date, (ii) not eligible to be exchanged for Exchange
Notes in the Exchange Offer and (iii) held by it following consummation of the
Exchange Offer or (d) any Holder (other than an exchanging dealer) is not
eligible to participate in the Exchange Offer or, in the case of any Holder
that participates in the Exchange Offer (other than an exchanging dealer),
does not receive freely tradeable Exchange Notes in exchange for tendered
Senior Subordinated Notes (and in either case so advises the Company within
ten business days following the later of the consummation of the Exchange
Offer or the time at which such Holder becomes aware or is notified by the
Company of such circumstance) or if the Company so elects, in each case the
Company shall promptly (and in any event within three business days) deliver
to the Holders and the Trustee written notice thereof (the "Shelf Notice").
The Company will, at its expense, (i) as promptly as practicable after
delivery of the Shelf Notice, file with the Commission a Shelf Registration
Statement covering resales of the Notes to which such Shelf Registration
Statement is applicable, (ii) use its best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act as
promptly as possible after such filing occurs and (iii) use its best efforts
to keep the Shelf Registration Statement effective until three years after its
effective date (or such shorter period that will terminate when all the Notes
covered thereby have been sold pursuant thereto or in certain other
circumstances).
In the event that (i) the Exchange Offer Registration Statement is not
declared effective within 135 days after the Issue Date, (ii) the Exchange
Offer is not consummated on or prior to 165 days after the Issue Date,
(iii) the Shelf Registration Statement is not filed with the Commission within
45 days after the Shelf Notice is required to be delivered or is not declared
effective within 135 days after such date or (iv) the Shelf Registration
Statement is filed and declared effective within 135 days after the date the
Shelf Notice is required to be delivered but shall thereafter cease to be
effective (at any time that the Company is obligated to maintain the
effectiveness thereof) without being succeeded within 30 days by an additional
or amended Registration Statement filed and declared effective (each such
event referred to in clauses (i) through (iv), a "Registration Default"), the
Company must pay liquidated damages. See "Senior Subordinated Notes
Registration Rights."
TERMS OF THE EXCHANGE
The Company hereby offers to exchange, upon the terms and subject to the
conditions set forth herein and in the Letter of Transmittal accompanying this
Registration Statement of which this Prospectus is a part (the "Letter of
Transmittal"), $1,000 principal amount of Exchange Notes for each $1,000
principal amount of Senior Subordinated Notes. The terms of the Exchange Notes
are identical in all respects to the terms of the
25
<PAGE>
Senior Subordinated Notes for which they may be exchanged pursuant to this
Exchange Offer, except that (i) the Exchange Notes will generally be freely
transferable by holders thereof and (ii) the holders of the Exchange Notes
will not be entitled to registration rights under the Exchange and
Registration Rights Agreement except under certain limited circumstances. See
"Senior Subordinated Notes Registration Rights." The Exchange Notes will
evidence the same debt as the Senior Subordinated Notes and will be entitled
to the benefits of the Indenture. See "Description of the Notes."
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Senior Subordinated Notes being tendered or accepted for exchange.
Based on interpretations set forth in no-action letters issued by the Staff
to third parties, the Company believes that Exchange Notes issued pursuant to
the Exchange Offer in exchange for the Senior Subordinated Notes may be
offered for resale, resold and otherwise transferred by holders thereof (other
than any holder which is (i) an Affiliate, (ii) a broker-dealer who acquired
Senior Subordinated Notes directly from the Company or (iii) a broker-dealer
who acquired Senior Subordinated Notes as a result of market making or other
trading activities) without compliance with the registration and prospectus
delivery provisions of the Securities Act provided that such Exchange Notes
are acquired in the ordinary course of such holders' business, and such
holders have no arrangement with any person to participate in a distribution
of such Exchange Notes. Each broker-dealer that receives Exchange Notes for
its own account in exchange for Senior Subordinated Notes, where such Senior
Subordinated Notes were acquired by such broker-dealer as a result of market
making activities or other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. See
"Plan of Distribution." Any holder that cannot rely upon such interpretations
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction.
Tendering holders of Senior Subordinated Notes will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of the Senior
Subordinated Notes pursuant to the Exchange Offer.
Interest on each Exchange Note issued pursuant to the Exchange Offer will
accrue from the last interest payment date to which interest was paid on the
Senior Subordinated Notes surrendered in exchange therefor or, if no interest
has been paid on the Senior Subordinated Notes, from the date of original
issue of the Senior Subordinated Notes.
EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS
The Exchange Offer will expire on the Expiration Date. The term "Expiration
Date" means 5:00 p.m., New York City time, on , 1997 unless the Company in
its sole discretion extends the period during which the Exchange Offer is
open, in which event the term "Expiration Date" means the latest time and date
on which the Exchange Offer, as so extended by the Company, expires. The
Company reserves the right to extend the Exchange Offer at any time and from
time to time prior to the Expiration Date by giving written notice to The Bank
of New York (the "Exchange Agent") and by timely public announcement
communicated by no later than 5:00 p.m. on the next business day following the
Expiration Date, unless otherwise required by applicable law or regulation, by
making a release to the Dow Jones News Service. During any extension of the
Exchange Offer, all Senior Subordinated Notes previously tendered pursuant to
the Exchange Offer will remain subject to the Exchange Offer.
The Exchange Date will be the first business day following the Expiration
Date. The Company expressly reserves the right to (i) terminate the Exchange
Offer and not accept for exchange any Senior Subordinated Notes for any
reason, including if any of the events set forth below under "--Conditions to
the Exchange Offer" shall have occurred and shall not have been waived by the
Company and (ii) amend the terms of the Exchange Offer in any manner, whether
before or after any tender of the Senior Subordinated Notes. If any such
termination or amendment occurs, the Company will notify the Exchange Agent in
writing and will either issue a press release
26
<PAGE>
or give written notice to the holders of the Senior Subordinated Notes as
promptly as practicable. Unless the Company terminates the Exchange Offer
prior to 5:00 p.m., New York City time, on the Expiration Date, the Company
will exchange the Exchange Notes for the Senior Subordinated Notes on the
Exchange Date.
If the Company waives any material condition to the Exchange Offer, or
amends the Exchange Offer in any other material respect, and if at the time
that notice of such waiver or amendment is first published, sent or given to
holders of Senior Subordinated Notes in the manner specified above, the
Exchange Offer is scheduled to expire at any time earlier than the expiration
of a period ending on the fifth business day from, and including, the date
that such notice is first so published, sent or given, then the Exchange Offer
will be extended until the expiration of such period of five business days.
This Prospectus and the related Letter of Transmittal and other relevant
materials will be mailed by the Company to record holders of Senior
Subordinated Notes and will be furnished to brokers, banks and similar persons
whose names, or the names of whose nominees, appear on the lists of holders
for subsequent transmittal to beneficial owners of Senior Subordinated Notes.
HOW TO TENDER
The tender to the Company of Senior Subordinated Notes by a holder thereof
pursuant to one of the procedures set forth below will constitute an agreement
between such holder and the Company in accordance with the terms and subject
to the conditions set forth herein and in the Letter of Transmittal.
General Procedures. A holder of a Senior Subordinated Note may tender the
same by (i) properly completing and signing the Letter of Transmittal or a
facsimile thereof (all references in this Prospectus to the Letter of
Transmittal shall be deemed to include a facsimile thereof) and delivering the
same, together with the certificate or certificates representing the Senior
Subordinated Notes being tendered and any required signature guarantees (or a
timely confirmation of a book-entry transfer (a "Book-Entry Confirmation")
pursuant to the procedure described below), to the Exchange Agent at its
address set forth on the back cover of this Prospectus on or prior to the
Expiration Date or (ii) complying with the guaranteed delivery procedures
described below. Each broker-dealer that receives Exchange Notes for its own
account in exchange for Senior Subordinated Notes, where such Senior
Subordinated Notes were acquired by such broker-dealer as a result of market-
making activities or other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes.
If tendered Senior Subordinated Notes are registered in the name of the
signer of the Letter of Transmittal and the Exchange Notes to be issued in
exchange therefor are to be issued (and any untendered Senior Subordinated
Notes are to be reissued) in the name of the registered holder, the signature
of such signer need not be guaranteed. In any other case, the tendered Senior
Subordinated Notes must be endorsed or accompanied by written instruments of
transfer in form satisfactory to the Company and duly executed by the
registered holder and the signature on the endorsement or instrument of
transfer must be guaranteed by a bank, broker, dealer, credit union, savings
association, clearing agency or other institution (each an "Eligible
Institution") that is a member of a recognized signature guarantee medallion
program within the meaning of Rule 17Ad-15 under the Exchange Act. If the
Exchange Notes and/or Senior Subordinated Notes not exchanged are to be
delivered to an address other than that of the registered holder appearing on
the note register for the Senior Subordinated Notes, the signature on the
Letter of Transmittal must be guaranteed by an Eligible Institution.
Any beneficial owner whose Senior Subordinated Notes are registered in the
name of a broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender Senior Subordinated Notes should contact such holder
promptly and instruct such holder to tender Senior Subordinated Notes on such
beneficial owner's behalf. If such beneficial owner wishes to tender such
Senior Subordinated Notes himself or herself, such beneficial owner must,
prior to completing and executing the Letter of Transmittal and delivering
such Senior Subordinated Notes, either make appropriate arrangements to
register ownership of the Senior Subordinated Notes in such beneficial owner's
name or follow the procedures described in the immediately preceding
paragraph. The transfer of record ownership may take considerable time.
Book-Entry Transfer. The Exchange Agent will make a request to establish an
account with respect to the Senior Subordinated Notes at The Depository Trust
Company (the "Book-Entry Transfer Facility") for purpose of the Exchange Offer
within two business days after receipt of this Prospectus, and any financial
institution that
27
<PAGE>
is a participant in the Book-Entry Transfer Facility's systems may make book-
entry delivery of Senior Subordinated Notes by causing the Book-Entry Transfer
Facility to transfer such Senior Subordinated Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of
Senior Subordinated Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal, with any required
signature guarantees and any other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at the address specified on
the back cover page of this Prospectus on or prior to the Expiration Date or
the guaranteed delivery procedures described below must be complied with.
THE METHOD OF DELIVERY OF SENIOR SUBORDINATED NOTES AND ALL OTHER DOCUMENTS
IS AT THE ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS RECOMMENDED
THAT REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, PROPER INSURANCE BE
OBTAINED, AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION
DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION
DATE.
Guaranteed Delivery Procedures. If a holder desires to accept the Exchange
Offer, and time will not permit a Letter of Transmittal or Senior Subordinated
Notes to reach the Exchange Agent before the Expiration Date, a tender may be
effected if the Exchange Agent has received at its office listed on the back
cover hereof on or prior to the Expiration Date a letter, telegram or
facsimile transmission from an Eligible Institution setting forth the name and
address of the tendering holder, the principal amount of the Senior
Subordinated Notes being tendered, the names in which the Senior Subordinated
Notes are registered and, if possible, the certificate numbers of the Senior
Subordinated Notes to be tendered, and stating that the tender is being made
thereby and guaranteeing that within three New York Stock Exchange trading
days after the date of execution of such letter, telegram or facsimile
transmission by the Eligible Institution, the Senior Subordinated Notes, in
proper form for transfer, will be delivered by such Eligible Institution
together with a properly completed and duly executed Letter of Transmittal
(and any other required documents). Unless Senior Subordinated Notes being
tendered by the above-described method (or a timely Book-Entry Confirmation)
are deposited with the Exchange Agent within the time period set forth above
(accompanied or preceded by a properly completed Letter of Transmittal and any
other required documents), the Company may, at its option, reject the tender.
Copies of a Notice of Guaranteed Delivery which may be used by Eligible
Institutions for the purposes described in this paragraph are available from
the Exchange Agent.
A tender will be deemed to have been received as of the date when the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Senior Subordinated Notes (or a timely Book-Entry
Confirmation) is received by the Exchange Agent. Issuances of Exchange Notes
in exchange for Senior Subordinated Notes tendered pursuant to a Notice of
Guaranteed Delivery or letter, telegram or facsimile transmission to similar
effect (as provided above) by an Eligible Institution will be made only
against deposit of the Letter of Transmittal (and any other required
documents) and the tendered Senior Subordinated Notes (or a timely Book-Entry
Confirmation).
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Senior Subordinated
Notes will be determined by the Company, whose determination will be final and
binding. The Company reserves the absolute right to reject any or all tenders
not in proper form or the acceptances for exchange of which may, in the
opinion of counsel to the Company, be unlawful. The Company also reserves the
absolute right to waive any of the conditions of the Exchange Offer or any
defect or irregularities in tenders of any particular holder whether or not
similar defects or irregularities are waived in the case of other holders.
Neither the Company, the Exchange Agent nor any other person will be under any
duty to give notification of any defects or irregularities in tenders or shall
incur any liability for failure to give any such notification. The Company's
interpretation of the terms and conditions of the Exchange Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
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<PAGE>
The party tendering Senior Subordinated Notes for exchange (the
"Transferor") exchanges, assigns and transfers the Senior Subordinated Notes
to the Company and irrevocably constitutes and appoints the Exchange Agent as
the Transferor's agent and attorney-in-fact to cause the Senior Subordinated
Notes to be assigned, transferred and exchanged. The Transferor represents and
warrants that it has full power and authority to tender, exchange, assign and
transfer the Senior Subordinated Notes and to acquire Exchange Notes issuable
upon the exchange of such tendered Senior Subordinated Notes, and that, when
the same are accepted for exchange, the Company will acquire good and
unencumbered title to the tendered Senior Subordinated Notes, free and clear
of all liens, restrictions, charges and encumbrances and not subject to any
adverse claim. The Transferor also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Company to be
necessary or desirable to complete the exchange, assignment and transfer of
tendered Senior Subordinated Notes. The Transferor further agrees that
acceptance of any tendered Senior Subordinated Notes by the Company and the
issuance of Exchange Notes in exchange therefor shall constitute performance
in full by the Company of its obligations under the Exchange and Registration
Rights Agreement and that the Company shall have no further obligations or
liabilities thereunder (except in certain limited circumstances). All
authority conferred by the Transferor will survive the death or incapacity of
the Transferor, and every obligation of the Transferor shall be binding upon
the heirs, legal representatives, successors, assigns, executors and
administrators of such Transferor.
By tendering Senior Subordinated Notes and executing the Letter of
Transmittal, the Transferor certifies that (a) it is not an Affiliate, that it
is not a broker-dealer that owns Senior Subordinated Notes acquired directly
from the Company or an Affiliate of the Company, that it is acquiring the
Exchange Notes offered hereby in the ordinary course of such Transferor's
business and that such Transferor has no arrangement with any person to
participate in the distribution of such Exchange Notes or (b) that it is an
Affiliate of the Company or of the Initial Purchaser and that it will comply
with the registration and prospectus delivery requirements of the Securities
Act to the extent applicable to it.
WITHDRAWAL RIGHTS
Senior Subordinated Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Exchange Agent at its address set
forth on the back cover of this Prospectus prior to the Expiration Date. Any
such notice of withdrawal must specify the person named in the Letter of
Transmittal as having tendered Senior Subordinated Notes to be withdrawn, the
certificate numbers of Senior Subordinated Notes to be withdrawn, the
principal amount of Senior Subordinated Notes to be withdrawn, a statement
that such holder is withdrawing his or her election to have such Senior
Subordinated Notes exchanged, and the name of the registered holder of such
Senior Subordinated Notes, and must be signed by the holder in the same manner
as the original signature on the Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the
Company that the person withdrawing the tender has succeeded to the beneficial
ownership of the Senior Subordinated Notes being withdrawn. The Exchange Agent
will return the properly withdrawn Senior Subordinated Notes promptly
following receipt of notice of withdrawal. All questions as to the validity of
notices of withdrawal, including time of receipt, will be determined by the
Company, and such determination will be final and binding on all parties.
ACCEPTANCE OF SENIOR SUBORDINATED NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE
NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance for exchange of Senior Subordinated Notes validly tendered and not
withdrawn and the issuance of the Exchange Notes will be made on the Exchange
Date. For the purposes of the Exchange Offer, the Company shall be deemed to
have accepted for exchange validly tendered Senior Subordinated Notes when, as
and if the Company has given written notice thereof to the Exchange Agent.
The Exchange Agent will act as agent for the tendering holders of Senior
Subordinated Notes for the purposes of receiving Exchange Notes from the
Company and causing the Senior Subordinated Notes to be
29
<PAGE>
assigned, transferred and exchanged. Upon the terms and subject to the
conditions of the Exchange Offer, delivery of Exchange Notes to be issued in
exchange for accepted Senior Subordinated Notes will be made by the Exchange
Agent promptly after acceptance of the tendered Senior Subordinated Notes.
Senior Subordinated Notes not accepted for exchange by the Company will be
returned without expense to the tendering holders (or in the case of Senior
Subordinated Notes tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the procedures
described above, such non-exchanged Senior Subordinated Notes will be credited
to an account maintained with such Book-Entry Transfer Facility) promptly
following the Expiration Date or, if the Company terminates the Exchange Offer
prior to the Expiration Date, promptly after the Exchange Offer is so
terminated.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, or any extension
of the Exchange Offer, the Company will not be required to issue Exchange
Notes in respect of any properly tendered Senior Subordinated Notes not
previously accepted and may terminate the Exchange Offer (by oral or written
notice to the Exchange Agent and by timely public announcement, unless
otherwise required by applicable law or regulation) or, at its option, modify
or otherwise amend the Exchange Offer, if (a) there shall be threatened,
instituted or pending any action or proceeding before, or any injunction,
order or decree shall have been issued by, any court or governmental agency or
other governmental regulatory or administrative agency or commission, (i)
seeking to restrain or prohibit the making or consummation of the Exchange
Offer or any other transaction contemplated by the Exchange Offer, (ii)
assessing or seeking any damages as a result thereof, or (iii) resulting in a
material delay in the ability of the Company to accept for exchange or
exchange some or all of the Senior Subordinated Notes pursuant to the Exchange
Offer; (b) any statute, rule, regulation, order or injunction shall be sought,
proposed, introduced, enacted, promulgated or deemed applicable to the
Exchange Offer or any of the transactions contemplated by the Exchange Offer
by any government or governmental authority, domestic or foreign, or any
action shall have been taken, proposed or threatened, by any government,
governmental authority, agency or court, domestic or foreign, that in the sole
judgment of the Company might directly or indirectly result in any of the
consequences referred to in clauses (a)(i) or (ii) above or, in the sole
judgment of the Company, might result in the holders of Exchange Notes having
obligations with respect to resales and transfers of Exchange Notes which are
greater than those described in the interpretations of the Commission referred
to on the cover page of this Prospectus, or would otherwise make it
inadvisable to proceed with the Exchange Offer; or (c) a material adverse
change shall have occurred in the business, condition (financial or
otherwise), operations, or prospects of the Company.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by it with respect to all or any portion of the Exchange Offer
regardless of the circumstances (including any action or inaction by the
Company) giving rise to such condition or may be waived by the Company in
whole or in part at any time or from time to time in its sole discretion. The
failure by the Company at any time to exercise any of the foregoing rights
will not be deemed a waiver of any such right, and each right will be deemed
an ongoing right which may be asserted at any time or from time to time. In
addition, the Company has reserved the right, notwithstanding the satisfaction
of each of the foregoing conditions, to terminate or amend the Exchange Offer.
Any determination by the Company concerning the fulfillment or non-
fulfillment of any conditions will be final and binding upon all parties.
In addition, the Company will not accept for exchange any Senior
Subordinated Notes tendered, and no Exchange Notes will be issued in exchange
for any such Senior Subordinated Notes, if at such time any stop order shall
be threatened or in effect with respect to the Registration Statement of which
this Prospectus constitutes a part or qualification of the Indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
EXCHANGE AGENT
The Bank of New York has been appointed as the Exchange Agent for the
Exchange Offer. Letters of Transmittal must be addressed to the Exchange Agent
at its address set forth on the back cover page of this Prospectus.
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<PAGE>
Delivery to an address other than as set forth herein, or transmissions of
instructions via a facsimile or telex number other than the ones set forth
herein, will not constitute a valid delivery.
SOLICITATION OF TENDERS; EXPENSES
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer. The
Company will, however, pay the Exchange Agent reasonable and customary fees
for its services and will reimburse it for reasonable out-of-pocket expenses
in connection therewith. The Company will also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding tenders for their customers. The expenses to be
incurred in connection with the Exchange Offer, including the fees and
expenses of the Exchange Agent and printing, accounting and legal fees, will
be paid by the Company and are estimated at approximately $ .
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those
contained in this Prospectus. If given or made, such information or
representations should not be relied upon as having been authorized by the
Company. Neither the delivery of this Prospectus nor any exchange made
hereunder shall, under any circumstances, create any implication that there
has been no change in the affairs of the Company since the respective dates as
of which information is given herein. The Exchange Offer is not being made to
(nor will tenders be accepted from or on behalf of) holders of Senior
Subordinated Notes in any jurisdiction in which the making of the Exchange
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. However, the Company may, at its discretion, take such
action as it may deem necessary to make the Exchange Offer in any such
jurisdiction and extend the Exchange Offer to holders of Senior Subordinated
Notes in such jurisdiction. In any jurisdiction the securities laws or blue
sky laws of which require the Exchange Offer to be made by a licensed broker
or dealer, the Exchange Offer is being made on behalf of the Company by one or
more registered brokers or dealers which are licensed under the laws of such
jurisdiction.
APPRAISAL RIGHTS
HOLDERS OF SENIOR SUBORDINATED NOTES WILL NOT HAVE DISSENTERS' RIGHTS OR
APPRAISAL RIGHTS IN CONNECTION WITH THE EXCHANGE OFFER.
FEDERAL INCOME TAX CONSEQUENCES
The exchange of the Senior Subordinated Notes for the Exchange Notes in the
Exchange Offer should not constitute an exchange for federal income tax
purposes. Consequently, (i) no gain or loss should be realized by a U.S.
Holder upon receipt of an Exchange Note; (ii) the holding period of the
Exchange Note should include the holding period of the Senior Subordinated
Note exchanged therefor; and (iii) the adjusted tax basis of the Exchange Note
should be the same as the adjusted tax basis of the Senior Subordinated Note
exchanged therefor immediately before the exchange. Even if the exchange of a
Senior Subordinated Note for an Exchange Note were treated as an exchange,
however, such an exchange should constitute a tax-free recapitalization for
federal income tax purposes. Accordingly, an Exchange Note should have the
same issue price as a Senior Subordinated Note and a U.S. Holder should have
the same adjusted basis and holding period in the Exchange Note as it had in a
Senior Subordinated Note immediately before the exchange. As used herein, the
term "U.S. Holder" means a person who is, for United States federal income tax
purposes, (i) a citizen or resident of the United States; (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof; or (iii) an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source.
OTHER
Participation in the Exchange Offer is voluntary, and holders should
carefully consider whether to accept the Exchange Offer and tender their
Senior Subordinated Notes. Holders of the Senior Subordinated Notes are urged
to consult their financial and tax advisors in making their own decisions on
what action to take.
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<PAGE>
As a result of the making of, and upon acceptance for exchange of all
validly tendered Senior Subordinated Notes pursuant to the terms of, this
Exchange Offer, the Company will have fulfilled covenants contained in the
terms of the Senior Subordinated Notes and the Exchange and Registration
Rights Agreement. Holders of the Senior Subordinated Notes who do not tender
their certificates in the Exchange Offer will continue to hold such
certificates and will be entitled to all the rights, and subject to all the
limitations applicable thereto, under the Indenture, except for any such
rights under the Exchange and Registration Rights Agreement which by their
terms terminate or cease to have further effect as a result of the making of
this Exchange Offer. See "Description of the Notes." All untendered Senior
Subordinated Notes will continue to be subject to the restriction on transfer
set forth in the Indenture. To the extent that Senior Subordinated Notes are
tendered and accepted in the Exchange Offer, the trading market, if any, for
the Senior Subordinated Notes could be adversely affected. See "Risk Factors--
Consequences of Exchange and Failure to Exchange."
The Company may in the future seek to acquire untendered Senior Subordinated
Notes in the open market or privately negotiated transactions, through
subsequent exchange offers or otherwise. The Company has no present plan to
acquire any Senior Subordinated Notes that are not tendered in the Exchange
Offer.
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<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
October 16, 1996 (i) on a pro forma basis to give effect to the Transactions
and (ii) as adjusted to give effect to the Initial Offering and the
application of the proceeds therefrom. See "Use of Proceeds." This table
should be read in conjunction with "Selected Historical and Pro Forma
Financial Information," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Combined Financial Statements and
the notes thereto included elsewhere in this Prospectus. The Company was
incorporated on September 5, 1996 for the purpose of consummating the
Transactions.
<TABLE>
<CAPTION>
OCTOBER 16, 1996
-------------------------------------
PRO FORMA FOR AS ADJUSTED FOR
THE TRANSACTIONS THE INITIAL OFFERING
---------------- --------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt:
Revolving Credit Facility(a)........... $ 31,000 $ 31,000
Term Facility.......................... 350,000 281,000
Senior Subordinated Credit Facility.... 100,000 --
Senior Subordinated Notes due 2006..... -- 175,000
-------- --------
Total long-term debt................. 481,000 487,000
-------- --------
Shareholders' equity:
Common stock, $.01 par value, 275,000
authorized: 109,090 Class A shares and
13,910 Class B shares outstanding..... 1 1
Additional paid-in capital............. 122,999 122,999
Accumulated deficit.................... -- (3,069)(b)
-------- --------
Total shareholders' equity........... 123,000 119,931
-------- --------
Total capitalization................. $604,000 $606,931
======== ========
</TABLE>
- --------
(a) Borrowings of up to $150.0 million under the Revolving Credit Facility are
available for working capital and general corporate purposes, including up
to $50.0 million for letters of credit ($12.5 million of which were issued
on the Acquisition Closing Date). After giving effect to the Transactions,
the Initial Offering, the application of proceeds therefrom and borrowing
base limitations, the Company's unused availability under the Revolving
Credit Facility totaled approximately $102.0 million. See "Description of
Senior Bank Facilities."
(b) Reflects the write-off of deferred financing costs (net of related income
tax benefit) associated with the repayment of the Senior Subordinated
Credit Facility and a portion of the Term Facility with the proceeds of
the Initial Offering.
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<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
The following table sets forth summary historical financial and other data
of the Company for each of the four years in the period ended December 31,
1995, the nine months ended September 30, 1995 and the period January 1, 1996
through October 16, 1996 and certain pro forma financial and other data for
the year ended December 31, 1995 and the period January 1, 1996 through
October 16, 1996. The pro forma financial data gives effect to the
Transactions, the Initial Offering and the application of the proceeds
therefrom, as if they had occurred on January 1, 1995 for statement of
operations data purposes and October 16, 1996 for balance sheet data purposes.
The historical financial information for each of the years ended December 31,
1994 and 1995 and for the period January 1, 1996 through October 16, 1996 has
been derived from the audited combined financial statements of the Company.
Such combined financial statements have been audited by KPMG Peat Marwick LLP
and are included elsewhere herein. The historical financial information for
each of the years ended December 31, 1992 and 1993 and for the nine months
ended September 30, 1995 is unaudited but, in the opinion of management,
includes all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of such information. The pro forma
information does not purport to represent what the Company's results would
have actually been if the Transactions and the Initial Offering had occurred
at the dates indicated, nor does such information purport to project the
results of the Company for any future period. The selected financial
information should be read in conjunction with "Unaudited Pro Forma Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Combined Financial Statements and the related
notes thereto included elsewhere in this Prospectus.
34
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NINE MONTHS JANUARY 1
ENDED THROUGH
YEAR ENDED DECEMBER 31, SEPTEMBER 30, OCTOBER 16,
--------------------------------------------------- ------------- ---------------------
PRO FORMA PRO FORMA
1992 1993 1994 1995 1995 1995 1996 1996
-------- -------- -------- -------- --------- ------------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues:
One-way truck rentals.. $167,309 $184,875 $218,881 $224,369 $224,369 $177,513 $187,931 $187,931
Local truck rentals.... 196,015 209,049 229,053 214,520 214,520 155,590 167,140 167,140
Accessory rentals and
product sales(a)...... 48,586 68,378 75,782 87,211 87,211 68,777 70,994 70,994
Other revenues(b)...... 14,455 17,625 25,917 20,621 20,621 15,802 13,714 13,714
-------- -------- -------- -------- -------- -------- -------- --------
Total Revenues.......... 426,365 479,927 549,633 546,721 546,721 417,682 439,779 439,779
Operating expense....... 171,956 182,893 204,552 185,920 185,920 146,224 155,264 155,264
Selling, general and
administrative
expense................ 169,114 187,483 209,399 213,600 214,450 164,083 166,568 167,241
Depreciation expense
(net of gains) and
amortization(c)........ 79,285 84,939 90,215 104,258 117,886 76,087 84,949(d) 95,738(d)
Restructuring and other
charges(e)............. -- -- -- 6,370 6,370 5,169 1,891 1,891
-------- -------- -------- -------- -------- -------- -------- --------
Operating income........ 6,010 24,612 45,467 36,573 22,095 26,119 31,107 19,645
Interest expense(f)..... 20,590 20,049 24,256 29,663 44,927 22,558 20,291 35,568
Miscellaneous expense,
net.................... 4 89 102 324 324 180 690 690
-------- -------- -------- -------- -------- -------- -------- --------
Earnings (loss) before
income taxes........... (14,584) 4,474 21,109 6,586 (23,156) 3,381 10,126 (16,613)
Provision (benefit) for
income taxes........... (5,484) 1,994 8,800 2,984 (8,913) 1,633 4,304 (6,392)
-------- -------- -------- -------- -------- -------- -------- --------
Net earnings (loss)..... $ (9,100) $ 2,480 $ 12,309 $ 3,602 $(14,243)(g) $ 1,748 $ 5,822 $(10,221)
======== ======== ======== ======== ======== ======== ======== ========
OTHER FINANCIAL DATA:
EBITDA(h)............... $ 85,291 $109,462 $135,580 $140,507 $139,657 $102,026 $115,366 $114,693
EBITDA margin........... 20.0% 22.8% 24.7% 25.7% 25.5% 24.4% 26.2% 26.1%
Adjusted EBITDA(i)...... $ 85,291 $109,462 $135,580 $146,877 $146,027 $107,195 $117,257 $116,584
Adjusted EBITDA margin.. 20.0% 22.8% 24.7% 26.9% 26.7% 25.7% 26.7% 26.5%
Cash interest
expense(j)............. $ 20,590 $ 20,049 $ 24,256 $ 29,663 $ 42,310 $ 22,558 $ 20,291 $ 33,496
Ratio of Adjusted EBITDA
to cash interest
expense................ 4.1x 5.5x 5.6x 5.0x 3.5x 4.8x 5.8x 3.5x
Ratio of earnings to
fixed charges(k)....... (k) 1.2x 1.8x 1.2x (k) 1.1x 1.5x (k)
Capital
expenditures(1)........ $180,912 $195,675 $191,925 $223,749 $223,749 $208,609 $ 69,228 $ 69,228
Proceeds from
disposition of trucks.. 45,484 50,215 50,030 72,211 72,211 50,395 45,428 45,428
FLEET DATA:
Number of trucks
purchased.............. 8,500(m) 8,011 7,442 8,468 8,468 8,467 2,515 2,515
Number of trucks sold... 6,384 6,530 5,883 7,603 7,603 5,282 4,187 4,187
Average operating
fleet(n)............... 30,270 31,078 32,814 34,110 34,110 34,302 31,874 31,874
Utilization(o)(t)....... 37.9% 39.8% 44.1% 41.8% 41.8% 41.2% 44.4% 44.4%
Average age in months
(end of period)(t)..... 35 32 31 29 29 28 34 34
Average number of
dealers(t)............. 4,563 4,477 4,765 5,031 5,031 4,986 4,622(p) 4,622(p)
BALANCE SHEET DATA (END
OF PERIOD):
Revenue earning
equipment(q)........... $383,400 $448,949 $503,643 $547,365 -- $587,054 $490,661 $539,459
Total assets............ 430,376 506,501 575,933 629,817 -- 654,007 555,267 612,333
Total debt(r)........... -- -- -- -- -- -- -- 487,000
Total shareholders'
equity(r).............. 297,060 369,464 412,058 490,437 -- 501,148 408,560 119,931(s)
</TABLE>
See Notes to Selected Historical and Pro Forma Financial Information
35
<PAGE>
NOTES TO SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
(a) Includes rental of automobile towing equipment and moving accessories;
sales of moving supplies; and sales of liability-limiting products such as
physical damage waivers, personal accident and cargo protection, and
supplemental liability protection.
(b) Other revenues represent household relocation services provided by the
Company's subsidiary, Ryder Move Management, Inc. ("RMM").
(c) Gains on the disposition of trucks, net of vehicle disposition costs and
other adjustments, have been reported as reductions of depreciation
expense by the Company. Such gains amounted to $12.5 million, $20.5
million, $25.9 million, $21.9 million, $17.3 million and $8.7 million
during the years ended December 31, 1992, 1993, 1994 and 1995 (actual and
pro forma), the nine months ended September 30, 1995 and the period
January 1, 1996 through October 16, 1996 (actual and pro forma),
respectively.
(d) Effective January 1, 1996, the Company changed the estimated useful lives
and residual values used to calculate depreciation expense on certain
types of trucks in order to better reflect recent experience. This
accounting change was treated as a change in estimate and accounted for on
a prospective basis from January 1, 1996. As a result of this change,
depreciation expense was decreased by approximately $6.0 million for the
period January 1, 1996 through October 16, 1996 (actual and pro forma).
(e) The Company recorded restructuring and other charges of $6.4 million, $5.2
million and $1.9 million for the year ended December 31, 1995 (actual and
pro forma), the nine months ended September 30, 1995 and the period
January 1, 1996 through October 16, 1996 (actual and pro forma),
respectively. In the third quarter of 1995, the Company consolidated its
20 administrative locations into two area centers. As a result, the
Company incurred restructuring and other charges for lease termination,
employee severance and employee relocation costs. In 1996, additional
consolidating and restructuring actions were taken by the Seller which
impacted the Company; these actions included management and staff
reductions and elimination of the company-owned car benefit program.
(f) Historical interest expense consists of interest on advances from RSI.
(g) Excludes the write-off of deferred financing costs ($3.1 million, net of
related income tax benefit) associated with the repayment of the Senior
Subordinated Credit Facility and a portion of the Term Facility with the
proceeds of the Initial Offering.
(h) EBITDA represents earnings before interest expense, income taxes,
depreciation (net of gains) and amortization. EBITDA does not include
gains on the disposition of trucks. The Company includes information
concerning EBITDA because it is used by certain investors as a measure of
the Company's ability to service and/or incur debt. EBITDA should not be
considered in isolation or as a substitute for net income or cash flows
from operating activities presented in accordance with generally accepted
accounting principles or as a measure of a company's profitability or
liquidity.
(i) Adjusted EBITDA represents EBITDA plus restructuring and other charges.
(j) Cash interest expense represents interest expense exclusive of
amortization of deferred financing costs.
(k) For the purpose of determining the ratio of earnings to fixed charges,
earnings consist of earnings (loss) before income taxes and fixed charges.
Fixed charges consist of interest expense, whether expensed or
capitalized, including amortization of deferred financing costs, and the
portion of rental expense considered to be interest (assumed to be one-
third). Earnings were insufficient to cover fixed charges for the year
ended December 31, 1992 and, on a pro forma basis, adjusted for the
Transactions, the Initial Offering and the application of the proceeds
therefrom, for the year ended December 31, 1995 and for the period January
1, 1996 through October 16, 1996 by $14.6 million, $23.2 million and $16.6
million, respectively.
(l) Capital expenditures for rental trucks totaled $171.1 million, $189.0
million, $182.0 million and $210.8 million for the years ended December
31, 1992, 1993, 1994 and 1995 (actual and pro forma), respectively, and
$200.4 million and $62.9 million for the nine months ended September 30,
1995 and the period January 1, 1996 through October 16, 1996 (actual and
pro forma), respectively. Capital expenditures for the year ended December
31, 1995 includes $10.3 million to purchase approximately 1,200 trucks
that were added to the fleet in 1992 under operating leases.
(m) Includes approximately 1,500 trucks added to the fleet under operating
leases, of which approximately 1,200 were purchased in 1995.
36
<PAGE>
(n) Average operating fleet includes those trucks undergoing maintenance and
excludes those trucks removed from the rental fleet for disposition.
(o) Utilization represents the total number of truck rental days generated by
the fleet for the period divided by the total number of calendar days
which were available for the average operating fleet for the period.
(p) At September 30, 1996, the Company had approximately 4,400 dealers.
(q) Revenue earning equipment consists of rental trucks, towing and other
rental equipment and tires in service.
(r) Historical shareholders' equity represents the investment by and interest-
bearing advances from RSI. See Combined Financial Statements and related
notes thereto.
(s) Includes the write-off of deferred financing costs ($3.1 million, net of
related income tax benefit) associated with the repayment of the Senior
Subordinated Credit Facility and a portion of the Term Facility with the
proceeds of the Initial Offering.
(t) Amounts for the period January 1, 1996 through October 16, 1996 (actual
and pro forma) are calculated as of September 30, 1996, the most recent
date for which these calculations are available.
37
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information is based on the
historical financial statements of the Company included elsewhere in this
Prospectus, adjusted to give effect to (i) the Transactions and (ii) the
Initial Offering and the application of the proceeds therefrom.
The unaudited Pro Forma Condensed Balance Sheet as of October 16, 1996 gives
effect to the Transactions, the Initial Offering and the application of the
proceeds therefrom, as if each of the underlying transactions had been
consummated on October 16, 1996. The unaudited Pro Forma Condensed Statements
of Operations for the period January 1, 1996 through October 16, 1996 and the
year ended December 31, 1995 give effect to the Transactions, the Initial
Offering and the application of the proceeds therefrom, as if each of the
underlying transactions had been consummated on January 1, 1995.
The unaudited pro forma financial information does not purport to be
indicative of the results that would actually have been obtained if the
Transactions, the Initial Offering and the application of the proceeds
therefrom had occurred on the dates indicated, or of the results that may be
obtained in the future. The unaudited pro forma financial information is
presented for comparative purposes only. The pro forma adjustments, as
described in the accompanying notes, are based on available information and
certain assumptions that management believes are reasonable.
The Acquisition is accounted for under the purchase method of accounting.
The aggregate purchase price for the Acquisition of $579.4 million plus $9.0
million of fees and expenses (out of total fees and expenses of approximately
$24.2 million) less $4.7 million of preliminary purchase price adjustments (as
discussed in the following paragraph) has been allocated to the tangible and
identifiable intangible assets and liabilities of the acquired business based
upon the Company's preliminary estimates of their fair value. The allocation
of purchase price for the Acquisition is subject to revision when additional
information concerning asset and liability valuations is obtained. In the
opinion of the Company's management, the asset and liability valuations for
the Acquisition will not be materially different from the unaudited pro forma
financial information presented.
The purchase price paid for the Acquisition was subject to adjustment in the
event that the actual net book value of the assets purchased and liabilities
assumed at closing differed from an amount equal to the purchase price less
$60.0 million. The Company and the Seller have reached an agreement with
respect to a reduction of approximately $4.7 million to the purchase price,
and the parties have also agreed on procedures that may result in certain
additional purchase price adjustments.
For a period of up to two years, RTR has agreed to provide the Company with
certain administrative and management information systems support services.
RTR will also continue to provide various services which it performed prior to
the Acquisition, including acting as a dealer in the rental of the Company's
trucks and rental-related products at certain RTR branch locations, acting as
an agent in the sale of used trucks and performing maintenance on the
Company's trucks. The charge for these services is expected to approximately
equal the internal rate that was previously charged to the Business. The
Seller also charged the Business management-related fees for services such as
finance, accounting, treasury, internal audit, legal and public relations.
These services are expected to be replaced at approximately the same cost as
has been historically charged by the Seller. See "Relationships with the
Seller."
38
<PAGE>
RYDER TRS, INC.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF OCTOBER 16, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TRANSACTIONS TRANSACTIONS INITIAL OFFERING ADJUSTED
HISTORICAL ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA
---------- ------------ ------------ ---------------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash.................. $ 6,321 $ (6,321)(a) $ 436 $ -- $ 436
436 (b)
Receivables........... 18,109 (18,109)(a) -- -- --
Tires in service...... 24,543 2,414 (b) 26,957 -- 26,957
Deferred income 6,186 (6,186)(a) -- 2,046 (e) 2,046
taxes................
Due from Seller....... -- 4,746 4,746 -- 4,746
Prepaid expenses and
other current
assets............... 13,168 (4,468)(a) 8,700 -- 8,700
-------- --------- -------- --------- --------
Total current 68,327 (27,488) 40,839 2,046 42,885
assets.............
Revenue earning 466,118 46,586 (b) 512,502 -- 512,502
equipment.............. (202)(a)
Operating property and 15,149 153 (a) 15,302 -- 15,302
equipment..............
Intangible assets....... -- 20,000 (b) 20,000 -- 20,000
Deferred financing -- 15,200 (b) 15,200 885 (d) 16,085
costs..................
Other assets............ 5,673 (114)(a) 5,559 -- 5,559
-------- --------- -------- --------- --------
Total assets........ $555,267 $ 54,135 $609,402 $ 2,931 $612,333
======== ========= ======== ========= ========
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable...... $ 11,931 $ (11,314)(a) $ 617 $ -- $ 617
Accrued expenses and 31,390 (26,605)(a) 4,785 -- 4,785
other liabilities....
-------- --------- -------- --------- --------
Total current 43,321 (37,919) 5,402 -- 5,402
liabilities........
Deferred income taxes... 76,443 (76,443)(a) -- -- --
Other non-current 26,943 (26,943)(a) -- -- --
liabilities............
Revolving Credit -- 31,000 (b) 31,000 -- 31,000
Facility...............
Term Facility........... -- 350,000 (b) 350,000 (69,000)(c) 281,000
Senior Subordinated -- 100,000 (b) 100,000 (100,000)(c) --
Credit Facility........
Senior Subordinated -- -- -- 175,000 (c) 175,000
Notes due 2006.........
-------- --------- -------- --------- --------
Total liabilities... 146,707 339,695 486,402 6,000 492,402
-------- --------- -------- --------- --------
Shareholders' equity:
Investment by and 408,560 (408,560)(a) -- -- --
advances from RSI....
Common stock.......... -- 1 (b) 1 -- 1
Additional paid-in -- 122,999 (b) 122,999 -- 122,999
capital..............
Accumulated deficit... -- -- -- (3,069)(e) (3,069)
-------- --------- -------- --------- --------
Total shareholders' 408,560 (285,560) 123,000 (3,069) 119,931
equity.............
-------- --------- -------- --------- --------
Total liabilities
and shareholders'
equity............. $555,267 $ 54,135 $609,402 $ 2,931 $612,333
======== ========= ======== ========= ========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Balance Sheet
39
<PAGE>
RYDER TRS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
(a) To reflect the elimination of assets, liabilities and capital structure of
the Business which were not purchased by the Company pursuant to the
Acquisition Agreements.
(b) To reflect the initial purchase price of $579.4 million for the
Acquisition plus $9.0 million of acquisition fees and expenses, estimated
deferred financing costs of $15.2 million and excess cash at closing of
$0.4 million. These transactions were financed with borrowings under the
Senior Bank Facilities and the Senior Subordinated Credit Facility
aggregating $481.0 million and capital contributions made to the Company
in the amount of $123.0 million. The preliminary purchase price reduction
of $4.7 million has been reflected in the allocation below. The following
is a summary of pro forma adjustments to reflect the aforementioned
sources and uses of funds associated with the Acquisition (in thousands):
<TABLE>
<S> <C>
Borrowings under Term Facility..................................... $350,000
Borrowings under Revolving Credit Facility......................... 31,000
Borrowings under Senior Subordinated Credit Facility............... 100,000
Equity proceeds.................................................... 123,000
--------
Total sources.................................................. $604,000
========
Preliminary purchase price allocation:
Tires in service................................................. $ 26,957
Prepaid expenses................................................. 8,700
Revenue earning equipment........................................ 512,502
Operating property and equipment................................. 15,302
Identifiable intangible assets (primarily trademark)............. 20,000
Other assets..................................................... 5,559
Accounts payable................................................. (617)
Accrued expenses................................................. (4,785)
--------
Total purchase price........................................... 583,618
Deferred financing costs:
Senior Bank Facilities........................................... 11,700
Senior Subordinated Credit Facility.............................. 3,500
Excess cash at closing............................................. 436
Due from Seller (preliminary purchase price adjustment)............ 4,746
--------
Total uses..................................................... $604,000
========
</TABLE>
Borrowings of up to $150.0 million under the Revolving Credit Facility are
available for working capital and general corporate purposes, including up
to $50.0 million for letters of credit. The above schedule of sources and
uses excludes letters of credit issued on the Acquisition Closing Date in
the aggregate face amount of $12.5 million. After giving effect to the
Transactions, the Initial Offering, the application of proceeds therefrom
and borrowing base limitations, the Company's unused availability under the
Revolving Credit Facility totaled approximately $102.0 million.
(c) To reflect (i) the net proceeds from the Initial Offering of $169.0
million after deducting underwriting discounts and estimated fees and
expenses related thereto of $6.0 million and (ii) the application of such
net proceeds to the repayment of the Senior Subordinated Credit Facility
and a portion of the Term Facility.
(d) To reflect (i) deferred financing costs of $6.0 million associated with
the Initial Offering, and (ii) the write-off of deferred financing costs
of $3.5 million associated with the Senior Subordinated Credit Facility
and $1.6 million associated with the Term Facility.
(e) To reflect the write-off of deferred financing costs of $3.1 million (net
of related income tax benefit) associated with the repayment of the Senior
Subordinated Credit Facility and a portion of the Term Facility with the
proceeds of the Initial Offering.
40
<PAGE>
RYDER TRS, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE PERIOD JANUARY 1, 1996 THROUGH OCTOBER 16, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TRANSACTIONS TRANSACTIONS INITIAL OFFERING ADJUSTED
HISTORICAL ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA
---------- ------------ ------------ ---------------- ---------
<S> <C> <C> <C> <C> <C>
Truck rental and related
revenue................ $439,779 $ -- $439,779 $ -- $439,779
-------- -------- -------- ----- --------
Operating expense....... 155,264 -- 155,264 -- 155,264
Selling, general and ad-
ministrative expense... 166,568 673 (a) 167,241 -- 167,241
Depreciation expense
(net of gains)......... 84,949 9,206 (b) 94,155 -- 94,155
Amortization of intangi-
ble assets............. -- 1,583 (c) 1,583 -- 1,583
Restructuring and other
charges................ 1,891 -- 1,891 -- 1,891
Interest expense........ 20,291 15,592 (d) 35,883 (315)(e) 35,568
Miscellaneous expense,
net.................... 690 -- 690 -- 690
-------- -------- -------- ----- --------
429,653 27,054 456,707 (315) 456,392
-------- -------- -------- ----- --------
Earnings (loss) before
income taxes......... 10,126 (27,054) (16,928) 315 (16,613)
Provision (benefit) for
income taxes........... 4,304 (10,822)(f) (6,518) 126 (f) (6,392)
-------- -------- -------- ----- --------
Net earnings (loss)... $ 5,822 $(16,232) $(10,410) $ 189 $(10,221)
======== ======== ======== ===== ========
OTHER DATA:
EBITDA(g)............. $115,366 $114,693
EBITDA margin......... 26.2% 26.1%
Adjusted EBITDA(h).... $117,257 $116,584
Adjusted EBITDA
margin............... 26.7% 26.5%
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Statements of
Operations
41
<PAGE>
RYDER TRS, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TRANSACTIONS TRANSACTIONS INITIAL OFFERING ADJUSTED
HISTORICAL ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA
---------- ------------ ------------ ---------------- ---------
<S> <C> <C> <C> <C> <C>
Truck rental and related
revenue................ $546,721 $ -- $546,721 $ -- $546,721
-------- -------- -------- ------- --------
Operating expense....... 185,920 -- 185,920 -- 185,920
Selling, general and ad-
ministrative expense... 213,600 850(a) 214,450 -- 214,450
Depreciation expense
(net of gains)......... 104,258 11,628(b) 115,886 -- 115,886
Amortization of intangi-
ble assets............. -- 2,000(c) 2,000 -- 2,000
Restructuring and other
charges................ 6,370 -- 6,370 -- 6,370
Interest expense........ 29,663 19,162(d) 48,825 (3,898)(e) 44,927
Miscellaneous expense,
net.................... 324 -- 324 -- 324
-------- -------- -------- ------- --------
540,135 33,640 573,775 (3,898) 569,877
-------- -------- -------- ------- --------
Earnings (loss) before
income taxes......... 6,586 (33,640) (27,054) 3,898 (23,156)
Provision (benefit) for
income taxes........... 2,984 (13,456)(f) (10,472) 1,559(f) (8,913)
-------- -------- -------- ------- --------
Net earnings (loss)... $ 3,602 $(20,184) $(16,582) $ 2,339 $(14,243)(i)
======== ======== ======== ======= ========
Other data:
EBITDA(g)............. $140,507 $139,657
EBITDA margin......... 25.7% 25.5%
Adjusted EBITDA(h).... $146,877 $146,027
Adjusted EBITDA
margin............... 26.9% 26.7%
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Statements of
Operations
42
<PAGE>
RYDER TRS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
(a) To reflect management fee expense of $850,000, on an annual basis, in
accordance with the terms of the Management and Consulting Agreement
between the Company and Questor Management Company.
(b) To reflect the increase in depreciation resulting from the step up of
revenue earning equipment, including tires in service, by $49.0 million to
its estimated fair value of $539.1 million, and assuming an average
remaining 50 month depreciable life for the purchased revenue earning
equipment.
Effective January 1, 1996, the Company changed the estimated useful lives
and residual values used to calculate the provision for depreciation on
certain types of trucks in order to better reflect recent experience. This
accounting change was treated as a change in estimate and accounted for on
a prospective basis from January 1, 1996; accordingly, depreciation and
amortization for 1995 does not reflect the impact of this change.
(c) To reflect the amortization of acquired identifiable intangible assets
($20.0 million) over a ten year period.
(d) To reflect the net increase in interest expense resulting from the
incurrence of the Acquisition debt as follows (in thousands):
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 1,
1996
THROUGH YEAR ENDED
OCTOBER 16, DECEMBER 31,
1996 1995
-------------- ------------
<S> <C> <C>
Elimination of interest expense of the
Business...................................... $(20,291) $(29,663)
Interest resulting from Senior Subordinated
Credit Facility of $100.0 million at an
assumed average interest rate of 12.80%....... 10,133 12,800
Interest resulting from the Term Facility of
$350.0 million at an assumed average interest
rate of 7.79%................................. 21,585 27,265
Interest resulting from Revolving Credit
Facility of $31 million less interest income
resulting from a preliminary purchase price
reduction of $4.7 million due from Seller, at
an assumed average interest rate of 7.79%..... 1,619 2,045
Estimated annual fees associated with Senior
Bank Facilities............................... 693 875
Amortization of deferred financing costs
related to the above.......................... 1,853 5,840
-------- --------
$ 15,592 $ 19,162
======== ========
</TABLE>
Amortization of deferred financing costs for 1995 includes all costs ($3.5
million) associated with the Senior Subordinated Credit Facility because
the Company expects to refinance such facility within one year of issuance.
43
<PAGE>
(e) To reflect the net decrease in interest expense resulting from the Initial
Offering of the $175.0 million Senior Subordinated Notes due 2006 and the
application of the net proceeds therefrom of $169.0 million as follows (in
thousands):
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 1,
1996
THROUGH YEAR ENDED
OCTOBER 16, DECEMBER 31,
1996 1995
-------------- ------------
<S> <C> <C>
Elimination of interest on the Senior
Subordinated Credit Facility of
$100.0 million................................ $(10,133) $(12,800)
Elimination of interest on the Term Facility of
$69.0 million................................. (4,255) (5,375)
Elimination of amortization of deferred
financing costs associated with the Senior
Subordinated Credit Facility and Term
Facility...................................... (256) (3,823)
Interest on the $175.0 million Senior
Subordinated Notes due 2006 at an interest
rate of 10.00%................................ 13,854 17,500
Amortization of deferred financing costs
related to the Initial Offering............... 475 600
-------- --------
$ (315) $ (3,898)
======== ========
</TABLE>
(f) To reflect the income tax benefit resulting from items (a) through (e) at
an assumed tax rate of 40%.
(g) EBITDA represents earnings before interest expense, income taxes,
depreciation (net of gains) and amortization. EBITDA does not include
gains on the disposition of trucks. The Company has included information
concerning EBITDA because it is used by certain investors as a measure of
the Company's ability to service and/or incur debt. EBITDA should not be
considered in isolation or as a substitute for net income or cash flows
from operating activities presented in accordance with generally accepted
accounting principles or as a measure of a company's profitability or
liquidity.
(h) Adjusted EBITDA represents EBITDA plus restructuring and other charges.
(i) Excludes the write-off of deferred financing costs of $3.1 million (net of
related income tax benefit) associated with the repayment of the Senior
Subordinated Credit Facility and a portion of the Term Facility with the
proceeds of the Initial Offering.
44
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and results
of operations covers periods before completion of the Transactions. As a
result of the Acquisition, the Company's assets and liabilities assumed will
be adjusted to their estimated fair values as of October 17, 1996. In
addition, the Company entered into new financing arrangements and, as a newly
formed company, has its own capital structure. Accordingly, the results of
operations for periods subsequent to October 17, 1996 will not be comparable
to prior periods. For further discussion relating to the impact that the
Transactions may have on the Company, see "Summary--The Acquisition, Financing
and Related Transactions," "Risk Factors," "Selected Historical and Pro Forma
Financial Information," "Unaudited Pro Forma Financial Information" and the
Combined Financial Statements and notes thereto included elsewhere in this
Prospectus.
GENERAL
The Company is the second largest provider of truck rentals and related
moving supplies and services to the consumer and light commercial markets in
the United States. The Company rents trucks, towing equipment and accessory
equipment and sells liability-limiting products and moving supplies to
consumers and commercial customers through its nationwide network of
approximately 4,400 dealers. The Company supplements its truck rental business
with a range of other products and services. The Company rents automobile
towing equipment and other moving accessories such as hand trucks and
furniture pads and sells moving supplies such as boxes, tape and packing
materials. The Company also offers customers a range of liability-limiting
products such as physical damage waivers, personal accident and cargo
protection, and supplemental liability protection. As is the case with many
other vehicle rental companies, liability-limiting products provide the
Company with an important and continuing source of revenue and cash flow. Over
the last three years, total revenues have grown at a compound average annual
rate of 8.6% from $426.4 million in 1992 to $546.7 million in 1995.
In 1995, fleet utilization and revenue per truck (including accessory
rentals and product sales) declined from 1994 levels, primarily due to an
increase in average fleet size of approximately 1,300 trucks. Accordingly, the
Company accelerated vehicle dispositions in 1995 and 1996, and reduced capital
expenditures for new vehicles purchased in 1996. As a result, the average
fleet for the period January 1, 1996 through October 16, 1996 comprised
approximately 2,400 fewer trucks than for the nine month period ended
September 30, 1995. Total revenues for 1995 were relatively flat compared to
the same period in the prior year. Total revenues for the period January 1,
1996 through October 16, 1996 increased 5.3% when compared with the nine month
period ended September 30, 1995. This increase was primarily due to the
additional days in the 1996 period compared with the 1995 period. As a result
of the additional days in the 1996 period combined with the fleet size
reduction in 1996 and improved fleet utilization, revenue per truck (including
accessory rentals and product sales) improved by 14.1% for the period January
1, 1996 through October 16, 1996 compared with the nine month period ended
September 30, 1995.
In order to streamline its operations, the Company consolidated its 20
administrative locations into two area centers in the third quarter of 1995.
As a result, in 1995 the Company incurred restructuring and other charges of
$6.4 million consisting of employee relocation costs of $3.3 million, employee
severance costs of $2.2 million and lease termination costs of $0.9 million.
During the period January 1, 1996 through October 16, 1996 additional actions
were taken by RSI which impacted the Company, including management and staff
reductions and the elimination of the company-owned car benefit program. The
Company recorded restructuring charges of $1.9 million related to these
actions.
Over the last three years, the Company's EBITDA increased at a compound
average annual rate of 18.1% from $85.3 million in 1992 to $140.5 million in
1995. Excluding the restructuring charges discussed above, the Company's
EBITDA increased at a compound average annual rate of 19.9% from $85.3 million
in 1992 to $146.9 million in 1995. Management believes that the increase in
EBITDA is primarily the result of better utilization of revenue earning
equipment, increased sales of rental-related products and reduction of certain
operating costs.
45
<PAGE>
The Company incurs significant annual capital expenditures primarily to
purchase trucks. Capital expenditures for trucks totaled $189.0 million,
$182.0 million and $210.8 million in 1993, 1994 and 1995, respectively, and
$200.4 million and $62.9 million for the nine-month period ended September 30,
1995 and the period January 1, 1996 through October 16, 1996, respectively.
The decrease in capital spending in 1996 was due primarily to a planned
decrease in the average size of the fleet. Based on the average age and
running cost statistics for different trucks, the Company regularly disposes
of vehicles. Dispositions, including trade-ins through manufacturers,
generated proceeds of $50.2 million, $50.0 million and $72.2 million in 1993,
1994 and 1995, respectively, and $50.4 million and $45.4 million for the nine-
month period ended September 30, 1995 and the period January 1, 1996 through
October 16, 1996, respectively.
Purchasing of trucks is coordinated through the Company's headquarters in
Miami, Florida. Purchases are negotiated annually with each manufacturer.
Orders are typically placed in October or November of each year for delivery
primarily between March and June of the following year. The Company believes
that its purchasing expertise and the volume of its purchases enable it to buy
vehicles on terms believed to be more favorable than those available to its
smaller competitors. The Company disposes of its vehicles through several
outlets, including trade-ins through manufacturers, sales through RTR's used
truck sales operations and sales through the Company's dealers. The Company
disposes of its trucks throughout the year, with a larger proportion being
sold or traded in during the six month period from October through March.
Depreciation of revenue earning equipment is computed using the straight-
line method over the estimated useful lives (5 to 7 years) of the assets,
giving effect to an estimated residual value. Gains on sales of revenue
earning equipment, net of vehicle disposition costs, are reported as
reductions of depreciation expense. Since the completion of the Acquisition on
October 17, 1996, the Company has commenced a study of historical management
policies regarding the age and composition of the truck rental fleet and the
expected useful life of the fleet. The impact of any changes in management
policies and accounting policies with respect to the depreciation of revenue
earning equipment will also be assessed. Upon completion of this review, the
Company will apply any changes to such policies that are determined to be
appropriate to future periods.
In connection with the Acquisition, the Company and RTR entered into
agreements pursuant to which RTR will provide the Company with various
services which it performed prior to the Acquisition. For a period of up to
two years, RTR has agreed to provide the Company with certain administrative
and management information systems support services related to the business.
RTR has also agreed to act as a dealer in the rental of the Company's trucks
and rental-related products at certain RTR branch locations and as an agent in
the sale of trucks and to perform maintenance on the Company's trucks. The
charges for these services are expected to approximately equal the internal
rates that were previously charged to the Business. The Seller also charged
the Business management-related fees for services such as finance, accounting,
treasury, internal audit, legal and public relations. These services are
expected to be replaced at approximately the same cost as has been
historically charged by the Seller. During the years ended December 31, 1994
and 1995, the total charges for the aforementioned services amounted to $109.3
million and $95.0 million, respectively, including management-related fees of
approximately $5.0 million for each year. See "Relationships with the Seller."
The Company has been included in consolidated income tax filings of the
Seller for federal and state income tax purposes. However, the income tax
provisions have been determined as if the Company were an independent stand-
alone entity filing separate income tax returns.
CERTAIN PRO FORMA EFFECTS OF THE TRANSACTIONS
The Pro Forma Condensed Statements of Operations for the year ended December
31, 1995 and the period January 1, 1996 through October 16, 1996, reflect the
Transactions, the Initial Offering and the application of the proceeds
therefrom, as if they had occurred on January 1, 1995. The pro forma results
of operations do not purport to be indicative of the results that would
actually have been obtained if the Transactions, the Initial Offering and the
application of the proceeds therefrom had occurred on January 1, 1995, or of
the results that may be obtained in the future. See "Unaudited Pro Forma
Financial Information."
46
<PAGE>
On a pro forma basis for 1995, the Company's net loss would have been $14.2
million compared to a reported net income of $3.6 million in 1995. On a pro
forma basis for the period January 1, 1996 through October 16, 1996, the
Company's net loss would have been $10.2 million compared to a reported net
income of $5.8 million for the period January 1, 1996 through October 16,
1996. Major components of these changes include: (i) an increase in
depreciation expense as a result of the step-up of revenue earning equipment
to estimated fair value as part of the Transactions, (ii) an increase in
interest expense resulting from the financing incurred in connection with the
Transactions, the Initial Offering and the application of the proceeds
therefrom and (iii) income tax benefits resulting from the tax effect of the
aforementioned adjustments at an assumed tax rate of 40%.
Excluded from pro forma net loss is the write-off of deferred financing
costs ($3.1 million, net of related income tax benefit) associated with the
repayment of the Senior Subordinated Credit Facility and a portion of the Term
Facility with the proceeds of the Initial Offering.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain
historical income statement data for the Company as a percentage of revenues:
<TABLE>
<CAPTION>
JANUARY 1,
NINE MONTHS 1996
YEAR ENDED DECEMBER 31, ENDED THROUGH
------------------------- SEPTEMBER 30, OCTOBER 16,
1993 1994 1995 1995 1996
------- ------- ------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Revenues:
One-way truck rentals.. 38.5% 39.8% 41.0% 42.4% 42.7%
Local truck rentals.... 43.6 41.7 39.2 37.3 38.0
Accessory rentals and
product sales......... 14.2 13.8 16.0 16.5 16.2
Other revenues......... 3.7 4.7 3.8 3.8 3.1
------- ------- ------- ----- -----
Total revenues....... 100.0 100.0 100.0 100.0 100.0
------- ------- ------- ----- -----
Operating expense........ 38.1 37.3 34.0 35.0 35.3
Selling, general and
administrative expense.. 39.1 38.1 39.1 39.3 37.9
Depreciation expense (net
of gains)............... 17.7 16.4 19.1 18.2 19.3
Restructuring and other
charges................. -- -- 1.2 1.3 .4
Interest expense......... 4.2 4.4 5.4 5.4 4.6
Miscellaneous expense,
net..................... -- -- -- -- .2
------- ------- ------- ----- -----
Total costs and
expenses............ 99.1 96.2 98.8 99.2 97.7
------- ------- ------- ----- -----
Earnings before
income taxes........ 0.9% 3.8% 1.2% 0.8% 2.3%
======= ======= ======= ===== =====
</TABLE>
Period January 1, 1996 through October 16, 1996 Compared to Nine Months Ended
September 30, 1995
Revenues. Revenues for the period January 1, 1996 through October 16, 1996
were $439.8 million compared with $417.7 million in the first nine months of
1995. The overall increase in revenues was primarily due to the additional
days in the 1996 period. Revenue growth from one-way truck rentals, local
truck rentals and accessory rentals and product sales was partially offset by
a decline in revenues from RMM. Revenues from one-way rentals increased by
5.9% to $187.9 million for the period January 1, 1996 through October 16, 1996
compared with the first nine months of 1995 as a result of a 3.1% increase in
the number of one-way transactions (due primarily to the additional days in
the 1996 period) and a 2.2% increase in the average revenue per transaction.
Revenues from local truck rentals increased by 7.4% to $167.1 million for the
period January 1, 1996 through October 16, 1996 compared with the first nine
months of 1995 as a result of a 7.8% increase in the number of local
transactions (due primarily to the additional days in the 1996 period)
partially offset by a .7% decrease in the average revenue per transaction.
Accessory rentals and product sales increased by 3.2% to $71.0 million for the
period January 1, 1996 through October 16, 1996 compared with the first nine
months of 1995 (due entirely to the additional days in the 1996 period).
Revenues from liability-limiting products were $43.9 million for the period
January 1, 1996 through October 16, 1996 and $41.4 million for the first nine
months of 1995.
47
<PAGE>
Operating expense. Operating expense was $155.3 million for the period
January 1, 1996 through October 16, 1996 compared with $146.2 million in the
first nine months of 1995. The increase in expense for the 1996 period was
primarily due to the increase in the number of days for this period compared
with the number of days for the 1995 period. Operating expense as a percentage
of revenues was up slightly at 35.3% for the period January 1, 1996 through
October 16, 1996 compared with 35.0% for the first nine months of 1995. The
increase in operating expense as a percentage of revenues was primarily due to
higher vehicle maintenance cost, 18.4% for the period January 1, 1996 through
October 16, 1996 compared with 17.5% for the first nine months of 1995. The
increase in vehicle maintenance cost was primarily the result of an increase
in the average age of the fleet. In addition, expenses related to bodily
injury and property damage claims as a percentage of revenues increased to
5.4% for the period January 1, 1996 through October 16, 1996 from 5.3% in the
first nine months of 1995. These increases were partially offset by a
reduction in vehicle operating lease expense due to the purchase of
approximately 1,200 trucks in late 1995 that had been leased in 1992.
Selling, general and administrative expense. Selling, general and
administrative expense was $166.6 million for the period January 1, 1996
through October 16, 1996 compared with $164.1 million for the first nine
months of 1995. The increase in expense for the 1996 period was entirely due
to the increase in the number of days for this period compared with the number
of days for the 1995 period. Selling, general and administrative expense as a
percentage of revenues declined to 37.9% for the period January 1, 1996
through October 16, 1996 from 39.3% for the first nine months of 1995. This
decrease resulted from costs savings generated from the consolidation of
administrative functions in late 1995 as well as reduced advertising expenses
for the period January 1, 1996 through October 16, 1996 compared with the
first nine months of 1995.
Depreciation expense (net of gains). Depreciation expense (net of gains) was
$84.9 million for the period January 1, 1996 through October 16, 1996 compared
with $76.1 million for the first nine months of 1995. Depreciation expense
(net of gains) as a percentage of revenues increased to 19.3% for the period
January 1, 1996 through October 16, 1996 from 18.2% for the first nine months
of 1995. Depreciation expense before gains on vehicle sales and other charges
increased to $93.6 million for the period January 1, 1996 through October 16,
1996 from $93.4 million for the first nine months of 1995. The net increase
resulted from higher depreciation due to the additional days in the 1996
period decreased by several factors. The average size of the fleet during the
period January 1, 1996 through October 16, 1996 was reduced 7.1% compared with
the first nine months of 1995 partially offset by the additional depreciation
associated with the purchase of approximately 1,200 trucks in late 1995 that
had been leased in 1992. Effective January 1, 1996, the estimated useful lives
and residual values used to calculate the provision for depreciation on
certain types of trucks were changed to better reflect recent experience. As a
result of this change, depreciation expense was decreased by approximately
$6.0 million during the period January 1, 1996 through October 16, 1996. Gains
on vehicle sales declined $5.3 million to $12.0 million for the period January
1, 1996 through October 16, 1996 from $17.3 million in the first nine months
of 1995. This reduction resulted from 20.7% fewer units sold as well as a
12.2% decline in the average gain per vehicle sold for the period January 1,
1996 through October 16, 1996 compared to the first nine months of 1995.
Management attributes the decline in the average gain per vehicle in part to a
change in the mix of vehicles being sold. Additionally a $3.3 million charge
against vehicle gains as a result of a physical inventory of revenue-earning
equipment conducted prior to the sale is reflected in the period January 1,
1996 through October 16, 1996.
Restructuring and other charges. Restructuring and other charges were $1.9
million for the period January 1, 1996 through October 16, 1996, compared with
$5.2 million in the first nine months of 1995. The 1996 charge reflects $0.8
million in costs associated with the elimination of the Company-owned car
benefit program and employee severance costs of $1.1 million resulting from
actions taken by RSI during the second and third quarters of 1996. The 1995
charge reflects the Company's consolidation of its 20 administrative locations
into two area centers and includes $0.9 million for lease termination costs,
$2.2 million for employee severance costs and $2.1 million for employee
relocation costs related to these actions.
Interest expense. Interest expense reflects charges from RSI based upon its
overall interest expense. Interest expense decreased $2.3 million to $20.3
million for the period January 1, 1996 through October 16, 1996
48
<PAGE>
from $22.6 million in the first nine months of 1995. This decrease resulted
from a decrease in the balance of interest bearing advances from RSI and a
slight reduction in RSI's overall cost of debt.
Income taxes. The Company's effective income tax rate was 42.5% for the
period January 1, 1996 through October 16, 1996 compared with 48.3% in the
first nine months of 1995. The decrease in the 1996 tax rate compared with
1995 resulted primarily from the impact of a level amount of non-deductible
expenses on changing levels of pre-tax earnings.
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
Revenues. Revenues in 1995 were $546.7 million compared with $549.6 million
in 1994, a decrease of $2.9 million or 0.5%. Higher revenues from one-way
truck rentals and accessory rentals and product sales, primarily liability-
limiting products, were more than offset by declines in revenues from local
truck rentals and from RMM. Revenues from one-way truck rentals increased by
$5.5 million, or 2.5%, to $224.4 million in 1995 as a result of a 6.4%
increase in the number of transactions partially offset by a 3.7% decrease in
the average revenue per transaction. Revenues from local truck rentals
decreased $14.6 million, or 6.4%, to $214.5 million in 1995. Lower local truck
rental revenues resulted from a 2.6% decrease in the number of transactions as
well as a 3.7% decrease in the average revenue per transaction. Accessory
rentals and product sales increased $11.4 million, or 15.1%, to $87.2 million
in 1995, resulting primarily from sales of new liability-limiting products
such as supplemental liability and towed vehicle coverage, which were
introduced in 1995. Revenues from liability-limiting products were $54.8
million in 1995 and $45.8 million in 1994.
Operating expense. Operating expense was reduced to $185.9 million in 1995
from $204.6 million in 1994, a decrease of $18.7 million or 9.1%. Operating
expense as a percentage of revenues declined to 34.0% in 1995 from 37.3% in
1994. This decrease was primarily due to lower bodily injury and property
damage costs as a percentage of revenues, 7.8% in 1995 compared with 9.4% in
1994. Improvement in incident frequency and severity as well as favorable
developments on reserves for open claims resulting from the Company's
increased emphasis on dealer training and safety programs contributed to the
expense reduction in 1995. In addition, maintenance expenses as a percentage
of revenues were slightly lower during 1995 as a result of a decrease in the
average age of the fleet.
Selling, general and administrative expense. Selling, general and
administrative expense increased to $213.6 million in 1995 from $209.4 million
in 1994, an increase of $4.2 million, or 2.0%. Selling, general and
administrative expense as a percentage of revenues increased to 39.1% in 1995
from 38.1% in 1994. The increase was primarily due to start-up costs such as
supplies and training costs associated with the two area centers.
Depreciation expense (net of gains). Depreciation expense (net of gains)
increased to $104.3 million in 1995 compared to $90.2 million in 1994, an
increase of $14.1 million or 15.6%. The increase in net depreciation expense
reflects greater depreciation expense and lower gains on vehicle sales.
Depreciation expense (net of gains) as a percentage of revenues increased to
19.1% in 1995 from 16.4% in the same period of 1994. Depreciation expense
before gains on vehicle sales increased to $126.2 million in 1995 from $116.1
million in 1994. The increase resulted from a 3.9% increase in the average
size of the fleet during 1995 compared with 1994. Depreciation related to
investments in systems technology and development also contributed to the
increase. Gains on vehicle sales decreased to $21.9 million in 1995 from $25.9
million in 1994. The decrease in gains was due to a 34% reduction in the
average gain per vehicle sold, partially offset by a 29% increase in the
number of vehicles sold. Management attributes the decline in the average gain
per vehicle in part to a change in the mix of vehicles sold.
Restructuring and other charges. Restructuring charges of $6.4 million in
1995 resulted from the Company's consolidation of its 20 administrative
locations into two area centers. As a result, the Company incurred
restructuring and other charges totaling $3.1 million, including $0.9 million
for lease termination costs and $2.2 million for employee severance costs. In
addition, the Company incurred relocation costs of $3.3 million in 1995
related to these actions.
49
<PAGE>
Interest expense. Interest expense reflecting charges from RSI increased to
$29.7 million in 1995 from $24.3 million in 1994, an increase of $5.4 million.
This change resulted from an increase in the balance of interest bearing
advances from RSI as well as an increase in RSI's overall average cost of
debt.
Income taxes. The Company's effective income tax rate was 45.3% in 1995
compared with 41.7% in 1994. The increase in the 1995 tax rate compared with
1994 resulted primarily from the impact of a level amount of non-deductible
expenses on changing levels of pre-tax earnings.
Year Ended December 31, 1994 Compared to Year Ended December 31, 1993
Revenues. Revenues increased 14.5% to $549.6 million in 1994 from $479.9
million in 1993. One-way and local truck rental revenues increased by 18.4%
and 9.6% or $34.0 million and $20.1 million, respectively, in 1994 to $218.9
million and $229.1 million, respectively. The increase in revenues from one-
way truck rentals resulted from a 20.6% increase in the number of transactions
partially offset by a 1.9% decrease in the average revenue per transaction.
Revenues from local truck rentals increased as a result of a 4.0% increase in
the number of transactions as well as a 5.4% increase in the average revenue
per transaction. Accessory rentals and product sales increased $7.4 million,
or 10.8%, to $75.8 million in 1994 compared with 1993 as a result of truck
rental revenue growth. Revenues from liability-limiting products were $45.8
million in 1994 and $39.0 million in 1993.
Operating expense. Operating expense increased 11.9% to $204.6 million in
1994 from $182.9 million in 1993 corresponding with the growth in revenues.
However, operating expense as a percentage of revenues declined slightly
during the period to 37.3% in 1994 from 38.1% in 1993. This reduction resulted
primarily from lower maintenance costs as a percentage of revenues, 15.3% in
1994 compared with 16.6% in 1993. This reduction resulted from a change in the
fleet mix and improvements in maintenance processes. Partially offsetting this
improvement were higher costs of bodily injury and property damage claims as a
percentage of revenue, 9.4% in 1994 compared with 8.8% in 1993. This increase
resulted predominantly from an increase in the average cost of new claims
during the period.
Selling, general and administrative expense. Selling, general and
administrative expense rose to $209.4 million in 1994 from $187.5 million in
1993, an increase of $21.9 million, or 11.7%. Dealer commissions, which are
based on truck rental revenues and other revenues such as the sale of
liability-limiting products, increased $10.1 million, or 12.8%, during 1994.
The remaining increase during the period was attributable to higher
administrative overhead costs, primarily salaries. Employee headcount
increased 5.9% during 1994 compared with 1993 largely as a result of the
increased volume of move management services during the year. As a percentage
of revenues, selling general and administrative expense decreased to 38.1% in
1994 from 39.1% in 1993.
Depreciation expense (net of gains). Depreciation expense (net of gains)
increased to $90.2 million in 1994 compared to $84.9 million in 1993, an
increase of $5.3 million or 6.2%. The increase in net depreciation expense
reflects greater depreciation expense partially offset by increased gains on
vehicle sales. Depreciation expense (net of gains) as a percentage of revenues
decreased to 16.4% in 1994 from 17.7% in 1993. Depreciation expense before
gains on vehicle sales increased to $116.1 million in 1994 from $105.4 million
in 1993. The increase resulted from a 5.6% increase in the average size of the
fleet during 1994 compared with 1993. Gains on vehicle sales increased to
$25.9 million in 1994 from $20.5 million in 1993. The higher gains were due to
a 41% increase in the average gain per vehicle sold partially offset by a 10%
decrease in the number of vehicles sold.
Interest expense. Interest expense reflecting charges from RSI increased
$4.3 million to $24.3 million in 1994 from $20.0 million in 1993. This change
resulted from an increase in the balance of interest bearing advances from RSI
as well as an increase in RSI's overall average borrowing rate.
Income taxes. The Company's effective income tax rate was 41.7% in 1994
compared with 44.6% in 1993. The decrease in the 1994 tax rate compared with
1993 resulted primarily from the impact of a level amount of non-deductible
expenses on changing levels of pre-tax earnings.
50
<PAGE>
SEASONALITY
Truck rentals display some seasonality, with generally higher levels of
demand occurring during the summer months. The Company's third quarter is
typically its strongest quarter. For 1995, the third quarter represented 31.0%
of annual revenues, while the first, second and fourth quarters represented
18.9%, 26.5% and 23.6% of annual revenues, respectively. On average,
approximately 50% of the Company's annual revenues are earned during the five-
month period beginning in May and ending in September. The Company's strongest
month is typically August, which on average accounts for 11% to 12% of annual
revenues.
Because a significant portion of the Company's customers are self-movers, a
larger portion of its sales are concentrated on weekends. In addition, rentals
are generally stronger during the last weekend of the month, when residential
rent and lease contracts typically expire.
The Company's cash flows display more seasonality than its earnings
primarily due to the timing of truck purchases and dispositions. The Company
typically receives delivery of trucks between March and June of each year,
resulting in additional borrowing needs during that period. Dispositions are
spread more evenly throughout the year, with greater dispositions occurring
during the first and fourth quarters. Going forward, management anticipates
that dispositions will occur at times that more optimally meet supply and
demand requirements.
INFLATION
The Company does not believe that inflation has had a material impact on its
financial position or results of operations during the periods covered by the
Combined Financial Statements included herein.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity needs arise primarily from debt service on
indebtedness incurred in connection with the Acquisition, working capital
needs and the funding of capital expenditures. The Company incurred
substantial indebtedness in connection with the Acquisition. As of October 16,
1996, on a pro forma basis, after giving effect to the Transactions, the
Initial Offering and the application of the proceeds therefrom, the Company
would have had outstanding approximately $487.0 million of indebtedness,
consisting of $175.0 million of Notes, $281.0 million under the Term Facility
and $31.0 million under the Revolving Credit Facility.
Principal and interest payments under the Senior Bank Facilities and the
Notes represent significant liquidity requirements for the Company. Pursuant
to the Term Facility and after giving effect to the Initial Offering and
application of the proceeds therefrom, the Company will be required to make
principal payments totaling $16.1 million in each of fiscal 1998, 1999 and
2000, and $232.7 million in 2001. Outstanding balances under the Senior Bank
Facilities will bear interest at floating rates based upon the interest rate
option selected by the Company. In compliance with the terms of the Senior
Bank Facilities, the Company entered into interest rate protection agreements
effective December 9, 1996 with respect to $125.0 million aggregate principal
amount outstanding under the Term Facility. These interest rate protection
agreements establish an effective minimum base interest rate of 5.33% and an
effective maximum base interest rate of 6.65% with respect to $125.0 million
of the Company's floating rate debt for a period of up to three years. See
"Description of Senior Bank Facilities."
The Company intends to refinance all of the Term Facility, and a portion of
the Revolving Credit Facility, with the proceeds of the Securitization by
Leasco. It is currently anticipated that the Securitization will be effected
through a commercial paper financing, a medium term note financing or other
forms of borrowing and including credit enhancement facilities, but the
refinancing intended to be effected by the Securitization could take other
forms. There can be no assurance that Leasco will be able to effect the
Securitization or that it will be able to effect the Securitization on terms
acceptable to Leasco or the Company. The Company anticipates that following
the Securitization it will retain a smaller revolving credit facility to meet
short term working capital needs.
The Company's capital expenditures, primarily for the purchase of revenue
earning equipment, were $69.2 million for the period January 1, 1996 through
October 16, 1996, compared with $208.6 million in the first nine months of
1995. For 1996, the Company estimates that its total capital expenditures will
be approximately $75.0 million. The Company estimates that its total capital
expenditures for 1997 will range between $100.0 million
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<PAGE>
and $115 million. The decrease in capital spending in 1996 was due primarily
to a planned decrease in the average size of the fleet. Capital expenditures
were $223.7 million in 1995, $191.9 million in 1994 and $195.7 million in
1993. The increase in capital spending during 1995 was due primarily to the
replacement of older trucks and a change in fleet mix coupled with a
simultaneous increase in the size of the fleet. The Company's ability to make
capital expenditures is subject to certain restrictions under the Senior Bank
Facilities.
The Company's principal source of cash to fund its liquidity needs will be
net cash from operating activities, proceeds from sales of revenue earning
equipment and borrowings under the Revolving Credit Facility. The components
of net cash from operating activities are detailed in the Combined Financial
Statements and the related notes thereto included elsewhere in this Prospectus
and include net income adjusted for (i) depreciation, (ii) deferred income
taxes and (iii) changes in operating assets and liabilities. Net cash flows
from operating activities increased $45.2 million to $116.8 million for the
period January 1, 1996 through October 16, 1996 from $71.6 million in the
first nine months of 1995. The increase resulted from higher net earnings
combined with greater cash flows from changes in working capital items. During
the period of January 1, 1996 through October 16, 1996, receivables decreased
due to reductions in used vehicle sales, while accounts payable decreased due
to the timing of vehicle purchases. Cash flows from operating activities were
$79.3 million in 1995, $114.6 million in 1994 and $80.8 million in 1993. The
decrease in 1995 compared with 1994 resulted primarily from lower earnings
combined with changes in certain working capital items, including reduced
accounts payable due to the timing of vehicle purchases. These items were
somewhat offset by higher non-cash charges for depreciation, net of gains in
1995. The increase in 1994 compared with 1993 was attributable to higher
earnings and an increase in depreciation expense as well as certain changes in
working capital items. The most significant working capital changes impacting
cash flow comparisons were an increase in receivables resulting from higher
revenue and an increase in accounts payable resulting from the timing of
vehicle purchases.
The Company disposes of its vehicles through several outlets, including
trade-ins through manufacturers, sales through RTR's truck sales operations
and sales through the Company's independent dealers. Proceeds from such
dispositions were $45.4 million for the period January 1, 1996 through October
16, 1996, a decrease of 9.9%, or $5.0 million, from $50.4 million for the
first nine months of 1995. For the year ended 1995, proceeds from such
dispositions totaled $72.2 million compared to $50.0 million in 1994. The
change in the amount of proceeds from dispositions is primarily related to the
number and type of vehicles sold during the respective periods. The Company
also disposes of other property and equipment in the ordinary course of
business. Proceeds from such dispositions are not material.
As of October 16, 1996, on a pro forma basis after giving effect to the
Transactions, the amount outstanding under the Revolving Credit Facility would
have been $31.0 million, and approximately $102.0 million would have been
available to be drawn. Amounts available under the Revolving Credit Facility
are subject to borrowing base availability and may be used for working capital
and general corporate purposes (including $50.0 million for letters of
credit), subject to certain limitations under the Senior Bank Facilities. The
Company believes that cash generated from operations and asset dispositions,
together with the amounts available under the Revolving Credit Facility, will
be adequate to meet its debt service requirements, capital expenditure
requirements and working capital needs for the foreseeable future, although no
assurance can be given in this regard. The Company's future operating
performance and ability to service or refinance the Notes and to extend or
refinance the Senior Bank Facilities will be subject to future economic
conditions and to financial, business and other factors, many of which are
beyond the Company's control.
ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation," which the Company is required
to adopt in 1996. SFAS No. 123 establishes optional alternative accounting
methods for stock-based compensation as well as new required disclosures. The
Company intends to account for stock-based compensation under previously
existing accounting guidance. As such, SFAS No. 123 will be adopted for
disclosure purposes only and will not impact the Company's financial position,
operating results or cash flows.
52
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THE ACQUISITION
On the Acquisition Closing Date, pursuant to the Acquisition Agreements, (i)
the Company acquired (for a cash purchase price of approximately $44.4
million) from RTR substantially all of the assets of the Division, other than
the trucks used in the Business, and (ii) Leasco acquired (for a cash purchase
price of approximately $535.0 million) approximately 32,200 trucks used in the
Business, for an aggregate cash purchase price of $579.4 million. Leasco was
formed by the Company to facilitate transfers to one entity of ownership of
and legal title to the trucks and to be the issuer of securities in a proposed
securitized financing of the trucks. Leasco leases the trucks to the Company
pursuant to a Master Motor Vehicle Lease Agreement. See "Leasco and Proposed
Securitization."
In addition to the trucks, the assets acquired include moving equipment and
related accessories, including car carriers, hand trucks, movers' dollies,
furniture pads and service vehicles, prepaid advertising and license fees and
certain management information systems, hardware and software systems that
comprise the yield management and fleet management systems. The assets also
include the royalty-free right to use the 1-800-GO-RYDER telephone number,
subject to certain restrictions, for a period of up to 13 years; for a period
of three years thereafter, the Seller has agreed not to market the 1-800-GO-
RYDER number in any truck rental or leasing business. In addition, the Company
acquired the royalty-free right to use (i) Ryder trademarks, subject to
certain restrictions, for a period of up to ten years, provided that the
Company must begin using the Ryder name in conjunction with a successor name
after five years, and (ii) the Ryder signature color scheme in perpetuity,
subject to certain restrictions. The Company also acquired all of the
outstanding stock of two wholly-owned subsidiaries of RTR, RMM and Ryder Truck
Rental One-Way, Inc.
The purchase price paid on the Acquisition Closing Date was subject to
adjustment in the event that the actual net book value of the assets purchased
and liabilities assumed at closing differed from an amount equal to the
purchase price less $60 million. The Company and the Seller have reached an
agreement with respect to a reduction of approximately $4.7 million to the
purchase price, and the parties have also agreed on procedures that may result
in certain additional purchase price adjustments. See "Unaudited Pro Forma
Financial Information."
Pursuant to the Acquisition Agreements, the Company agreed to assume all
liabilities and obligations of the Business (i) arising out of the conduct of
the Business by the Company on or after the Acquisition Closing Date, (ii) as
a result of the condition of any asset of the Business (other than with
respect to environmental liability), but only to the extent that the harm to
third parties occurred on or after the Acquisition Closing Date, (iii) arising
from the violation of any laws, but only with respect to periods on or after
the Acquisition Closing Date, and (iv) to the extent recorded as a liability
on the statement of the net book value of the Business as of the Acquisition
Closing Date. RTR and the Company agreed that the Company would not be liable
for environmental conditions existing prior to the Acquisition Closing Date,
whether discovered or undiscovered.
In connection with the Acquisition, the Company and RTR entered into certain
agreements pursuant to which RTR provides services to the Company, including
the provision of maintenance, sales of used trucks and administrative services
and management information systems support. See "Relationships with the
Seller."
53
<PAGE>
BUSINESS
GENERAL
The Company is the second largest provider of truck rentals and related
moving supplies and services to the consumer and light commercial markets in
the United States, with a fleet of approximately 32,200 trucks. The Company
rents trucks, towing equipment and accessory equipment and sells liability-
limiting products and moving supplies to consumers and commercial customers
through its nationwide network of approximately 4,400 dealers. The average age
of the Company's trucks is 34 months, which is considerably younger than that
of its principal competitor. The Company has an approximate 30% share of the
estimated $1.3 billion consumer truck rental market and an approximate 28%
share of the estimated $520 million light commercial truck rental market,
based on 1995 revenues. The Company's revenues and EBITDA grew at compound
annual rates of 8.6% and 18.1%, respectively, from 1992 through 1995. Over the
same period, EBITDA margins increased from 20.0% to 25.7%. For the period
January 1, 1996 to October 16, 1996, the Company generated total revenues of
$439.8 million and EBITDA of $115.4 million.
The Company rents trucks primarily to consumers who are moving to new
household locations. These customers generally rent trucks from one Ryder
location and return them either to the same location (a "local" rental) or to
a different location (a "one-way" rental). Revenues from consumer rentals
accounted for approximately 74% of the Company's total truck rental revenues
in 1995, of which one-way revenues represented 70% and local revenues
represented 30%. The Company has focused on the one-way segment because it is
generally more profitable, generates higher revenues per day and capitalizes
on the competitive advantages provided by the Company's state-of-the-art yield
management system as well as its modern and dependable fleet. The Company has
an approximate 34% share of the consumer one-way market and an approximate 22%
share of the consumer local market, based on 1995 revenues.
In addition to serving the consumer market, the Company rents trucks,
primarily on a local basis, to businesses for a wide range of light commercial
uses. Commercial customers range from small local businesses, such as
florists, package delivery companies and local private moving companies, to
large national companies that rent Ryder trucks primarily for the
transportation and delivery of inventory and packages. Revenues from light
commercial rentals accounted for approximately 26% of the Company's total
truck rental revenues in 1995. The light commercial segment complements the
Company's consumer rental business by enabling the Company to improve
utilization of its trucks on weekdays, when consumer demand is typically lower
than it is on weekends.
The Company supplements its truck rental business with a range of other
products and services. The Company rents automobile towing equipment and other
moving accessories such as hand trucks and furniture pads and sells moving
supplies such as boxes, tape and packing materials. The Company also offers
customers a range of liability-limiting products such as physical damage
waivers, personal accident and cargo protection and supplemental liability
protection. These accessory products enhance the Company's appeal to consumers
by offering customers "one-stop" moving services.
The Company derives important competitive advantages from its proprietary
one-way yield management system, which has enabled the Company to increase
fleet utilization and optimize pricing for one-way transactions and thereby
increase profitability and return on assets. The one-way yield management
system was rolled out to the Company's dealers through its proprietary point-
of-sale (the "POS") system in the early 1990s. Management believes that the
Company is the only national truck rental company to have sophisticated POS
computers at every dealer location. The yield management system is designed to
optimize fleet utilization and revenue per vehicle by renting the greatest
number of vehicles each day at the best possible rates. This system determines
the optimal price for each one-way transaction, based on forecasted demand,
vehicle availability, existing reservations, operating costs and competitors'
pricing in each market. In addition, the system enables the Company to offer
its one-way customers a wide range of pricing alternatives to increase
utilization during
54
<PAGE>
off-peak periods and position its trucks for the most profitable peak period
rentals. The yield management system has assisted the Company in increasing
utilization and annual revenue per truck (including accessory rentals and
product sales) from 36% and $12,797 in 1991 to 42% and $15,424 in 1995. For
the nine-month period ended September 30, 1996, utilization has increased to
44%.
In addition to automating the customer reservation process and providing the
dealers with pricing information, the Company's POS system provides all of its
dealers with valuable information on the location, mileage and maintenance
status of each truck available in a specific market. Furthermore, the POS
system is integrated with the Company's management information systems,
providing management with access to operational and financial information,
which is updated at least daily, concerning the Company's performance at all
levels, including the individual dealer.
INDUSTRY OVERVIEW
The Company competes in two primary segments of the truck rental industry:
(i) the consumer market, consisting of people who rent trucks primarily to
move household goods, which accounted for approximately $1.3 billion of
revenues in 1995 (the "consumer market"), and (ii) the light commercial
market, which serves a wide range of businesses that rent light- and medium-
duty trucks (i.e., trucks with a gross vehicle weight of less than 26,000
pounds) for a variety of commercial applications, which accounted for
approximately $520 million of revenues in 1995 (the "light commercial
market").
The Consumer Market. Management believes that the four largest consumer
truck rental companies accounted for approximately 89% of 1995 estimated
consumer market revenues of $1.3 billion (which includes truck rental and
rental-related products), approximately 80% of which the Company estimates was
related to household moves. Based on data published by the United States
Census Bureau, the total number of household moves, which include people who
rent trucks, hire full service van lines or use owned or borrowed trucks, was
approximately 16 million in 1995, approximately 30% of which management
estimates involved the rental of trucks. More than 50% of the total number of
household moves are conducted with owned or borrowed vehicles (the
"owned/borrowed market"), which the Company believes provides an opportunity
to expand the $1.3 billion consumer truck rental market. Management estimates
that, over the past six years, the percentage of household moves in the
owned/borrowed market has decreased from approximately 61% in 1989 to
approximately 57% in 1995. During this same period, the percentage of
household moves in the truck rental segment has increased from 27% to 30%.
Management believes that, while the total number of household relocations has
tended to decline slightly during economic downturns, the total number of
truck rental transactions has either remained stable or has increased.
Management believes that truck rentals account for a higher percentage of
household moves during economic downturns because renting a truck is usually
more economical than hiring a full-service van line.
The $1.3 billion consumer truck rental market is comprised of the one-way
segment, estimated to have revenues of approximately $800 million, and the
local segment, estimated to have revenues of approximately $500 million. The
following table sets forth estimated market shares for participants in the
consumer market for 1995:
<TABLE>
<CAPTION>
ONE-WAY SEGMENT LOCAL SEGMENT TOTAL CONSUMER
PARTICIPANTS REVENUE SHARE REVENUE SHARE MARKET REVENUE SHARE
------------ --------------- ------------- --------------------
<S> <C> <C> <C>
U-Haul.................... 42% 57% 47%
RYDER TRS, INC. .......... 34 22 30
Penske.................... 10 4 8
Budget.................... 5 2 4
Other..................... 9 15 11
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
- --------
Source: Market Segment Share Tracking Study, ICR (study commissioned by the
Company).
55
<PAGE>
The Company has a much larger share of the one-way segment of the consumer
market than it does of the local segment. One-way rentals generate higher
revenues per day than local rentals and, in general, are more profitable.
The Commercial Market. Management estimates that the five largest light
commercial truck rental companies accounted for approximately 84% of 1995
estimated light commercial truck rental revenues of $520 million. Customers in
the light commercial market range from small local businesses to large
national companies, which rent trucks primarily for the transportation and
delivery of inventory and packages. Management estimates that since 1992, the
light commercial market has grown at a compound annual rate of approximately
7%. Management attributes a large part of this increase in demand for light-
duty commercial trucks to growth in the number of small businesses, a trend
towards outsourcing and an emphasis on "just-in-time" inventory management.
The following table sets forth management's estimated market shares for
participants in the light commercial market for 1995:
<TABLE>
<CAPTION>
LIGHT COMMERCIAL
MARKET REVENUE
PARTICIPANTS SHARE
------------ ----------------
<S> <C>
RYDER TRS, INC.............................................. 28%
RTR......................................................... 27
Rollins..................................................... 12
U-Haul...................................................... 10
Penske...................................................... 7
Other....................................................... 16
---
100%
===
</TABLE>
BUSINESS STRATEGY
The Company's strategy for achieving continued growth in revenues,
profitability and fleet utilization includes: (i) achieving cost reductions
and improving return on capital; (ii) expanding yield management capabilities;
(iii) increasing sales of rental-related products; (iv) enhancing marketing
and advertising efforts; and (v) improving customer service and conversion
rates.
Achieve Cost Reductions and Improve Return on Capital. Management believes
that opportunities exist to implement approximately $10 million to $20 million
of continuing annual cost savings over the next several years by streamlining
general and administrative processes, reducing telecommunications costs,
improving insurance claims processing, creating operational efficiencies
through MIS initiatives and more effectively managing maintenance procedures.
In addition, through better utilization of the fleet, the Company anticipates
reducing its average operating fleet to approximately 31,000 trucks for 1997,
resulting in lower interest expense and reduced ongoing capital expenditure
requirements.
Expand Yield Management Capabilities. Management believes that an effective
way to maximize profitability and return on assets is to optimize utilization
by renting the greatest number of vehicles each day at the best possible
rates. Management believes that the Company's one-way yield management system
is the most extensive and advanced in the industry and is largely responsible
for the increase in fleet utilization from 36% in 1991 (the period immediately
preceding the rollout of the one-way yield management system) to 42% in 1995.
The Company is in the process of enhancing this system by implementing a
complementary local yield management system, which is expected to be available
on-line through the POS system to each dealer in 1997. This system will apply
to the Company's local consumer and light commercial business the same
principles that the Company has successfully used to more efficiently manage
its one-way business. Local rental prices will be updated daily based on
forecasted demand, vehicle availability, existing reservations, operating
costs and competitors' pricing in each market. Management believes that the
Company will be the only major participant in the industry using sophisticated
yield management techniques to price and manage one-way and local
transactions. This should not only result in an increase in local consumer and
light commercial market share but
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<PAGE>
also enable the Company to allocate its fleet more efficiently between the
local and one-way segments, thus further improving overall fleet utilization
and profitability.
Increase Sales of Rental-Related Products. Management believes that there
are significant opportunities to increase revenues and profitability through
greater sales of liability-limiting products and moving supplies. For example,
less than 60% of the Company's consumer customers purchased liability-limiting
products in 1995, even though most consumers are not covered for truck rentals
under traditional personal automobile insurance policies. In addition, less
than one-third of the Company's dealers actively participate in the Company-
sponsored moving supplies program. The Company intends to increase the quality
and frequency of dealer training to improve the marketing and merchandising of
liability-limiting products and moving supplies and increase the number of
dealers that participate in the Company-sponsored moving supplies program. The
Company will also consider implementing a new dealer compensation structure to
provide better incentives for dealers to sell these products.
Enhance Marketing and Advertising Efforts. As an independent entity, the
Company will be able to focus marketing and advertising programs specifically
on the consumer and light commercial markets. Such marketing efforts will
capitalize on the Company's competitive advantages, featuring the unique
benefits of its modern, comfortable and reliable fleet. Management believes
that these enhanced marketing activities should not only increase the
Company's share of the truck rental market but also attract additional
customers from the owned/borrowed market.
Improve Customer Service and Conversion Rates. Management believes that
there is a significant opportunity to increase the percentage of customer
inquiries that result in booked reservations, referred to as the conversion
rate. Telephone inquiries placed to the 1-800-GO-RYDER number are handled both
by professional customer service agents and by dealers. In general,
professional customer service agents tend to achieve higher conversion rates
than dealers. The Company will seek to provide professional customer service
agents with more accurate information on the location and availability of
vehicles, enabling these professional agents to process a higher percentage of
calls placed to the 1-800-GO-RYDER number. Management also believes that there
is broad disparity in the quality of individual dealers' handling of telephone
inquiries. Management will seek to increase the quality and frequency of
dealer training in customer service in an effort to increase the conversion
rate for those calls that are placed directly to the dealers.
PRODUCTS AND SERVICES
The Company's principal line of business consists of renting trucks and
towing equipment and selling moving supplies and rental-related products to
consumers and commercial customers. In addition, the Company offers
comprehensive household goods relocation services to corporate employee
relocation departments through RMM. The following is a brief summary of the
Company's products and services.
Truck Rentals
The Company rents the following four types of vehicles to consumer and
commercial customers: the mini moving van (10 feet); the midsize moving van
(15 feet); the full size moving van (20 feet); and the maxi moving van (24
feet).
One-Way Truck Rentals (41% of 1995 Total Revenues). The one-way truck rental
business involves the rental of trucks to customers who rent vehicles from one
Ryder location and return them to a different Ryder location. This segment
serves primarily consumer customers. The Company is one of four national
companies to offer one-way truck rentals, which command higher revenues per
day and are generally more profitable than local transactions. The Company's
proprietary yield management system is designed to determine the optimal price
for each one-way transaction, based on forecasted demand, vehicle
availability, existing reservations, operating costs and competitors' pricing
in each market. The yield management system updates prices daily on each one-
way transaction, allowing dealers to offer customers a variety of different
rates for alternative moving dates.
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<PAGE>
Local Truck Rentals (39% of 1995 Total Revenues). The local truck rental
business involves the rental of trucks to customers who generally rent and
return trucks at the same Ryder location. This segment serves both consumer
and light commercial customers. Although the majority of local consumer
renters are individuals who are moving to a new household location in the same
area, local consumer renters also include individuals who may rent a truck for
other purposes such as to pick up furniture from a local store or move
appliances from one location to another. Commercial customers range from small
local businesses, such as florists, package delivery companies and local
private moving companies, to large national companies that rent Ryder trucks
primarily for the transportation and delivery of inventory and packages. In
many instances, commercial customers rent Ryder trucks during their peak
demand periods; for example, a florist may rent Ryder trucks just before
Valentine's Day.
Accessory Rentals and Product Sales (16% of 1995 Total Revenues)
The Company offers additional rental-related products that complement its
truck rental business.
Towing Equipment and Accessory Rentals. The Company rents automobile
towing equipment, including automobile carriers (which carry an entire car)
and tow dollies (which lift only the front two wheels of the car). In
addition, the Company rents furniture pads (which protect furniture during
the moving process), hand trucks and movers' dollies for moving appliances,
boxes and other large or heavy objects.
Liability-Limiting Products. As part of its rental business, the Company
offers its customers a range of liability-limiting products, including
physical damage waivers, personal accident and cargo protection and
supplemental liability protection. The Company carries commercial insurance
coverage with respect to its supplemental liability protection, and retains
the risk for all other liability-limiting products. More than half of the
Company's 1995 truck rental transactions involved the sale of one or more
liability-limiting products.
Sales of Moving Supplies. The Company sells a variety of moving supplies,
including boxes, packing materials and tape. Management believes that there
is a significant opportunity to increase the sale of moving supplies and
will seek to increase the sale of these products in the future. See "--
Dealer Network."
Ryder Move Management, Inc. (4% of 1995 Total Revenues)
RMM specializes in the management of household goods transportation services
for large and medium sized companies relocating their employees. Operating as
a broker, RMM works with a network of full-service van line operators and
relocation service providers to offer a variety of transportation and
relocation services.
MANAGEMENT INFORMATION SYSTEMS
The Company's proprietary yield management system is designed to optimize
utilization and revenue per vehicle by renting the greatest number of vehicles
each day at the best possible rates. This system determines the optimal price
for each one-way transaction, based on forecasted demand, vehicle
availability, existing reservations, operating costs and competitors' prices
in each market. In addition, the system enables the Company to offer its one-
way customers a wide range of pricing alternatives to improve utilization
during off-peak periods and position its trucks for the most profitable peak
period rentals. The yield management system has assisted the Company in
increasing utilization and annual revenue per vehicle (including accessory
rentals and product sales) from 36% and $12,797 in 1991 to 42% and $15,424 in
1995. In addition, by more efficiently managing its truck inventory, the
Company has been able to reduce the long-distance transfer of trucks from one
location to another. The Company is in the process of enhancing this system by
implementing a complementary local yield management system that it expects to
be available on-line through the POS system to each dealer in 1997. This
system will apply to the Company's local consumer and light commercial
business the same principles that the Company has successfully used in
managing its one-way business. Management believes that the implementation of
the local yield management system should not only result in an increase in
local consumer
58
<PAGE>
and light commercial market share and profitability, but should also enable
the Company to allocate its fleet more efficiently between the local and one-
way segments, thus further improving overall fleet utilization and
profitability.
The Company interfaces with its dealers through its POS system. Management
believes that it is the only national truck rental company to have a
sophisticated POS computer at every dealer location. Each dealer is equipped
with a computer that provides valuable information on reservations and
pricing, as well as the location, mileage and maintenance status of each truck
available in that dealer's market. The POS system is integrated with the
Company's management information systems, which provide management with real-
time access to operational and financial information concerning the Company's
performance at all levels, including the individual dealer.
The Company continually upgrades existing systems and develops new systems
to enhance its operations and improve the management decision process. The
Company has several new technology initiatives under development. For example,
a new reservations system would provide customer service agents with more
accurate information on the location and availability of vehicles, as well as
information on customer inquiries and reservations. Additionally, the Company
is in the process of completing its Transfer Optimization Model, scheduled to
be implemented by early 1997, which will automate the local vehicle transfer
decision process, minimizing costs associated with the transfer of trucks
between dealers.
SALES, MARKETING AND ADVERTISING
The Company's marketing and promotional activities are designed to build
brand awareness and preference by positioning Ryder as the high-quality truck
rental provider and emphasizing the convenience and ease of doing business
with the Company. Approximately half of the Company's advertising budget is
devoted to Yellow Pages advertising, which management believes is the most
effective advertising medium for truck rentals. According to a study
commissioned by the Company, approximately 65% of all renters use the Yellow
Pages to select a truck rental company. The Company also utilizes national
television advertising to build Ryder brand awareness and to position Ryder as
the highest quality truck rental company in the industry. The Company also
utilizes local radio, print and direct mail to support specific market
objectives. In 1992, the Company launched its 1-800-GO-RYDER number designed
to communicate the "ease of doing business" with Ryder.
The Company uses a number of other advertising media to target potential
customers just before they move. For example, the Company currently is a
sponsor of the United States Postal Service Mover's Guide, which is available
in post offices throughout the United States and contains the official post
office change-of-address form which is typically filled out prior to a move.
The guide features a yellow truck on the cover, and contains the Company's
advertisement and coupons. The Company also sponsors "Smart Moves," a moving
planner that is provided to the Apartment Management Association, a nationwide
apartment management group, for distribution to apartment renters when they
sign new leases. This program targets frequent movers, providing them with
moving tips and coupons from the Company.
MAINTENANCE
The Company's maintenance program establishes a schedule of preventive
maintenance customized to each vehicle category. In addition, the Company's
information systems maintain an up-to-date maintenance history on each vehicle
in the fleet, and the POS system notifies dealers when vehicles are due for
preventive maintenance. Each dealer is responsible for performing on-site
vehicle condition inspections after each rental. Management believes that, as
a result of this program, the Company is able to obtain more dependable
performance from its fleet, extend the useful life of its fleet and obtain
more favorable prices for used trucks when they are sold.
59
<PAGE>
VEHICLE ACQUISITION AND DISPOSITION
The Company purchases the chassis for its trucks primarily from General
Motors, Ford and Navistar, and purchases the "boxes" (the storage compartment
on the back of the truck) from Morgan Body Company, UtiliMaster, Grumman Olson
and Supreme Corporation. The Company's fleet consists of approximately 16,100
smaller trucks, consisting of mini moving vans (10 feet) and midsize moving
vans (15 feet) and approximately 16,100 larger trucks, consisting of full size
moving vans (20 feet) and maxi moving vans (24 feet). The Company has not
experienced any significant delays in obtaining delivery of its trucks.
Purchasing of trucks is coordinated through the Company's headquarters in
Miami, Florida. Purchases are negotiated annually with each manufacturer.
Orders are placed in October or November for delivery primarily between March
and June of the following year in time for the busy summer season. The Company
believes that its purchasing expertise and the volume of its purchases enable
it to buy vehicles on terms that are more favorable than those available to
its smaller competitors.
The Company disposes of its used vehicles through several outlets, including
trade-ins through manufacturers, sales through RTR's truck sales operations
and sales through the Company's dealers. In 1995, the Company sold 40% of its
used vehicles through trade-ins, 50% through RTR's sales operations and 10%
through selected independent dealers. The Company disposes of its trucks
throughout the year, with a larger proportion being sold or traded in during
the first and fourth quarters after the busy summer season.
The Company uses various quantitative analyses to make disposition decisions
based upon the average age and running cost statistics for different trucks.
The Company may dispose of a certain year and make of truck prior to its
targeted holding period if that particular model has high running costs or
above average downtime. Similarly, it will hold trucks beyond the average
holding period if they have low running costs.
OPERATIONS
The Company is headquartered in Miami, Florida and operates under the Ryder
name through a national network of approximately 4,400 dealers. The Company
divides the United States into an Eastern and a Western area, with area
centers in Norcross, Georgia and Aurora, Colorado, and maintains regional
marketing offices in eleven metropolitan areas. The Company may consider
relocating some or all of its executive employees to one of the area center
locations to achieve greater operational efficiencies.
Each regional marketing office is headed by a Director of Business
Development ("DBD") reporting to one of two area vice-presidents. DBDs are
primarily responsible for overall business development and recruiting,
training and managing Ryder dealers. Each of the eleven geographic areas has
eight to twelve Dealer Development Managers ("DDMs"), each of whom manages
approximately 5 to 10 Market Teams, each of which, in turn, is comprised of 3
to 8 dealers. Each geographic area also has a team of dealer coordinators,
based in the respective area centers, who are collectively responsible for the
operation and management of the fleet. In addition, each DBD also supervises a
Sales Executive who is responsible for RMM's sales and account management.
Trucks are shared among the members of each Market Team, and dealers have
access through their POS systems to information concerning inventory levels at
all dealers within their team. The Company involves its dealers in business
planning through local, regional and national dealer councils which meet on a
regular basis to provide the Company with input regarding operating and
marketing issues.
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<PAGE>
DEALER NETWORK
The Company's truck rental services are offered nationwide through
approximately 4,060 independent dealers, and 340 dealers owned and operated by
the Seller. The number of dealers peaked above 5,000 in 1995 and has now been
reduced to the current level as a result of the Company's efforts to
rationalize its distribution network. Dealer turnover, which often occurs
during the first year after a dealership is established, was approximately 16%
in 1995 (down from a high of approximately 30% in 1990). As part of the
rationalization of the distribution network, management sought to eliminate
dealers with the lowest transaction volume and to allocate its fleet to its
most successful dealers. Management intends to apply more stringent dealer
selection criteria in the future, which it believes should further reduce the
dealer turnover rate.
Dealerships consist primarily of auto parts retailers and service suppliers,
self storage centers, car rental locations and other vehicle-related businesses
that are owned by independent parties. These dealers rent Ryder trucks in
addition to operating their principal lines of business. The 340 dealers owned
and operated by the Seller also rent trucks on behalf of the Company on
substantially the same terms and conditions as for independent dealers. A small
number of independent dealers are affiliated with national organizations (e.g.,
Shurgard Storage Centers) that negotiate certain matters with the Company on
behalf of the affiliated dealers.
All of the Company's dealers sell liability-limiting products and less than
one-third actively participate in the Company-sponsored moving supplies
program. With respect to moving supplies, the Company's suppliers receive
orders directly from participating dealers and then forward invoices to the
Company, which in turn bills the dealers. Although such products currently
represent a small portion of the dealers' overall business, the Company
believes that opportunities exist to increase the sale of these products within
the dealer network.
Independent dealers receive a 17% commission on all truck rentals, sales of
liability-limiting products and rentals of moving-related products generated by
their dealerships. Certain incentives are offered from time to time to
influence sales in certain areas of the business. The average dealer earns
approximately $20,000 per year in commissions. Dealership agreements can be
terminated by either party upon 30 to 90 days' prior written notice, depending
on dealer tenure. RTR dealership arrangements can be terminated at certain
times depending on dealer revenues. See "Relationships with the Seller--Dealer
and Cooperation Arrangements."
The Company currently operates, either through dealers or directly, 24 pilot
Ryder stores that, in addition to renting trucks, sell a more extensive array
of moving supplies, such as boxes, tape, storage containers and other packing
supplies. These stores have a modern "retail store" design. In some cases,
these stores also earn revenue from other sources such as car or motorcoach
rental, or operate as parcel packaging and shipping stores, but their primary
source of revenue is the rental of Ryder trucks and related services.
COMPETITION
The truck rental industry is highly competitive, with U-Haul being the
principal competitor with a greater market share and potentially greater
financial resources than the Company. U-Haul has more dealers and operates a
significantly greater number of its own stores than does the Company. However,
management believes that the Company's fleet of trucks is younger than U-Haul's
fleet. Other competitors include Budget Rent-A-Car and Penske Truck Leasing.
Competition in the truck rental industry is generally based on price, product
quality, brand name recognition, service, convenience and availability.
EMPLOYEES
As of September 30, 1996, the Company had approximately 600 full-time
employees, none of whom was represented by a union. The Company also hires
part-time personnel to transfer trucks among dealers. The Company believes that
its relationship with its employees is adequate.
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<PAGE>
FACILITIES
The Company leases all of its office and retail locations. Of 54 facilities,
30 are used for office space while 24 are pilot Ryder stores. The Company owns
no real property.
Significant office operations are located in Miami, Florida, where the
Company maintains its headquarters, and in Norcross, Georgia and Aurora,
Colorado, the Company's two area centers. The Miami office is subleased from
the Seller for a period of two years with three annual renewal options. Each
of the area centers contains approximately 25,000 square feet and is leased
for an initial five-year term with options for annual renewals thereafter.
Ryder stores are typically storefront locations in suburban areas. These
locations, on average, contain approximately 800 to 2,500 square feet of store
space, plus a parking area for the rental trucks. Lease terms are typically
two to four years, and the rent is generally no greater than $30,000 annually.
The Company's independent dealers generally operate out of facilities owned or
leased by them for their principal businesses.
INTELLECTUAL PROPERTY
The Company has the royalty-free right to use certain Ryder trademarks,
subject to certain restrictions, for a period of up to ten years. After
October 17, 2001, the Company must begin using these trademarks in conjunction
with a successor name. On October 17, 2006, the Company will no longer be
permitted to use the "Ryder" name in any manner. The Company has the royalty-
free right to use the 1-800-GO-RYDER number, subject to certain restrictions,
for a period of up to 13 years. The Company has the royalty-free right to use
the Ryder signature color scheme in perpetuity, subject to certain
restrictions. See "Relationships with the Seller--Intellectual Property."
Ryder's material trademarks have been registered with the United States Patent
and Trademark Office. The unexpected loss of such trademarks prior to the
expiration of the ten-year period could have a material adverse effect on the
Company's business.
INSURANCE
Historically the Company participated in the Seller's overall risk
management programs for automobile and general liability insurance, workers'
compensation and other insurance programs. In connection with the Acquisition,
the Seller retained liability for claims arising prior to the Acquisition
Closing Date. The reserves for these claims at December 31, 1995 and September
30, 1996 were $45.4 million and $44.8 million, respectively. See Notes to
Combined Financial Statements included herein.
The Company plans to retain a portion of its risk under automobile and
general liability insurance, workers' compensation and other insurance
programs. Recorded reserves will reflect estimated liabilities, including
claims incurred but not reported. Such liabilities will necessarily be based
on actuarial or other estimates. There can be no assurance that the estimates
will not change as a result of limitations inherent in the estimation process.
Changes in the estimates of these reserves will be charged or credited to
income in the period determined.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS
The Company and its operations are subject to various federal, state and
local laws and regulations, including those relating to taxing and licensing
of vehicles, transportation and vehicle safety, consumer protection,
insurance, advertising, used vehicle sales, labor matters and environmental
protection. The Company believes that it is in substantial compliance with
applicable laws and regulations. However, the Company may be affected by
changes, from time to time, in such laws and regulations. In addition, the
Company's operations, as well as those of its competitors, could be affected
by any limitation in fuel supply or any rationing of fuel.
The Company offers for sale, in addition to the rental of trucks, certain
liability-limiting products, such as physical damage waivers and limited
damage waivers, pursuant to which the Company agrees to waive its right
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<PAGE>
to recovery from a renter for damage to the truck. Approximately 8.0% and
10.0% of the Company's revenues in 1994 and 1995, respectively, were generated
from the sale of such liability-limiting products. Certain states have enacted
legislation, generally applicable to automobile rentals, which limits the
rates that may be charged for collision damage waivers, limits potential
customer liability for damage to rented vehicles or restricts the sale of such
waivers. In addition, Congress has from time to time considered legislation to
regulate the sale of collision damage waivers by rental companies, but no such
legislation has been enacted to date. The adoption of additional state or
federal legislation applicable to truck rentals that would restrict the sale,
or limit the rates, of collision damage waivers or other liability-limiting
products, or would limit potential customer liability could adversely affect
sales of these products by the Company.
A number of states currently hold a vehicle owner, including vehicle rental
companies, vicariously liable, regardless of fault, for the actions of any
person lawfully driving such owned vehicle.
The Company and its operations are subject to various federal, state and
local environmental laws and regulations, including laws and regulations which
relate to the ownership or use of tanks for the storage of petroleum products,
the management and removal of asbestos-containing materials in buildings, and
the disposal of solid or liquid wastes. Such laws and regulations impose
liability on responsible parties to remediate, or contribute to the costs of
remediating, sites at which petroleum products or hazardous wastes or
substances were disposed of or released, which may include sites operated by
the Company or to which it may have sent waste products for disposal,
treatment or recycling. Such remediation requirements may be imposed without
regard to fault or legality at the time of disposal or release.
The Seller has remediated contamination at one property pursuant to such
remediation laws, and there can be no assurance that contamination requiring
remediation will not be found in the future at other properties leased by the
Company. Also, there can be no assurance that asbestos-containing building
materials, such as asbestos-containing floor and ceiling materials, do not
exist in one or more of its leased buildings. The Seller, however, has agreed,
pursuant to the Acquisition Agreements, to retain liability for certain
environmental conditions existing at the properties at the time the Company
assumed the leases from the Seller. Therefore, the Company believes that it
will not incur material liability in the event that such environmental
conditions are found to exist.
The Company also maintains aboveground storage tanks at one property for the
storage of petroleum products, and performs light vehicle maintenance at some
of its leased properties. While the Seller has retained liability with respect
to environmental conditions existing prior to the date of the Acquisition,
whether discovered or undiscovered, there can be no assurance that present or
future activities undertaken by the Company will not result in environmentally
related expenditures for which the Company may be responsible. The Company
believes, however, that such expenditures would not have a material adverse
effect on its financial condition.
LEGAL PROCEEDINGS
From time to time, the Company is a party to legal actions in the normal
course of its business. The Company is not currently involved in any legal
proceedings that it believes would have a material adverse effect upon its
financial condition or results of operations.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information with respect to the
executive officers and directors of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Jay Alix................ 41 Chairman of the Board of Directors and Chief Executive Officer
Lawrence J. Ramaekers... 58 Vice Chairman of the Board of Directors
Gerald R. Riordan....... 47 President, Chief Operating Officer and Director
Wayne M. Mincey......... 39 Vice President, Eastern Area
Deborah L. Riston....... 45 Vice President, Human Resources
David S. Russell........ 37 Vice President, Western Area
Gary L. Andrews......... 55 Vice President, Maintenance
Stephen T. D. Dixon..... 37 Vice President, Information Systems
Larry D. Thogmartin..... 47 Vice President and Controller
Christopher G. Mumford.. 51 Vice President and Director
Alfred A. Piergallini... 50 Director
Thomas R. Reusche....... 42 Director
Edward L. Scarff........ 66 Director
</TABLE>
The By-Laws of the Company provide that the Board of Directors shall consist
of such number of directors as shall be fixed from time to time by resolution
of the Board, such number being limited to 15. The members of the Board were
elected in accordance with the provisions of a Shareholders' Agreement among
the Company and all of the shareholders of the Company pursuant to which
Madison Dearborn Capital Partners, L.P. ("Madison Dearborn") has the right to
designate one director, with the other directors being designated by Questor.
See "Certain Transactions--Shareholders' Agreement."
Each director of the Company will hold office until the next annual meeting
of shareholders of the Company or until his successor has been elected and
qualified. Officers of the Company are elected by the Board of Directors and
serve at the discretion of the Board of Directors.
JAY ALIX has been a principal of Questor Principals, Inc. ("Questor
Principals") and Questor Management Company ("Questor Management") since 1995
and has been President of Jay Alix & Associates, Inc. ("JA&A"), a nationally
known turnaround management firm located in Southfield, Michigan, Chicago and
New York City, since 1981. From 1992 to 1995, Mr. Alix and JA&A were retained
by General Motors Corporation to direct the restructuring of its National Car
Rental subsidiary, and during that period Mr. Alix was the Chief Executive
Officer and a director of National Car Rental.
LAWRENCE J. RAMAEKERS has been a principal of JA&A since 1982. On January
24, 1996, he became the Chairman of the Board of Directors of Color Tile, Inc.
to direct the restructuring of Color Tile, Inc. Previously, among other
engagements, Mr. Ramaekers was Chief Operating Officer of National Car Rental
during the two and a half years that JA&A was engaged by that entity.
GERALD R. RIORDAN joined the Seller in 1972. Mr. Riordan has been President
of the Company since December 1992. From October 1991 to December 1992, Mr.
Riordan served as Senior Executive Vice President and General Manager of the
Company.
WAYNE M. MINCEY joined the Seller in 1979. Mr. Mincey has been Vice
President, Eastern Area, of the Company since August 1995. From July 1993 to
August 1995, Mr. Mincey served as Vice President, Central
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<PAGE>
Area. From July 1991 to July 1993, Mr. Mincey served as Vice President,
Operations & Development of the Company and General Manager of RMM.
DEBORAH L. RISTON joined the Seller in 1978. Ms. Riston has been Vice
President, Human Resources, of the Company since October 1995. From July 1991
to October 1995, Ms. Riston served as Director of Human Resources and, prior
to that, as Director of Employee Benefits of the Company.
DAVID S. RUSSELL joined the Seller in 1982. Mr. Russell has been Vice
President, Western Area, of the Company since August 1995. From November 1993
to August 1995, Mr. Russell served as Vice President, Operations & Development
of the Company and General Manager of RMM. From September 1991 to November
1993, Mr. Russell served as District Manager of the Company.
GARY L. ANDREWS joined the Seller in 1963. Prior to becoming Vice President,
Maintenance in October 1996, Mr. Andrews had been Director of Consumer
Maintenance of the Seller since June 1992. From September 1985 to June 1992,
Mr. Andrews served as Director of Maintenance of RSI.
STEPHEN T. D. DIXON joined the Seller in 1986. Prior to becoming Vice
President, Information Systems, Mr. Dixon had been Director, Central
Operations & Development of the Company and General Manager of RMM since
October 1995. From August 1993 to October 1995, Mr. Dixon served as Director
of Pricing and Inventory Management of RSI. From January 1990 to August 1993,
Mr. Dixon served as Senior Manager, Rental Pricing of RSI.
LARRY D. THOGMARTIN joined the Seller in 1971. Prior to becoming Vice
President and Controller, Mr. Thogmartin had been Controller of the Company
since June 1991. Prior to June 1991, Mr. Thogmartin served as the District and
Region Controller for RTR.
CHRISTOPHER G. MUMFORD has been a managing director of Questor Management
since 1995 and a general partner of Scarff, Sears & Associates in San
Francisco, an investment firm, since 1986. From 1982 to 1994, Mr. Mumford also
served as Executive Vice President and Chief Financial Officer of Arcata
Corporation. Mr. Mumford has been a director of the general partner of Crown
Pacific Limited Partnership and its predecessor entities since 1991.
ALFRED A. PIERGALLINI has been President and Chief Executive Officer of
Gerber Products Co., which manufactures and sells baby food and offers life
insurance services, since April 1989. Mr. Piergallini is also a director of
Comerica Incorporated and Toy Biz Inc.
THOMAS R. REUSCHE has been a Vice President of Madison Dearborn, an
investment firm, since January 1993. From June 1983 to December 1992, he was a
Senior Investment Manager at First Chicago Venture Capital. He is also a
director of Hines Horticulture, Inc.
EDWARD L. SCARFF has been a principal of Questor Principals and Questor
Management since 1995 and the founder and a general partner of Scarff, Sears &
Associates in San Francisco, an investment firm, since 1983. Mr. Scarff has
been a private investment banker in San Francisco since 1971. Prior to
establishing his own business, Mr. Scarff was a Senior Industrial Economist at
the Stanford Research Institute from 1955 to 1959, Head of Investment Research
at Investors Diversified Services from 1959 to 1963, President of North
American Securities Corporation from 1964 to 1965, and President and Chief
Operating Officer of Transamerica Corporation from 1965 to 1970. Mr. Scarff is
also a director of Clorox Company.
COMPENSATION OF DIRECTORS
The current directors of the Company presently receive no compensation. The
Company expects that Mr. Piergallini, who became a director in December 1996,
and other directors appointed or elected in the future who are not otherwise
affiliated with the Company, will be compensated as may be determined by the
Board of Directors from time to time.
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<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation paid by
the Seller for services rendered by certain of the Company's executive
officers (collectively, the "Named Officers") during fiscal 1995, the last
full fiscal year for which the Named Officers received compensation from the
Seller:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------
OTHER ANNUAL ALL OTHER
NAME AND SALARY BONUS COMPENSATION(A) COMPENSATION(B)
PRINCIPAL POSITION $ $ $ $
------------------ ------- ------- --------------- ---------------
<S> <C> <C> <C> <C>
Gerald R. Riordan.............. 240,000 150,000 2,994 13,690
President
Wayne M. Mincey................ 135,098 55,000 1,469 5,637
Vice President, Eastern Area
Deborah L. Riston.............. 119,750 42,500 1,497 4,821
Vice President, Human Re-
sources
David S. Russell............... 116,583 44,000 0 2,900
Vice President, Western Area
Gary L. Andrews................ 113,333 18,000 0 2,250
Director of Consumer Mainte-
nance
</TABLE>
- --------
(a) This column represents amounts reimbursed for the payment of taxes on
certain perquisites provided to the Named Officers.
(b) All other compensation consists of contributions to the Seller's profit
sharing plan made, and insurance premiums paid, by the Seller on behalf of
the Named Officers.
For fiscal 1996, from the Acquisition Closing Date through December 31,
1996, the compensation paid by the Company to the Named Officers consisted
only of salary and was as follows: Mr. Riordan $54,083, Mr. Mincey $31,792,
Ms. Riston $28,875, Mr. Russell $30,958 and Mr. Andrews $28,167. Mr. Alix does
not receive any compensation in his capacity as Chief Executive Officer. See
"Certain Transactions."
RSI OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth information regarding grants of options to
the Named Officers to purchase stock of RSI during fiscal 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES
OPTIONS OF STOCK PRICE
NUMBER OF GRANTED TO APPRECIATION FOR OPTION
SECURITIES EMPLOYEES EXERCISE OR TERM
UNDERLYING IN FISCAL BASE PRICE EXPIRATION -------------------------
NAME OPTIONS GRANTED YEAR ($/SH) DATE 5% 10%
---- --------------- ---------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gerald R. Riordan....... 20,000 1.75% 25.4375 10/02/05 $ 319,950 $ 810,816
Wayne M. Mincey......... 6,000 0.52 25.4375 10/02/05 95,985 243,245
Deborah L. Riston....... 4,500 0.39 25.4375 10/02/05 71,989 182,434
David S. Russell........ 5,000 0.43 25.4375 10/02/05 79,988 202,704
Gary L. Andrews......... 1,500 0.13 25.4375 10/02/05 23,996 60,811
</TABLE>
AGGREGATED RSI OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR END
OPTION VALUES
The following table sets forth, on an aggregated basis, information
regarding stock of RSI underlying unexercised options during fiscal 1995 by
the Named Officers.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED IN-
UNDERLYING THE-
UNEXERCISED MONEY OPTIONS AT
OPTIONS AT YEAR END YEAR END
------------------- ----------------
SHARES ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
---- ------------------ -------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Gerald R. Riordan....... -- -- 97,820/61,500 $281,975/18,750
Wayne M. Mincey......... -- -- 15,066/ 9,250 19,227/ --
Deborah L. Riston....... 1,641 $19,745 12,299/ 6,300 28,671/ --
David S. Russell........ 1,641 4,493 3,350/ 6,550 -- / --
Gary L. Andrews......... -- -- 7,032/ 2,300 11,518/ --
</TABLE>
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<PAGE>
COMPANY STOCK PURCHASE AND OPTION PLANS
Key members of management have been offered the opportunity to purchase up
to approximately 3,400 shares of the Company's Class C non-voting common stock
at Questor's purchase price of $1,000 per share. There can be no assurance
that any or all of these subscription rights will be exercised. In connection
with such purchases, the key members of management would also be granted
options to purchase an equivalent number of shares.
In addition, the Company is contemplating adopting a stock option plan (the
"Plan") for key members of management and outside directors that is intended
to satisfy stock compensation needs for the next several years. Under the
Plan, eligible participants would be granted options to purchase newly issued
common stock of the Company at Questor's purchase price, representing
(together with the options referred to in the preceding paragraph) up to
approximately 10% of the common stock on a fully diluted basis. Such options
under the plan are expected to have a term of up to 10 years and to be subject
to customary vesting and other conditions. The Plan has not been approved by
the Board of Directors of the Company, and there can be no assurance that any
such Plan will be adopted.
OWNERSHIP OF CAPITAL STOCK
The Company is authorized to issue 275,000 shares of Common Stock, par value
$.01 per share ("Common Stock"), of which 225,000 shares shall be Class A
Common Stock, 25,000 shares shall be Class B Common Stock and 25,000 shares
shall be Class C Common Stock. As of December 31, 1996, 109,090 shares of
Class A Common Stock and 13,910 shares of Class B Common Stock were issued and
outstanding.
The holders of Class A Common Stock are entitled to vote on all matters to
be voted upon by shareholders of the Company. Holders of Class B Common Stock
and Class C Common Stock have no voting rights other than as required by law
and with respect to certain mergers or other transactions in which such
holders would be treated differently from holders of Class A Common Stock.
Shares of Class A Common Stock are convertible into the same number of shares
of Class B Common Stock, and shares of Class B Common Stock are convertible
into the same number of shares of Class A Common Stock in connection with
certain events, including certain sales of securities, mergers or similar
transactions that would result in a change of control of the Company, as
provided in the Company's Restated and Amended Certificate of Incorporation.
Shares of Class C Common Stock are not convertible into shares of Class A
Common Stock or Class B Common Stock.
The table below sets forth certain information, as of December 31, 1996,
regarding the ownership of the Class A Common Stock by (i) each person who
beneficially owns five percent or more of the outstanding shares of such
Common Stock, (ii) each director and executive officer of the Company and
(iii) all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF CLASS A
NAME AND ADDRESS SHARES COMMON STOCK
---------------- --------- ------------------
<S> <C> <C>
Questor Partners Fund, L.P.(1)................... 62,433 57.2%
103 Springer Building
3411 Silverside Road
Wilmington, Delaware 19810
Questor Side-by-Side Partners, L.P.(1)........... 4,479 4.1%
103 Springer Building
3411 Silverside Road
Wilmington, Delaware 19810
Madison Dearborn Capital Partners, L.P.(2)....... 24,600 22.6%
Three First National Plaza Suite 1330
Chicago, Illinois 60602
All executive officers and directors as a group 91,512 83.9%
(13 in number)(3)...............................
</TABLE>
- --------
(1) Questor Principals is the general partner of (i) Questor General Partner,
L.P., the general partner of Questor Partners Fund, L.P. ("Questor
Partners"), and (ii) Questor Side-by-Side Partners, L.P. ("Questor Side-
by-
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<PAGE>
Side"). Questor Management has been appointed to act on behalf of the
general partners of Questor Partners and Questor Side-by-Side with respect
to matters relating to such partnerships. Questor Partners and Questor
Side-by-Side together own beneficially 66,912 shares of Class A Common
Stock, representing 61.3% of the outstanding shares of such stock. Jay
Alix, Melvyn N. Klein, Dan W. Lufkin and Edward L. Scarff are the
shareholders of each of Questor Principals and Questor Management, with the
power, jointly, to direct the actions of such corporations, and may be
deemed to share beneficial ownership of the shares owned by Questor
Partners and Questor Side-by-Side by virtue of their status and rights as
such shareholders, but each expressly disclaims beneficial ownership of
such shares by reason of such status and rights.
(2) Thomas R. Reusche, a director of the Company, is the designee of Madison
Dearborn as a director of the Company.
(3) Consists of (i) the shares of Class A Common Stock owned by Questor
Partners and Questor Side-by-Side, as to which Messrs. Alix and Scarff,
directors of the Company, may be deemed to share beneficial ownership (see
note (1)), and (ii) the shares of Class A Common Stock owned by Madison
Dearborn, as to which Mr. Reusche, as the designee of Madison Dearborn as
a director of the Company, may be deemed to have beneficial ownership, but
Mr. Reusche expressly disclaims beneficial ownership of such shares by
reasons of such status.
Each of Societe Generale Investment Corporation and Chase Equity Associates,
an affiliate of Chase, owns 5,345 shares of Class A Common Stock (each
representing 4.9% of the outstanding Class A Common Stock). Societe Generale
Investment Corporation also owns 9,415 shares of Class B Common Stock and
Chase Equity Associates also owns 4,495 shares of Class B Common Stock.
SHAREHOLDERS' AGREEMENT
In connection with its formation and the Acquisition, the Company entered
into a Shareholders' Agreement (the "Shareholders Agreement") with all of the
holders of its Class A Common Stock and Class B Common Stock (collectively,
the "Shareholders"). The Shareholders Agreement contains certain restrictions
on transfers of Common Stock and provisions under which Shareholders may sell
Common Stock or require other Shareholders to sell Common Stock or under which
the Company may acquire Common Stock from Shareholders. The Shareholders
Agreement provides that, upon certain issuances by the Company of equity
securities to any of the initial Shareholders (or their permitted
transferees), Shareholders will have rights to maintain their percentage
equity interests in the Company's capital stock by purchasing a portion of
such equity securities.
Pursuant to the Shareholders Agreement, each of the Shareholders agrees to
vote its shares of Common Stock so that the Board of Directors will consist of
one director appointed by Madison Dearborn and as many other directors as
shall be appointed by Questor.
Subject to certain conditions, the Shareholders will have certain demand and
"piggyback" rights to have their shares of Common Stock registered under the
Securities Act. The Company has agreed to pay the costs and expenses
associated with any such registration, except for discounts and commissions.
The Shareholders Agreement will expire on the earlier to occur of the
closing of the underwritten initial public offering of Common Stock of the
Company and October 17, 2006.
CERTAIN TRANSACTIONS
MANAGEMENT AGREEMENT WITH QUESTOR MANAGEMENT
The Company has entered into a Management and Consulting Agreement with
Questor Management, pursuant to which Questor Management will provide
consulting, management and advisory services to the Company, including
services with respect to strategic planning, financial matters and operations.
As
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<PAGE>
compensation for such services, Questor Management will be paid an annual
management fee of $850,000 and costs and expenses incurred by Questor
Management in providing such services. The Company has also agreed to
indemnify Questor Management and its affiliates from liabilities and claims
arising out of or in connection with the performance by Questor Management of
such services, other than those resulting from the gross negligence or willful
misconduct of Questor Management. This agreement will continue for so long as
Questor Management or any affiliate thereof or affiliate of any such affiliate
continues to hold any shares of common stock of the Company. The Senior Bank
Facilities require that payment of at least 50% of the management fee be
deferred during the occurrence and continuance of an event of default under
the Senior Bank Facilities and that the payment of all of the management fee
be deferred following a change of control of the Company. Madison Dearborn
will receive 20% of the annual management fee paid to Questor Management.
AGREEMENT WITH JAY ALIX & ASSOCIATES, INC. FOR MANAGEMENT CONSULTING SERVICES
The Company has entered into an agreement with JA&A, pursuant to which JA&A
will provide advisory services to facilitate the Company's achievement of its
business plan, including evaluating the Company's organizational structure,
providing and implementing a cash flow planning model and assisting with
capital expenditure planning and other matters. For such services, JA&A will
be paid on an hourly basis and will be paid or reimbursed for its out-of-
pocket expenses. The Company paid JA&A a retainer of $250,000 upon execution
of this agreement, and JA&A has advised the Company that it estimates that its
assignment will be completed within 12 months and that the total fees and
expenses, excluding contingent success fees, would approximate $2.6 million.
The agreement provides that JA&A will receive a contingent success fee that
ranges from 6% to 15% of EBITDA in excess of certain EBITDA levels for 1997
and 1998.
The Company has also agreed to indemnify JA&A and its principals, employees
and agents from liabilities and claims relating to or arising from the
engagement of JA&A, other than for actions taken or omitted to be taken by
JA&A in bad faith or gross negligence. The agreement may be terminated at any
time by either party, provided that notwithstanding any such termination, JA&A
will be entitled to any fees and expenses earned under the provisions of the
agreement.
OTHER TRANSACTIONS WITH AFFILIATES
On the Acquisition Closing Date, Questor Management and Madison Dearborn
received $7.6 million and $400,000, respectively, in merger and acquisition
fees relating to the Acquisition.
RELATIONSHIPS WITH THE SELLER
In connection with the Acquisition, the Company entered into a number of
agreements with the Seller, which are summarized below.
NON-COMPETITION COVENANTS
In connection with the sale of the Business, RTR and the Company have each
agreed not to engage in certain types of rental transactions after the
Acquisition Closing Date. In particular, for a period of ten years after such
date (which period may be extended to twelve years in certain circumstances)
(such period, the "Seller Non-Compete Period"), RTR has agreed not to engage
in the "one-way" consumer and "one-way" light commercial truck rental
businesses. For a period of two years following the Acquisition Closing Date,
RTR has agreed to refer to the Company all customers in the one-way consumer
and one-way light commercial rental businesses. For purposes of the Agreement,
the term "one-way" rental means the rental of a truck that is not returned to
the original renting office or, in the case of a commercial rental, to a
rental office within 35 miles of the original renting office.
For as long as the Company is using the Ryder name (such period, the "Buyer
Non-Compete Period"), the Company has agreed not to engage in leasing
(generally defined as the renting of a truck for a period in excess
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of ninety days) or heavy duty truck rentals (defined as the renting of
vehicles with a manufacturer's gross vehicle weight of 26,000 pounds or more).
Until October 17, 1998, the Company has agreed to refer to RTR all customers
of leasing or heavy duty truck rentals. In the event the Company fails to cure
a willful and material breach of its non-competition covenant within 45 days
after notice thereof by RTR, RTR may, among other things, terminate the
service arrangements described below under "Service Agreements."
The Company and RTR will each engage in the local consumer rental business
and the local light commercial rental business. For this purpose RTR will
serve as a dealer of the Company's trucks. However, during the Seller Non-
Compete Period, RTR has agreed not to advertise with respect to the local
consumer rental business or to engage through third party dealers, agents or
franchisees in the local consumer rental business.
Except as described in the second paragraph of "Dealer and Cooperation
Arrangements" below, neither party, however, is restricted from engaging in
the local light commercial rental business (defined as the rental of trucks
with a manufacturer's gross vehicle weight of under 26,000 pounds for a
business purpose). Pursuant to the Acquisition Agreements, the Company and RTR
have agreed to cooperate with each other to develop a joint marketing and
truck rental program with respect to certain of the largest of RTR's current
customers in the light commercial rental business.
DEALER AND COOPERATION ARRANGEMENTS
Pursuant to the Dealer Agreement, RTR has agreed to act as a dealer of the
Company's trucks and accessory equipment at certain of the RTR branch
locations. RTR's dealers will be paid a commission of up to 16.5% of gross
rental revenues through December 31, 1998 for renting the Company's trucks
(which is below the Company's standard dealer commission rate of up to 17%).
This commission will be adjusted to match the Company's standard commission
rate beginning in 1999. Each party may, upon 60 days' notice to the other
party, remove RTR's dealer locations as dealers of the Company's trucks
without cause (based on rental revenues for such dealers for the immediately
preceding year) according to the following schedule: in 1996, dealers
accounting for up to $1 million of 1995 rental revenues; in 1997, dealers
accounting for up to $6 million of 1996 rental revenues; and in 1998 and each
year thereafter, dealers accounting for up to $12 million of rental revenues
for the previous calendar year. RTR or the Company may terminate the Dealer
Agreement with respect to any dealer location upon a material breach of the
terms of such agreement not cured within 30 days after notice thereof.
RTR has agreed to limit the size of its vehicle fleet of light duty trucks
(i.e., trucks having a manufacturer's gross vehicle weight of 16,000 pounds or
less) to 6,500 trucks in 1997 and 7,500 trucks in 1998, so long as the Company
(i) makes available to RTR dealers a minimum daily average number of 2,600
trucks (calculated on a rolling four calendar quarters in arrears basis) and
(ii) does not open any new dealers within a two-mile radius of any branch of
RTR during such period.
Pursuant to the Acquisition Agreements, the Company and RTR have also agreed
for a period of up to ten years to cooperate with each other in structuring a
joint program for Yellow Pages advertising in phonebooks. RTR has also agreed
to sell to the Company, through RTR's affiliate, Network Sales, Inc., truck
parts and components at wholesale cost for so long as such affiliate is a
distributor of repair parts and components.
SERVICE AGREEMENTS
Following the Acquisition Closing Date, RTR will continue to provide the
Company with various services which it performed prior to the Acquisition,
including acting as agent in the sale of used trucks and providing maintenance
on the Company's trucks.
RTR has agreed to act as the Company's agent in selling the Company's used
trucks at RTR's Used Truck Centers and other RTR branch locations. Upon
delivery of the used trucks to RTR, the Company (on behalf of Leasco) must
designate both an asking price and an acceptable sale price ("Take Price") for
each truck. RTR
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may not sell any used truck for more than $500 below the Take Price designated
by the Company without the prior consent of the Company. In consideration for
such services, the Company has agreed to pay RTR a fixed amount per vehicle
sold, plus a per vehicle sales commission in accordance with RTR's used truck
representative sales compensation plan consistent with past practice. The
Company also agreed to reimburse RTR for a fixed amount per truck sold for
advertising expenses. The Company has also agreed to consign to RTR at least
40% of the total number of used vehicles it trades or sells in 1997, 35% in
1998, 30% in 1999, 25% in 2000 and 20% in 2001. After December 31, 2001,
either party may terminate the agreement upon 60 days' notice.
RTR has agreed, pursuant to the Vehicle Maintenance Agreement, to provide
maintenance for the Company's vehicles at a rate that is intended to
approximate the rate RTR charged the Company prior to the Acquisition Closing
Date. The Company has agreed to order a minimum amount of labor hours of
repairs each year from RTR, which each party has the unilateral right to
reduce (i) in 1997 by an amount up to 10% of the minimum amount of labor hours
for that year and (ii) in 1998 and thereafter, by an amount up to 20% of the
minimum amount of labor hours for that year.
RTR has agreed, pursuant to the Administrative Services Agreement and the
MIS Support Agreement, to provide the Company, at its request, for a period of
up to two years, with certain administrative and management information
systems support services related to the Business. Services provided under
these agreements include those relating to financial reporting activities,
accounting and tax functions, payroll administration, vehicle purchasing
administration, employee and dealer training, third party automobile liability
claims management and computer systems support. Pursuant to the MIS Support
Agreement, the Company will be charged a rate that is intended to approximate
the internal transfer pricing rate charged the Company by RTR prior to the
Acquisition Closing Date, which rate is fixed for the term of the contract,
provided that the Company's usage of such services does not increase from the
Company's usage prior to the Acquisition Closing Date. Any or all services may
be discontinued upon 90 days' notice from the Company. Pursuant to the
Administrative Services Agreement, the Company will be charged a rate that is
intended to approximate the internal transfer pricing rate charged by RTR to
the Company prior to the Acquisition Closing Date, plus a markup with respect
to certain services. Any or all services may be discontinued upon 60 days'
notice from the Company.
INTELLECTUAL PROPERTY
Pursuant to the License Agreement, RSI has granted the Company the royalty-
free right to use certain Ryder trademarks in connection with providing its
truck rental services and the marketing of such services until October 17,
2006. However, no later than October 17, 2001, the Company must begin using
the Ryder trademarks in conjunction with a successor tradename and trademarks
(subject to approval by the Seller) until the expiration of the License
Agreement. The Company has the royalty-free right, subject to certain
restrictions, to use the Ryder signature color scheme in perpetuity,
notwithstanding the expiration or termination of the License Agreement.
Pursuant to the License Agreement and the Acquisition Agreements, RTR has
granted the Company the right to use the 1-800-GO-RYDER Number and service
mark. The Company will allocate incoming calls among its dealers, including
RTR dealers, based on the geographic proximity of the applicable dealer to the
prospective customer. If an incoming call for a local transaction is directed
to an RTR dealer, such dealer may rent an RTR truck rather than a Company
truck if an RTR truck is available. The Company has the right to use the phone
number, subject to such limitation, for up to 13 years and, for a period of
three years thereafter, the Seller has agreed not to market the 1-800-GO-RYDER
number in any truck rental or leasing business.
RTR has assigned certain patents, including patents relating to loading
ramps, to the Company. Pursuant to the Patent License Agreement, the Company
has granted RTR the right to use these patents.
Pursuant to the Copyright License Agreement, RTR has granted the Company the
royalty-free right to use written promotional materials, which were developed
and copyrighted by RTR prior to the Acquisition Closing
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Date, in connection with marketing the Business for ten years, subject to
certain restrictions. The Company may grant sublicenses of its rights to its
dealers, subject to certain restrictions.
Pursuant to the Software License Agreement, RTR has granted the Company a
royalty-free perpetual right to use certain computer software necessary for
the operation of the Company's business that was not transferred to the
Company by RTR in the Acquisition.
The Company believes that the overall arrangement with the Seller is
adequate, in all material respects, to provide for an effective transition of
the Company to an independently operating entity.
LEASCO AND PROPOSED SECURITIZATION
In connection with the Acquisition, the Company formed Leasco as a wholly-
owned, special purpose subsidiary to facilitate transfers to one entity of
ownership in and legal title to the truck fleet and to create an entity that
may be the issuer of obligations in a proposed securitized financing of the
trucks.
On October 17, 1996, Leasco purchased the trucks being sold by RTR pursuant
to the Acquisition Agreements for $535.0 million, such funds having been
contributed to Leasco as capital by the Company. Upon such purchase, the
Company and Leasco entered into a Master Motor Vehicle Lease Agreement (the
"Lease Agreement"), pursuant to which Leasco agreed to lease to the Company,
and the Company agreed to lease from Leasco, the trucks so purchased and all
other trucks purchased by Leasco thereafter. The rent payable by the Company
under the Lease Agreement is calculated, for each vehicle, on the basis of the
fair market value (in the case of the initial trucks) or the capitalized cost
(in the case of subsequently acquired trucks) for such vehicle, taking into
account the remaining economic life of the truck and an interest factor.
Pursuant to the Lease Agreement, the Company (i) provides maintenance for
the vehicles, at Leasco's cost, obtains insurance, places vehicle orders with
Leasco and handles certain other matters with respect to the trucks and (ii)
after consultation with Leasco, sells used trucks on Leasco's behalf. Leasco
is responsible for registering, licensing and titling the trucks. The Company
has indemnified Leasco against losses and liabilities arising out of the use
and rental of the trucks by the Company in its business. Subject to certain
restrictions, Leasco may terminate the Lease Agreement upon the occurrence of
a default by the Company thereunder, which includes a failure to make lease
payments, breach of a covenant or bankruptcy. The Lease Agreement will expire
on the date of expiration of the lease of the last truck subject to the Lease
Agreement, which will be the date representing the expiration of two-thirds of
the economic life of such truck or such earlier date as of which the truck is
disposed of or Leasco receives proceeds of a casualty with respect thereto.
Legal title (but not rights of ownership) to the trucks was not transferred
to Leasco on the Acquisition Closing Date but will be transferred prior to
October 17, 1997. To provide for such transfers, Leasco and RTR entered into a
Vehicle Title Nominee Agreement pursuant to which RTR will, until transfer of
title, hold title to the trucks as nominee of Leasco and Leasco will undertake
to effect transfers of title by April 17, 1997. Leasco has indemnified RTR for
claims arising out of or relating to ownership of the trucks after the
Acquisition Closing Date (except for claims otherwise provided for in the
Acquisition Agreements or in the following sentence). RTR has indemnified
Leasco for claims by a creditor or purchaser of a truck as a result of RTR's
retention of legal title to the vehicle or breach of the Vehicle Title Nominee
Agreement. The Vehicle Title Nominee Agreement also contains provisions
relating to insurance for the trucks.
The Company intends to refinance all of the Term Facility, and a portion of
the Revolving Credit Facility, with the proceeds of a securitization by Leasco
of the truck rental fleet (the "Securitization"). It is currently anticipated
that the Securitization will be effected through a commercial paper financing,
a medium term note financing, other borrowing or a combination thereof, but
the refinancing intended to be effected by the Securitization could take other
forms. There can be no assurance that Leasco will be able to effect the
Securitization or that it will be able to effect the Securitization on terms
acceptable to Leasco or the Company.
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The Company expects that the documents to be entered into in connection with
the Securitization will provide for certain restrictions and limitations on
Leasco's business and assets.
Leasco is not a guarantor of the Notes or the Senior Bank Facilities, and
the lenders under the Senior Bank Facilities do not have liens on or security
interests in any of the assets of Leasco as security for such facilities.
However, the Senior Bank Facilities provide that if the Securitization has not
been consummated on or prior to July 17, 1997, the Company may be required by
the agents or the lenders under the Senior Bank Facilities to cause Leasco to
guarantee the Senior Bank Facilities on a senior basis, and in such event the
obligations of Leasco under such guarantee would be secured by liens on, and
security interests in, the assets of Leasco. If such a guarantee of the Senior
Bank Facilities is provided, the Company would also be required to cause
Leasco and the other subsidiaries of the Company to guarantee the Notes on an
unsecured, senior subordinated basis. All of the capital stock of Leasco is
presently pledged as security for the Senior Bank Facilities. See "Description
of Senior Bank Facilities."
The Leasco Charter requires that the membership of the Board of Directors of
Leasco shall consist of at least two independent directors, each of whom (i)
is not a stockholder (whether direct, indirect or beneficial), partner,
customer or supplier of JA&A or Questor Management or any affiliate of any of
the foregoing (the "Related Corporate Group"), (ii) is not a director,
officer, employee, affiliate or associate of any member of the Related
Corporate Group (other than the Company), (iii) is not a person related to any
person referred to in clause (i) or (ii), (iv) is not a trustee, conservator
or receiver for any member of the Related Corporate Group and (v) has (A)
prior experience as an independent director for a corporation whose charter
documents required the unanimous consent of all independent directors thereof
before such corporation could consent to the institution of bankruptcy or
insolvency proceedings against it or could file a petition seeking relief
under any applicable bankruptcy law and (B) at least three years of employment
experience with one or more entities that provide, in the ordinary course of
business, advisory, management or placement services to issuers of
securitization or structured finance securities. All independent directors of
Leasco must affirmatively vote for any dividend or distribution payable on the
common stock of Leasco or any loan or advance to the Company. The affirmative
vote of the independent directors is also required for certain other actions
by Leasco, including certain mergers, sales of assets or acquisitions and the
filing, or consent to the filing, of any petition under bankruptcy or
insolvency laws, and the affirmative vote of at least one independent director
is required for Leasco to grant a guarantee or liens on assets. See "Risk
Factors--Limitations on Access to Cash Flow and Assets of Leasco."
The By-Laws of Leasco contain various provisions relating to the conduct of
the business of Leasco, including a requirement that Leasco conduct all
transactions and dealings with other members of the Related Corporate Group on
terms that Leasco reasonably believes to be on an arm's-length basis and for
fair consideration. The By-Laws also require that Leasco have at least one
officer who is not an officer of the Company.
DESCRIPTION OF SENIOR BANK FACILITIES
The Company entered into a Credit Agreement dated as of October 17, 1996
(the "Credit Agreement") with Chase, as administrative agent and lender, and
Citicorp, U.S.A., Inc., as documentation agent, collateral agent and lender,
and the other lenders party thereto that provided for term loans of $350.0
million (the "Term Facility") and a revolving credit facility of $150.0
million, of which up to $50.0 million is available for letters of credit (the
"Revolving Credit Facility" and, together with the provisions of the Credit
Agreement relating to the Term Facility, the "Senior Bank Facilities").
Proceeds of the Initial Offering were used to repay approximately $69 million
of loans then outstanding under the Term Facility. The following is a summary
of the principal terms of the Credit Agreement and is subject to and qualified
in its entirety by reference to the Credit Agreement and related loan
documents, which are available upon request from the Company.
Use of Facilities. On the Acquisition Closing Date, the Company borrowed the
full amount of the Term Facility and $31.0 million under the Revolving Credit
Facility and used $380.6 million of the proceeds thereof,
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together with certain other funds, for payment of the purchase price of the
Acquisition and related fees and expenses, with $0.4 million remaining as
excess cash. On such date, the Company also obtained letters of credit for use
in the ordinary course of business in the aggregate face amount of $10.0
million and a letter of credit issued to RTR in the face amount of $2.5
million. The remainder of the Revolving Credit Facility is available (subject
to borrowing base availability) for general corporate purposes.
Security; Guarantees. The obligations of the Company under the Credit
Agreement are unconditionally guaranteed, jointly and severally, by each
existing, and will be so guaranteed by each subsequently acquired or organized
domestic and, to the extent that no adverse tax consequences would result,
foreign, subsidiary of the Company, other than Leasco. The obligations under
the Senior Bank Facilities and the guarantees thereof are secured by
substantially all the assets of the Company and the Existing Subsidiaries
other than Leasco, including (i) a first priority pledge of all the capital
stock of Leasco and each existing and subsequently acquired or organized
subsidiary of the Company (which pledge, in the case of foreign subsidiaries,
would be limited to 65% of the capital stock of each such subsidiary to the
extent the pledge of any greater percentage would result in adverse tax
consequences to the Company) and (ii) perfected first priority security
interests in substantially all tangible and intangible assets of the Company
and of each existing and subsequently acquired or organized subsidiary of the
Company, other than Leasco, including accounts receivable, inventory,
equipment, intellectual property, general intangibles, owned real property,
cash and proceeds of the foregoing, in each case subject to certain
exceptions. Notwithstanding the foregoing, at the request of the agents or the
lenders under the Senior Bank Facilities, the Company may be required to cause
Leasco to guarantee the obligations of the Company under the Credit Agreement,
and to grant security interests in, and liens on, Leasco's assets as security
for such guarantee, if the Securitization has not been consummated on or prior
to July 17, 1997.
Borrowing Base. Loans under the Revolving Credit Facility are subject to
maintenance by the Company of a borrowing base, which equals the sum of
specified fixed percentages of (i) eligible accounts receivable, (ii) the
original cost of eligible revenue-producing vehicles, (iii) the book value of
eligible non-vehicle revenue-producing equipment, (iv) the book value of
eligible non-revenue-producing vehicles, (v) the appraised fair market value
of eligible real estate, and (vi) the book value of eligible non-vehicle non-
revenue-producing equipment.
Amortization; Interest. The Term Facility matures on October 17, 2001 and
amortizes in equal quarterly installments totaling $20.0 million in each of
fiscal 1998, 1999, and 2000, and $290 million in fiscal 2001. The Term
Facility bears interest at a rate per annum equal (at the Company's option) to
(i) an adjusted London inter-bank offered rate ("Adjusted LIBOR") plus 2.0% or
(ii) an Alternate Base Rate (equal to the highest of Chase's prime rate, a
certificate of deposit rate plus 1% and the Federal Funds effective rate plus
1/2 of 1%) plus 1.0%. The Revolving Credit Facility matures on October 17,
2001 and bears interest at a rate per annum equal (at the Company's option) to
(i) Adjusted LIBOR plus 2.0% or (ii) the Alternate Base Rate plus 1.0%. If the
Securitization is not consummated on or prior to July 17, 1997, the Term
Facility and Revolving Credit Facility borrowings will each bear interest at a
rate per annum equal (at the Company's option) to (i) Adjusted LIBOR plus 2.5%
or (ii) the Alternate Base Rate plus 1.5%.
Prepayments and Reduction of Commitments. The Senior Bank Facilities permit
the Company to prepay loans and permanently reduce revolving credit
commitments, in whole or in part, at any time in minimum principal amounts of
$5.0 million, without premium or penalty, subject to reimbursement of the
lenders' redeployment costs in the case of a prepayment of borrowings bearing
interest at Adjusted LIBOR other than on the last day of the relevant interest
period. Until such time as the Securitization is consummated, the Company will
be required to make mandatory prepayments of loans under the Senior Bank
Facilities, subject to certain exceptions, with (i) 100% of the net cash
proceeds of all non-ordinary course asset sales or other dispositions of
property by the Company and (ii) up to 100% of the net proceeds of issuances
of equity and debt obligations (other than the Notes) of the Company and its
subsidiaries. In addition, if the Securitization is not consummated on or
prior to July 17, 1997, then until such time as the Securitization has been
consummated, the Company will be required to make mandatory prepayments of
loans under the Senior Bank Facilities with 75% of excess cash
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flow (as such term is defined in the Senior Bank Facilities), subject to
reduction to 50% based upon financial performance and certain other standards.
The mandatory prepayments described in the preceding paragraph will
initially be applied to the Term Facility, first to the next two scheduled
amortization payments and then in inverse order of maturity to the remaining
amortization payments thereunder. When the Term Facility has been paid in
full, such mandatory prepayments will be applied to reduce loans (but not
commitments) under the Revolving Credit Facility. Subject to certain
conditions, the Company may from time to time make optional prepayments under
the Term Facility without premium or penalty. Any optional prepayments of the
Term Facility will be applied pro rata against the remaining scheduled
amortization payments of the Term Facility.
Fees. The Company will be required to pay the lenders under the Revolving
Credit Facility, on a quarterly basis, a commitment fee equal to 3/8 of 1% per
annum on the undrawn portion of the Revolving Credit Facility; provided, that
if the Securitization is not consummated on or prior to July 17, 1997, such
fee will be increased to 1/2 of 1% per annum until such time as the
Securitization has been consummated. The Company will also be required to pay
(i) a letter of credit fee equal to the difference between the spread over
Adjusted LIBOR under the Revolving Credit Facility and 1/4 of 1% on the
average daily exposure of letters of credit, (ii) to the issuing bank, a fee
of 1/4 of 1% on the aggregate face amount of outstanding letters of credit,
(iii) annual administration fees, and (iv) agent, arrangement and other
similar fees. The fees set forth in clauses (i) and (ii) above are computed on
an annual basis and are paid quarterly.
Covenants. The Senior Bank Facilities contain a number of covenants that,
among other things, restrict the ability of the Company and its subsidiaries
to dispose of assets, incur additional indebtedness, prepay other indebtedness
or amend certain other debt instruments, pay dividends or make distributions,
create liens on assets, enter into sale and leaseback transactions, make
investments, loans or advances, make acquisitions, engage in mergers or
consolidations, issue capital stock, change the business conducted by the
Company or its subsidiaries, make capital expenditures or engage in certain
transactions with affiliates and otherwise restrict certain corporate
activities, including with respect to the Company's vehicle sales and bank
accounts. In addition, under the Senior Bank Facilities, the Company is
required to comply with specified financial ratios and tests, including
minimum interest coverage ratios, maximum leverage ratios, minimum EBITDA
requirements and minimum fixed charge coverage ratios.
Events of Default. The Senior Bank Facilities contain customary events of
default, including defaults relating to payments, breach of representations
and warranties, covenants, cross-defaults and cross-acceleration to certain
other indebtedness, certain events of bankruptcy and insolvency, ERISA,
judgments, actual or asserted invalidity of security and change of control.
DESCRIPTION OF NOTES
GENERAL
The Exchange Notes will be issued, and the Senior Subordinated Notes were
issued, under an Indenture, dated as of November 25, 1996 (the "Indenture"),
between the Company and The Bank of New York, as Trustee (the "Trustee"), a
copy of which is available upon request to the Company.
The following summary of certain provisions of the Indenture and the Notes
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Indenture, including the
definitions of certain terms therein and those terms made a part thereof by
the Trust Indenture Act of 1939, as amended ("TIA"). Capitalized terms used
herein and not otherwise defined have the meanings set forth in the section
"--Certain Definitions."
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be exchanged or transferred, at the office or agency of the
Company in the Borough of Manhattan, The City of New York
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(which initially shall be the principal corporate trust office of the Trustee,
at 101 Barclay Street, New York, New York 10286), except that, at the option
of the Company, payment of interest may be made by check mailed to the
registered holders of the Notes at their registered addresses.
The Exchange Notes will be issued, and the Senior Subordinated Notes were
issued, only in fully registered form, without coupons, in denominations of
$1,000 and any integral multiple of $1,000. No service charge was made, or
will be made, for any registration of transfer or exchange of Senior
Subordinated Notes or Exchange Notes, as the case may be, but the Company may
require payment of a sum sufficient to cover any transfer tax or other similar
governmental charge payable in connection therewith.
TERMS OF THE NOTES
The Exchange Notes will be, and the Senior Subordinated Notes are, unsecured
obligations of the Company, limited to $175.0 million aggregate principal
amount, and will mature on December 1, 2006. Each Note will bear interest at a
rate of 10% per annum from November 25, 1996, or from the most recent date to
which interest has been paid or provided for, payable semiannually to Holders
of record at the close of business on the May 15 or November 15 immediately
preceding the interest payment date on June 1 and December 1 of each year,
commencing June 1, 1997.
OPTIONAL REDEMPTION
The Notes will be redeemable, at the Company's option, in whole or in part,
at any time on or after December 1, 2001, and prior to maturity, upon not less
than 30 nor more than 60 days' prior notice mailed by first-class mail to each
Holder's registered address, at the following redemption prices (expressed as
a percentage of principal amount), plus accrued interest, if any, to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the 12-month period commencing on December 1 of the years set
forth below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
------ ----------
<S> <C>
2001........................................................... 105.000%
2002........................................................... 103.333%
2003........................................................... 101.667%
2004 and thereafter............................................ 100.000%
</TABLE>
In addition, at any time and from time to time prior to December 1, 1999,
the Company may redeem in the aggregate up to 33- 1/3% of the original
aggregate principal amount of the Notes with the proceeds of one or more
Public Equity Offerings by the Company following which there is a Public
Market, at a redemption price (expressed as a percentage of principal amount
thereof) of 110% plus accrued interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided,
however, that at least 66- 2/3% of the original aggregate principal amount of
the Notes must remain outstanding after each such redemption.
At any time on or prior to December 1, 2001, the Notes may also be redeemed
as a whole at the option of the Company upon the occurrence of a Change of
Control, upon not less than 30 nor more than 60 days' prior notice (but in no
event more than 180 days after the occurrence of such Change of Control)
mailed by first-class mail to each Holder's registered address, at a
redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued but unpaid interest, if any, to, the
date of redemption (the "Redemption Date") (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date).
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SELECTION
In the case of any partial redemption, selection of the Notes for redemption
will be made by the Trustee, by lot or by such other method as the Trustee in
its sole discretion shall deem to be fair and appropriate, although no Note of
$1,000 in original principal amount or less will be redeemed in part. If any
Note is to be redeemed in part only, the notice of redemption relating to such
Note shall state the portion of the principal amount thereof to be redeemed. A
new Note in principal amount equal to the unredeemed portion thereof will be
issued in the name of the Holder thereof upon cancellation of the original
Note.
RANKING
Prior to the Subordination Termination Date (as defined below), the
indebtedness evidenced by the Notes will be unsecured Senior Subordinated
Indebtedness of the Company, will be subordinated in right of payment, as set
forth in the Indenture, to the payment when due of all existing and future
Senior Indebtedness of the Company, will rank pari passu in right of payment
with all existing and future Senior Subordinated Indebtedness of the Company
and will be senior in right of payment to all existing and future Subordinated
Obligations of the Company. The Notes will also be effectively subordinated to
any Secured Indebtedness of the Company and its Subsidiaries to the extent of
the value of the assets securing such Indebtedness. However, payment from the
money or the proceeds of U.S. Government Obligations held in any defeasance
trust described under "--Defeasance" below is not subordinated to any Senior
Indebtedness or subject to the restrictions described herein. On the first
date (but not earlier than January 1, 1998) as of which (i) the Securitization
has been consummated, (ii) any consents required under the Senior Bank
Facilities in connection with the transaction contemplated by this sentence
shall have been obtained and (iii) no default or event of default shall have
occurred and be continuing under the Senior Bank Facilities, the subordination
provisions of the Notes will terminate and cease to be effective with respect
to any Indebtedness, whenever incurred, and the Notes will constitute Senior
Indebtedness of the Company. The date as of which the subordination provisions
of the Notes shall terminate and cease to be effective in accordance with the
foregoing provisions is referred to herein as the "Subordination Termination
Date." The Company has agreed that it will use its reasonable best efforts as
determined in good faith by the Board of Directors to obtain any consents
required in order to effectuate the foregoing provisions.
Certain of the operations of the Company are conducted through its
Subsidiaries. Claims of creditors of such Subsidiaries, including trade
creditors, and claims of preferred stockholders (if any) of such Subsidiaries
generally will have priority with respect to the assets and earnings of such
Subsidiaries over the claims of creditors of the Company, including holders of
the Notes. The Notes, therefore, will be effectively subordinated to creditors
(including trade creditors) and preferred stockholders (if any) of
Subsidiaries of the Company. At October 16, 1996, after giving effect to the
Transactions, the Initial Offering and the application of the proceeds
therefrom as described herein under "Use of Proceeds," the total liabilities
of the Company's Subsidiaries were approximately $3.2 million, including Trade
Payables. Although the Indenture limits the incurrence of Indebtedness and
preferred stock of certain of the Company's Subsidiaries, such limitation is
subject to a number of significant qualifications.
At October 16, 1996, after giving effect to the Transactions, the Initial
Offering and the application of the proceeds therefrom as described herein
under "Use of Proceeds," the outstanding Senior Indebtedness of the Company
would have been approximately $312.0 million (exclusive of unused commitments)
all of which would have been Secured Indebtedness. Although the Indenture
contains limitations on the amount of additional Indebtedness which the
Company may Incur, under certain circumstances the amount of such Indebtedness
could be substantial and, in any case, such Indebtedness may be Senior
Indebtedness. See "--Certain Covenants--Limitation on Indebtedness" below.
"Senior Indebtedness" means the following obligations, whether outstanding
on the date of the Indenture or thereafter issued, without duplication: (i)
all obligations consisting of Bank Indebtedness; (ii) all obligations
consisting of the principal of and premium, if any, and accrued and unpaid
interest (including interest accruing on or after the filing of any petition
in bankruptcy or for reorganization relating to the Company regardless of
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whether postfiling interest is allowed in such proceeding) in respect of (1)
indebtedness of the Company for money borrowed and (2) indebtedness evidenced
by notes, debentures, bonds or other similar instruments for the payment of
which the Company is responsible or liable as obligor, guarantor or otherwise;
(iii) all Capitalized Lease Obligations of the Company; (iv) all obligations
of the Company (1) for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction, (2) under interest
rate swaps, caps, collars, options and similar arrangements and foreign
currency hedges entered into in respect of any obligations described in
clauses (i), (ii) and (iii) (such obligations to be equal at any time to the
termination value of such agreements or arrangements that would be payable by
such Person at such time) or (3) issued or assumed as the deferred purchase
price of property and all conditional sale obligations of the Company and all
obligations of the Company under any title retention agreement; (v) all
obligations of other Persons of the type referred to in clauses (ii), (iii)
and (iv) and all dividends of other Persons for the payment of which, in
either case, the Company is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise, including guarantees of such obligations and
dividends; and (vi) all obligations of the Company consisting of
modifications, renewals, extensions, replacements, refinancings and refundings
of any obligations described in clauses (i), (ii), (iii), (iv) and (v);
unless, in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, it is provided that such obligations are not superior
in right of payment to the Notes; provided, however, that Senior Indebtedness
shall not include (1) any obligation of the Company to any Subsidiary, (2) any
liability for Federal, state, local or other taxes owed or owing by the
Company, (3) any accounts payable and accruals or other liabilities (other
than those specified above) arising in the ordinary course of business
(including guarantees thereof or instruments evidencing such liabilities), (4)
any Indebtedness, Guarantee or obligation of the Company that is subordinate
or junior to any other Indebtedness, Guarantee or obligation of the Company or
(5) any Indebtedness that is incurred in violation of the Indenture. If any
Designated Senior Indebtedness is disallowed, avoided or subordinated pursuant
to the provisions of Section 548 of Title 11 of the United States Code or any
applicable state fraudulent conveyance law, such Designated Senior
Indebtedness nevertheless will constitute Senior Indebtedness. "Senior
Indebtedness" of any Note Guarantor has a correlative meaning.
The following provisions under this caption "--Ranking" are applicable to
the Notes prior to the Subordination Termination Date as described above.
Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the Notes in accordance with the provisions of the Indenture. The
Notes will in all respects rank pari passu with all other Senior Subordinated
Indebtedness of the Company. The Company has agreed in the Indenture that it
will not Incur, directly or indirectly, any Indebtedness that is subordinate
or junior in ranking in any respect to Senior Indebtedness unless such
Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated
in right of payment to Senior Subordinated Indebtedness. Unsecured
Indebtedness is not deemed to be subordinate or junior to Secured Indebtedness
merely because it is unsecured.
The Company may not pay principal of, premium (if any) or interest on, the
Notes or make any deposit pursuant to the provisions described under
"Defeasance" below and may not otherwise purchase, redeem or otherwise retire
any Notes (collectively, "pay the Notes") if (i) any Senior Indebtedness is
not paid when due or (ii) any other default on Senior Indebtedness occurs and
the maturity of such Senior Indebtedness is accelerated in accordance with its
terms unless, in either case, (x) the default has been cured or waived and any
such acceleration has been rescinded in writing or (y) such Senior
Indebtedness has been paid in full. However, the Company may pay the Notes
without regard to the foregoing if the Company and the Trustee receive written
notice approving such payment from the Representative of the Designated Senior
Indebtedness with respect to which either of the events set forth in clause
(i) or (ii) of the immediately preceding sentence has occurred and is
continuing. During the continuance of any default (other than a default
described in clause (i) or (ii) of the second preceding sentence) with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof
may be accelerated immediately without further notice (except such notice as
may be required to effect such acceleration) or the expiration of any
applicable grace periods, the Company may not pay the Notes for a period (a
"Payment Blockage Period") commencing upon the receipt by the Trustee (with a
copy to the Company) of written notice (a "Blockage Notice") of such default
from the Representative of the Designated Senior
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Indebtedness specifying an election to effect a Payment Blockage Period and
ending 179 days thereafter (or earlier if such Payment Blockage Period is
terminated (i) by written notice to the Trustee and the Company from the
Person or Persons who gave such Blockage Notice, (ii) because such Designated
Senior Indebtedness has been repaid in full or (iii) because the default
giving rise to such Blockage Notice is no longer continuing). Notwithstanding
the provisions described in the immediately preceding sentence (but subject to
the provisions contained in the first sentence of this paragraph), unless the
holders of such Designated Senior Indebtedness or the Representative of such
holders have accelerated the maturity of such Designated Senior Indebtedness,
the Company may resume payments on the Notes after the end of such Payment
Blockage Period. Not more than one Blockage Notice may be given in any
consecutive 360-day period, irrespective of the number of defaults with
respect to Designated Senior Indebtedness during such period. However, if any
Blockage Notice within such 360-day period is given by or on behalf of any
holders of Designated Senior Indebtedness other than Bank Indebtedness, a
Representative of Bank Indebtedness may give another Blockage Notice within
such period. In no event, however, may the total number of days during which
any Payment Blockage Period or Periods is in effect exceed 179 days in the
aggregate during any 360 consecutive day period.
Upon any payment or distribution of the assets of the Company upon a total
or partial liquidation or dissolution or reorganization of or similar
proceeding relating to the Company or its property, the holders of Senior
Indebtedness will be entitled to receive payment in full of the Senior
Indebtedness before the Noteholders are entitled to receive any payment and
until the Senior Indebtedness is paid in full, any payment or distribution to
which Noteholders would be entitled but for the subordination provisions of
the Indenture will be made to holders of the Senior Indebtedness as their
interest may appear. If a distribution is made to Noteholders that due to the
subordination provisions should not have been made to them, such Noteholders
are required to hold it in trust for the holders of Senior Indebtedness and
pay it over to them as their interests may appear.
If payment of the Notes is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness or the Representative of such holders of the acceleration.
The Company may not pay the Notes until five Business Days after such holders
or the Representative of the Designated Senior Indebtedness receive notice of
such acceleration and, thereafter, may pay the Notes only if the subordination
provisions of the Indenture otherwise permit payment at that time.
By reason of such subordination provisions contained in the Indenture, in
the event of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the Noteholders, and creditors of
the Company who are not holders of Senior Indebtedness or of Senior
Subordinated Indebtedness (including the Notes) may recover less, ratably,
than holders of Senior Indebtedness and may recover more, ratably, than the
holders of Senior Subordinated Indebtedness.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each Holder will have the right to require the Company to
repurchase all or any part of such Holder's Notes at a purchase price in cash
equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of repurchase (subject to the right of Holders
of record on the relevant record date to receive interest due on the relevant
interest payment date), provided, however, that notwithstanding the occurrence
of a Change of Control, the Company shall not be obligated to purchase the
Notes pursuant to this covenant in the event that it has exercised its right
to redeem all of the Notes as described under "--Optional Redemption":
(i) prior to the first public offering of Voting Stock of the Company,
either (x) Permitted Holders cease to be the "beneficial owner" or
"beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of more than 35% of the total voting power of
the Voting Stock of the Company, or (y) Permitted Holders cease to be
entitled by voting power, contract or otherwise to elect or cause the
election of directors of the Company having a majority of the total voting
power of the Board of Directors, in each case, whether as a result of
issuance of securities of the Company, any merger, consolidation,
liquidation or dissolution of the Company, any direct or indirect transfer
of securities by any
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Permitted Holder or otherwise (for purposes of this clause (i) and clause
(ii) below, Permitted Holders shall be deemed to beneficially own any
Voting Stock of an entity (the "specified entity") held by any other entity
(the "parent entity") so long as the Permitted Holders beneficially own (as
so defined), directly or indirectly, a majority of the Voting Stock of the
parent entity);
(ii) following the first public offering of Voting Stock of the Company,
any "Person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in clause (i) above, except that a Person
shall be deemed to have "beneficial ownership" of all shares that any such
Person has the right to acquire within one year), directly or indirectly,
of more than 35% of the Voting Stock of the Company; provided that the
Permitted Holders beneficially own (as defined in clause (i) above),
directly or indirectly, in the aggregate a lesser percentage of the Voting
Stock of the Company than such other Person and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors; or
(iii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together with
any new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Company was approved by
a vote of a majority of the directors of the Company then still in office
who were either directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease for any reason
to constitute a majority of the Board of Directors then in office.
In the event that at the time of such Change of Control the terms of the
Bank Indebtedness restrict or prohibit the repurchase of Notes pursuant to
this covenant, then prior to the mailing of the notice to Holders provided for
in the immediately following paragraph but in any event within 30 days
following any Change of Control, the Company shall (i) repay in full all Bank
Indebtedness or offer to repay in full all Bank Indebtedness and repay the
Bank Indebtedness of each lender who has accepted such offer or (ii) obtain
the requisite consent under the agreements governing the Bank Indebtedness to
permit the repurchase of the Notes as provided for in the immediately
following paragraph.
Within 30 days following any Change of Control, the Company shall mail a
notice to each Holder with a copy to the Trustee stating: (1) that a Change of
Control has occurred and that such Holder has the right to require the Company
to purchase such Holder's Notes at a purchase price in cash equal to 101% of
the principal amount thereof, plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of Holders of record on a record date
to receive interest on the relevant interest payment date); (2) the
circumstances and relevant facts and financial information regarding such
Change of Control; (3) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and (4) the
instructions determined by the Company, consistent with this covenant, that a
Holder must follow in order to have its Notes purchased.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this covenant, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under this paragraph by virtue thereof.
The Change of Control purchase feature is a result of negotiations between
the Company and the Initial Purchaser. The Company has no present plans to
engage in a transaction involving a Change of Control, although it is possible
that the Company would decide to do so in the future. Subject to the
limitations discussed below, the Company could, in the future, enter into
certain transactions, including acquisitions, refinancings or
recapitalizations, that would not constitute a Change of Control under the
Indenture, but that could increase the amount of indebtedness outstanding at
such time or otherwise affect the Company's capital structure or credit
ratings.
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The occurrence of a Change of Control would constitute a default under the
Senior Credit Agreement. Future Senior Indebtedness of the Company may contain
prohibitions of certain events which would constitute a Change of Control or
require such Senior Indebtedness to be repurchased upon a Change of Control.
Moreover, the exercise by the Holders of their right to require the Company to
repurchase the Notes could cause a default under such Senior Indebtedness,
even if the Change of Control itself does not, due to the financial effect of
such repurchase on the Company. Finally, the Company's ability to pay cash to
the Holders upon a repurchase may be limited by the Company's then existing
financial resources. There can be no assurance that sufficient funds will be
available when necessary to make any required repurchases.
CERTAIN COVENANTS
The Indenture contains covenants including, among others, the following:
Limitation on Indebtedness. (a) The Company will not, and will not permit
any Restricted Subsidiary to, Incur any Indebtedness; provided, however, that
the Company may Incur Indebtedness if on the date of the Incurrence of such
Indebtedness the Consolidated Coverage Ratio would be greater than 2.75:1.00.
Notwithstanding the foregoing, the Company shall not permit any Subsidiary to
issue, to any party other than the Company, any Preferred Stock.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness under the Term Loans included in the Senior Credit
Agreement (as the same may be amended from time to time, without increasing
the committed amount thereunder, except as otherwise permitted by this
covenant) and any Refinancing Indebtedness of the Company with respect
thereto in an aggregate principal amount on the date of Incurrence that,
when added to all other Indebtedness Incurred pursuant to this clause (i)
and then outstanding, shall not exceed $350.0 million less the aggregate
amount of all prepayments of principal applied to reduce the then
outstanding Indebtedness under the Term Loans actually made since the Issue
Date;
(ii) Indebtedness of the Company consisting of revolving credit, working
capital or letter of credit facilities in an aggregate principal amount at
any time outstanding not in excess of $150.0 million (less the aggregate
amount of all repayments of principal actually made thereunder since the
Issue Date with Net Available Cash from Asset Dispositions pursuant to
clause (a)(iii)(A) of the covenant described under "--Limitation on Sales
of Assets");
(iii) the Securitization; provided, however, that the amount of
Indebtedness outstanding under clauses (i) and (ii) above and this clause
(iii) shall not in the aggregate exceed $465.0 million at any one time
outstanding;
(iv) Indebtedness (A) of the Company to any Wholly Owned Restricted
Subsidiary or to any Note Guarantor and (B) of any Restricted Subsidiary to
the Company or any other Wholly Owned Restricted Subsidiary; provided,
however, that any subsequent issuance or transfer of any Capital Stock or
any other event that results in any such Wholly Owned Subsidiary ceasing to
be a Wholly Owned Subsidiary or any other subsequent transfer of any such
Indebtedness (except to the Company or a Wholly Owned Subsidiary) will be
deemed, in each case, an Incurrence of Indebtedness by the Company or such
Restricted Subsidiary, as the case may be;
(v) Indebtedness represented by the Notes, any Indebtedness (other than
the Indebtedness described in clauses (i), (ii), (iii) or (iv) above)
outstanding on the date of the Indenture and any Refinancing Indebtedness
Incurred in respect of any Indebtedness described in this clause (v) or
paragraph (a);
(vi) Indebtedness of the Company or any Restricted Subsidiary for the
deferred purchase price of newly acquired property (other than Vehicles) of
the Company and its Subsidiaries used in the ordinary course of business of
the Company and its Subsidiaries (provided such purchase money financing is
entered into within 180 days of the acquisition of such property) in an
amount (based on the remaining balance of the obligations therefor on the
books of the Company and its Restricted Subsidiaries) which shall not
exceed
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$20.0 million in the aggregate at any one time outstanding, when taken
together with any Indebtedness outstanding under the covenant described in
clause (b)(viii) below;
(vii) Indebtedness of the Company or any Restricted Subsidiary (which may
comprise Bank Indebtedness) in an aggregate principal amount at any one
time outstanding not in excess of $20.0 million;
(viii) Indebtedness of the Company or any Restricted Subsidiary in the
form of Capitalized Lease Obligations in an aggregate amount not in excess
of $20.0 million at any one time outstanding, when taken together with the
principal amount of any Indebtedness outstanding under the covenant
described in clause (b)(vi) above; provided, however, that any Indebtedness
incurred by a Restricted Subsidiary pursuant to the covenant described in
clause (vi) or (vii) above or this clause (viii) must be secured and all
such Indebtedness shall not exceed $20.0 million in aggregate principal
amount at any time outstanding;
(ix) Indebtedness represented by the Note Guarantees and Guarantees of
Indebtedness Incurred pursuant to clause (i) or (ii) above;
(x) Indebtedness under Hedging Obligations; provided, however, that such
Hedging Obligations are entered into for bona fide hedging purposes of the
Company or Leasco in the ordinary course of business; and
(xi) Indebtedness of a Restricted Subsidiary issued and outstanding on or
prior to the date on which such Restricted Subsidiary was acquired by the
Company (other than Indebtedness Incurred (A) as consideration in, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Restricted Subsidiary or was
acquired by the Company or (B) otherwise in connection with, or in
contemplation of, such acquisition) and any Refinancing Indebtedness with
respect thereto; provided, however, that on the date of any such
acquisition of a Restricted Subsidiary, the Company shall have been able to
Incur at least an additional $1.00 of Indebtedness under paragraph (a)
above.
(c) Notwithstanding the foregoing, the Company will not Incur any
Indebtedness pursuant to the foregoing paragraph (b) if the proceeds thereof
are used, directly or indirectly, to Refinance any Subordinated Obligations
unless such Indebtedness will be subordinated to the Notes to at least the
same extent as such Subordinated Obligations.
Limitation on Restricted Payments. (a) The Company shall not, and shall not
permit any Restricted Subsidiary, directly or indirectly, to (i) declare or
pay any dividend or make any distribution on or in respect of its Capital
Stock (including any payment in connection with any merger or consolidation
involving the Company) except dividends or distributions payable solely in its
Capital Stock (other than Disqualified Stock) and except dividends or
distributions payable to the Company or any Wholly Owned Restricted Subsidiary
(provided that if such Restricted Subsidiary is not wholly owned, to its other
shareholders on a pro rata basis), (ii) purchase, redeem, retire or otherwise
acquire for value any Capital Stock of the Company or any Restricted
Subsidiary held by Persons other than the Company or another Restricted
Subsidiary, (iii) purchase, repurchase, redeem, defease or otherwise acquire
or retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment, any Subordinated Obligations (other than the
purchase, repurchase or other acquisition of Subordinated Obligations
purchased in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the date of
acquisition) or (iv) make any Investment (other than a Permitted Investment)
in any Person (any such dividend, distribution, purchase, redemption,
repurchase, defeasance, other acquisition, retirement or Investment being
herein referred to as a "Restricted Payment") if at the time the Company or
such Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Company could not incur at least an additional $1.00 of
Indebtedness under paragraph (a) of the covenant described under "--
Limitation on Indebtedness"; or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount so expended, if other than in cash, to be
determined in good faith by the Company's Board of Directors,
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whose determination shall be conclusive and evidenced by a resolution of
the Company's Board of Directors) declared or made subsequent to the date
of the Indenture would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the Issue Date to the end of
the most recent fiscal quarter ending at least 45 days prior to the
date of such Restricted Payment (or, in case such Consolidated Net
Income shall be a deficit, minus 100% of such deficit);
(B) the aggregate Net Cash Proceeds received by the Company from the
issuance or sale of its Capital Stock (other than Disqualified Stock)
subsequent to the Issue Date (other than an issuance or sale to a
Restricted Subsidiary of the Company and other than an issuance or sale
to an employee stock ownership plan or other trust established by the
Company or any of its Subsidiaries for the benefit of their employees
to the extent the purchase by such plan or trust is financed by
Indebtedness of such plan or trust and for which the Company is liable
as Guarantor or otherwise);
(C) the amount by which Indebtedness of the Company is reduced on the
Company's balance sheet upon the conversion or exchange (other than by
a Subsidiary of the Company) subsequent to the Issue Date, of any
Indebtedness of the Company or its Restricted Subsidiaries convertible
or exchangeable for Capital Stock (other than Disqualified Stock) of
the Company (less the amount of any cash, or other property (other than
Capital Stock), distributed by the Company upon such conversion or
exchange); and
(D) an amount equal to the sum of (i) the net reduction in
Investments in Unrestricted Subsidiaries resulting from dividends,
repayments of loans or advances, in each case to the Company or any
Restricted Subsidiary from Unrestricted Subsidiaries, and (ii) the
portion (proportionate to the Company's equity interest in such
Subsidiary) of the fair market value of the net assets of an
Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
designated a Restricted Subsidiary; provided, however, that the
foregoing sum shall not exceed, in the case of any Unrestricted
Subsidiary, the amount of Investments previously made by the Company or
any Restricted Subsidiary in such Unrestricted Subsidiary, which amount
was treated as a Restricted Payment.
(b) The provisions of the foregoing paragraph (a) will not prohibit:
(i) any purchase or redemption of Capital Stock of the Company or
Subordinated Obligations made by exchange for, or out of the proceeds of
the substantially concurrent sale of, Capital Stock of the Company (other
than Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary or an employee stock ownership plan or other trust established
by the Company or any of its Subsidiaries); provided, however, that such
purchase or redemption shall be excluded in the calculation of the amount
of Restricted Payments;
(ii) any purchase or redemption of Subordinated Obligations made by
exchange for, or out of the proceeds of the substantially concurrent sale
of, Indebtedness of the Company that is permitted to be Incurred pursuant
to the covenant described under "--Limitation on Indebtedness"; provided,
however, that such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments;
(iii) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted by the covenant described under "--
Limitation on Sales of Assets"; provided, however, that such purchase or
redemption shall be excluded in the calculation of the amount of Restricted
Payments;
(iv) dividends paid within 60 days after the date of declaration thereof
if at such date of declaration such dividend would have complied with
paragraph (a); provided, however, that such dividend shall be included in
the calculation of the amount of Restricted Payments; or
(v) Permitted Employee Payments in an aggregate amount not in excess of
$5.0 million in the aggregate at any time (giving effect to any
repayments); provided, however, that such payments shall be included in the
calculation of the amount of Restricted Payments.
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Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock or pay any Indebtedness or other obligations owed to the
Company, (ii) make any loans or advances to the Company or (iii) transfer any
of its property or assets to the Company, except:
(1) any encumbrance or restriction pursuant to an agreement in effect at
or entered into on the date of the Indenture;
(2) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness Incurred
by such Restricted Subsidiary prior to the date on which such Restricted
Subsidiary was acquired by the Company (other than Indebtedness Incurred as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was acquired by the Company) and outstanding on
such date;
(3) any encumbrance or restriction pursuant to an agreement effecting a
refinancing of Indebtedness Incurred pursuant to an agreement referred to
in clause (1) or (2) of this covenant or this clause (3) or contained in
any amendment to an agreement referred to in clause (1) or (2) of this
covenant or this clause (3); provided, however, that the encumbrances and
restrictions contained in any such refinancing agreement or amendment are
no more restrictive taken as a whole (as conclusively determined in good
faith by the Company's Board of Directors, whose determination shall be
conclusive and evidenced by a resolution of the Company's Board of
Directors) than encumbrances and restrictions contained in such agreements;
(4) in the case of clause (iii) above, any encumbrance or restriction (A)
that restricts in a customary manner the subletting, assignment or transfer
of any property or asset that is subject to a lease, license or similar
contract, (B) by virtue of any transfer of, agreement to transfer, option
or right with respect to, or Lien on, any property or assets of the Company
or any Restricted Subsidiary not otherwise prohibited by the Indenture or
(C) contained in security agreements securing Indebtedness of a Restricted
Subsidiary to the extent such encumbrance or restrictions restrict the
transfer of the property subject to such security agreements;
(5) any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all the Capital Stock or assets of such Restricted Subsidiary
pending the closing of such sale or disposition; and
(6) in the case of Leasco, restrictions created in connection with the
Securitization that, in the good faith determination of the Board of
Directors, are necessary to effect the Securitization.
Limitation on Sales of Assets. (a) The Company will not, and will not permit
any Restricted Subsidiary to, make any Asset Disposition unless (i) the
Company or such Restricted Subsidiary receives consideration (including by way
of relief from, or by any other Person assuming sole responsibility for, any
liabilities, contingent or otherwise) at the time of such Asset Disposition at
least equal to the fair market value of the shares and assets subject to such
Asset Disposition, (ii) at least 85% of the consideration thereof received by
the Company or such Restricted Subsidiary is in the form of cash and (iii) an
amount equal to 100% of the Net Available Cash from such Asset Disposition is
applied by the Company (or such Restricted Subsidiary, as the case may be) (A)
first, to the extent the Company elects (or is required by the terms of any
Senior Indebtedness or Indebtedness (other than Preferred Stock) of a Wholly
Owned Subsidiary), to prepay, repay or purchase Senior Indebtedness (including
the Notes after the Subordination Termination Date) or such Indebtedness
(other than Preferred Stock) of a Wholly Owned Subsidiary (in each case other
than Indebtedness owed to the Company or an Affiliate of the Company) within
six months after the later of the date of such Asset Disposition or the
receipt of such Net Available Cash; (B) second, to the extent of the balance
of Net Available Cash after application in accordance with clause (A), to the
extent the Company or such Restricted Subsidiary elects, to reinvest in
Additional Assets (including by means of an Investment in Additional Assets by
a Restricted Subsidiary) with Net Available Cash received by the Company or
another Restricted Subsidiary within one year from the later of
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the date of such Asset Disposition or the receipt of such Net Available Cash;
(C) third, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A) and (B), to make an offer to
purchase Notes pursuant and subject to the conditions of the Indenture to the
Noteholders at a purchase price of 100% of the principal amount thereof plus
accrued and unpaid interest to the purchase date and (D) fourth, to the extent
of the balance of such Net Available Cash after application in accordance with
clauses (A), (B) and (C) above, to fund (to the extent consistent with any
other applicable provision of the Indenture) any corporate purpose; provided,
however, that in connection with any prepayment, repayment or purchase of
Indebtedness pursuant to clause (A) or (C) above, the Company or such
Restricted Subsidiary will retire such Indebtedness and will cause the related
loan commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased. Notwithstanding the
foregoing provisions of this covenant, the Company and the Restricted
Subsidiaries shall not be required to apply any Net Available Cash in
accordance with this covenant except to the extent that the aggregate Net
Available Cash from all Asset Dispositions that is not applied in accordance
with this covenant exceeds $5.0 million.
For the purposes of this covenant, the following are deemed to be cash: (x)
the assumption of Indebtedness of the Company (other than Disqualified Stock
of the Company) or any Restricted Subsidiary and the release of the Company or
such Restricted Subsidiary from all liability on such Indebtedness in
connection with such Asset Disposition and (y) securities received by the
Company or any Restricted Subsidiary from the transferee that are promptly
converted by the Company or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase of Notes
pursuant to clause (a)(iii)(A) or (a)(iii)(C), the Company will be required to
purchase Notes tendered pursuant to an offer by the Company for the Notes (the
"Offer") at a purchase price of 100% of their principal amount plus accrued
and unpaid interest to the Purchase Date in accordance with the procedures
(including prorating in the event of oversubscription) set forth in the
Indenture. If the aggregate purchase price of the Notes tendered pursuant to
the Offer is less than the Net Available Cash allotted to the purchase of
Notes, the remaining Net Available Cash will be available to the Company for
use in accordance with clause (a)(iii)(D) above. The Company shall not be
required to make an Offer for Notes pursuant to this covenant if the Net
Available Cash available therefor (after application of the proceeds as
provided in clauses (a)(iii)(A) and (a)(iii)(B) above) is less than $5.0
million for any particular Asset Disposition (which lesser amounts shall be
carried forward for purposes of determining whether an Offer is required with
respect to the Net Available Cash from any subsequent Asset Disposition).
(c) The Company will comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this paragraph (c) by virtue thereof.
Limitation on Transactions with Affiliates. (a) The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, enter
into or conduct any transaction or series of transactions (including the
purchase, sale, lease or exchange of any property or the rendering of any
service but excluding rentals of Vehicles (and related ancillary services) in
the ordinary course of business at then prevailing rates) with any Affiliate
of the Company (an "Affiliate Transaction") on terms (i) that are less
favorable to the Company or such Restricted Subsidiary, as the case may be,
than those that could be obtained at the time of such transaction in arm's-
length dealings with a Person who is not such an Affiliate and (ii) that, in
the event such Affiliate Transaction involves an aggregate amount in excess of
$2.5 million, are not in writing and have not been approved by a majority of
the members of the Board of Directors having no personal stake in such
Affiliate Transaction. In addition, any transaction (excluding rentals of
Vehicles (and related ancillary services) in the ordinary course of business
at then prevailing rates) involving aggregate payments or other transfers by
the Company and its Restricted Subsidiaries in excess of $7.5 million will
also require an opinion from an independent investment banking firm or
appraiser of national prominence, as appropriate, to the effect that the terms
of such transaction are either (i) no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than those that could be
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obtained at the time of such transaction in arm's length dealings with a
Person who is not an Affiliate or (ii) fair to the Company or such Restricted
Subsidiary, as the case may be, from a financial point of view.
(b) The provisions of the foregoing paragraph (a) shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to the covenant described
under "--Limitation on Restricted Payments", (ii) the performance of the
Company's or Subsidiary's obligations under any employment contract,
collective bargaining agreement, employee benefit plan, related trust
agreement or any other similar arrangement heretofore or hereafter entered
into in the ordinary course of business, (iii) payment of compensation to
employees, officers or directors in the ordinary course of business, (iv)
maintenance in the ordinary course of business of benefit programs or
arrangements for employees, officers or directors, including vacation plans,
health and life insurance plans, deferred compensation plans, and retirement
or savings plans and similar plans, (v) any transaction between the Company
and a Wholly Owned Subsidiary or between Wholly Owned Subsidiaries, (vi)
payment of management fees to Questor Management Company pursuant to the terms
of the Management Agreement in an aggregate amount of up to $850,000 in any 12
month period unless (x) a Default or Event of Default shall have occurred and
be continuing or would result therefrom in which event no more than 50% of
such aggregate amount may be paid to Questor Management Company in any such
period or (y) a Change of Control shall have occurred, in which case no such
amount may be paid to Questor Management Company or (vii) fees paid in respect
of the letter agreement between the Company and Jay Alix & Associates, Inc.
dated as of October 15, 1996, as in effect on and as of the date of the
Indenture, without giving effect to any subsequent downward adjustment to the
1997 and 1998 EBITDA levels set forth therein.
Limitation on the Sale or Issuance of Capital Stock of Restricted
Subsidiaries. The Company will not sell any shares of Capital Stock of a
Restricted Subsidiary, and will not permit any Restricted Subsidiary, directly
or indirectly, to issue or sell any shares of its Capital Stock except: (i) to
the Company or a Wholly Owned Subsidiary; or (ii) if, immediately after giving
effect to such issuance or sale, such Restricted Subsidiary would no longer
constitute a Restricted Subsidiary. Notwithstanding the foregoing, the Company
is permitted to sell all the Capital Stock of a Subsidiary as long as the
Company is in compliance with the terms of the covenant described under "--
Limitation on Sales of Assets".
Limitation on Liens. The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, create or permit to exist
any Lien (other than Permitted Liens) on any of its property or assets
(including Capital Stock), whether owned on the date of the Indenture or
thereafter acquired, securing any Indebtedness, unless contemporaneously
therewith effective provision is made to secure the obligations due under the
Indenture and the Notes and, in respect of Liens on any Restricted
Subsidiary's property or assets, any Guarantee of the Notes by such Restricted
Subsidiary equally and ratably with (subject to the subordination provisions
of the Notes prior to the Subordination Termination Date, or on a senior basis
to, in the case of Indebtedness subordinated in right of payment to the Notes
and such Guarantee) such obligation for so long as such obligation is so
secured, provided, however, that prior to the Subordination Termination Date,
no such equal and ratable security need be provided if the Indebtedness
secured is Senior Indebtedness of the Company.
Limitation on Lines of Business. The Company will not, and will not permit
any Restricted Subsidiary to, engage in any business, other than a Related
Business.
SEC Reports. Notwithstanding that the Company may not be required to be or
remain subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company will file (if then permitted to do so) with the SEC
and provide (whether or not so filed with the SEC) the Trustee and Noteholders
and prospective Noteholders (upon request) with the annual reports and the
information, documents and other reports, in each case without exhibits, which
are specified in Sections 13 and 15(d) of the Exchange Act; provided, however,
that the Company shall provide one copy of the exhibits to the foregoing to
the Trustee and shall (upon request) provide additional copies of such
exhibits to any Noteholder or prospective Noteholder. The Company also will
comply with the other provisions of TIA (S) 314(a).
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Future Note Guarantors. The Company will cause each Domestic Subsidiary
other than Leasco (unless Leasco is a Guarantor under the Senior Credit
Agreement) that Incurs Indebtedness or is a guarantor of Indebtedness pursuant
to clause (b)(i) or (b)(ii) of the covenant described under "--Limitation on
Indebtedness" to execute and deliver to the Trustee a Note Guarantee pursuant
to which such Subsidiary will Guarantee payment of the Notes; provided,
however, that there will be no such Note Guarantees from the Existing
Subsidiaries unless (i) Leasco is or becomes a Guarantor under the Senior
Credit Agreement, in which case all Existing Subsidiaries will become Note
Guarantors, or (ii) any of the Existing Subsidiaries, other than Leasco, and
any subsequently acquired or organized Domestic Subsidiary (other than any
subsidiary of Leasco) or, to the extent that no adverse tax consequences would
result, Foreign Subsidiary becomes a Significant Subsidiary, in which case
each such Subsidiary that becomes a Significant Subsidiary will become a Note
Guarantor. Each Note Guarantee will be limited to an amount not to exceed the
maximum amount that can be Guaranteed by that Subsidiary without rendering the
Note Guarantee, as it relates to such Subsidiary, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
MERGER AND CONSOLIDATION
The Company will not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor Company")
will be a corporation organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia and the
Successor Company (if not the Company) will expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the
Notes and the Indenture; (ii) immediately after giving effect to such
transaction (and treating any Indebtedness which becomes an obligation of the
Successor Company or any Restricted Subsidiary as a result of such transaction
as having been Incurred by the Successor Company or such Restricted Subsidiary
at the time of such transaction), no Default will have occurred and be
continuing; (iii) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of Indebtedness
under paragraph (a) of the covenant described under "--Limitation on
Indebtedness"; (iv) immediately after giving effect to such transaction, the
Successor Company will have Consolidated Net Worth in an amount which is not
less than the Consolidated Net Worth of the Company immediately prior to such
transaction; and (v) the Company will have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the Indenture.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture, but the
predecessor Company in the case of a conveyance, transfer or lease of all or
substantially all its assets will not be released from the obligation to pay
the principal of and interest on the Notes.
Notwithstanding the foregoing clauses (ii), (iii) and (iv), (1) any
Restricted Subsidiary may consolidate with, merge into or transfer all or part
of its properties and assets to the Company and (2) the Company may merge with
an Affiliate incorporated for the purpose of reincorporating the Company in
another jurisdiction to realize tax or other benefits.
DEFAULTS
An Event of Default is defined in the Indenture as (i) a default in any
payment of interest on any Note when due, continued for 30 days, (ii) a
default in the payment of principal of any Note when due at its Stated
Maturity, upon optional redemption, upon required repurchase, upon declaration
or otherwise, whether or not such payment is prohibited by the provisions
described under "--Ranking" above, (iii) the failure by the Company to comply
with its obligations under the covenant described under "--Merger and
Consolidation" above, (iv) the failure by the Company to comply for 30 days
after notice with any of its obligations under the covenants described under
"--Change of Control" or "--Certain Covenants" above (in each case, other than
a
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failure to purchase Notes), (v) the failure by the Company to comply for 60
days after notice with its other agreements contained in the Notes or the
Indenture, (vi) the failure by any Note Guarantor to comply with its
obligations under any Note Guarantee to which such Note Guarantor is a party,
after any applicable grace period, (vii) the failure by the Company or any
Significant Subsidiary to pay any Indebtedness within any applicable grace
period after final maturity or the acceleration of any such Indebtedness by
the holders thereof because of a default if the total amount of such
Indebtedness unpaid or accelerated exceeds $10.0 million or its foreign
currency equivalent (the "cross acceleration provision"), (viii) certain
events of bankruptcy, insolvency or reorganization of the Company or a
Significant Subsidiary (the "bankruptcy provisions"), (ix) the rendering of
any judgment or decree for the payment of money in excess of $10.0 million or
its foreign currency equivalent against the Company or a Significant
Subsidiary if (A) an enforcement proceeding thereon is commenced or (B) such
judgment or decree remains outstanding for a period of 60 days following such
judgment or decree and is not discharged, waived or stayed (the "judgment
default provision") or (x) the failure of any Note Guarantee by a Note
Guarantor which is a Significant Subsidiary to be in full force and effect
(except as contemplated by the terms thereof) or the denial or disaffirmation
by any such Note Guarantor of its obligations under the Indenture or any Note
Guarantee if such Default continues for 10 days.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body.
However, a Default under clause (iv) or (v) will not constitute an Event of
Default until the Trustee or the Holders of at least 25% in principal amount
of the outstanding Notes notify the Company of the Default and the Company
does not cure such Default within the time specified in clauses (iv) and (v)
hereof after receipt of such notice.
If an Event of Default (other than a Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least a
majority in principal amount of the outstanding Notes by notice to the Company
and the Trustee, may declare the principal of and accrued but unpaid interest
on all the Notes to be due and payable. Upon such a declaration, such
principal and interest will be due and payable immediately. If an Event of
Default relating to certain events of bankruptcy, insolvency or reorganization
of the Company occurs and is continuing, the principal of and interest on all
the Notes will become immediately due and payable without any declaration or
other act on the part of the Trustee or any Holders. Under certain
circumstances, the Holders of a majority in principal amount of the
outstanding Notes may rescind any such acceleration with respect to the Notes
and its consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee
will be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such
Holders have offered to the Trustee reasonable indemnity or security against
any loss, liability or expense. Except to enforce the right to receive payment
of principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Notes unless (i) such Holder has
previously given the Trustee notice that an Event of Default is continuing,
(ii) Holders of at least 25% in principal amount of the outstanding Notes have
requested the Trustee to pursue the remedy, (iii) such Holders have offered
the Trustee reasonable security or indemnity against any loss, liability or
expense, (iv) the Trustee has not complied with such request within 60 days
after the receipt of the request and the offer of security or indemnity and
(v) the Holders of a majority in principal amount of the outstanding Notes
have not given the Trustee a direction inconsistent with such request within
such 60-day period. Subject to certain restrictions, the Holders of a majority
in principal amount of the outstanding Notes are given the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Trustee or of exercising any trust or power conferred on the Trustee.
The Trustee, however, may refuse to follow any direction that conflicts with
law or the Indenture or that the Trustee determines is unduly prejudicial to
the rights of any other Holder or that would involve the Trustee in personal
liability. Prior to taking any action
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under the Indenture, the Trustee will be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses
caused by taking or not taking such action.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each Holder notice of the
Default within 90 days after it occurs. Except in the case of a Default in the
payment of principal of, premium (if any) or interest on any Note, the Trustee
may withhold notice if and so long as a committee of its Trust Officers in
good faith determines that withholding notice is in the interests of the
Noteholders. In addition, the Company is required to deliver to the Trustee,
within 120 days after the end of each fiscal year, a certificate indicating
whether the signers thereof know of any Default that occurred during the
previous year. The Company also is required to deliver to the Trustee, within
30 days after the occurrence thereof, written notice of any event which would
constitute certain Defaults, their status and what action the Company is
taking or proposes to take in respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the consent
of the Holders of a majority in principal amount of the Notes then outstanding
and any past default or compliance with any provisions may be waived with the
consent of the Holders of a majority in principal amount of the Notes then
outstanding. However, without the consent of each Holder of an outstanding
Note affected, no amendment may, among other things, (i) reduce the amount of
Notes whose Holders must consent to an amendment, (ii) reduce the rate of or
extend the time for payment of interest on any Note, (iii) reduce the
principal of or extend the Stated Maturity of any Note, (iv) reduce the
premium payable upon the redemption of any Note or change the time at which
any Note may be redeemed as described under "--Optional Redemption" above, (v)
make any Note payable in money other than that stated in the Note, (vi) make
any change to the subordination provisions of the Indenture that adversely
affects the rights of any Holder, (vii) impair the right of any Holder to
receive payment of principal of and interest on such Holder's Notes on or
after the due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such Holder's Notes or (viii) make any change in
the amendment provisions which require each Holder's consent or in the waiver
provisions.
Without the consent of any Holder, the Company and Trustee may amend the
Indenture to cure any ambiguity, omission, defect or inconsistency, to provide
for the assumption by a successor corporation of the obligations of the
Company under the Indenture, to provide for uncertificated Notes in addition
to or in place of certificated Notes (provided, however, that the
uncertificated Notes are issued in registered form for purposes of Section
163(f) of the Code, or in a manner such that the uncertificated Notes are
described in Section 163(f)(2)(B) of the Code), to add Guarantees with respect
to the Notes, to secure the Notes, to add to the covenants of the Company for
the benefit of the Noteholders or to surrender any right or power conferred
upon the Company, to make any change that does not adversely affect the rights
of any Holder or to comply with any requirement of the SEC in connection with
the qualification of the Indenture under the TIA. However, no amendment may be
made to the subordination provisions of the Indenture that adversely affects
the rights of any holder of Senior Indebtedness then outstanding unless the
holders of such Senior Indebtedness (or any group or representative thereof
authorized to give a consent) consent to such change (provided that the
foregoing does not apply to the change in subordination provisions described
in "--Ranking").
The consent of the Noteholders is not necessary under the Indenture to
approve the particular form of any proposed amendment. It is sufficient if
such consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Company is
required to mail to Noteholders a notice briefly describing such amendment.
However, the failure to give such notice to all Noteholders, or any defect
therein, will not impair or affect the validity of the amendment.
TRANSFER AND EXCHANGE
A Noteholder may transfer or exchange Notes in accordance with the
Indenture. Upon any transfer or exchange, the registrar and the Trustee may
require a Noteholder, among other things, to furnish appropriate
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endorsements and transfer documents and the Company may require a Noteholder
to pay any taxes or other government changes required by law or permitted by
the Indenture. The Company is not required to transfer or exchange any Note
selected for redemption or to transfer or exchange any Note for a period of 15
days prior to the mailing of a notice of redemption. The Notes will be issued
in registered form and the registered holder of a Note will be treated as the
owner of such Note for all purposes.
DEFEASANCE
The Company at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register
the transfer or exchange of the Notes, to replace mutilated, destroyed, lost
or stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Company at any time may terminate its obligations under the
covenants described under "--Certain Covenants", the operation of the cross
acceleration provision, the bankruptcy provisions with respect to Subsidiaries
and the judgment default provision described under "--Defaults" above and the
limitations contained in clauses (iii) and (iv) under "--Merger and
Consolidation" above ("covenant defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because
of an Event of Default with respect thereto. If the Company exercises its
covenant defeasance option, payment of the Notes may not be accelerated
because of an Event of Default specified in clause (iv), (vi), (viii) with
respect only to Subsidiaries, (ix) or (x) under "--Defaults" above or because
of the failure of the Company to comply with clause (iii) or (iv) under "--
Merger and Consolidation" above.
In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium (if any) and
interest on the Notes to redemption or maturity, as the case may be, and must
comply with certain other conditions, including delivery to the Trustee of an
Opinion of Counsel to the effect that holders of the Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such
deposit and defeasance and will be subject to Federal income tax on the same
amount and in the same manner and at the same times as would have been the
case if such deposit and defeasance had not occurred (and, in the case of
legal defeasance only, such Opinion of Counsel must be based on a ruling of
the Internal Revenue Service or other change in applicable Federal income tax
law).
CONCERNING THE TRUSTEE
The Bank of New York is the Trustee under the Indenture and has been
appointed by the Company as Registrar and Paying Agent with regard to the
Notes.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
"Acquisition" means the acquisition by the Company and its assignee, Leasco,
of all or substantially all the assets of the Consumer Truck Rental business
unit of Ryder Truck Rental, Inc., a Florida corporation, on October 17, 1996.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary in a Related Business; (ii) the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Company or another
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Restricted Subsidiary; or (iii) Capital Stock constituting a minority interest
in any Person that at such time is a Restricted Subsidiary; provided, however,
that, in the case of clauses (ii) and (iii), such Restricted Subsidiary is
primarily engaged in a Related Business.
"Affiliate" of any specified Person means (i) any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person or (ii) any Person who is a director or
officer (a) of such Person, (b) of any Subsidiary of such Person or (c) of any
Person described in clause (i) above. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of the covenant described under "--Certain Covenants--
Limitation on Sales of Assets" only, "Affiliate" shall also mean any
beneficial owner of shares representing 5% or more of the total voting power
of the Voting Stock (on a fully diluted basis) of the Company or of rights or
warrants to purchase such Voting Stock (whether or not currently exercisable)
and any Person who would be an Affiliate of any such beneficial owner pursuant
to the first sentence hereof.
"Applicable Premium" means, with respect to a Note at any Redemption Date,
the greater of (i) 1.0% of the principal amount of such Note and (ii) the
excess of (A) the present value of all remaining required interest and
principal payments due on such Note, computed using a discount rate equal to
the Treasury Rate plus 75 basis points, over (B) the then-outstanding
principal amount of such Note.
"Asset Disposition" means any sale, lease, transfer or other disposition of
shares of Capital Stock of a Restricted Subsidiary (other than directors'
qualifying shares), property or other assets (each referred to for the
purposes of this definition as a "disposition") by the Company or any of its
Restricted Subsidiaries (including any disposition by means of a merger,
consolidation or similar transaction) other than (i) a disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of inventory,
equipment or Vehicles in the ordinary course of business, (iii) the sale of
Temporary Cash Investments in the ordinary course of business, (iv) the sale
of used or obsolete equipment in the ordinary course of business so long as
the fair market value of the assets disposed of pursuant to this clause (iv)
does not exceed $500,000 in the aggregate in any fiscal year, (v) for purposes
of the covenant described under "--Certain Covenants--Limitation on Sales of
Assets" only, a disposition subject to the covenant described under "--Certain
Covenants--Limitation on Restricted Payments", (vi) transfers required in
connection with the Securitization, (vii) Permitted Liens and (viii) Permitted
Investments.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
assumed in making calculations in accordance with FAS 13) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied
by the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in respect of
the Senior Credit Agreement and the other Senior Credit Documents,
Indebtedness Incurred pursuant to the covenant described in clause (b)(ii)
under "--Certain Covenants--Limitation on Indebtedness," the Securitization
and any Refinancing Indebtedness with respect to any of the foregoing, as
amended from time to time, including principal, premium (if any), interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a
claim for postfiling interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, guarantees and all other amounts payable
thereunder or in respect thereof.
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"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banking institutions are authorized or required by law to
close in New York City.
"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any
Preferred Stock, but excluding any debt securities convertible into such
equity.
"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented
by such obligation shall be the capitalized amount of such obligation
determined in accordance with GAAP; and the Stated Maturity thereof shall be
the date of the last payment of rent or any other amount due under such lease.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending prior to the date of such
determination to (ii) Consolidated Interest Expense for such four fiscal
quarters (in each case, determined, for each fiscal quarter of the four fiscal
quarters ending prior to the Issue Date, on a pro forma basis to give effect
to the Acquisition as if it had occurred at the beginning of such period);
provided, however, that (1) if the Company or any Restricted Subsidiary has
Incurred any Indebtedness since the beginning of such period that remains
outstanding on such date of determination or if the transaction giving rise to
the need to calculate the Consolidated Coverage Ratio is an Incurrence of
Indebtedness, EBITDA and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to such Indebtedness as
if such Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period, (2) if since the beginning of such
period the Company or any Restricted Subsidiary shall have made any Asset
Disposition, the EBITDA for such period shall be reduced by an amount equal to
the EBITDA (if positive) directly attributable to the assets that are the
subject of such Asset Disposition for such period or increased by an amount
equal to the EBITDA (if negative) directly attributable thereto for such
period and Consolidated Interest Expense for such period shall be reduced by
an amount equal to the Consolidated Interest Expense directly attributable to
any Indebtedness of the Company or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect to the Company and
its continuing Restricted Subsidiaries in connection with such Asset
Disposition for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Restricted Subsidiary to the extent
the Company and its continuing Restricted Subsidiaries are no longer liable
for such Indebtedness after such sale), (3) if since the beginning of such
period the Company or any Restricted Subsidiary (by merger or otherwise) shall
have made an Investment in any Restricted Subsidiary (or any Person that
becomes a Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially all
of an operating unit of a business, EBITDA and Consolidated Interest Expense
for such period shall be calculated after giving pro forma effect thereto
(including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period and (4) if since the
beginning of such period any Person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset Disposition or
any Investment or acquisition of assets that would have required an adjustment
pursuant to clause (2) or (3) above if made by the Company or a Restricted
Subsidiary during such period, EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving pro forma effect thereto as if
such Asset Disposition, Investment or acquisition of assets occurred on the
first day of such period. For purposes of this definition, whenever pro forma
effect is to be given to an acquisition of assets, the amount of income or
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earnings relating thereto and the amount of Consolidated Interest Expense
associated with any Indebtedness Incurred in connection therewith, the pro
forma calculations shall be determined in good faith by a responsible
financial or accounting Officer of the Company. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest
expense on such Indebtedness shall be calculated as if the rate in effect on
the date of determination had been the applicable rate for the entire period
(taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term as at the
date of determination in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total
consolidated interest expense of the Company and its Restricted Subsidiaries,
plus, to the extent incurred by the Company and its Subsidiaries in such
period but not included in such interest expense, (i) interest expense
attributable to Capitalized Lease Obligations and rent expense associated with
Attributable Debt, (ii) the earned discount or yield with respect to a sale of
receivables and any corresponding amount relating to the Securitization, (iii)
amortization of debt discount and debt issuance cost, (iv) capitalized
interest, (v) noncash interest expense, (vi) commissions, discounts and other
fees and charges attributable to letters of credit and bankers' acceptance
financing, (vii) interest in respect of or other obligation of any other
Person that has been Guaranteed by the Company or any Restricted Subsidiary,
(viii) net costs associated with Hedging Obligations, (ix) Preferred Stock
dividends in respect of all Preferred Stock of Subsidiaries of the Company and
Disqualified Stock of the Company held by Persons other than the Company or a
Wholly Owned Subsidiary; and (x) the cash contributions to any employee stock
ownership plan or similar trust to the extent such contributions are used by
such plan or trust to pay interest or fees to any Person (other than the
Company) in connection with Indebtedness Incurred by such plan or trust;
provided, however, that there shall be excluded therefrom (i) any such
interest expense of any Unrestricted Subsidiary to the extent the related
Indebtedness is not Guaranteed or paid by the Company or any Restricted
Subsidiary, and (ii) any write-off of debt issuance costs of the Company and
its Restricted Subsidiaries associated with the Indebtedness Incurred to
finance the Acquisition. For purposes of the foregoing, gross interest expense
shall be determined after giving effect to any net payments made or received
by the Company and its Subsidiaries with respect to Interest Rate Agreements.
"Consolidated Net Income" means, for any period, the consolidated net income
(loss) of the Company and its Restricted Subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income:
(i) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that (A) subject to the limitations contained
in clause (iv) below, the Company's equity in the net income of any such
Person for such period shall be included in such Consolidated Net Income up
to the aggregate amount of cash actually distributed by such Person during
such period to the Company or a Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other
distribution to a Restricted Subsidiary, to the limitations contained in
clause (iii) below) and (B) the Company's equity in a net loss of any such
Person (other than an Unrestricted Subsidiary) for such period shall be
included in determining such Consolidated Net Income,
(ii) any net income (loss) of any person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition,
(iii) any net income (loss) of any Restricted Subsidiary if such
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that (A) subject
to the limitations contained in (iv) below, the Company's equity in the net
income of any such Restricted Subsidiary for such period shall be included
in such Consolidated Net Income up to the aggregate amount of cash that
could have been distributed by such Restricted Subsidiary during such
period to the Company or another Restricted Subsidiary as a dividend
(subject, in the case of a dividend that could have been made to another
Restricted Subsidiary, to the limitation contained in this clause) and (B)
the Company's equity in a net loss of any such Restricted Subsidiary for
such period shall be included in determining such Consolidated Net Income,
(iv) any gain (but not loss) realized upon the sale or other disposition
of any asset of the Company or its Consolidated Subsidiaries (including
pursuant to any Sale/Leaseback Transaction) that is not sold or
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otherwise disposed of in the ordinary course of business and any gain (but
not loss) realized upon the sale or other disposition of any Capital Stock
of any Person,
(v) any extraordinary gain or loss, and
(vi) the cumulative effect of a change in accounting principles.
"Consolidated Net Worth" means the total of the amounts shown on the balance
sheet of the Company and the Restricted Subsidiaries, determined on a
Consolidated basis, as of the end of the most recent fiscal quarter of the
Company ending prior to the taking of any action for the purpose of which the
determination is being made, as (i) the par or stated value of all outstanding
Capital Stock of the Company plus (ii) paid-in capital or capital surplus
relating to such Capital Stock plus (iii) any retained earnings or earned
surplus less (A) any accumulated deficit and (B) any amounts attributable to
Disqualified Stock.
"Consolidation" means the consolidation of the accounts of each of the
Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; provided, however, that "Consolidation" will not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Unrestricted Subsidiary will be accounted for as an
investment. The term "Consolidated" has a correlative meaning.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"Default" means any event or condition that is, or after notice or passage
of time or both would be, an Event of Default.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness and (ii)
any other Senior Indebtedness which, at the date of determination, has an
aggregate principal amount of, or under which, at the date of determination,
the holders thereof are committed to lend up to, at least $5.0 million and is
specifically designated by the Company in the instrument evidencing or
governing such Senior Indebtedness as "Designated Senior Indebtedness" for
purposes of the Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable) or upon the
happening of any event (i) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise, (ii) is convertible or exchangeable for
Indebtedness or Disqualified Stock or (iii) is redeemable at the option of the
holder thereof, in whole or in part, in each case on or prior to the first
anniversary of the Stated Maturity of the Notes.
"Domestic Subsidiary" means any Restricted Subsidiary of the Company other
than a Foreign Subsidiary.
"EBITDA" means, for any period, the Consolidated Net Income for such period,
plus the following to the extent deducted in calculating such Consolidated Net
Income: (i) income tax expense, (ii) Consolidated Interest Expense, (iii)
depreciation and depletion expense and (iv) amortization of intangibles and
amortization of other non-cash charges or non-cash losses (including financing
and acquisition expenses incurred in connection with the Acquisition).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Subsidiaries" means Leasco, Ryder Move Management, Inc., Ryder
Truck Rental One-Way, Inc., Ryder Relocation Services, Inc. and The Move Shop,
Inc.
"Foreign Subsidiary" means any Restricted Subsidiary of the Company that is
not organized under the laws of the United States of America or any state
thereof or the District of Columbia.
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"GAAP" means generally accepted accounting principles in the United States
of America applied on a consistent basis.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other nonfinancial
obligation of any other Person and any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or such other
obligation of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided, however, that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note is registered
in the Register.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by
such Subsidiary at the time it becomes a Subsidiary. Any Indebtedness issued
at a discount (including Indebtedness on which interest is payable through the
issuance of additional Indebtedness) shall be deemed incurred at the time of
original issuance of the Indebtedness at the initial accreted amount thereof.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(i) the principal of and premium (if any) in respect of indebtedness of
such Person for borrowed money,
(ii) the principal of and premium (if any) in respect of obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments,
(iii) all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations with respect
thereto), but shall not include commercial letters of credit or letters of
credit issued in connection with liabilities incurred in the ordinary
course of business (including those issued to governmental entities to
self-insure under applicable workers' compensation statutes and the $2.5
million standby letter of credit issued to Ryder System, Inc. pursuant to
the Acquisition) prior to the time of a drawing that gives rise to a
reimbursement obligation,
(iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables), which
purchase price is due more than six months after the date of placing such
property in final service or taking final delivery and title thereto or the
completion of such services,
(v) all Capitalized Lease Obligations and all Attributable Debt of such
Person,
(vi) the redemption, repayment or other repurchase amount of such Person
with respect to any Disqualified Stock or, with respect to any Subsidiary
of the Company, any Preferred Stock (but excluding, in each case, any
accrued dividends),
(vii) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person;
provided, however, that the amount of Indebtedness of such Person shall be
the lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness of such other
Persons,
(viii) all Indebtedness of other Persons to the extent Guaranteed by such
Person, and
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(ix) to the extent not otherwise included in this definition, net Hedging
Obligations of such Person (such obligations to be equal at any time to the
termination value of such agreement or arrangement giving rise to such
Hedging Obligation that would be payable by such Person at such time).
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
"Interest Rate Agreement" means with respect to any Person any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar
agreement or arrangement as to which such Person is party or a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including by way of Guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person. For purposes
of the definition of "Unrestricted Subsidiary" and the covenant described
under "--Certain Covenants--Limitation on Restricted Payments", (i)
"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary in an amount
(if positive) equal to (x) the Company's "Investment" in such Subsidiary at
the time of such redesignation less (y) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of such Subsidiary at the time of such redesignation; and (ii) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Board of Directors.
"Investors" means Questor and the other parties that purchased equity
interests in the Company on October 17, 1996.
"Issue Date" means November 25, 1996, the date on which the Senior
Subordinated Notes were originally issued.
"Jay Alix & Associates, Inc." means Jay Alix & Associates, Inc., a Michigan
corporation.
"Leasco" means RCTR, Inc., a special purpose Delaware corporation that is a
Wholly Owned Subsidiary, and any other Wholly Owned Subsidiary that is
established for the purpose of entering into a Securitization with respect to
the Vehicles.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Loan Agreement" means the loan agreement dated as of October 17, 1996,
among the Company, the several lenders (the "Lenders") from time to time
parties thereto and The Chase Manhattan Bank, a New York banking corporation,
as administrative agent for the Lenders.
"Management Agreement" means the Management Agreement dated October 15,
1996, between the Company and Questor Management Company (and its permitted
successors and assigns), as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof.
"Moody's" means Moody's Investors Service, Inc., and its successors.
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"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and
when received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations
relating to the properties or assets that are the subject of such Asset
Disposition or received in any other noncash form) therefrom, in each case net
of (i) all legal, title and recording tax expenses, commissions and other fees
and expenses incurred, and all Federal, state, provincial, foreign and local
taxes required to be paid or accrued as a liability under GAAP, as a
consequence of such Asset Disposition, (ii) all payments made on any
Indebtedness that is secured by any assets subject to such Asset Disposition,
in accordance with the terms of any Lien upon such assets, or that must by its
terms, or in order to obtain a necessary consent to such Asset Disposition, or
by applicable law be repaid out of the proceeds from such Asset Disposition,
(iii) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition and (iv) appropriate amounts to be provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with the
assets disposed of in such Asset Disposition and retained by the Company or
any Restricted Subsidiary after such Asset Disposition.
"Net Cash Proceeds" means, with respect to any issuance or sale of any
securities of the Company or any Subsidiary by the Company or any Subsidiary,
the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Note Guarantee" means any guarantee that may from time to time be executed
and delivered by a Subsidiary of the Company pursuant to the covenant
described under "--Certain Covenants--Future Note Guarantors". Prior to the
Subordination Termination Date, each such Note Guarantee shall have
subordination provisions equivalent to those contained in the Indenture and
shall be a senior unsecured guarantee after the Subordinated Termination Date.
"Note Guarantor" means any Subsidiary that has issued a Note Guarantee.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary or the Controller of the Company.
"Officer's Certificate" means a certificate signed by one Officer.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Permitted Employee Payments" means Restricted Payments by the Company or
any Restricted Subsidiary in respect of (i) the repurchase of Capital Stock of
the Company or any Restricted Subsidiary from an employee of the Company or
any Restricted Subsidiary or their assigns, estates or heirs upon the death,
retirement or termination of such employee or (ii) loans or advances to
employees of the Company or any Subsidiary made in the ordinary course of
business.
"Permitted Holders" means the Investors, their respective Affiliates and any
Person acting in the capacity of an underwriter in connection with a public or
private offering of the Company's Capital Stock.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in (i) a Restricted Subsidiary, the Company or a Person that will,
upon the making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is a Related
Business; (ii) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related Business;
(iii) Temporary Cash Investments;
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(iv) receivables owing to the Company or any Restricted Subsidiary, if created
or acquired in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms; provided, however, that such trade
terms may include such concessionary trade terms as the Company or any such
Restricted Subsidiary deems reasonable under the circumstances; (v) payroll,
travel and similar advances to cover matters that are expected at the time of
such advances ultimately to be treated as expenses for accounting purposes and
that are made in the ordinary course of business; (vi) loans or advances to
employees made in the ordinary course of business of the Company or such
Restricted Subsidiary; (vii) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to
the Company or any Restricted Subsidiary or in satisfaction of judgments; and
(viii) securities received as consideration in sales of assets made in
compliance with the covenant described under "--Limitation on Sales of
Assets."
"Permitted Liens" means:
(a) Liens for taxes, assessments or other governmental charges not yet
delinquent or that are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Company or such Subsidiary, as the case may be, in accordance
with GAAP;
(b) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
in respect of obligations that are not yet due or that are bonded or that
are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the books of the
Company or such Subsidiary, as the case may be, in accordance with GAAP;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) pledges or deposits to secure the performance of bids, tenders, trade
or government contracts (other than for borrowed money), leases, licenses,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;
(e) easements (including reciprocal easement agreements), rights-of-way,
building, zoning and similar restrictions, utility agreements, covenants,
reservations, restrictions, encroachments, changes, and other similar
encumbrances or title defects incurred, or leases or subleases granted to
others, in the ordinary course of business, which do not in the aggregate
materially detract from the aggregate value of the properties of the
Company and its Subsidiaries, taken as a whole, or materially interfere
with or adversely affect in any material respect the ordinary conduct of
the business of the Company and its Subsidiaries on the properties subject
thereto, taken as a whole;
(f) Liens incurred in connection with the Securitization;
(g) Liens existing on the date of the Indenture;
(h) (i) mortgages, liens, security interests, restrictions, encumbrances
or any other matters of record that have been placed by any developer,
landlord or other third party on property over which the Company or any
Restricted Subsidiary of the Company has easement rights or on any leased
property and subordination or similar agreements relating thereto and (ii)
any condemnation or eminent domain proceedings affecting any real property;
(i) Liens securing Hedging Obligations incurred in compliance with the
covenant described under "--Certain Covenants--Limitation on Indebtedness";
(j) Liens arising out of judgments or awards (other than any judgment
that is described in clause (viii) under "--Defaults" and constitutes an
Event of Default thereunder) in respect of which the Company shall in good
faith be prosecuting an appeal or proceedings for review and in respect of
which it shall have secured a subsisting stay of execution pending such
appeal or proceedings for review, provided that the Company shall have set
aside on its books adequate reserves, in accordance with GAAP, with respect
to such judgment or award;
(k) leases or subleases to third parties;
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(l) Liens securing Indebtedness incurred in compliance with clause
(b)(vi) or (b)(viii) of the covenant described under "--Certain Covenants--
Limitation on Indebtedness"; and
(m) Liens securing commercial bank indebtedness.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock" as applied to the Capital Stock of any corporation means
Capital Stock of any class or classes (however designated) that is preferred
as to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.
"principal" of a Note means the principal of the Note plus the premium, if
any, payable on the Note that is due or overdue or is to become due at the
relevant time.
"Public Equity Offering" means an underwritten primary public offering of
common stock of the Company pursuant to an effective registration statement
under the Securities Act.
"Public Market" means any time after (x) a Public Equity Offering has been
consummated and (y) at least 15% of the total issued and outstanding common
stock of the Company has been distributed by means of an effective
registration statement under the Securities Act.
"Questor" means, collectively, Questor Partners Fund, L.P., a Delaware
limited partnership, and Questor Side-by-Side Partners, L.P., a Delaware
limited partnership.
"Questor Management Company" means Questor Management Company, a Delaware
corporation.
"Refinancing Indebtedness" means Indebtedness that is Incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances," and
"refinanced" shall have a correlative meaning) any Indebtedness existing on
the date of the Indenture or Incurred in compliance with the Indenture
(including Indebtedness of the Company that refinances Indebtedness of any
Restricted Subsidiary (to the extent permitted in the Indenture) and
Indebtedness of any Restricted Subsidiary that refinances Indebtedness of
another Restricted Subsidiary) including Indebtedness that refinances
Refinancing Indebtedness; provided, however, that (i) the Refinancing
Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the
Indebtedness being refinanced, (ii) the Refinancing Indebtedness has an
Average Life at the time such Refinancing Indebtedness is Incurred that is
equal to or greater than the Average Life of the Indebtedness being refinanced
and (iii) such Refinancing Indebtedness is Incurred in an aggregate principal
amount (or if issued with original issue discount, an aggregate issue price)
that is equal to or less than the aggregate principal amount (or if issued
with original issue discount, the aggregate accreted value) then outstanding
of the Indebtedness being refinanced, plus fees, underwriting discounts,
premiums and other costs and expenses incurred in connection with such
Refinancing Indebtedness; provided further, however, that Refinancing
Indebtedness shall not include (x) Indebtedness of a Restricted Subsidiary
that is not a Guarantor that refinances Indebtedness of the Company or (y)
Indebtedness of the Company or a Restricted Subsidiary that refinances
Indebtedness of an Unrestricted Subsidiary.
"Related Business" means those businesses in which the Company or any of its
Subsidiaries is engaged on the date of the Indenture, or that are reasonably
related or incidental thereto.
"Representative" means the trustee, agent or representative (if any) for an
issue of Senior Indebtedness.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Revolving Credit Loans" means revolving credit loans available for working
capital needs and letter of credit made under commitments pursuant to the
Senior Credit Agreement.
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"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired by the Company or a Restricted Subsidiary whereby
the Company or such Restricted Subsidiary transfers such property to a Person
and the Company or such Restricted Subsidiary leases it from such Person,
other than leases between the Company and a Wholly Owned Subsidiary or between
Wholly Owned Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.
"Securitization" means a financing or series of financings consisting
principally of an asset-backed program based on rental Vehicles owned by
Leasco (funded by the issuance of commercial paper, medium term notes or other
forms of borrowing and including credit enhancement facilities), and which may
consist of or include such other forms of financing consistent with the
foregoing as the Board of Directors shall approve in good faith.
"Senior Credit Agreement" means the credit agreement dated as of October 17,
1996, as amended, waived or otherwise modified, among the Company, the several
lenders party thereto, Chase as administrative agent and Citibank, U.S.A.,
Inc., as documentation and collateral agent (except to the extent that any
such amendment, waiver or other modification thereto would be prohibited by
the terms of the Indenture, unless otherwise agreed to by the Trustee.)
"Senior Credit Documents" means the collective reference to the Senior
Credit Agreement, the notes issued pursuant thereto and the Guarantee
Agreement, the Security Agreement, the Indemnity, Subrogation and Contribution
Agreement, the Pledge Agreement (each as defined in the Senior Credit
Agreement) and each of the security agreements and other instruments and
documents executed and delivered pursuant to any of the foregoing or pursuant
to Section 5.16 of the Senior Credit Agreement.
"Senior Subordinated Indebtedness" means, prior to the Subordination
Termination Date, the Notes and any other Indebtedness of the Company that
specifically provides that such Indebtedness is to rank pari passu with the
Notes and is not subordinated by its terms to any Indebtedness or other
obligation of the Company that is not Senior Indebtedness.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"S&P" means Standard & Poor's Ratings Service, a division of The McGraw-Hill
Companies, Inc., and its successors.
"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the date of the Indenture or thereafter Incurred) which is
subordinate or junior in right of payment to the Notes pursuant to a written
agreement.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person or (ii) one or more
Subsidiaries of such Person.
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"Successor Company" shall have the meaning assigned thereto in clause (i)
under "--Merger and Consolidation."
"Temporary Cash Investments" means any of the following: (i) any investment
in direct obligations (x) of the United States of America or any agency
thereof or obligations Guaranteed by the United States of America or any
agency thereof or (y) of any foreign country recognized by the United States
of America rated at least "A" by S&P or "A-1" by Moody's, (ii) investments in
time deposit accounts, certificates of deposit and money market deposits
maturing within 180 days of the date of acquisition thereof issued by a bank
or trust company that is organized under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America having capital and surplus aggregating in excess of $250.0
million (or the foreign currency equivalent thereof) and whose long-term debt
is rated "A" by S&P or "A-1" by Moody's, (iii) repurchase obligations with a
term of not more than 30 days for underlying securities of the types described
in clause (i) or (ii) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) investments in commercial
paper, maturing not more than 270 days after the date of acquisition, issued
by a corporation (other than an Affiliate of the Company) organized and in
existence under the laws of the United States of America or any foreign
country recognized by the United States of America with a rating at the time
as of which any investment therein is made of "P-1" (or higher) according to
Moody's or "A-1" (or higher) according to S&P, (v) investments in securities
with maturities of six months or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United States
of America, or by any political subdivision or taxing authority thereof, and
rated at least "A" by S&P or "A" by Moody's, (vi) any money market deposit
accounts issued or offered by a domestic commercial bank or a commercial bank
organized and located in a country recognized by the United States of America,
in each case, having capital and surplus in excess of $250.0 million (or the
foreign currency equivalent thereof), or investments in money market funds
complying with the risk limiting conditions of Rule 2a-7 (or any successor
rule) of the SEC, under the Investment Company Act of 1940, as amended, and
(vii) similar investments approved by the Board of Directors in the ordinary
course of business.
"Term Loans" means term loans made pursuant to the Senior Credit Agreement.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb)
as in effect on the date of the Indenture.
"Trade Payables" means, with respect to any Person, any accounts payable or
any indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by such Person arising in the ordinary course of business in
connection with the acquisition of goods or services.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519)
which has become publicly available at least two Business Days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the
period from the Redemption Date to the Stated Maturity; provided, however,
that if the period from the Redemption Date to the Stated Maturity is not
equal to the constant maturity of a United States Treasury security for which
a weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for which such
yields are given, except that if the period from the Redemption Date to the
Stated Maturity is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of
one year shall be used.
"Trustee" means the party named as such in the Indenture until a successor
replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any other
officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
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"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors in the manner provided below and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors may designate any
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness
of, or owns or holds any Lien on any property of, the Company or any other
Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so
designated; provided, however, that either (A) the Subsidiary to be so
designated has total consolidated assets of $1,000 or less or (B) if such
Subsidiary has consolidated assets greater than $1,000, then such designation
would be permitted under "--Certain Covenants--Limitation on Restricted
Payments". The Board of Directors may designate any Unrestricted Subsidiary to
be a Restricted Subsidiary; provided, however, that immediately after giving
effect to such designation (x) the Company could incur at least $1.00 of
additional Indebtedness under paragraph (a) in the covenant described under
"--Certain Covenants--Limitation on Indebtedness" and (y) no Default shall
have occurred and be continuing. Any such designation by the Board of
Directors shall be evidenced to the Trustee by promptly filing with the
Trustee a copy of the resolution of the Company's Board of Directors giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.
"Vehicles" shall mean any trucks or other vehicles owned by the Company or
any Subsidiary and registered and based in the United States of America, the
body (including the "box" or storage component thereto) and equipment mounted
thereon and all accessions, attachments, and accessories of any type or
description attached to such trucks or vehicles.
"Voting Stock" of an entity means all classes of Capital Stock of such
entity then outstanding and normally entitled to vote in the election of
directors or all interests in such entity with the ability to control the
management or actions of such entity.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the Company all
the Capital Stock of which (other than directors' qualifying shares) is owned
by the Company or another Wholly Owned Subsidiary.
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the Exchange Notes will be issued in fully
registered form. The Company expects that the Exchange Notes will be issued
initially in the form of a permanent global certificate in fully registered
form (the "Global Note") and will be deposited with the Trustee as custodian
for The Depository Trust Company ("DTC") and registered in the name of a
nominee of DTC.
Global Note. The Company expects that upon the issuance of the Global Note,
DTC or its custodian will credit, on its book-entry registration and transfer
system, the respective principal amount of Exchange Notes of the individual
beneficial interests represented by such Global Note to the accounts of
Persons who have accounts with such depositary. Such accounts initially will
be designated by or on behalf of the Initial Purchaser. Ownership of
beneficial interests in the Global Note will be limited to Persons who have
accounts with DTC ("participants") or Persons who hold interests through
participants. Ownership of beneficial interests in the Global Note will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
Persons other than participants).
So long as DTC, or its nominee, is the registered owner or holder of the
Exchange Notes, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Exchange Notes represented by such Global Note
for all purposes under the Indenture. No beneficial owner of an interest in
the Global Note will be able to transfer that interest except in accordance
with DTC's procedures, in addition to those provided for under the Indenture.
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Payments of the principal of, premium (if any) and interest on the Global
Note will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. None of the Company, the Trustee or any paying agent will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Note
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium (if any) or interest in respect of the Global Note, will
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amounts of the Global Note as
shown on the records of DTC or its nominee. The Company also expects that
payments by participants to owners of beneficial interests in the Global Note
held through such participants will be governed by standing instructions and
customary practice, as is now the case with securities held for the accounts
of customers registered in the names of nominees for such customers. Such
payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in clearinghouse funds. If a
holder requires physical delivery of a certificated Exchange Note for any
reason, including to sell Exchange Notes to persons in states which require
physical delivery of such Exchange Notes, or to pledge such securities, such
holder must transfer its interest in the Global Note in accordance with the
normal procedures of DTC and with the procedures set forth in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Exchange Notes (including the presentation of Exchange
Notes for exchange as described below) only at the direction of one or more
participants to whose account the DTC interests in the Global Note are
credited and only in respect of such portion of the aggregate principal amount
of Exchange Notes as to which such participant or participants has or have
given such direction. However, if there is an Event of Default under the
Indenture, DTC will exchange the Global Note for certificated Exchange Notes,
which it will distribute to its participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a participant, either directly or indirectly
("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among participants of DTC, it is
under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Certificated Securities. If DTC is at any time unwilling or unable to
continue as a depository for the Global Note and a successor depository is not
appointed by the Company within 90 days, Exchange Notes in definitive form
will be issued in exchange for the Global Note.
SENIOR SUBORDINATED NOTES REGISTRATION RIGHTS
The Company and the Initial Purchaser entered into the Exchange and
Registration Rights Agreement on the Issue Date pursuant to which the Company
agreed to (i) file with the Commission on or prior to 45 days
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after the Issue Date a registration statement on Form S-1 or Form S-4, if the
use of such form is then available (the "Exchange Offer Registration
Statement") relating to the Exchange Offer and (ii) use its best efforts to
cause the Exchange Offer Registration Statement to be declared effective under
the Securities Act within 135 days after the Issue Date. Upon the Exchange
Offer Registration Statement being declared effective, the Company will offer
to the holders of Senior Subordinated Notes who are not prohibited by any law
or policy of the Commission from participating in the Exchange Offer the
opportunity to exchange their Senior Subordinated Notes for Exchange Notes.
The Company will keep the Exchange Offer open for not less than 30 days (or
longer, if required by applicable law) after the date notice of the Exchange
Offer is mailed to the holders of the Senior Subordinated Notes. For each
Senior Subordinated Note surrendered to the Company for exchange pursuant to
the Exchange Offer, the holder of such Note will receive an Exchange Note
having a principal amount at maturity equal to that of the surrendered Senior
Subordinated Note. Interest on each Exchange Note will accrue from the last
interest payment date on which interest was paid on the Senior Subordinated
Note surrendered in exchange therefor or, if no interest has been paid on such
Senior Subordinated Note, from the date of original issuance. See "The
Exchange Offer."
In the event that (a) prior to the consummation of the Exchange Offer, the
Company reasonably determines in good faith that, after conferring with
counsel, that the Commission is unlikely to permit the consummation of the
Exchange Offer within 165 days after the Issue Date, (b) for any other reason
the Exchange Offer is not consummated within 165 days of the Issue Date, (c)
the Initial Purchaser so requests with respect to Senior Subordinated Notes
(i) purchased by it from the Company on the Issue Date, (ii) not eligible to
be exchanged for Exchange Notes in the Exchange Offer and (iii) held by it
following consummation of the Exchange Offer or (d) any holder (other than an
exchanging dealer) is not eligible to participate in the Exchange Offer or, in
the case of any holder that participates in the Exchange Offer (other than an
exchanging dealer), does not receive freely tradeable Exchange Notes in
exchange for tendered Senior Subordinated Notes (and in either case so advises
the Company within ten business days following the later of the consummation
of the Exchange Offer or the time at which such holder becomes aware or is
notified by the Company of such circumstance) or if the Company so elects, in
each case the Company shall promptly (and in any event within three business
days) deliver to the holders and the Trustee written notice thereof (the
"Shelf Notice"). After delivery of the Shelf Notice, the Company will file
with the Commission a shelf registration statement (the "Shelf Registration
Statement") to cover resales of Transfer Restricted Securities (as defined) by
such holders who satisfy certain conditions relating to the provision of
information in connection with the Shelf Registration Statement. For purposes
of the foregoing, "Transfer Restricted Securities" means each Note until (i)
the date on which such Note has been exchanged for a freely transferable
Exchange Note in the Exchange Offer; (ii) the date on which such Note has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (iii) the date on which such Note is
distributed to the public pursuant to Rule 144 under the Securities Act or is
saleable pursuant to Rule 144(k) under the Securities Act.
The Company will use its best efforts to have the Exchange Offer
Registration Statement or, if applicable, the Shelf Registration Statement
(each, a "Registration Statement") declared effective by the Commission as
promptly as practicable after the filing thereof. Unless the Exchange Offer
would not be permitted by a policy of the Commission, the Company will
commence the Exchange Offer and will use its best efforts to consummate the
Exchange Offer as promptly as practicable, but in any event prior to 165 days
after the Issue Date. If applicable, the Company will use its best efforts to
keep the Shelf Registration Statement effective for a period of three years
after the date the Shelf Registration Statement is declared effective by the
Commission or such shorter period that will terminate when all the Notes
covered by the Shelf Registration Statement (i) have been sold pursuant to the
Shelf Registration Statement or (ii) are distributed to the public pursuant to
Rule 144 under the Securities Act or are saleable pursuant to Rule 144(k)
under the Securities Act. If (i) the Exchange Offer Registration Statement is
not declared effective within 135 days after the Issue Date; (ii) the Exchange
Offer is not consummated on or prior to 165 days after the Issue Date; (iii)
the Shelf Registration Statement is not filed with the Commission within 45
days after the Shelf Notice is required to be delivered or is not declared
effective within 135 days after such date or (iv) the Shelf Registration
Statement is filed and declared effective within 135 days after the date the
Shelf Notice is required to be delivered but shall thereafter cease to be
effective (at any
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time that the Company is obligated to maintain the effectiveness thereof)
without being succeeded within 30 days by an additional or amended
Registration Statement filed and declared effective (each such event referred
to in clauses (i) through (iv), a "Registration Default"), the Company will
pay liquidated damages to each holder of Transfer Restricted Securities,
during the period of Registration Default, in an amount equal to $0.192 per
week per $1,000 principal amount of the Notes constituting Transfer Restricted
Securities held by such holder until the applicable Registration Statement is
filed or declared effective, the Exchange Offer is consummated or the Shelf
Registration Statement again becomes effective, as the case may be. All
accrued liquidated damages shall be paid to holders in the same manner as
interest payments on the Notes on semi-annual payment dates which correspond
to interest payment dates for the Notes. Following the cure of all
Registration Defaults, the accrual of liquidated damages will cease.
The Exchange and Registration Rights Agreement provides that the Company (i)
shall make available for a period of 90 days after the consummation of the
Exchange Offer additional copies of the prospectus meeting the requirements of
the Securities Act and any amendment or supplement thereto to any broker-
dealer for use in connection with any resale of any such Exchange Notes and
(ii) shall pay all expenses incident to the Exchange Offer (including the
expense of one counsel to the holders of the Notes) other than commissions or
concessions of any brokers or dealers and will indemnify holders of the Notes
(including any broker-dealer) against certain liabilities, including
liabilities under the Securities Act. A broker-dealer which delivers such a
prospectus to purchasers in connection with such resales will be subject to
certain of the civil liability provisions under the Securities Act and will be
bound by the provisions of the Exchange and Registration Rights Agreement
(including certain indemnification rights and obligations).
Each holder of Senior Subordinated Notes who wishes to exchange such Senior
Subordinated Notes for Exchange Notes in the Exchange Offer will be required
to make certain representations, including representations that (i) any
Exchange Notes to be received by it will be acquired in the ordinary course of
its business; (ii) it has no arrangements or understandings with any person to
participate in the distribution of the Senior Subordinated Notes or the
Exchange Notes and (iii) it is not an Affiliate.
If the holder is not a broker-dealer, it will be required to represent that
it is not engaged in, and does not intend to engage in, the distribution of
the Exchange Notes. If the holder is a broker-dealer that will receive
Exchange Notes for its own account in exchange for Senior Subordinated Notes
that were acquired as a result of market-making activities or other trading
activities, it will be required to acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes.
Holders of the Notes will be required to make certain representations to the
Company (as described above) in order to participate in the Exchange Offer and
will be required to deliver information to be used in connection with any
Shelf Registration Statement in order to have their Notes included in the
Shelf Registration Statement. A holder who sells Notes pursuant to the Shelf
Registration Statement generally will be required to be named as a selling
securityholder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Exchange and Registration Rights Agreement which are
applicable to such a holder (including certain indemnification obligations).
For so long as the Notes are outstanding, the Company will continue to
provide to holders of the Notes and to prospective purchasers of the Notes the
information required by Rule 144A(d)(4) under the Securities Act.
The foregoing summary of certain provisions of the Exchange and Registration
Rights Agreement does not purport to be complete and is qualified in its
entirety by reference to all provisions of the Exchange and Registration
Rights Agreement, a copy of which has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part.
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PLAN OF DISTRIBUTION
Based on interpretations by the Staff set forth in no-action letters issued
to third parties, the Company believes that Exchange Notes issued pursuant to
the Exchange Offer in exchange for Senior Subordinated Notes may be offered
for resale, resold and otherwise transferred by holders thereof (other than
any holder which is (i) an "Affiliate," (ii) a broker-dealer who acquired
Senior Subordinated Notes directly from the Company or (iii) broker-dealers
who acquired Senior Subordinated Notes as a result of market-making or other
trading activities) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such Exchange Notes
are acquired in the ordinary course of such holders' business and such holders
have no arrangement with any person to participate in a distribution of such
Exchange Notes; provided that broker-dealers receiving Exchange Notes in the
Exchange Offer will be subject to a prospectus delivery requirement with
respect to resales of such Exchange Notes.
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. This Prospectus, as it may
be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Notes received in exchange for Senior
Subordinated Notes where Senior Subordinated Notes were acquired as a result
of market-making activities or other trading activities. The Company has
agreed that, for a period of 90 days after the Expiration Date, it will make
this Prospectus, as amended or supplemented, available to any broker-dealer
for use in connection with any such resale. In addition, until , 1997,
all dealers effecting transactions in the Exchange Notes may be required to
deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange Notes by
broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or at negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer and/or the purchasers of any such Exchange Notes.
Any broker-dealer that resells Exchange Notes that were received by it for its
own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act, and any profit on any
such resale of Exchange Notes and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
For a period of 90 days after the Expiration Date, the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the
Letter of Transmittal. The Company has agreed to pay all expenses incident to
the Exchange Offer (including the expenses of one counsel for the holders of
the Notes) other than commissions or concessions of any brokers or dealers and
will indemnify such holders (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Exchange Notes
will be passed upon for the Company by Willkie Farr & Gallagher, New York, New
York.
106
<PAGE>
EXPERTS
The balance sheet of Ryder TRS, Inc. (a development stage company) as of
September 30, 1996, included in this Prospectus has been included herein in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
The Combined Financial Statements of the Division as of October 16, 1996,
December 31, 1995 and 1994 and for the period January 1, 1996 to October 16,
1996 and for each of the years in the two-year period ended December 31, 1995
included in this Prospectus have been audited by KPMG Peat Marwick LLP,
independent accountants, as stated in their reports appearing herein. Such
Combined Financial Statements are included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
107
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PAGE
RYDER TRS, INC.
<TABLE>
<S> <C>
Report of Independent Accountants.......................................... F-2
Balance Sheet at September 30, 1996........................................ F-3
Notes to Financial Statements.............................................. F-4
</TABLE>
RYDER CONSUMER TRUCK RENTAL DIVISION
Audited Combined Financial Statements
<TABLE>
<S> <C>
Report of Independent Auditors............................................ F-6
Combined Balance Sheets at December 31, 1994 and 1995..................... F-7
Combined Statements of Operations and Changes in Ryder Investment for the
years ended
December 31, 1994 and 1995............................................... F-8
Combined Statements of Cash Flows for the years ended December 31, 1994
and 1995................................................................. F-9
Notes to Combined Financial Statements.................................... F-10
</TABLE>
Unaudited Combined Financial Statements
<TABLE>
<S> <C>
Combined Statement of Operations and Changes in Ryder Investment for the
nine months ended
September 30, 1995....................................................... F-18
Combined Statement of Cash Flows for the nine months ended September 30,
1995..................................................................... F-19
Notes to Combined Financial Statements.................................... F-20
</TABLE>
Audited Combined Financial Statements
<TABLE>
<S> <C>
Report of Independent Auditors............................................ F-21
Combined Balance Sheet at October 16, 1996................................ F-22
Combined Statement of Earnings and Changes in Ryder Investment for the Pe-
riod January 1, 1996
to October 16, 1996...................................................... F-23
Combined Statement of Cash Flows for the Period January 1, 1996 to October
16, 1996................................................................. F-24
Notes to Combined Financial Statements.................................... F-25
</TABLE>
F-1
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Shareholders
Ryder TRS, Inc.
We have audited the accompanying balance sheet of Ryder TRS, Inc. (a
development stage company) as of September 30, 1996. This financial statement
is the responsibility of the Company's management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Ryder TRS, Inc. (a development
stage company) as of September 30, 1996, in conformity with generally accepted
accounting principles.
Coopers & Lybrand L.L.P.
Miami, Florida
January 6, 1997
F-2
<PAGE>
RYDER TRS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
--------------
(IN THOUSANDS)
<S> <C>
ASSETS......................................................... $ --
-------
Total Assets............................................... $ --
=======
LIABILITIES AND SHAREHOLDER'S EQUITY
Common Stock $.01 par value, 1,000 shares authorized: one share
outstanding................................................... $ --
-------
Total Liabilities and Shareholder's Equity................. $ --
=======
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
RYDER TRS, INC.
NOTES TO BALANCE SHEET
NOTE 1--NATURE OF BUSINESS
Ryder TRS, Inc. (the "Company") was incorporated on September 5, 1996 for the
purpose of consummating the transactions that are more fully described in Note
2 below.
NOTE 2--SUBSEQUENT EVENTS
Common Stock. On October 17, 1996, the Company's Certificate of Incorporation
was restated and amended to increase the number of authorized shares of Common
Stock from 1,000 shares to 275,000 shares, of which 225,000 shares were
designated as Class A Common Stock, 25,000 shares were designated as Class B
Common Stock and 25,000 shares were designated as Class C Common Stock.
The holders of the Class B Common Stock and Class C Common Stock have no
voting rights except in certain limited circumstances. Class A Common Stock is
convertible into the same number of shares of Class B Common Stock. Upon the
occurrence of certain events, Class B Common Stock is convertible into the same
number of shares of Class A Common Stock. Class C Common Stock is not
convertible into Class A Common Stock or Class B Common Stock.
In connection with its formation and the acquisition, as described below, the
Company entered into a Shareholders' Agreement (the "Shareholders Agreement")
with all of the holders of its Class A Common Stock and Class B Common Stock
(collectively, the "Shareholders"). The Shareholders Agreement contains certain
restrictions on transfers of Common Stock and provisions under which
Shareholders may sell Common Stock or require other Shareholders to sell Common
Stock or under which the Company may acquire Common Stock from Shareholders.
The Shareholders Agreement provides that, upon certain issuances by the Company
of equity securities to any of the initial Shareholders (or their permitted
transferees), Shareholders will have rights to maintain their percentage equity
interests in the Company's capital stock by purchasing a portion of such equity
securities.
Acquisition. On October 17, 1996, pursuant to an Asset and Stock Purchase
Agreement (together with related agreements), the Company (together with a
newly formed subsidiary, Leasco) acquired from Ryder Truck Rental, Inc. (a
subsidiary of Ryder System, Inc., collectively, the "Seller") substantially all
the assets and assumed certain of the liabilities of the Consumer Truck Rental
division of the Seller. As a result of this acquisition, the Company is the
second largest provider of truck rentals and related moving supplies and
services to the consumer and light commercial markets in the United States,
with a fleet of approximately 32,200 trucks. The Company rents trucks, towing
equipment and accessory equipment, and sells liability-limiting products and
moving supplies to consumers and commercial customers through its nationwide
network of approximately 4,400 dealers.
The aggregate cash purchase price for the net assets acquired was $579.4
million (subject to post-closing adjustment). Additionally, the Company paid
$9.0 million of fees and expenses that were capitalized as part of the
acquisition cost. Financing for the acquisition and for an additional $15.2
million of deferred financing costs consisted of issuing 109,090 shares of
Class A Common Stock and 13,910 shares of Class B Common Stock for an aggregate
amount of $123.0 million, borrowing $350.0 million of term loans and $31.0
million of revolving loans under a $500.0 million senior secured credit
facility with certain banks, and borrowing $100.0 million under a senior
subordinated loan facility.
The $500.0 million senior secured credit facility consists of a $350.0
million term facility and a $150.0 million revolving credit facility, of which
$50.0 million is available for letters of credit. The term facility matures on
October 17, 2001 and amortizes in equal quarterly installments totaling $20.0
million in each of fiscal 1998,
F-4
<PAGE>
1999 and 2000, and $290 million in fiscal 2001. The revolving credit facility
matures on October 17, 2001. These senior facilities bear interest at LIBOR
plus 2.0% or an alternate variable rate. The obligations of the Company under
the senior bank facilities are unconditionally guaranteed, jointly and
severally, by each existing subsidiary of the Company, other than Leasco. The
obligations under the senior bank facilities and the guarantees thereof are
secured by substantially all the assets of the Company and the existing
subsidiaries other than Leasco, including (i) a first priority pledge of all
the capital stock of Leasco and each existing subsidiary of the Company and
(ii) perfected first priority security interests in substantially all tangible
and intangible assets of the Company and of each existing subsidiary of the
Company, other than Leasco, subject to certain exceptions. Notwithstanding the
foregoing, at the request of the agents or the lenders under the senior bank
facilities, the Company may be required to cause Leasco to guarantee the
obligations of the Company under the senior bank facilities, and to grant
security interests in, and liens on, Leasco's assets as security for such
guarantee, if a securitization by Leasco of the truck rental fleet has not
been consummated on or prior to July 17, 1997. The Company intends to
refinance all of the term facility and a portion of the revolving credit
facility with the proceeds of this securitization. The senior bank facilities
contain a number of covenants that, among other things, restrict the ability
of the Company and its subsidiaries to dispose of assets, incur additional
indebtedness, prepay other indebtedness, pay dividends or make distributions,
create liens on assets, make investments, loans or advances, make
acquisitions, engage in mergers or consolidations, issue capital stock, make
capital expenditures or engage in certain transactions with affiliates and
otherwise restrict certain corporate activities, including with respect to the
Company's vehicle sales and bank accounts. In addition, under the senior bank
facilities, the Company is required to comply with specified financial ratios
and tests, including minimum interest coverage ratios, maximum leverage
ratios, minimum EBITDA requirements and minimum fixed charge coverage ratios.
In connection with the acquisition, the Company entered into various
agreements with the Seller regarding dealer relationships, competition,
vehicle maintenance, use of intellectual property, sales of used trucks,
administrative services and management information systems support.
Debt Refinancing. On November 25, 1996, the $100.0 million senior
subordinated loan facility and $69.0 million of the term loans were refinanced
with the proceeds, net of approximately $6.0 million in deferred financing
costs, of $175.0 million of 10% senior subordinated notes due in 2006. In
connection with the refinancing, deferred financing costs of $3.1 million (net
of related taxes) associated with the senior subordinated loan facility and
the term loans repaid were charged to earnings. The notes are senior
subordinated unsecured obligations of the Company. Except under certain
circumstances, the notes may not be redeemed prior to December 1, 2001. On and
after that date and until December 1, 2004, the Company may redeem all or any
portion of the notes at redemption prices ranging from 105% to 101.667% of the
principal amount. After December 1, 2004, the Company may redeem all or any
portion of the notes at 100% of the principal amount. The notes mature in full
on December 1, 2006.
Related Party Transactions. On the date of acquisition, the Company paid
merger and acquisition fees totaling $8.0 million to certain shareholders.
These fees were capitalized as part of the acquisition costs. Additionally,
the Company entered into a Management and Consulting Agreement with an
affiliate of one of the Company's shareholders providing for annual
compensation of $850,000, subject to certain conditions, for a period that
will continue for as long as the shareholder or certain affiliates of the
shareholder hold any shares of Common Stock of the Company. Also, the Company
entered into a consulting agreement for certain other services with another
affiliate of the shareholder which can be terminated by either party at any
time. This agreement is estimated to cost $2.6 million, exclusive of expenses
and contingent success fees, over the next twelve months.
F-5
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Ryder System, Inc.:
We have audited the accompanying combined balance sheets of Ryder Consumer
Truck Rental (a division of Ryder Truck Rental, Inc., a wholly-owned
subsidiary of Ryder System, Inc.) as of December 31, 1994 and 1995, and the
related combined statements of operations and changes in Ryder investment and
of cash flows for each of the years in the two-year period ended December 31,
1995. These combined financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Ryder Consumer
Truck Rental as of December 31, 1994 and 1995, and the results of its
operations and its cash flows for each of the years in the two-year period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Miami, Florida
September 23, 1996
F-6
<PAGE>
RYDER CONSUMER TRUCK RENTAL
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1994 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash....................................................... $ 1,831 $ 2,610
Receivables................................................ 26,611 35,780
Tires in service........................................... 25,455 27,603
Deferred income taxes...................................... 11,035 7,733
Prepaid expenses and other current assets.................. 12,308 10,451
-------- --------
Total current assets..................................... 77,240 84,177
Revenue earning equipment.................................... 478,188 519,762
Operating property and equipment............................. 17,818 21,409
Other assets................................................. 2,687 4,469
-------- --------
Total assets............................................. $575,933 $629,817
======== ========
LIABILITIES AND RYDER INVESTMENT
Current liabilities:
Accounts payable........................................... $ 24,344 $ 6,737
Accrued expenses and other liabilities..................... 39,931 34,886
-------- --------
Total current liabilities................................ 64,275 41,623
Deferred income taxes........................................ 70,625 70,175
Other non-current liabilities................................ 28,975 27,582
Investment by and advances from Ryder........................ 412,058 490,437
-------- --------
Total liabilities and Ryder investment................... $575,933 $629,817
======== ========
</TABLE>
See accompanying notes to combined financial statements.
F-7
<PAGE>
RYDER CONSUMER TRUCK RENTAL
COMBINED STATEMENTS OF OPERATIONS AND CHANGES IN RYDER INVESTMENT
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------
1994 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Truck rental and related revenue............................. $549,633 $546,721
Operating expense............................................ 204,552 185,920
Selling, general and administrative expense.................. 209,399 213,600
Depreciation expense, net of gains........................... 90,215 104,258
Interest expense............................................. 24,256 29,663
Restructuring and other charges.............................. -- 6,370
Miscellaneous expense, net................................... 102 324
-------- --------
528,524 540,135
-------- --------
Earnings before income taxes............................... 21,109 6,586
Provision for income taxes................................... 8,800 2,984
-------- --------
Net earnings................................................. $ 12,309 $ 3,602
======== ========
Changes in Ryder Investment:
Investment by and advances from Ryder at beginning of peri-
od........................................................ $369,464 $412,058
Net earnings............................................... 12,309 3,602
Net change in investment by and advances from Ryder........ 30,285 74,777
-------- --------
Investment by and advances from Ryder at end of period..... $412,058 $490,437
======== ========
</TABLE>
See accompanying notes to combined financial statements.
F-8
<PAGE>
RYDER CONSUMER TRUCK RENTAL
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net earnings........................................... $ 12,309 $ 3,602
Depreciation expense, net of gains..................... 90,215 104,258
Deferred income taxes.................................. 4,291 2,852
Increase in receivables................................ (10,644) (9,169)
Increase (decrease) in accounts payable................ 16,272 (17,607)
Increase (decrease) in accrued expenses and other lia-
bilities.............................................. 1,828 (5,045)
Increase (decrease) in other non-current liabilities... 2,554 (1,393)
Other, net............................................. (2,193) 1,835
--------- ---------
Net cash provided by operating activities............ 114,632 79,333
--------- ---------
Cash flows from investing activities:
Purchases of property and revenue earning equipment.... (191,925) (223,749)
Sales of property and revenue earning equipment........ 50,102 72,410
Other, net............................................. (1,935) (1,992)
--------- ---------
Net cash used in investing activities................ (143,758) (153,331)
--------- ---------
Cash flows from financing activities:
Net increase in investments by and advances from Ry-
der................................................... 30,285 74,777
--------- ---------
Net cash provided by financing activities............ 30,285 74,777
--------- ---------
Increase in cash......................................... 1,159 779
Cash at beginning of period.............................. 672 1,831
--------- ---------
Cash at end of period.................................... $ 1,831 $ 2,610
========= =========
</TABLE>
See accompanying notes to combined financial statements.
F-9
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994 AND 1995
NOTE 1--NATURE OF BUSINESS
Ryder Consumer Truck Rental (the "Company") is a division of Ryder Truck
Rental, Inc., a wholly-owned subsidiary of Ryder System, Inc. ("Ryder"). The
Company consists of the U.S.-based consumer truck rental operations of Ryder
and Ryder's wholly-owned subsidiary, Ryder Move Management, Inc. The Company
is engaged in the domestic rental of trucks to do-it-yourself movers and
"light commercial" customers, and the sale of related moving accessories and
liability-limiting products. The Company, through Ryder Move Management, is
also engaged in household goods relocation services for corporate employee
relocation programs. The Company's truck rental distribution network consists
of independent dealers and Ryder branch locations. Approximately 10% to 15% of
the Company's revenue is generated through Ryder branch locations. The
Company's business is seasonal, with generally higher levels of demand during
the summer months. As a result, the Company typically experiences greater
profitability in the second half of the year compared with the first half.
NOTE 2--SALE OF COMPANY
On September 19, 1996, Ryder Truck Rental, Inc. entered into a definitive
agreement to sell substantially all the assets and certain liabilities of the
Company to Questor Partners Fund, L.P. and certain other investors
(collectively "Questor") for approximately $575 million. In addition, Ryder
will give Questor a royalty-free license to use the Ryder trademark and color
scheme, subject to certain restrictions, for a total of 10 years (with
required modifications to the trademark after five years). Ryder and Questor
have also entered into service agreements for various periods of time ranging
from two to five years, with options for extensions after five years for
certain of the agreements. Under the agreements, Ryder will continue to
provide various services to the Company including vehicle maintenance, claims
processing, management information systems and other administrative services.
In addition, certain Ryder branch locations will continue to act as consumer
truck rental dealers and Ryder will continue to assist in the disposition of
the Company's used vehicles through its sales network. Rates agreed upon for
the various services are considered reasonable based on market rates. The
transaction is expected to be completed prior to the end of 1996.
NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying Combined Financial Statements are presented for periods
prior to the date of the sale agreement utilizing the historical accounting
practices followed by Ryder.
Basis of Presentation. The accompanying Combined Financial Statements
include the operations, assets and liabilities of the Company. The financial
statements do not include assets and liabilities of Ryder not specifically
identifiable to the Company. The financial information included herein is not
necessarily indicative of the financial position and results of operations or
cash flows that would have occurred had the Company been an independent stand-
alone entity during the periods presented, nor is it necessarily indicative of
future results of the Company.
Receivables. Receivables consist primarily of trade receivables resulting
from rental transactions and receivables from the sale of revenue earning
equipment. Receivables are reduced by amounts considered by management to be
uncollectible based on historical collection loss experience and review of the
current status of existing receivables.
Revenue Earning Equipment, Operating Property and Equipment and
Depreciation. Revenue earning equipment, principally rental trucks, and
operating property and equipment are stated at cost. Provision for
F-10
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1994 AND 1995
depreciation is computed using the straight-line method on substantially all
depreciable assets. Annual straight-line depreciation rates are 14% to 20% for
revenue earning equipment, 13% to 25% for office equipment and furniture and
19% to 30% for transfer vehicles and company cars.
Gains on sales of revenue earning equipment, net of vehicle disposition
costs, are reported as reductions of depreciation expense and totaled $25.9
million and $21.9 million for the years ended December 31, 1994 and 1995,
respectively. Gains on operating property and equipment sales are reflected in
miscellaneous expense, net.
Tires in Service. Consistent with industry practice, the Company allocates a
portion of the acquisition costs of revenue earning equipment to tires in
service. The cost of replacement tires and tire repairs are expensed when
incurred.
Software Development Costs. Internal costs for development of internal use
software are expensed as incurred. Incremental external costs for software
development are capitalized and amortized over the expected useful lives of
the software which range from four to five years. Other assets in the Combined
Balance Sheets are comprised primarily of software development and purchased
software costs.
Accrued Insurance and Loss Reserves. The Company participates in Ryder's
overall risk management programs for auto and general liability, workers'
compensation and other insurance programs. The primary risks to Ryder and the
Company are associated with auto and general liability and Ryder retains
losses for the exposure up to $1 million per occurrence. Ryder insures losses
above $1 million with third party insurance companies.
The Company has recorded insurance reserves for auto and general liability
claims which reflect the Company's portion of the undiscounted estimated
liabilities up to $500,000 per occurrence (plus allocated loss adjustment
expense) and an estimate of claims incurred but not reported. Such liabilities
are necessarily based on estimates and, while management believes that the
amount is adequate, there can be no assurance that changes to management's
estimates may not occur due to limitations inherent in the estimation process.
Changes in the estimates of these reserves are charged or credited to income
in the period determined. Amounts estimated to be paid within one year have
been classified as accrued expenses with the remainder included in other non-
current liabilities. For exposures from $500,000 to $1 million per occurrence,
the Company is charged a premium based on the Company's loss experience and
the related liability is retained by Ryder. Costs associated with insurance
premiums to third party insurance companies for coverage in excess of $1
million are allocated by Ryder to the Company based on the Company's pro rata
share of Ryder's revenue.
Revenue Recognition. Truck rental and related revenue is recognized as
earned.
Income Taxes. The Company has been included in consolidated income tax
filings of Ryder for Federal and state income tax purposes. However, the
income tax provisions included in the accompanying Combined Financial
Statements have been determined as if the Company was an independent stand-
alone entity filing separate income tax returns.
Deferred tax assets and liabilities are determined based upon differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that currently would be in
effect when the differences are expected to reverse. Deferred tax balances
will be adjusted for tax law changes in periods that include the enactment
date of such changes. See Note (9).
Other Costs. Vehicle licensing fees are deferred when paid and amortized to
income over the period to which the fees relate. Vehicle repairs and
maintenance which do not extend the life or increase the value of the
F-11
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1994 AND 1995
vehicle are expensed as incurred. Yellow Page directory costs are deferred
when paid and amortized over the period the directories are effective, which
is typically 12 months. Advertising and sales promotion costs are expensed as
incurred.
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
NOTE 4--TRANSACTIONS WITH RYDER
Certain Ryder branch locations provide vehicle repairs and maintenance
services to the Company and also serve as consumer truck rental dealers. Rates
charged to the Company for repairs and maintenance approximate rates charged
to significant Ryder customers and reflect the cost of parts and the cost of
labor plus a mark-up. Commission rates paid to Ryder for trucks rented through
Ryder locations are based on revenue generated from the transactions and are
generally consistent with those paid to independent dealers.
The Company participates in Ryder's combined risk management programs for
auto and general liability and Ryder processes claims related to auto and
general liability and workers' compensation. The Company also participates in
Ryder medical and dental, pension, postretirement and savings plans. See Notes
(3) and (10).
Ryder provides various general and administrative services to the Company
including information systems, treasury, legal, human resources, payroll,
marketing, purchasing, accounting and others. Costs for these services are
charged to the Company through Ryder's internal cost allocation methodologies
which are designed to estimate the actual costs incurred by Ryder to render
these services. In addition, general and administrative costs charged by Ryder
include a corporate management fee, which is based on the Company's equity and
revenue levels. The Company also shares various facilities with Ryder for
which it is charged an amount based on relative square footage which is
intended to represent the Company's portion of occupancy costs including
utilities, maintenance and other costs.
The Company is charged by Ryder for vehicle disposition costs, including
sales commissions, costs to prepare vehicles for sale and a per vehicle
service fee.
The Company's cash and financing needs are managed by Ryder. The
accompanying Combined Balance Sheets do not include Ryder's general corporate
debt, which is used to finance the operations of all of Ryder's business
units. However, Ryder allocates its corporate interest expense to each
business unit based upon a target debt to equity ratio. The composition of the
investment by and advances from Ryder in the Combined Balance Sheets has been
periodically adjusted to effect this target debt to equity ratio. Interest
expense charged to the Company by Ryder is principally based upon the interest
cost incurred by Ryder for certain of its indebtedness.
Management believes the methods used to determine intercompany charges and
cost allocations are reasonable, however, such costs may not be representative
of those which would be incurred if the Company operated as an independent
stand-alone entity.
F-12
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1994 AND 1995
Amounts charged and allocated by Ryder to the Company for the above expense
items are summarized in the following table:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1994 1995
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Operating expense:
Repairs and maintenance.............................. $ 70,377 $ 57,378
Auto and general liability costs..................... 36,611 26,464
Selling, general and administrative expense:
General and administrative........................... 18,490 20,136
Commissions on truck rentals......................... 13,367 10,071
Pension, postretirement and savings plans............ 1,016 1,078
Other self insurance costs........................... 1,316 1,326
Occupancy............................................ 446 429
Depreciation expense, net of gains:
Vehicle disposition costs............................ 6,591 6,970
Interest expense....................................... 24,256 29,663
</TABLE>
The components of the investment by and advances from Ryder in the Combined
Balance Sheets were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1994 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Interest-bearing advances from Ryder.......................... $317,762 $362,607
Ryder investment.............................................. 94,296 127,830
-------- --------
$412,058 $490,437
======== ========
</TABLE>
NOTE 5--RECEIVABLES
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Trade accounts receivables.................................... $19,940 $19,785
Receivables from vehicle sales................................ 5,868 14,575
Other receivables............................................. 1,318 1,934
------- -------
27,126 36,294
Allowance for doubtful accounts............................. (515) (514)
------- -------
$26,611 $35,780
======= =======
</TABLE>
Bad debt expense totaled $0.9 million and $1.0 million for the years ended
December 31, 1994 and 1995, respectively.
F-13
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1994 AND 1995
NOTE 6--REVENUE EARNING EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Rental trucks............................................. $ 738,282 $ 777,610
Towing and other equipment................................ 28,615 31,898
--------- ---------
766,897 809,508
Accumulated depreciation................................ (288,709) (289,746)
--------- ---------
$ 478,188 $ 519,762
========= =========
</TABLE>
NOTE 7--OPERATING PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Office equipment and furniture................................ $28,415 $38,871
Transfer vehicles and company cars............................ 5,571 5,458
Other......................................................... 51 63
------- -------
34,037 44,392
Accumulated depreciation.................................... (16,219) (22,983)
------- -------
$17,818 $21,409
======= =======
</TABLE>
NOTE 8--ACCRUED EXPENSES AND OTHER LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Auto and general liability reserves......................... $ 46,239 $ 43,104
Dealer commissions.......................................... 3,498 5,210
Advertising................................................. 1,448 818
Other self-insurance reserves............................... 2,193 2,264
Revenue earning equipment rent.............................. 4,278 --
Other accruals.............................................. 11,250 11,072
-------- --------
68,906 62,468
Non-current portion......................................... (28,975) (27,582)
-------- --------
Accrued expenses and other liabilities...................... $ 39,931 $ 34,886
======== ========
</TABLE>
F-14
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1994 AND 1995
NOTE 9--INCOME TAXES
The provision for income taxes included the following components (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1994 1995
----------- -----------
<S> <C> <C>
Current tax expense:
Federal............................................. $ 3,901 $ 79
State............................................... 608 53
----------- -----------
4,509 132
Deferred tax expense:
Federal............................................. 3,274 2,377
State............................................... 1,017 475
----------- -----------
4,291 2,852
----------- -----------
Provision for income taxes............................ $8,800 $2,984
=========== ===========
A reconciliation of the Federal statutory tax rate with the effective tax
rate follows:
<CAPTION>
% OF PRETAX INCOME
------------------
YEAR ENDED DECEMBER 31,
-----------------------
1994 1995
----------- -----------
<S> <C> <C>
Statutory tax rate.................................... 35.0 35.0
State income taxes, net of Federal income tax
benefit.............................................. 5.0 5.3
Non-deductible items.................................. 1.7 5.0
----------- -----------
Effective tax rate.................................... 41.7 45.3
=========== ===========
</TABLE>
Non-deductible items in the above table are comprised of meal and
entertainment expenses and fines and penalties. As described in Notes (1) and
(3), the Company was a division of Ryder for all of the periods presented in
the accompanying Combined Financial Statements. The deferred tax assets and
liabilities shown below have been determined as though the Company was a
separate company and not part of Ryder's consolidated U.S. income tax returns.
On the date of sale (see Note 2) deferred tax assets and liabilities will be
subject to redetermination by the buyer. No tax attributes will carry over to
the buyer from the Company or Ryder.
The components of the net deferred income tax liability were as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1995
-------- --------
<S> <C> <C>
Deferred income tax assets:
Accrued self-insurance.................................... $ 19,211 $ 18,428
Alternative minimum taxes................................. 5,344 5,104
Miscellaneous other accruals.............................. 4,515 2,627
-------- --------
29,070 26,159
-------- --------
Deferred income tax liabilities:
Property and equipment basis differences.................. (86,463) (86,264)
Other items............................................... (2,197) (2,337)
-------- --------
(88,660) (88,601)
-------- --------
Net deferred income tax liability........................... $(59,590) $(62,442)
======== ========
</TABLE>
F-15
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1994 AND 1995
The Company had unused alternative minimum tax credits, for tax purposes, of
$5.1 million at December 31, 1995 available to reduce future income tax
liabilities. The alternative minimum tax credits may be carried forward
indefinitely.
On a separate return basis, no valuation allowance was deemed necessary for
any of the periods presented.
NOTE 10--PENSION, POSTRETIREMENT AND SAVINGS PLANS
Certain employees of the Company participate in a defined benefit pension
plan sponsored by Ryder. This plan generally provides participants with
benefits based on years of service and career-average compensation levels.
Separate calculations of the components of net pension expense and funded
status of the plan are not provided as such information is not maintained
separately for employees of the Company. Pension expense allocated to the
Company by Ryder (based on headcount) totaled $741,000 and $700,000 for the
years ended December 31, 1994 and 1995, respectively. As part of the agreement
for the sale of the Company, employees of the Company participating in the
plan will be treated as terminated and vested at the date of sale and Ryder
will retain both the plan assets and liabilities attributable to such
employees.
Employees of the Company take part in certain non-funded plans sponsored by
Ryder which provide retired employees with certain health care and life
insurance benefits. Substantially all employees of the Company are eligible
for these benefits. Health care benefits for Ryder's principal plan are
generally provided to qualified retirees under age 65 and eligible dependents.
Generally, this plan requires qualified early retirees to make contributions
which vary based on years of service and include provisions which cap company
contributions. The Company's portion of the actuarially determined costs
related to these plans was $139,000 and $106,000 for the years ended December
31, 1994 and 1995, respectively.
Ryder also maintains defined contribution savings plans that cover
substantially all eligible employees. Contributions to the plans include
employee contributions and contributions made by Ryder under a matching
program. Defined contribution expense totaled $163,000 and $272,000 for the
years ended December 31, 1994 and 1995, respectively. Upon sale of the
Company, employees of the Company will become fully vested in the plan and
Ryder will transfer their account balances to a successor plan at a later
date.
Management believes the method of allocating expenses for the above plans is
reasonable, however, such expenses are not necessarily representative of those
which would have been incurred if the Company operated as an independent
stand-alone entity.
NOTE 11--RESTRUCTURING AND OTHER CHARGES
In the third quarter of 1995, the Company consolidated its twenty
administrative locations into two central locations. As a result, the Company
incurred restructuring charges totaling $3.1 million in 1995 for lease
termination ($.9 million) and employee related costs ($2.2 million), of which
$2.8 million remained accrued at December 31, 1995. Approximately 170
employees were affected by the restructuring actions. In addition, the Company
incurred employee relocation costs of $3.3 million in 1995 related to these
actions.
NOTE 12--COMMITMENTS AND CONTINGENCIES
The Company leases facilities, office equipment and revenue earning
equipment (in 1994 and 1995) under operating lease agreements. The Company
also shares various facilities with Ryder. For the years ended December 31,
1994 and 1995, rent expense totaled $6.4 million and $5.1 million,
respectively. The Company
F-16
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED DECEMBER 31, 1994 AND 1995
had no lease commitments for revenue earning equipment at December 31, 1995.
Future minimum payments for facilities and office equipment leases in effect
at December 31, 1995 are as follows (in thousands):
<TABLE>
<S> <C>
Twelve months ended:
December 31, 1996............................................... $2,536
December 31, 1997............................................... 2,015
December 31, 1998............................................... 1,672
December 31, 1999............................................... 874
December 31, 2000............................................... 819
Thereafter...................................................... 1,104
------
$9,020
======
</TABLE>
At December 31, 1995, the Company had commitments totaling $3.9 million
related to the completion of the Company's Customer Reservation and Customer
Service project which was in progress at December 31, 1995 and is expected to
be completed in 1997.
Ryder is a party to various claims, legal actions and complaints arising in
the ordinary course of business which relate to operations of the Company.
While any proceeding or litigation has an element of uncertainty, management
believes that the disposition of these matters will not have a material impact
on the financial condition, liquidity or results of operations of the Company.
In addition, the Company has no environmental liabilities or contingencies
which management believes will have a material adverse effect on the Company's
financial condition, liquidity or results of operations.
F-17
<PAGE>
RYDER CONSUMER TRUCK RENTAL
COMBINED STATEMENT OF OPERATIONS AND CHANGES IN RYDER INVESTMENT
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30, 1995
------------------
(IN THOUSANDS)
<S> <C>
Truck rental and related revenue............................ $417,682
Operating expense........................................... 146,224
Selling, general and administrative expense................. 164,083
Depreciation expense, net of gains.......................... 76,087
Interest expense............................................ 22,558
Restructuring and other charges............................. 5,169
Miscellaneous expense, net.................................. 180
--------
414,301
--------
Earnings before income taxes.............................. 3,381
Provision for income taxes.................................. 1,633
--------
Net earnings.............................................. $ 1,748
========
Changes in Ryder Investment:
Investment by and advances from Ryder at beginning of pe-
riod..................................................... $412,058
Net earnings.............................................. 1,748
Net change in investment by and advances from Ryder....... 87,342
--------
Investment by and advances from Ryder at end of period.... $501,148
========
</TABLE>
See accompanying notes to combined financial statements.
F-18
<PAGE>
RYDER CONSUMER TRUCK RENTAL
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30, 1995
------------------
(IN THOUSANDS)
<S> <C>
Cash flows from operating activities:
Net earnings............................................... $ 1,748
Depreciation expense, net of gains......................... 76,087
Deferred income taxes...................................... 3,449
Decrease in receivables.................................... 1,929
Decrease in accounts payable............................... (13,838)
Increase in accrued expenses and other liabilities......... 1,007
Increase in other non-current liabilities.................. 34
Other, net................................................. 1,180
---------
Net cash provided by operating activities................ 71,596
---------
Cash flows from investing activities:
Purchases of property and revenue earning equipment........ (208,609)
Sales of property and revenue earning equipment............ 50,461
Other, net................................................. (122)
---------
Net cash used in investing activities.................... (158,270)
---------
Cash flows from financing activities:
Net increase in investment by and advances from Ryder...... 87,342
---------
Net cash provided by financing activities................ 87,342
---------
Increase in cash............................................. 668
Cash at beginning of period................................ 1,831
---------
Cash at end of period........................................ $ 2,499
=========
</TABLE>
See accompanying notes to combined financial statements.
F-19
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1995
NOTE 1--NATURE OF BUSINESS
Ryder Consumer Truck Rental (the "Company") is a division of Ryder Truck
Rental, Inc., a wholly-owned subsidiary of Ryder System, Inc. ("Ryder"). The
Company consists of the U.S.-based consumer truck rental operations of Ryder
and Ryder's wholly-owned subsidiary, Ryder Move Management, Inc. The Company
is engaged in the domestic rental of trucks to do-it-yourself movers and
"light commercial" customers, and the sale of related moving accessories and
liability-limiting products. The Company, through Ryder Move Management, is
also engaged in household goods relocation services for corporate employee
relocation programs. The Company's truck rental distribution network consists
of independent dealers and Ryder branch locations. Approximately 10% to 15% of
the Company's revenue is generated through Ryder branch locations. The
Company's business is seasonal, with generally higher levels of demand during
the summer months. As a result, the Company typically experiences greater
profitability in the second half of the year compared with the first half.
NOTE 2--FINANCIAL STATEMENTS
The accompanying unaudited combined financial statements have been prepared
by the Company in accordance with the accounting policies described in the
Notes to the audited financial statements of the Company for 1994 and 1995 and
should be read in conjunction with the financial statements and notes which
appear in that report. These statements do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included.
NOTE 3--SALE OF COMPANY
On October 17, 1996, Ryder Truck Rental, Inc. completed the sale of
substantially all the assets and certain liabilities of the Company to Questor
Partners Fund, L.P. and certain other investors (collectively "Questor") for
approximately $575 million. In addition, Ryder gave Questor a royalty-free
license to use the Ryder trademark and color scheme, subject to certain
restrictions, for a total of 10 years (with required modifications to the
trademark after five years). Ryder and Questor have also entered into service
agreements for various periods of time ranging from two to five years, with
options for extensions after five years for certain of the agreements. Under
the agreements, Ryder will continue to provide various services to the Company
including vehicle maintenance, claims processing, management information
systems and other administrative services. In addition, certain Ryder branch
locations will continue to act as consumer truck rental dealers and Ryder will
continue to assist in the disposition of the Company's used vehicles through
its sales network. Rates agreed upon for the various services are considered
reasonable based on market rates.
NOTE 4--RESTRUCTURING AND OTHER CHARGES
In the third quarter of 1995, the Company consolidated its twenty
administrative locations into two central locations. As a result, the Company
incurred restructuring charges totaling $3.1 million in 1995 for lease
termination ($.9 million) and employee related costs ($2.2 million).
Approximately 170 employees were affected by the restructuring actions. In
addition, the Company incurred employee relocation costs of $2.1 million in
1995 related to these actions.
F-20
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Ryder System, Inc.:
We have audited the accompanying combined balance sheet of Ryder Consumer
Truck Rental (a division of Ryder Truck Rental, Inc., a wholly-owned
subsidiary of Ryder System, Inc.) as of October 16, 1996, and the related
combined statements of earnings and changes in Ryder investment and cash flows
for the period January 1, 1996 through October 16, 1996. These combined
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Ryder Consumer
Truck Rental as of October 16, 1996, and the results of its operations and its
cash flows for the period January 1, 1996 through October 16, 1996 in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Miami, Florida
December 20, 1996
F-21
<PAGE>
RYDER CONSUMER TRUCK RENTAL
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
OCTOBER 16,
1996
--------------
(IN THOUSANDS)
<S> <C>
ASSETS
Current assets:
Cash........................................................... $ 6,321
Receivables.................................................... 18,109
Tires in service............................................... 24,543
Deferred income taxes.......................................... 6,186
Prepaid expenses and other current assets...................... 13,168
--------
Total current assets......................................... 68,327
Revenue earning equipment........................................ 466,118
Operating property and equipment................................. 15,149
Other assets..................................................... 5,673
--------
Total assets................................................. $555,267
========
LIABILITIES AND RYDER INVESTMENT
Current liabilities:
Accounts payable............................................... $ 11,931
Accrued expenses and other liabilities......................... 31,390
--------
Total current liabilities.................................... 43,321
Deferred income taxes............................................ 76,443
Other non-current liabilities.................................... 26,943
Investment by and advances from Ryder............................ 408,560
--------
Total liabilities and Ryder investment....................... $555,267
========
</TABLE>
See accompanying notes to combined financial statements.
F-22
<PAGE>
RYDER CONSUMER TRUCK RENTAL
COMBINED STATEMENT OF EARNINGS AND CHANGES IN RYDER INVESTMENT
<TABLE>
<CAPTION>
JANUARY 1-
OCTOBER 16,
1996
--------------
(IN THOUSANDS)
<S> <C>
Truck rental and related revenue................................. $439,779
Operating expense................................................ 155,264
Selling, general and administrative expense...................... 166,568
Depreciation expense, net of gains............................... 84,949
Interest expense................................................. 20,291
Restructuring and other charges.................................. 1,891
Miscellaneous expense, net....................................... 690
--------
429,653
--------
Earnings before income taxes................................... 10,126
Provision for income taxes..................................... 4,304
--------
Net earnings................................................... $ 5,822
========
Changes in Ryder Investment:
Investment by and advances from Ryder at beginning of period... $490,437
Net earnings................................................... 5,822
Net decrease in investment by and advances from Ryder.......... (87,699)
--------
Investment by and advances from Ryder at end of period......... $408,560
========
</TABLE>
See accompanying notes to combined financial statements.
F-23
<PAGE>
RYDER CONSUMER TRUCK RENTAL
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
JANUARY 1 -
OCTOBER 16,
1996
--------------
(IN THOUSANDS)
<S> <C>
Cash flows from operating activities:
Net earnings................................................... $ 5,822
Depreciation expense, net of gains............................. 84,949
Deferred income taxes.......................................... 7,815
Decrease in receivables........................................ 17,671
Increase in accounts payable................................... 5,194
Decrease in accrued expenses and other liabilities............. (3,496)
Decrease in other non-current liabilities...................... (639)
Other, net..................................................... (473)
--------
Net cash provided by operating activities.................... 116,843
--------
Cash flows from investing activities:
Purchases of property and revenue earning equipment............ (69,228)
Sales of property and revenue earning equipment................ 45,428
Other, net..................................................... (1,633)
--------
Net cash used in investing activities........................ (25,433)
--------
Cash flows from financing activities:
Net decrease in investments by and advances from Ryder......... (87,699)
--------
Net cash used in financing activities........................ (87,699)
--------
Increase in cash................................................. 3,711
Cash at beginning of period...................................... 2,610
--------
Cash at end of period............................................ $ 6,321
========
</TABLE>
See accompanying notes to combined financial statements.
F-24
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS
JANUARY 1 THROUGH OCTOBER 16, 1996
NOTE 1--NATURE OF BUSINESS
Ryder Consumer Truck Rental (the "Company") is a division of Ryder Truck
Rental, Inc., a wholly-owned subsidiary of Ryder System, Inc. ("Ryder"). The
Company consists of the U.S.- based consumer truck rental operations of Ryder
and Ryder's wholly-owned subsidiary, Ryder Move Management, Inc. The Company
is engaged in the domestic rental of trucks to do-it-yourself movers and
"light commercial" customers, and the sale of related moving accessories and
liability-limiting products. The Company, through Ryder Move Management, is
also engaged in household goods relocation services for corporate employee
relocation programs. The Company's truck rental distribution network consists
of independent dealers and Ryder branch locations. Approximately 10% to 15% of
the Company's revenue is generated through Ryder branch locations. The
Company's business is seasonal, with generally higher levels of demand during
the summer months. As a result, the Company typically experiences greater
profitability in the second half of the year compared with the first half.
NOTE 2--SALE OF COMPANY
On October 17, 1996, Ryder Truck Rental, Inc. completed the sale of
substantially all the assets and certain liabilities of the Company to Questor
Partners Fund, L.P. and certain other investors (collectively "Questor") for
$579.4 million (subject to adjustment upon final audit of assets sold). In
addition, Ryder gave Questor a royalty-free license to use the Ryder trademark
and color scheme, subject to certain restrictions, for a total of 10 years
(with required modifications to the trademark after five years). Ryder and
Questor also entered into service agreements for various periods of time
ranging from two to five years, with options for extensions after five years
for certain of the agreements. Under the agreements, Ryder will continue to
provide various services to the Company including vehicle maintenance, claims
processing, management information systems and other administrative services.
In addition, certain Ryder branch locations will continue to act as consumer
truck rental dealers and Ryder will continue to assist in the disposition of
the Company's used vehicles through its sales network. Rates agreed upon for
the various services are considered reasonable based on market rates.
NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying Combined Financial Statements are presented utilizing the
historical accounting practices followed by Ryder.
Basis of Presentation. The accompanying Combined Financial Statements
include the operations, assets and liabilities of the Company. The financial
statements do not include assets and liabilities of Ryder not specifically
identifiable to the Company. The financial information included herein is not
necessarily indicative of the financial position and results of operations or
cash flows that would have occurred had the Company been an independent stand-
alone entity during the period presented, nor is it necessarily indicative of
future results of the Company.
Receivables. Receivables consist primarily of trade receivables resulting
from rental transactions and receivables from the sale of revenue earning
equipment. Receivables are reduced by amounts considered by management to be
uncollectible based on historical collection loss experience and review of the
current status of existing receivables.
Revenue Earning Equipment, Operating Property and Equipment and
Depreciation. Revenue earning equipment, principally rental trucks, and
operating property and equipment are stated at cost. Provision for
depreciation is computed using the straight-line method on substantially all
depreciable assets. Annual straight-line depreciation rates are 14% to 20% for
revenue earning equipment, 13% to 25% for office equipment and furniture and
19% to 30% for transfer vehicles and company cars. Effective January 1, 1996,
the estimated useful
F-25
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 1 THROUGH OCTOBER 16, 1996
lives and residual values used to calculate the provision for depreciation on
certain types of revenue earning equipment were changed to reflect recent
experience. As a result of this change, depreciation expense was decreased by
approximately $6.0 million for the period January 1 through October 16, 1996.
Gains on sales of revenue earning equipment, net of vehicle disposition
costs, are reported as reductions of depreciation expense and totaled $8.7
million for the period January 1 through October 16, 1996. Gains on operating
property and equipment sales are reflected in miscellaneous expense, net.
Tires in Service. Consistent with industry practice, the Company allocates a
portion of the acquisition costs of revenue earning equipment to tires in
service. The cost of replacement tires and tire repairs are expensed when
incurred.
Software Development Costs. Internal costs for development of internal use
software are expensed as incurred. Incremental external costs for software
development are capitalized and amortized over the expected useful lives of
the software which range from four to five years. Other assets in the Combined
Balance Sheet are comprised primarily of software development and purchased
software costs.
Accrued Insurance and Loss Reserves. The Company participates in Ryder's
overall risk management programs for auto and general liability, workers'
compensation and other insurance programs. The primary risks to Ryder and the
Company are associated with auto and general liability and Ryder retains
losses for the exposure up to $1 million per occurrence. Ryder insures losses
above $1 million with third party insurance companies.
The Company has recorded insurance reserves for auto and general liability
claims which reflect the Company's portion of the undiscounted estimated
liabilities up to $500,000 per occurrence (plus allocated loss adjustment
expense) and an estimate of claims incurred but not reported. Such liabilities
are necessarily based on estimates and, while management believes that the
amount is adequate, there can be no assurance that changes to management's
estimates may not occur due to limitations inherent in the estimation process.
Changes in the estimates of these reserves are charged or credited to income
in the period determined. Amounts estimated to be paid within one year have
been classified as accrued expenses with the remainder included in other non-
current liabilities. For exposures from $500,000 to $1 million per occurrence,
the Company is charged a premium based on the Company's loss experience and
the related liability is retained by Ryder. Costs associated with insurance
premiums to third party insurance companies for coverage in excess of $1
million are allocated by Ryder to the Company based on the Company's pro rata
share of Ryder's revenue.
Revenue Recognition. Truck rental and related revenue is recognized as
earned.
Income Taxes. The Company has been included in consolidated income tax
filings of Ryder for Federal and state income tax purposes. However, the
income tax provision included in the accompanying Combined Financial
Statements has been determined as if the Company was an independent stand-
alone entity filing a separate income tax return.
Deferred tax assets and liabilities are determined based upon differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that currently would be in
effect when the differences are expected to reverse. Deferred tax balances
will be adjusted for tax law changes in periods that include the enactment
date of such changes. See Note (9).
Other Costs. Vehicle licensing fees are deferred when paid and amortized to
income over the period to which the fees relate. Vehicle repairs and
maintenance which do not extend the life or increase the value of the vehicle
are expensed as incurred. Yellow Page directory costs are deferred when paid
and amortized over the period the directories are effective, which is
typically 12 months. Advertising and sales promotion costs are expensed as
incurred.
F-26
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 1 THROUGH OCTOBER 16, 1996
Accounting Changes. On January 1, 1996, the Company adopted Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The Statement
establishes standards for measuring impairment of long-lived assets,
identifiable intangibles and goodwill related to these assets. Adoption of the
Statement had no impact on the Company's results of operations or financial
position in 1996.
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
NOTE 4--TRANSACTIONS WITH RYDER
Certain Ryder branch locations provide vehicle repairs and maintenance
services to the Company and also serve as consumer truck rental dealers. Rates
charged to the Company for repairs and maintenance approximate rates charged
to significant Ryder customers and reflect the cost of parts and the cost of
labor plus a mark-up. Commission rates paid to Ryder for trucks rented through
Ryder locations are based on revenue generated from the transactions and are
generally consistent with those paid to independent dealers.
The Company participates in Ryder's combined risk management programs for
auto and general liability and Ryder processes claims related to auto and
general liability and workers' compensation. The Company also participates in
Ryder medical and dental, pension, postretirement and savings plans. See Notes
(3) and (10).
Ryder provides various general and administrative services to the Company
including information systems, treasury, legal, human resources, payroll,
marketing, purchasing, accounting and others. Costs for these services are
charged to the Company through Ryder's internal cost allocation methodologies
which are designed to estimate the actual costs incurred by Ryder to render
these services. In addition, general and administrative costs charged by Ryder
include a corporate management fee, which is based on the Company's equity and
revenue levels. The Company also shares various facilities with Ryder for
which it is charged an amount based on relative square footage which is
intended to represent the Company's portion of occupancy costs including
utilities, maintenance and other costs.
The Company is charged by Ryder for vehicle disposition costs, including
sales commissions, costs to prepare vehicles for sale and a per vehicle
service fee.
The Company's cash and financing needs are managed by Ryder. The
accompanying Combined Balance Sheet does not include Ryder's general corporate
debt, which is used to finance the operations of all of Ryder's business
units. However, Ryder allocates its corporate interest expense to each
business unit based upon a target debt to equity ratio. The composition of the
investment by and advances from Ryder in the Combined Balance Sheet has been
periodically adjusted to effect this target debt to equity ratio. Interest
expense charged to the Company by Ryder is principally based upon the interest
cost incurred by Ryder for certain of its indebtedness.
Management believes the methods used to determine intercompany charges and
cost allocations are reasonable, however, such costs may not be representative
of those which would be incurred if the Company operated as an independent
stand-alone entity.
F-27
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 1 THROUGH OCTOBER 16, 1996
Amounts charged and allocated by Ryder to the Company for the above expense
items are summarized in the following table (in thousands):
<TABLE>
<CAPTION>
JANUARY 1 -
OCTOBER 16,
1996
--------------
<S> <C>
Operating expense:
Repairs and maintenance........................................ $ 47,147
Auto and general liability costs............................... 21,194
Selling, general and administrative expense:
General and administrative..................................... 12,531
Commissions on truck rentals................................... 7,377
Pension, postretirement and savings plans...................... 677
Other self insurance costs..................................... 962
Occupancy...................................................... 245
Depreciation expense, net of gains:
Vehicle disposition costs...................................... 4,836
Interest expense................................................. 20,291
The components of the investment by and advances from Ryder in the Combined
Balance Sheet were as follows (in thousands):
<CAPTION>
OCTOBER 16,
1996
--------------
<S> <C>
Interest-bearing advances from Ryder............................. $284,151
Ryder investment................................................. 124,409
--------
$408,560
========
NOTE 5--RECEIVABLES
<CAPTION>
OCTOBER 16,
1996
--------------
(IN THOUSANDS)
<S> <C>
Trade accounts receivable........................................ $ 16,546
Receivables from vehicle sales................................... 594
Other receivables................................................ 2,324
--------
19,464
Allowance for doubtful accounts................................ (1,355)
--------
$ 18,109
========
</TABLE>
Bad debt expense totaled $1.9 million for the period January 1 through
October 16, 1996.
F-28
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 1 THROUGH OCTOBER 16, 1996
NOTE 6--REVENUE EARNING EQUIPMENT
<TABLE>
<CAPTION>
OCTOBER 16,
1996
--------------
(IN THOUSANDS)
<S> <C>
Rental trucks.................................................... $751,636
Towing and other equipment....................................... 28,534
--------
780,170
Accumulated depreciation....................................... (314,052)
--------
$466,118
========
</TABLE>
NOTE 7--OPERATING PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
OCTOBER 16,
1996
--------------
(IN THOUSANDS)
<S> <C>
Office equipment and furniture................................... $ 38,575
Transfer vehicles ............................................... 1,289
Other............................................................ 161
--------
40,025
Accumulated depreciation....................................... (24,876)
--------
$ 15,149
========
</TABLE>
NOTE 8--ACCRUED EXPENSES AND OTHER LIABILITIES
<TABLE>
<CAPTION>
OCTOBER 16,
1996
--------------
(IN THOUSANDS)
<S> <C>
Auto and general liability reserves.............................. $ 42,854
Dealer commissions............................................... 2,986
Advertising...................................................... 1,064
Other self-insurance reserves.................................... 2,025
Other accruals................................................... 9,404
--------
58,333
Non-current portion.............................................. (26,943)
--------
Accrued expenses and other liabilities........................... $ 31,390
========
</TABLE>
F-29
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 1 THROUGH OCTOBER 16, 1996
NOTE 9--INCOME TAXES
The provision for income taxes included the following components (in
thousands):
<TABLE>
<CAPTION>
JANUARY 1-
OCTOBER 16,
1996
-----------
<S> <C>
Current tax expense:
Federal........................................................... $(2,993)
State............................................................. (518)
-------
(3,511)
Deferred tax expense:
Federal........................................................... 6,514
State............................................................. 1,301
-------
7,815
-------
Provision for income taxes.......................................... $ 4,304
=======
</TABLE>
A reconciliation of the Federal statutory tax rate with the effective tax
rate follows:
<TABLE>
<CAPTION>
JANUARY 1-
OCTOBER 16,
1996
-----------
<S> <C>
Statutory tax rate.................................................. 35.0
State income taxes, net of Federal income tax benefit............... 5.0
Non-deductible items................................................ 2.5
----
Effective tax rate.................................................. 42.5
====
</TABLE>
Non-deductible items in the above table are comprised of meal and
entertainment expenses and fines and penalties. As described in Notes (1) and
(3), the Company was a division of Ryder during the period presented in the
accompanying Combined Financial Statements. The deferred tax assets and
liabilities shown below have been determined as though the Company was a
separate company and not part of Ryder's consolidated U.S. income tax returns.
On the date of sale (see Note 2) deferred tax assets and liabilities are
subject to redetermination by the buyer. No tax attributes will carry over to
the buyer from the Company or Ryder.
F-30
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 1 THROUGH OCTOBER 16, 1996
The components of the net deferred income tax liability follow (in
thousands):
<TABLE>
<CAPTION>
OCTOBER 16,
1996
-----------
<S> <C>
Deferred income tax assets:
Accrued self-insurance............................................. $ 17,009
Alternative minimum taxes.......................................... 4,444
Miscellaneous other accruals....................................... 2,109
--------
23,562
Deferred income tax liabilities:
Property and equipment basis differences........................... (88,856)
Other items........................................................ (4,963)
--------
(93,819)
--------
Net deferred income tax liability................................... $(70,257)
========
</TABLE>
The Company had unused alternative minimum tax credits, for tax purposes, of
$4.4 million at October 16, 1996 available to reduce future income tax
liabilities. The alternative minimum tax credits may be carried forward
indefinitely.
On a separate return basis, no valuation allowance was deemed necessary.
NOTE 10--PENSION, POSTRETIREMENT AND SAVINGS PLANS
Certain employees of the Company participate in a defined benefit pension
plan sponsored by Ryder. This plan generally provides participants with
benefits based on years of service and career-average compensation levels.
Separate calculations of the components of net pension expense and funded
status of the plan are not provided as such information is not maintained
separately for employees of the Company. Pension expense allocated to the
Company by Ryder (based on headcount) totaled $408,000 for the period January
1 through October 16, 1996. As part of the agreement for the sale of the
Company, employees of the Company participating in the plan were treated as
terminated and vested at the date of sale and Ryder retained both the plan
assets and liabilities attributable to such employees.
Employees of the Company take part in certain non-funded plans sponsored by
Ryder which provide retired employees with certain health care and life
insurance benefits. Substantially all employees of the Company are eligible
for these benefits. Health care benefits for Ryder's principal plan are
generally provided to qualified retirees under age 65 and eligible dependents.
Generally, this plan requires qualified early retirees to make contributions
which vary based on years of service and include provisions which cap company
contributions. The Company's portion of the actuarially determined costs
related to these plans was $77,000 for the period January 1 through October
16, 1996.
Ryder also maintains defined contribution savings plans that cover
substantially all eligible employees. Contributions to the plans include
employee contributions and contributions made by Ryder under a matching
program. Defined contribution expense totaled $192,000 for the period January
1 through October 16, 1996. Upon sale of the Company, employees of the Company
became fully vested in the plan and Ryder will transfer their account balances
to a successor plan at a later date.
Management believes the method of allocating expenses for the above plans is
reasonable, however, such expenses are not necessarily representative of those
which would have been incurred if the Company operated as an independent
stand-alone entity.
F-31
<PAGE>
RYDER CONSUMER TRUCK RENTAL
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
JANUARY 1 THROUGH OCTOBER 16, 1996
NOTE 11--RESTRUCTURING AND OTHER CHARGES
In 1996, actions were taken by Ryder which impacted the Company including
management and staff reductions and elimination of the company-owned car
benefit program. The Company recorded a restructuring charge of $1.9 million
related to these actions consisting of $1.1 million for employee-related costs
(of which $0.7 million remained accrued at October 16, 1996) and asset write-
downs of $0.8 million. These actions are expected to result in ongoing annual
savings of approximately $0.8 million.
NOTE 12--COMMITMENTS AND CONTINGENCIES
The Company leases facilities and office equipment under operating lease
agreements. The Company also shares various facilities with Ryder. For the
period January 1 through October 16, 1996, rent expense totaled $2.5 million.
The Company had no lease commitments for revenue earning equipment at October
16, 1996. Future minimum payments for facilities and office equipment leases
in effect at October 16, 1996 are as follows (in thousands):
<TABLE>
<S> <C>
Twelve months ended:
October 16, 1997................................................ $2,294
October 16, 1998................................................ 1,867
October 16, 1999................................................ 966
October 16, 2000................................................ 881
October 16, 2001................................................ 520
Thereafter...................................................... 745
------
$7,273
======
</TABLE>
At October 16, 1996, the Company had commitments totaling $3.3 million
related to the completion of the Company's Customer Reservation and Customer
Service project which was in progress at October 16, 1996 and is expected to
be completed in 1997.
Ryder is a party to various claims, legal actions and complaints arising in
the ordinary course of business which relate to operations of the Company.
While any proceeding or litigation has an element of uncertainty, management
believes that the disposition of these matters will not have a material impact
on the financial condition, liquidity or results of operations of the Company.
In addition, the Company has no environmental liabilities or contingencies
which management believes will have a material adverse effect on the Company's
financial condition, liquidity or results of operations.
F-32
<PAGE>
RYDER TRS, INC.
All tendered Senior Subordinated Notes, executed Letters of Transmittal and
other related documents should be directed to the Exchange Agent. Requests for
assistance and for additional copies of the Prospectus, the Letter of
Transmittal and other related documents should be directed to the Exchange
Agent.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
By Facsimile:
(212) 571-3080
(For Eligible Institutions Only)
Confirm By Telephone:
(212) 815-6333
By Registered or Certified Mail:
The Bank of New York
101 Barclay Street - 7E
New York, New York 10286
Attention: Reorganization Section
By Hand/Overnight Delivery:
The Bank of New York
101 Barclay Street
New York, New York 10286
Corporate Trust Services Window
Ground Level
Attention: Reorganization Section
UNTIL , 1997 ALL DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES,
WHETHER OR NOT PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER
A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company, which is a Delaware corporation, is empowered by the Delaware
General Corporation Law, subject to the procedures and limitations stated
therein, to indemnify any person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with any threatened, pending or completed
action, suit or proceeding in which such person is made a party by reason of
such person being or having been a director, officer, employee or agent of the
Company. The statute provides that indemnification pursuant to its provisions
is not exclusive of other rights of indemnification to which a person may be
entitled under any by-law, agreement, vote of stockholders or disinterested
directors, or otherwise. The Certificate of Incorporation and By-Laws of the
Company provide for indemnification of the directors and officers of such
entities to the full extent permitted by the Delaware General Corporation Law.
The Company maintains insurance covering its officers and directors with
respect to certain liabilities and expenses incurred by them in certain
proceedings and under certain conditions.
Paragraph 9 of the Company's Certificate of Incorporation provides as
follows:
(a) The Company shall indemnify to the fullest extent permitted under and
in accordance with the laws of the State of Delaware any person who was or
is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director or officer of the Company, or any director or officer is or was
serving at the request of the Company as a director, officer, trustee,
employee or agent of or in any other capacity with another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The Company may, at
its discretion, indemnify employees and agents of the Company to the same
or lesser extent as set forth in the preceding sentence.
(b) Expenses (including reasonable attorneys' fees) incurred in defending
any civil, criminal, administrative or investigative action, suit or
proceeding shall (in the case of any action, suit or proceeding against a
director or officer of the Company) or may (in the case of any action, suit
or proceeding against a trustee, employee or agent) be paid by the Company
in advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors upon receipt of an undertaking by or
on behalf of the indemnified person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Company as authorized in this paragraph 9.
(c) The indemnification and other rights set forth in this paragraph 9
shall not be exclusive of any provisions with respect thereto in the by-
laws or any other contract or agreement between the Company and any
officer, director, employee or agent of the Company.
(d) Neither the amendment nor repeal of this paragraph 9, subparagraph
(a), (b) or (c), nor the adoption of any provision of this Restated and
Amended Certificate of Incorporation inconsistent with paragraph 9,
subparagraph (a), (b) or (c), shall eliminate or reduce the effect of this
paragraph 9, subparagraphs (a), (b) and (c), in respect of any matter
occurring before such amendment, repeal or adoption of an inconsistent
provision or in respect of any cause of action, suit or claim relating to
any such matter which would have given rise to a right of indemnification
or right to receive expenses pursuant to this paragraph 9, subparagraph
(a), (b) or (c), if such provision had not been so amended or repealed or
if a provision inconsistent therewith had not been so adopted.
II-1
<PAGE>
(e) No director shall be personally liable to the Company or any
stockholder for monetary damages for breach of fiduciary duty as a
director, except for any matter in respect of which such director (A) shall
be liable under Section 174 of the General Corporation Law of the State of
Delaware or any amendment thereto or successor provision thereto, or (B)
shall be liable by reason that, in addition to any and all other
requirements for liability, he:
(i) shall have breached his duty of loyalty to the Corporation or its
stockholders;
(ii) shall not have acted in good faith or, in failing to act, shall
not have acted in good faith;
(iii) shall have acted in a manner involving intentional misconduct
or a knowing violation of law or, in failing to act, shall have acted
in a manner involving intentional misconduct or a knowing violation of
law; or
(iv) shall have derived an improper personal benefit.
If the General Corporation Law of the State of Delaware is amended after
the date hereof to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the General Corporation Law of the State of Delaware,
as so amended.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<C> <S>
3.1 Restated Certificate of Incorporation of the Company.
3.2 Restated and Amended By-Laws of the Company.
3.3 Amended and Restated Certificate of Incorporation of Leasco.
3.4 By-Laws of Leasco.
4.1 Indenture, dated as of November 25, 1996, between the Company and The
Bank of New York, as trustee, relating to $175,000,000 principal amount
of 10% Senior Subordinated Notes due 2006, including forms of Senior
Subordinated Notes.
4.2 Credit Agreement, dated as of October 17, 1996, among the Company, The
Chase Manhattan Bank and other lending institutions.
4.3 Security Agreement, dated October 17, 1996, among the Company, the
Guarantor Subsidiaries, and Citicorp, U.S.A., Inc.
4.4 Guarantee Agreement, dated as of October 17, 1996, among the Guarantor
Subsidiaries and Citicorp, U.S.A., Inc.
4.5 Pledge Agreement, dated as of October 17, 1996, among the Company,
certain of its Subsidiaries and Citicorp, U.S.A., Inc.
4.6 Indemnity, Subrogation and Contribution Agreement, dated as of October
17, 1996, among the Company, the Guarantor Subsidiaries and Citicorp,
U.S.A., Inc.
4.7 Exchange and Registration Rights Agreement, dated November 25, 1996,
between the Company and Chase Securities Inc.
5* Opinion of Willkie Farr & Gallagher.
10.1 Purchase Agreement, dated November 20, 1996, between the Company and
Chase Securities Inc., relating to the Senior Subordinated Notes.
10.2* Asset and Stock Purchase Agreement dated as of September 19, 1996
between Ryder Truck Rental, Inc. and the Company.
10.3* Dealer Agreement dated October 17, 1996 between Ryder Truck Rental, Inc.
and the Company.
10.4* Vehicle Maintenance Agreement dated as of October 17, 1996 between Ryder
Truck Rental, Inc. and the Company.
10.5* Used Truck Sales Agreement dated as of October 17, 1996 between Ryder
Truck Rental, Inc. and the Company.
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
10.6* Administrative Services Agreement dated as of October 17, 1996 between
Ryder Truck Rental, Inc. and the Company.
10.7* MIS Support Agreement dated as of October 17, 1996 between Ryder Truck
Rental, Inc. and the Company.
10.8* Sublease Agreement dated as of October 17, 1996 between Ryder System,
Inc. and the Company.
10.9* Office License Agreements dated as of October 17, 1996 between Ryder
Truck Rental, Inc. and the Company.
10.10* Trademark License Agreement dated October 17, 1996 between Ryder
System, Inc. and the Company.
10.11* Patent License Agreement dated as of October 17, 1996 between Ryder
Truck Rental, Inc. and the Company.
10.12* Copyright License Agreement dated as of October 17, 1996 between Ryder
Truck Rental, Inc. and the Company.
10.13* Software License Agreement dated as of October 17, 1996 between Ryder
Truck Rental, Inc. and the Company.
10.14 Management and Consulting Agreement dated as of October 17, 1996
between the Company and Questor Management Company.
10.15* Letter Agreement dated October 15, 1996 between the Company and Jay
Alix & Associates, Inc.
10.16 Master Motor Vehicle Lease Agreement, dated as of October 17, 1996,
between the Company and Leasco.
10.17 Vehicle Title Nominee Agreement, dated as of October 17, 1996, between
Leasco and RTR.
12 Statement Regarding Computation of Ratio of Earnings to Fixed Charges.
21 Subsidiaries of the Company.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of KPMG Peat Marwick LLP.
23.3* Consent of Willkie Farr & Gallagher (included in its opinion to be
filed as Exhibit 5).
24.1 Powers of Attorney (included on signature pages to this Registration
Statement on Form S-4).
25.1 Statement on Form T-1 of Eligibility of Trustee.
99.1* Form of Letter of Transmittal.
99.2* Form of Notice of Guaranteed Delivery.
99.3* Form of Letter to Clients.
99.4* Form of Letter to Nominees.
</TABLE>
- --------
* To be filed by amendment.
(b) Financial Statement Schedules:
Schedules have been omitted because they are not applicable or not required
or the required information is included in the financial statements or notes
thereto.
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions, described under Item 20 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of
II-3
<PAGE>
expenses incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11 or 13 of Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of this Registration Statement through
the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
this Registration Statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Miami, State of Florida
on the 24th day of January, 1997.
Ryder TRS, Inc.
/s/ Gerald R. Riordan
By: _________________________________
Gerald R. Riordan President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Dean Anderson and Kevin Keenley, and each of
them, with full power to act without the other, his true and lawful attorney-
in-fact and agent, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any and
all amendments to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary fully to all intents and purposes
as he might or could do in person thereby ratifying and confirming all that
said attorney-in-fact and agents of any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
SIGNATURE TITLE DATE
/s/ Jay Alix Chairman of the January 24,
- ------------------------------------- Board and Chief 1997
JAY ALIX Executive Officer
(principal
executive officer)
/s/ Lawrence J. Ramaekers Vice Chairman of the January 24,
- ------------------------------------- Board of Directors 1997
LAWRENCE J. RAMAEKERS
/s/ Gerald R. Riordan President and Chief January 24,
- ------------------------------------- Operating Officer 1997
GERALD R. RIORDAN and Director
II-5
<PAGE>
SIGNATURE TITLE DATE
/s/ Larry D. Thogmartin Vice President and January 24,
- ------------------------------------- Controller 1997
LARRY D. THOGMARTIN (principal
financial officer
and controller)
/s/ Christopher G. Mumford Director January 24,
- ------------------------------------- 1997
CHRISTOPHER G. MUMFORD
/s/ Alfred A. Piergallini Director January 24,
- ------------------------------------- 1997
ALFRED A. PIERGALLINI
/s/ Thomas R. Reusche Director January 24,
- ------------------------------------- 1997
THOMAS R. REUSCHE
/s/ Edward L. Scarff Director January 24,
- ------------------------------------- 1997
EDWARD L. SCARFF
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. NO.
------- ----
<C> <S> <C>
3.1 Restated Certificate of Incorporation of the Company.
3.2 Restated and Amended By-Laws of the Company.
3.3 Amended and Restated Certificate of Incorporation of Leasco.
3.4 By-Laws of Leasco.
4.1 Indenture, dated as of November 25, 1996, between the Company
and The Bank of New York, as trustee, relating to $175,000,000
principal amount of 10% Senior Subordinated Notes due 2006,
including forms of Senior Subordinated Notes.
4.2 Credit Agreement, dated as of October 17, 1996, among the
Company, The Chase Manhattan Bank and other lending
institutions.
4.3 Security Agreement, dated October 17, 1996, among the Company,
the Guarantor Subsidiaries, and Citicorp, U.S.A., Inc.
4.4 Guarantee Agreement, dated as of October 17, 1996, among the
Guarantor Subsidiaries and Citicorp, U.S.A., Inc.
4.5 Pledge Agreement, dated as of October 17, 1996, among the
Company, certain of its Subsidiaries and Citicorp, U.S.A.,
Inc.
4.6 Indemnity, Subrogation and Contribution Agreement, dated as of
October 17, 1996, among the Company, the Guarantor
Subsidiaries and Citicorp, U.S.A., Inc.
4.7 Exchange and Registration Rights Agreement, dated November 25,
1996, between the Company and Chase Securities Inc.
5* Opinion of Willkie Farr & Gallagher.
10.1 Purchase Agreement, dated November 20, 1996, between the
Company and Chase Securities Inc., relating to the Senior
Subordinated Notes.
10.2* Asset and Stock Purchase Agreement dated as of September 19,
1996 between Ryder Truck Rental, Inc. and the Company.
10.3* Dealer Agreement dated October 17, 1996 between Ryder Truck
Rental, Inc. and the Company.
10.4* Vehicle Maintenance Agreement dated as of October 17, 1996
between Ryder Truck Rental, Inc. and the Company.
10.5* Used Truck Sales Agreement dated as of October 17, 1996 between
Ryder Truck Rental, Inc. and the Company.
10.6* Administrative Services Agreement dated as of October 17, 1996
between Ryder Truck Rental, Inc. and the Company.
10.7* MIS Support Agreement dated as of October 17, 1996 between
Ryder Truck Rental, Inc. and the Company.
10.8* Sublease Agreement dated as of October 17, 1996 between Ryder
System, Inc. and the Company.
10.9* Office License Agreements dated as of October 17, 1996 between
Ryder Truck Rental, Inc. and the Company.
10.10* Trademark License Agreement dated October 17, 1996 between
Ryder System, Inc. and the Company.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. NO.
------- ----
<C> <S> <C>
10.11* Patent License Agreement dated as of October 17, 1996 between
Ryder Truck Rental, Inc. and the Company.
10.12* Copyright License Agreement dated as of October 17, 1996
between Ryder Truck Rental, Inc. and the Company.
10.13* Software License Agreement dated as of October 17, 1996 between
Ryder Truck Rental, Inc. and the Company.
10.14 Management and Consulting Agreement dated as of October 17,
1996 between the Company and Questor Management Company.
10.15* Letter Agreement dated October 15, 1996 between the Company and
Jay Alix & Associates, Inc.
10.16 Master Motor Vehicle Lease Agreement, dated as of October 17,
1996, between the Company and Leasco.
10.17 Vehicle Title Nominee Agreement, dated as of October 17, 1996,
between Leasco and RTR.
12 Statement Regarding Computation of Ratio of Earnings to Fixed
Charges.
21 Subsidiaries of the Company.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of KPMG Peat Marwick LLP.
23.3* Consent of Willkie Farr & Gallagher (included in its opinion to
be filed as Exhibit 5).
24.1 Powers of Attorney (included on signature pages to this
Registration Statement on Form S-4).
25.1 Statement on Form T-1 of Eligibility of Trustee.
99.1* Form of Letter of Transmittal.
99.2* Form of Notice of Guaranteed Delivery.
99.3* Form of Letter to Clients.
99.4* Form of Letter to Nominees.
</TABLE>
- --------
* To be filed by amendment.
<PAGE>
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
RYDER TRS, INC.
* * * * * * * *
The corporation (the "Corporation") was incorporated under the name
"Camel Acquisition Company" on September 5, 1996. This Restated Certificate of
Incorporation restates and integrates and further amends the Certificate of
Incorporation to read as follows:
1. The current name of the Corporation is RYDER TRS, INC.
2. The address of its registered office in the State of Delaware is
1209 Orange Street in the City of Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purpose to be conducted or
promoted by 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.
4. The total number of shares of stock which the Corporation shall
have authority to issue is Two Hundred Seventy Five Thousand (275,000) shares of
Common Stock, par value $.01 per share (the "Common Stock"), of which 225,000
shares shall be designated Class A Common Stock, 25,000 shares shall be
designated Class B Common Stock and 25,000 shares shall be designated Class C
Common Stock. Except as otherwise provided in this Section 4 or as otherwise
required by applicable law, all shares of Class A Common Stock, Class B Common
Stock and Class C Common Stock shall be identical in all respects and shall
entitle the holders thereof to the same rights and privileges, subject to the
same qualifications, limitations and restrictions.
4.1 Voting Rights. Except as otherwise provided in this Section 4,
-------------
or as otherwise required by applicable law, the holders of Class A Common Stock
shall be entitled to one vote per share on all matters to be voted on by the
Corporation's stockholders, and the holders of Class B Common Stock and the
holders of Class C Common Stock shall have no right to vote on any matters to be
voted on by the Corporation's stockholders; provided, however, that the holders
-------- -------
of the Class B Common Stock and the holders of Class C Common Stock shall have
the right to vote as a separate class on any merger or consolidation of the
Corporation with or into another entity or entities, or any recapitalization or
reorganization, in each case in which shares of Class B Common Stock or Class C
Common Stock, as applicable, would receive or be exchanged for consideration
different on a
<PAGE>
per share basis from the consideration received with respect to, or in
exchange for, shares of Class A Common Stock or would otherwise be treated
differently from shares of Class A Common Stock, except that shares of Class B
Common Stock and Class C Common Stock may, without such a separate class vote,
receive or be exchanged for non-voting securities that are otherwise identical
on a per share basis in amount and form to the voting securities received with
respect to, or in exchange for, the Class A Common Stock so long as (i) with
respect to the Class B Common Stock, such non-voting securities are convertible
into voting securities on the same terms as the Class B Common Stock is
convertible into Class A Common Stock and (ii) all other consideration is equal
on a per share basis.
Before the Corporation redeems, purchases or otherwise acquires, directly or
indirectly, or converts or takes any action with respect to the voting rights
of, any shares of any class of its capital stock or any securities convertible
into or exchangeable for any shares of any class of its capital stock (other
than a conversion of Class A Common Stock or Class B Common Stock), the
Corporation shall give written notice of such pending action to the Initial
Class B Stockholders (as defined below). Upon the written request of any
Initial Class B Stockholder made within 10 days after its receipt of any such
notice stating that after giving effect to such action such Initial Class B
Stockholder would have a Regulatory Problem (as defined below), the Corporation
shall defer taking such action for such period (not to extend beyond 30 days
after such Initial Class B Stockholder's receipt of the Corporation's original
notice) as such Initial Class B Stockholder requests to permit such Initial
Class B Stockholder and its affiliates to reduce the quantity of the
Corporation's Class A Common Stock they own in order to avoid such Regulatory
Problem. For purposes of this paragraph, a person shall be deemed to have a
"Regulatory Problem" when such person and such person's affiliates would own,
control or have power over a greater quantity of securities of any kind issued
by the Corporation or any other entity than are permitted under any requirement
of any governmental authority. For purposes of this Section 4, a "person" shall
include any natural person and any corporation, partnership, joint venture,
trust, unincorporated organization and any other entity or organization. For
purposes of this Section 4, Initial Class B Stockholder shall mean Societe
Generale Investment Corporation, Chase Equity Associates and their permitted
successors and assigns who certify to the Corporation that, based upon an
opinion of counsel reasonably satisfactory to the Corporation, such shareholder
is reasonably likely to have a Regulatory Problem.
4.2 Dividends. As and when dividends are declared or paid thereon,
---------
whether in cash, property or securities of the Corporation, the holders of Class
A Common Stock, the holders of Class B Common Stock and the holders of Class C
Common Stock shall be entitled to participate in such dividends ratably on a per
share basis; provided, however, that (i) if dividends are
-------- -------
2
<PAGE>
declared that are payable in shares of Class A Common Stock, Class B Common
Stock or Class C Common Stock, dividends shall be declared that are payable at
the same rate on all classes of stock and the dividends payable in shares of
Class A Common Stock shall be payable to holders of Class A Common Stock, the
dividends payable in shares of Class B Common Stock shall be payable to holders
of Class B Common Stock and the dividends payable in shares of Class C Common
Stock shall be payable to holders of Class C Common Stock and (ii) in the case
of the holders of Class B Common Stock, if the dividends consist of other voting
securities of the Corporation, the Corporation shall make available to each
holder of Class B Common Stock, at such holder's request, dividends consisting
of non-voting securities of the Corporation that are otherwise identical to such
voting securities and that are convertible into or exchangeable for such voting
securities on the same terms as the Class B Common Stock is convertible into
Class A Common Stock.
4.3 Liquidation. The holders of the Class A Common Stock, Class B
-----------
Common Stock and Class C Common Stock shall be entitled to participate ratably
on a per share basis in all distributions to the holders of the Common Stock in
any liquidation, dissolution or winding up of the Corporation.
4.4 Conversion.
----------
4.4A. Conversion of Class A Common Stock. Each holder of Class A
----------------------------------
Common Stock shall be entitled to convert, at any time, any and all of such
holder's shares of Class A Common Stock into the same number of shares of Class
B Common Stock.
4.4B. Conversion of Class B Common Stock.
----------------------------------
(i) Upon the occurrence (or the expected occurrence as described in
(iii) below) of any Conversion Event, each holder of Class B Common Stock shall
be entitled to convert into the same number of shares of Class A Common Stock,
any or all of the shares of such Holder's Class B Common Stock being (or
expected to be) distributed, disposed of or sold in connection with such
Conversion Event.
(ii) For purposes of this paragraph 4.4.B, a "Conversion Event" shall
mean (a) any public offering or public sale of securities of the Corporation
(including a public offering registered under the Securities Act of 1933 and a
public sale pursuant to Rule 144 of the Securities and Exchange Commission or
any similar rule then in force), (b) any sale of securities of the Corporation
to a person or group of persons (within the meaning of the Securities and
Exchange Act of 1934, as amended (the "1934 Act")) if, after such sale, such
person or group of persons in the aggregate would own or control securities that
possess in the aggregate the ordinary voting power to elect a majority of the
Corporation's directors (provided that such sale has been approved by the
Corporation's Board of Directors or
3
<PAGE>
a committee thereof), (c) any sale of securities of the Corporation to a person
or group of persons (within the meaning of the 1934 Act) if, after such sale,
such person or group of persons in the aggregate would own or control securities
of the Corporation (excluding any Class B Common Stock being converted and
disposed of in connection with such Conversion Event) that possess in the
aggregate the ordinary voting power to elect a majority of the Corporation's
directors, (d) any sale of securities of the Corporation to a person or group of
persons (within the meaning of the 1934 Act) if, after such sale, such person or
group of persons would not, in the aggregate, own, control or have the right to
acquire more than two percent (2%) of the outstanding securities of any class of
voting securities of the Corporation, and (e) merger, consolidation or similar
transaction involving the Corporation if, after such transaction, a person or
group of persons (within the meaning of the 1934 Act) in the aggregate would own
or control securities that possess in the aggregate the ordinary voting power to
elect a majority of the surviving corporation's directors (provided that the
transaction has been approved by the Corporation's Board of Directors or a
committee thereof).
(iii) Each holder of Class B Common Stock shall be entitled to
convert shares of Class B Common Stock in connection with any Conversion Event
if such holder reasonably believes that such Conversion Event will be
consummated, and a written request for conversion from any holder of Class B
Common Stock to the Corporation stating such holder's reasonable belief that a
Conversion Event shall occur shall be conclusive and shall obligate the
Corporation to effect such conversion in a timely manner so as to enable each
such holder to participate in such Conversion Event. The Corporation will not
cancel the shares of Class B Common Stock so converted before the tenth day
following such Conversion Event and will reserve such shares until such tenth
day for reissuance in compliance with the next sentence. If any shares of Class
B Common Stock are converted into shares of Class A Common Stock in connection
with a Conversion Event and such shares of Class A Common Stock are not actually
distributed, disposed of or sold pursuant to such Conversion Event, such shares
of Class A Common Stock shall be promptly converted back into the same number of
shares of Class B Common Stock.
4.4C. Conversion of Class C Common Stock. The Class C Common Stock
----------------------------------
shall not be convertible into Class A Common Stock or Class B Common Stock.
4.4D. Conversion Procedure.
--------------------
(i) Unless otherwise provided in connection with a Conversion Event,
each conversion of shares pursuant to this paragraph 4.4D shall be effected by
the surrender of the certificate or certificates representing the shares to be
converted (the "Converting Shares") at the principal office of the Corporation,
at any time during its normal business hours,
4
<PAGE>
together with a written notice by the holder of such Converting Shares, stating
that such holder desires to convert the Converting Shares, or a stated number of
the shares represented by such certificate or certificates, into an equal number
of Class A Common Stock or Class B Common Stock, as the case may be (the
"Converted Shares"). Each conversion shall be deemed to have been effected as of
the close of business on the date on which such certificate or certificates have
been surrendered and such notice has been received, and at such time the rights
of the holder of the Converting Shares as such holder shall cease and the person
or persons in whose name or names the certificate or certificates for Converted
Shares are to be issued upon such conversion shall be deemed to have become the
holder or holders of record of the Converted Shares.
(ii) Promptly after the surrender of certificates and the receipt of
such written notice, the Corporation shall issue and deliver in accordance with
the surrendering holder's instructions (a) the certificate or certificates for
the Class A Common Stock or Class B Common Stock, as the case may be, issuable
upon such conversion and (b) a certificate representing any Class A Common Stock
or Class B Common Stock, as the case may be, that was represented by the
certificate or certificates delivered to the Corporation in connection with such
conversion but that was not converted.
(iii) The issuance of certificates for Class A Common Stock or Class
B Common Stock (upon conversion or otherwise) will be made without charge to the
holders of such shares for any issuance tax in respect thereof or other cost
incurred by the Corporation in connection with such conversion and/or the
related issuance of such shares.
(iv) The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Class A Common Stock, solely for
the purpose of issuance upon the conversion of the Class B Common Stock, such
number of shares of Class A Common Stock issuable upon the conversion of all
outstanding Class B Common Stock. All Converted Shares shall, when issued in
accordance with this Section 4.4.D, be deemed to be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens and charges. The
Corporation shall take all such actions as may be necessary to ensure that all
such shares of Class A Common Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of Class A Common Stock may be listed
(except for official notice of issuance, which will be immediately transmitted
by the Corporation upon issuance).
(v) The Corporation shall not close its books against the transfer of
Class A Common Stock or of Class B Common Stock issued or issuable upon
conversion of Class A Common Stock or
5
<PAGE>
Class B Common Stock in any manner that would interfere with the timely
conversion of such stock.
4.4E. Stock Splits. If the Corporation in any manner subdivides or
------------
combines the outstanding shares of one class of Common Stock, the outstanding
shares of the other class of Common Stock will be proportionately subdivided or
combined in a similar manner.
4.5 Notices. All notices referred to herein shall be in writing,
-------
shall be delivered personally or by first class mail, postage prepaid, and shall
be deemed to have been given when so delivered or mailed to the Corporation at
its principal executive offices and to any stockholder at such holder's address
as it appears in the stock records of the Corporation (unless otherwise
specified in a written notice to the Corporation by such holder).
4.6 Amendment and Waiver. No amendment or waiver of any provision of
--------------------
this Section 4 shall be effective without the prior approval of the holders of a
majority of the then outstanding Class B Common Stock voting as a separate
class.
5. The name and mailing address of the incorporator are as follows:
Sun H. Kim
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
6. In furtherance and not in limitation of the powers conferred by
statute, the by-laws of the Corporation may be made, altered, amended or
repealed by the stockholders or by a majority of the entire Board of Directors.
7. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any
6
<PAGE>
reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all
stockholders or class of stockholders of this Corporation, as the case may be,
and also on this Corporation.
8. Elections of directors need not be by written ballot.
9. (a) The Corporation shall indemnify to the fullest extent
permitted under and in accordance with the laws of the State of Delaware any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is or
was a director or officer of the Corporation, or any director or officer is or
was serving at the request of the Corporation as a director, officer, trustee,
employee or agent of or in any other capacity with another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The Corporation may, at its discretion, indemnify
employees and agents of the Corporation to the same or lesser extent as set
forth in the preceding sentence.
(b) Expenses (including reasonable attorneys' fees) incurred in
defending any civil, criminal, administrative or investigative action, suit or
proceeding shall (in the case of any action, suit or proceeding against a
director or officer of the Corporation) or may (in the case of any action, suit
or proceeding against a trustee, employee or agent) be paid by the Corporation
in advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors upon receipt of an undertaking by or on
behalf of the indemnified person to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in this paragraph 9.
(c) The indemnification and other rights set forth in this paragraph
9 shall not be exclusive of any provisions with respect thereto in the by-laws
or any other contract or agreement between the Corporation and any officer,
director, employee or agent of the Corporation.
(d) Neither the amendment nor repeal of this paragraph 9,
subparagraph (a), (b) or (c), nor the adoption of any provision of this Restated
and Amended Certificate of
7
<PAGE>
Incorporation inconsistent with paragraph 9, subparagraph (a), (b) or (c), shall
eliminate or reduce the effect of this paragraph 9, subparagraphs (a), (b) and
(c), in respect of any matter occurring before such amendment, repeal or
adoption of an inconsistent provision or in respect of any cause of action, suit
or claim relating to any such matter which would have given rise to a right of
indemnification or right to receive expenses pursuant to this paragraph 9,
subparagraph (a), (b) or (c), if such provision had not been so amended or
repealed or if a provision inconsistent therewith had not been so adopted.
(e) No director shall be personally liable to the Corporation or any
stockholder for monetary damages for breach of fiduciary duty as a director,
except for any matter in respect of which such director (A) shall be liable
under Section 174 of the General Corporation Law of the State of Delaware or any
amendment thereto or successor provision thereto, or (B) shall be liable by
reason that, in addition to any and all other requirements for liability, he:
(i) shall have breached his duty of loyalty to the Corporation
or its stockholders;
(ii) shall not have acted in good faith or, in failing to act,
shall not have acted in good faith;
(iii) shall have acted in a manner involving intentional
misconduct or a knowing violation of law or, in failing to act, shall have acted
in a manner involving intentional misconduct or a knowing violation of law; or
(iv) shall have derived an improper personal benefit.
If the General Corporation Law of the State of Delaware is amended
after the date hereof to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as so
amended.
8
<PAGE>
EXHIBIT 3.2
RYDER TRS, INC.
Incorporated Under the Laws of
the State of Delaware
RESTATED AND AMENDED BY-LAWS
----------------------------
ARTICLE I
OFFICES
The registered office of the Corporation in Delaware shall be at 1209 Orange
Street in the City of Wilmington, County of New Castle, in the State of
Delaware, and The Corporation Trust Company shall be the resident agent of this
Corporation in charge thereof. The Corporation may also have such other offices
at such other places, within or without the State of Delaware, as the Board of
Directors may from time to time designate or the business of the Corporation may
require.
ARTICLE II
STOCKHOLDERS
Section 1. Annual Meeting: The annual meeting of stockholders for the election
--------------
of directors and the transaction of any other business shall be held as may be
determined by the Board of Directors and set forth in the notice of meeting. The
annual meeting shall be held in such city and state and at such time and place
as may be designated by the Board of Directors and set forth in the notice of
such meeting. At the annual meeting any business may be transacted and any
corporate action may be taken, whether stated in the notice of meeting or not,
except as otherwise expressly provided by statute or the Certificate of
Incorporation.
Section 2. Special Meetings: Special meetings of the stockholders for any
----------------
purpose may be called at any time by the Board of Directors and shall be called
by the President at the request of the holders of a majority of the outstanding
shares of capital stock entitled to vote. Special meetings shall be held at
such place or places within or without the State of Delaware as shall from time
to time be designated by the Board of Directors and stated in the notice of such
meeting. At a special meeting no business shall be transacted and no corporate
action shall be taken other than that stated in the notice of the meeting.
Section 3. Notice of Meetings: Written notice of the time and place of any
------------------
stockholder's meeting, whether annual or special, shall be given to each
stockholder entitled to vote thereat, by personal delivery or by mailing the
same to him at his address as the same appears upon the records of the
<PAGE>
Corporation at least ten (10) days but not more than sixty (60) days before the
day of the meeting. Notice of any adjourned meeting need not be given except by
announcement at the meeting so adjourned, unless otherwise ordered in connection
with such adjournment. Such further notice, if any, shall be given as may be
required by law.
Section 4. Quorum: Any number of stockholders, together holding at least a
------
majority of the capital stock of the Corporation issued and outstanding and
entitled to vote, who shall be present in person or represented by proxy at any
meeting duly called, shall constitute a quorum for the transaction of all
business, except as otherwise provided by law, by the Certificate of
Incorporation or by these By-laws.
Section 5. Adjournment of Meetings: If less than a quorum shall attend at the
-----------------------
time for which a meeting shall have been called, the meeting may adjourn from
time to time by a majority vote of the stockholders present or represented by
proxy and entitled to vote without notice other than by announcement at the
meeting until a quorum shall attend. Any meeting at which a quorum is present
may also be adjourned in like manner and for such time or upon such as may be
determined by a majority vote of the stockholders present or represented by
proxy and entitled to vote. At any adjourned meeting at which a quorum shall be
present, any business may be transacted and any corporate action may be taken
which might have been transacted at the meeting as originally called.
Section 6. Voting List: The Secretary shall prepare and make, at least ten
-----------
days before every election of directors, a complete list of the stockholders
entitled to vote, arranged in alphabetical order and showing the address of each
stockholder and the number of shares of each stockholder. Such list shall be
open at the place where the election is to be held for said ten days, to the
examination of any stockholder, and shall be produced and kept at the time and
place of election during the whole time thereof, and subject to the inspection
of any stockholder who may be present.
Section 7. Voting: Each stockholder entitled to vote at any meeting may vote
------
either in person or by proxy, but no proxy shall be voted on or after three
years from its date, unless said proxy provides for a longer period. Each
stockholder entitled to vote shall at every meeting of the stockholders be
entitled to one vote for each share of stock registered in his name on the
record of stockholders, unless otherwise provided in the certificate of
corporation; provided, that at each election of Directors every stockholder
shall have the right to vote, in person or by proxy, the number of shares of
stock owned by him for as many persons as there are directors to be elected. At
all meetings of stockholders all matters, except as otherwise provided by
statute, shall be determined by the affirmative vote of the majority of shares
present in person or by proxy and
2
<PAGE>
entitled to vote on the subject matter. Voting at meetings of stockholders need
not be by written ballot.
Section 8. Record Date of Stockholders: The Board of Directors is authorized
---------------------------
to fix in advance a date not exceeding sixty days nor less than ten days
preceding the date of any meeting of stockholders, or the date for the payment
of any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or a
date in connection with obtaining the consent of stockholders for any purposes,
as a record date for the determination of the stockholders entitled to notice
of, and to vote at, any such meeting, and any adjournment thereof, or entitled
to receive payment of any such dividend, or to any such allotment of rights, or
to exercise the rights in respect of any such change, conversion or exchange of
capital stock, or to give such consent, and, in such case, such stockholders and
only such stockholders as shall be stockholders of record on the date so fixed
shall be entitled to such notice of, and to vote at, such meeting, and any
adjournment thereof, or to receive payment of such dividend, or to receive such
allotment of rights, or to exercise such rights, or to give such consent, as the
case may be, notwithstanding any transfer of any stock on the books of the
Corporation, after such record date fixed as aforesaid.
Section 9. Action Without Meeting: Any action required or permitted to be
----------------------
taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and shall be delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. Prompt notice of
the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented in
writing.
Section 10. Conduct of Meetings: The Chairman of the Board of Directors or, in
-------------------
his absence the President, or the Vice-President designated by the Chairman of
the Board, shall preside at all regular or special meetings of stockholders. To
the maximum extent permitted by law, such presiding person shall have the power
to set procedural rules, including but not limited to rules respecting the time
allotted to stockholders to speak, governing all aspects of the conduct of such
meetings.
3
<PAGE>
ARTICLE III
DIRECTORS
Section 1. Number and Qualifications: The Board of Directors shall consist
-------------------------
initially of three directors, and thereafter shall consist of such number as may
be fixed from time to time by resolution of the Board. The directors need not
be stockholders of the Corporation.
Section 2. Election of Directors: The directors shall be elected by the
---------------------
stockholders at the annual meeting of stockholders. The first Board of
Directors shall hold office until the first annual meeting of stockholders.
Section 3. Duration of Office: The directors chosen at any annual meeting
------------------
shall, except as hereinafter provided, hold office until the next annual
election and until their successors are elected and qualify.
Section 4. Removal and Resignation of Directors: Any director may be removed
------------------------------------
from the Board of Directors, with or without cause, by the holders of a majority
of the shares of capital stock entitled to vote, either by written consent or
consents or at any special meeting of the stockholders called for that purpose,
and the office of such director shall forthwith become vacant.
Any director may resign at any time. Such resignation shall take effect at the
time specified therein, and if no time be specified, at the time of its receipt
by the President or Secretary. The acceptance of a resignation shall not be
necessary to make it effective, unless so specified therein.
Section 5. Filling of Vacancies: Any vacancy among the directors, occurring
--------------------
from any cause whatsoever, may be filled by a majority of the remaining
directors, though less than a quorum, provided however, that the stockholders
-------- -------
removing any director may at the same meeting fill the vacancy caused by such
removal, and provided further, that if the directors fail fill any such vacancy,
-------- -------
the stockholders may at any special meeting called for that purpose fill such
vacancy. In case of any increase in the number of directors, the additional
directors may be elected by the directors in office before such increase.
Any person elected to fill a vacancy shall hold office, subject to the right of
removal as hereinbefore provided, until the next annual election and until his
successor is elected and qualifies.
Section 6. Regular Meetings: The Board of Directors shall hold an annual
----------------
meeting for the purpose of organization and the transaction of any business
immediately after the annual meeting of the stockholders, provided a quorum of
directors is present. Other regular meetings may be held at such times as may
4
<PAGE>
be determined from time to time by resolution of the Board of Directors.
Section 7. Special Meetings: Special meetings of the Board of Directors may be
----------------
called by the Chairman of the Board of Directors.
Section 8. Notice and Place of Meetings: Meetings of the Board of Directors
----------------------------
may be held at the principal office of the Corporation, or at such other place
as shall be stated in the notice of such meeting. Notice of any special
meeting, and, except as the Board of Directors may otherwise determine by
resolution, notice of any regular meeting also, shall be mailed to each director
addressed to him at his residence or usual place of business at least two days
before the day on which the meeting is to be held, or if sent to him at such
place by telegraph or cable, or delivered personally or by telephone, not later
than the day before the day on which the meeting is to be held. No notice of
the annual meeting of the Board of Directors shall be required if it is held
immediately after the annual meeting of the stockholders and if a quorum is
present.
Section 9. Business Transacted at Meetings, etc.: Any business may be
-------------------------------------
transacted and any corporate action may be taken at any regular or special
meeting of the Board of Directors at which a quorum shall be present, whether
such business or proposed action be stated in the notice of such meeting or not,
unless special notice of such business or proposed action shall be required by
statute.
Section 10. Quorum: A majority of the Board of Directors at any time in office
------
shall constitute a quorum. At any meeting at which a quorum is present, the
vote of a majority of the members present shall be the act of the Board of
Directors unless the act of a greater number is specifically required by law or
by the Certificate of Incorporation or these By-laws. The members of the Board
shall act only as the Board and the individual members thereof shall not have
any powers as such.
Section 11. Action Without a Meeting: Any action required or permitted to be
------------------------
taken at any meeting of the Board of Directors, or of any committee thereof, may
be taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of the proceedings of the Board or committee.
Section 12. Meetings Through Use of Communications Equipment: Members of the
-------------------------------------------------
Board of Directors, or any committee designated by the Board of Directors,
shall, except as otherwise provided by law, the Certificate of Incorporation or
these By-laws, have the power to participate in a meeting of the Board of
Directors, or any committee, by means of a conference telephone or similar
communications equipment by means of which
5
<PAGE>
all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at the meeting.
ARTICLE IV
COMMITTEES
Section 1. Executive Committee: The Board of Directors may, by resolution
-------------------
passed by a majority of the whole Board, designate one or more of their number
to constitute an Executive Committee to hold office at the pleasure of the
Board, which Committee shall, during the intervals between meetings of the Board
of Directors, have and exercise all of the powers of the Board of Directors in
the management of the business and affairs of the Corporation, subject only to
such restrictions or limitations as the Board of Directors may from time to time
specify, or as limited by the Delaware General Corporation Law, and shall have
power to authorize the seal of the Corporation to be affixed to all papers which
may require it.
Any member of the Executive Committee may be removed at any time, with or
without cause, by a resolution of a majority of the whole Board of Directors.
Any person ceasing to be a director shall ipso facto cease to be a member of the
---- -----
Executive Committee.
Any vacancy in the Executive Committee occurring from any cause whatsoever may
be filled from among the directors by a resolution of a majority of the whole
Board of Directors.
Section 2. Other Committees: Other committees of the Board of Directors may be
----------------
appointed by the Board of Directors, which committees shall hold office for such
time and have such powers and perform such duties as may from time to time be
assigned to them by the Board of Directors.
Any member of such a committee may be removed at any time, with or without
cause, by the Board of Directors. Any vacancy in a committee occurring from any
cause whatsoever may be filled by the Board of Directors.
Section 3. Resignation: Any member of a committee may resign at any time.
-----------
Such resignation shall be made in writing and shall take effect at the time
specified therein, or, if no time be specified, at the time of its receipt by
the President or Secretary. The acceptance of a resignation shall not be
necessary to make it effective unless so specified therein.
Section 4. Quorum: A majority of the members of a committee shall constitute a
------
quorum. The act of a majority of the members of a committee present at any
meeting at which a quorum is present shall be the act of such committee. The
6
<PAGE>
members of a committee shall act only as a committee, and the individual members
thereof shall not have any powers as such.
Section 5. Record of Proceedings, etc.: Each committee shall keep a record of
---------------------------
its acts and proceedings, and shall report the same to the Board of Directors
when and as required by the Board of Directors.
Section 6. Organization, Meetings, Notices, etc.: A committee may hold its
-------------------------------------
meetings at the principal office of the Corporation, or at any other place
designated by the Chairman of the committee. Each committee may make such rules
as it may deem expedient for the regulation and carrying on of its meetings and
proceedings. Unless otherwise ordered by a committee, any notice of a meeting
of such committee may be given by the Secretary of the Corporation or by the
chairman of the committee and shall be sufficiently given if mailed to each
member at his residence or usual place of business at least five days before the
day on which the meeting is to be held, or if sent to him at such place by
telegraph or cable or facsimile, or delivered personally or by telephone not
later than 24 hours before the time at which the meeting is to be held.
ARTICLE V
OFFICERS
Section 1. Number: The officers of the Corporation shall be a President, a
------
Vice-President, a Secretary, and a Treasurer, and such other officers as may be
appointed in accordance with the provisions of Section 3 of this Article V. The
Board of Directors in its discretion may also elect a Chairman and one or more
Vice Chairmen of the Board of Directors.
Section 2. Election, Term of Office and Qualifications: The officers, except
-------------------------------------------
as provided in Section 3 of this Article V, shall be chosen annually by the
Board of Directors. Each such officer shall, except as herein otherwise
provided, hold office until his successor shall have been chosen and shall
qualify. Except as otherwise provided by law, any number to of offices may be
held by the same person.
Section 3. Other Officers: Other officers, including one or more Senior Vice-
--------------
Presidents, Assistant Secretaries, Assistant Treasurers and officers with other
titles, may from time to time be appointed by the Board of Directors, which
other officers shall have such powers and perform such duties as may be assigned
to them by the Board of Directors.
Section 4. Removal of Officers: Any officer of the Corporation may be removed
-------------------
from office, with or without cause, by the Board of Directors.
7
<PAGE>
Section 5. Resignation: Any officer of the Corporation may resign at any time.
-----------
Such resignation shall be in writing and shall take effect at the time specified
therein, and if no time be specified, at the time of its receipt by the
President or Secretary. The acceptance of a resignation shall not be necessary
in order to make it effective, unless so specified therein.
Section 6. Filling of Vacancies: A vacancy in any office may be filled by the
--------------------
Board of Directors.
Section 7. Compensation: The compensation of the officers shall be fixed by
------------
the Board of Directors, or by any committee upon whom power in that regard may
be conferred by the Board of Directors.
Section 8. Chairman of the Board of Directors: The Chairman of the Board of
----------------------------------
Directors shall be a director and shall preside at all meetings of the Board of
Directors and of the stockholders at which he shall be present, and shall have
such power and perform such duties as may from time to time be assigned to him
by the Board of Directors.
Section 9. President: The President shall be the chief executive officer of
---------
the Corporation, and shall have the general direction of the business, affairs
and property of the Corporation, and of its several officers, and shall have and
exercise all such powers and discharge such duties as usually pertain to the
office of President.
Section 10. Vice-President: The Vice-Presidents shall perform such duties as
--------------
may be assigned to them by the Board of Directors.
Section 11. Secretary: The Secretary shall perform such duties as are incident
---------
to the office of Secretary, or as may from time to time be assigned to him by
the Board of Directors, or as are prescribed by these By-laws.
Section 12. Treasurer: The Treasurer shall perform such duties and have powers
---------
as are usually incident to the office of Treasurer or which may be assigned to
him by the Board of Directors.
ARTICLE VI
CAPITAL STOCK
Section 1. Issue of Certificates of Stock: Certificates of capital stock shall
------------------------------
be in such form as shall be approved by the Board of Directors. They shall be
numbered in the order of their issue and shall be signed by the Chairman of the
Board of Directors, the President, the Vice-President or an Assistant Vice-
President, and the Secretary or an Assistant
8
<PAGE>
Secretary or the Treasurer or an Assistant Treasurer, and the seal of the
Corporation or a facsimile thereof shall be impressed or affixed or reproduced
thereon, provided, however, that where such certificates are signed by a
transfer agent or an assistant transfer agent or by a transfer clerk acting on
behalf of the Corporation and a registrar, the signature of any such Chairman of
the Board of Directors, President, Vice-President, Assistant Vice-President,
Secretary, Assistant Secretary, Treasurer or Assistant Treasurer may be
facsimile. In case any officer or officers who shall have signed, or whose
facsimile signature or signatures shall have been used on any such certificate
or certificates shall cease to be such officer or officers of the Corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be adopted by the Corporation and be issued and
delivered as though the person or persons who signed such certificate or call
certificates, or whose facsimile signature or signatures shall have been used
thereon have not ceased to be such officer or officers of the Corporation.
Section 2. Registration and Transfer of Shares: The name of each person owning
-----------------------------------
a share of the capital stock of the Corporation shall be entered on the books of
the Corporation together with the number of shares held by him, the numbers of
the certificates covering such shares and the dates of issue of such
certificates. The shares of stock of the Corporation shall be transferable on
the books of the Corporation by the holders thereof in person, or by their duly
authorized attorneys or legal representatives, on surrender and cancellation of
certificates for a like number of shares, accompanied by an assignment or power
of transfer endorsed thereon or attached thereto, duly executed, and with such
proof of the authenticity of the signature as the Corporation or its agents may
reasonably require. A record shall be made of each transfer.
The Board of Directors may make other and further rules and regulations
concerning the transfer and registration of certificates for stock and may
appoint a transfer agent or registrar or both and may require all certificates
of stock to bear the signature of either or both.
Section 3. Lost, Destroyed and Mutilated Certificates: The holder of any stock
------------------------------------------
of the Corporation shall immediately notify the Corporation of any loss, theft,
destruction or mutilation of the certificates therefor. The Corporation may
issue a new certificate of stock in the place of any certificate theretofore
issued by it alleged to have been lost, stolen or destroyed, and the Board of
Directors may, in its discretion, require the owner of the lost, stolen or
destroyed certificate, or his legal representatives, to give the Corporation a
bond, in such sum and with such surety or sureties as they may require, to
indemnify it against any claim that may be made against it by reason of the
issue of such new certificate
9
<PAGE>
and against all other liability in the premises, or may remit such owner to such
remedy or remedies as he may have under the laws of the State of Delaware.
ARTICLE VII
DIVIDENDS, SURPLUS, ETC.
Section 1. General Discretion of Directors: The Board of Directors shall have
-------------------------------
power to fix and vary the amount to be set aside or reserved as working capital
of the Corporation, or as reserves, or for other proper purposes of the
Corporation, and, subject to the requirements of the Certificate of
Incorporation, to determine in its sole discretion whether any, if any, part of
the surplus or net profits of the Corporation shall be declared as dividends and
paid to the stockholders, and to fix the date or dates for the payment of
dividends.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 1. Fiscal Year: The fiscal year of the Corporation shall be fixed, and
-----------
may be changed, by resolution of the Board of Directors.
Section 2. Corporate Seal: The corporate seal shall be in such form as
--------------
approved by the Board of Directors and may be altered at their pleasure. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or reproduced or otherwise.
Section 3. Notices: Except as otherwise expressly provided, any notice
-------
required by these By-laws to be given shall be sufficient if given by depositing
the same in a post office or letter box in a sealed postpaid wrapper addressed
to the person entitled thereto at his address, as the same appears upon the
books of the Corporation, or by telegraphing, cabling or faxing the same to such
person at such addresses; and such notice shall be deemed to be given at the
time it is mailed, telegraphed, cabled or faxed.
Section 4. Waiver of Notice: Any stockholder or director may at any time, by
----------------
writing or by telegraph, cable or fax, waive any notice required to be given
under these By-laws, and if any stockholder or director shall be present at any
meeting his presence shall constitute a waiver of such notice.
Section 5. Checks, Drafts, etc.: All checks, drafts or other orders for the
--------------------
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation, shall be signed by such officer or officers, agent or agents of
the Corporation, and in such manner, as shall from time to time be designated by
resolution of the Board of Directors.
10
<PAGE>
Section 6. Deposits: All funds of the Corporation shall be deposited from time
--------
to time to the credit of the Corporation in such bank or banks, trust companies
or other depositories as the Board of Directors may select, and, for the purpose
of such deposit, checks, drafts, warrants and other orders for the payment of
money which are payable to the order of the Corporation, may be endorsed for
deposit, assigned and delivered by any officer of the Corporation, or by such
agents of the Corporation as the Board of Directors or the President may
authorize for that purpose.
Section 7. Voting Stock of Other Corporations: Except as otherwise ordered by
----------------------------------
the Board of Directors, the President or the Treasurer shall have full power and
authority on behalf of the Corporation to attend and to act and to vote at any
meeting of the stockholders of any corporation of which the Corporation is a
stockholder and to execute a proxy to any other person to represent the
Corporation at any such meeting, and at any such meeting the President or the
Treasurer or the holder of any such proxy, as the case may be, shall possess and
may exercise any and all rights and powers incident to ownership of such stock
and which, as owner thereof, the Corporation might have possessed and exercised
if present. The Board of Directors may from time to time confer like powers
upon any other person or persons.
ARTICLE IX
AMENDMENTS
The Board of Directors shall have the power to make, rescind, alter, amend and
repeal these By-laws, provided, however, that the stockholders shall have power
to rescind, alter, amend or repeal any by-laws made by the Board of Directors,
and to enact by-laws which if so expressed shall not be rescinded, altered,
amended or repealed by the Board of Directors.
* * * * *
11
<PAGE>
EXHIBIT 3.3
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
RCTR, INC.
FIRST: The name of this corporation is RCTR, Inc. (hereinafter called
the "Corporation").
SECOND: The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Company, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or
promoted by the Corporation are:
(a) to enter into, perform and comply with a Master Motor Vehicle
Lease Agreement (as amended, modified or supplemented from time to time, the
"Lease Agreement") by and among the Corporation and Ryder TRS, Inc., a Delaware
corporation ("Lessee"), pursuant to which the Corporation will lease certain
trucks acquired by the Corporation pursuant to the Asset and Stock Purchase
Agreement (the "Agreement"), by and between Ryder Truck Rental, Inc. and RCTR
Holdings, Inc. (predecessor to Lessee) and all new trucks acquired by the
Corporation in the future (collectively, the "Trucks"), to Lessee in exchange
for rental payments;
(b) to acquire Trucks as described in clause (a) above and to sell,
transfer or otherwise dispose of Trucks that are not otherwise leased to Lessee
pursuant to the Lease Agreement;
(c) to finance a portion of the acquisition price of the Trucks in
transactions with one or more trusts, banks, financial institutions, commercial
paper issuers, insurance companies or similar entities, and, in connection with
any such financing arrangements, to pledge as security up to all or
substantially all of its assets, including, without limitation, all of its
right, title and interest to and in the Trucks (collectively, the
"Securitization");
(d) to enter into, perform and comply with such other agreements as
are necessary and desirable to finance and otherwise effectuate the activities
described in clause (a), (b) or (c) of this Article THIRD (such other
agreements, together
<PAGE>
with the Agreement and the Lease Agreement, the "Securitization Documents"); and
(e) to engage in any lawful act or activity and to exercise any
powers permitted to corporations organized under the General Corporation Law of
Delaware that, in either case, are incidental to and necessary or convenient for
the accomplishment of the above-mentioned purposes.
FOURTH: The total number of shares of all classes of stock that the
Corporation is authorized to issue is one hundred (100) shares, all of which
shares shall be common stock, $.01 par value per share ("Common Stock"). All
shares of Common Stock will be identical and will entitle the holders thereof to
the same rights and privileges.
(a) Voting Rights. Except as set forth herein or as otherwise
-------------
required by law, each outstanding share of Common Stock shall be entitled to
vote on each matter on which the stock holders of the Corporation shall be
entitled to vote, and each holder of Common Stock shall be entitled to one vote
for each share of such stock held by such holder.
(b) Dividends and Other Distributions. The Corporation, with the
---------------------------------
affirmative vote of all the members of the Board of Directors (which must
include the affirmative vote of all duly appointed or elected Independent
Directors), may cause dividends to be paid to holders of shares of Common Stock
out of funds legally available for the payment of dividends. Any dividend or
distribution on the Common Stock shall be payable on shares of all Common Stock
share and share alike.
(c) Liquidation. In the event of any voluntary or involuntary
-----------
liquidation, dissolution or winding up of the Corpo ration, after payment or
provision for payment of the debts and other liabilities of the Corporation, the
holders of shares of Common Stock shall be entitled to share ratably, share and
share alike, in the remaining net assets of the Corporation.
FIFTH: In furtherance and not in limitation of the powers conferred
by statute, the Corporation's Board of Directors is expressly authorized to
alter, amend, repeal or adopt the By-Laws of the Corporation; provided, however,
-------- -------
that any such alter ation, amendment, repeal or adoption that relates to or
affects in any way the criteria for, or the qualifications of, an "Independent
Director" (as such term is defined in the Seventh Article hereof), or the
requirement that the Corporation maintain at least two Independent Directors, or
Article VI thereof, must,
-2-
<PAGE>
in each case, receive the prior affirmative vote or written consent of each
Independent Director.
SIXTH: Elections of directors need not be by written ballot unless,
and to the extent, so provided in the Corpora tion's By-Laws.
SEVENTH: The Corporation shall at all times, except as noted
hereafter, have at least two directors (each an "Independent Director") each of
whom (i) is not a stockholder (whether direct, indirect or beneficial), partner,
customer or supplier of Jay Alix & Associates, Inc. or Questor Management
Company or any of the foregoing's affiliates (the "Related Corporate Group");
(ii) is not a director, officer, employee, affiliate or associate of any member
of the Related Corporate Group (other than the Corporation); (iii) is not a
person related to any person referred to in clause (i) or (ii); (iv) is not a
trustee, conservator or receiver for any member of the Related Corporate Group;
and (v) has (A) prior experience as an independent director for a corporation
whose charter documents required the unanimous consent of all independent
directors thereof before such corporation could consent to the institution of
bankruptcy or insolvency proceedings against it or could file a petition seeking
relief under any applicable federal or state law relating to bankruptcy and (B)
at least three years of employment experience with one or more entities that
provide, in the ordinary course of their respective businesses, advisory,
management or placement services to issuers of securitization or structured
finance instruments, agreements or securities. The Corporation shall cause each
Independent Director to be paid a salary of at least $5,000 per year. In the
event of the death, incapacity, resignation or removal of any Independent
Director, or in the event that any director acting as an Independent Director
shall cease to satisfy the eligibility conditions set forth herein, the Board of
Directors shall promptly appoint a replacement Independent Director; provided,
--------
however, that the Board of Directors shall not vote or consent to any matter
- -------
(other than the appointment of two Independent Directors if there is no
Independent Director then in office or of one Independent Director if there is
only one Independent Director then in office) unless and until at least two
Independent Directors have been duly appointed to serve on the Board.
EIGHTH: 1. Indemnification. The Corporation shall indemnify to
---------------
the fullest extent permitted under and in accordance with the laws of the State
of Delaware any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact
-3-
<PAGE>
that he is or was a director or officer of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, trustee, employee or
agent of or in any other capacity with another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
Corporation, may at its discretion, indemnify employees or agents of the
Corporation to the same or lesser extent as set forth in the preceding sentence.
2. Payment of Expenses. Expenses (including attorneys' fees)
-------------------
incurred in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall (in the case of any action, suit or proceeding
against a director or officer of the Corporation) or may (in the case of any
action, suit or proceeding against an trustee, employee or agent) be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors upon receipt of an
undertaking by or on behalf of the indemnified person to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article EIGHTH.
3. Nonexclusivity of Provision. The indemnification and other
---------------------------
rights set forth in this Article EIGHTH shall not be exclusive of any provisions
with respect thereto in the by-laws or any other contract or agreement between
the Corporation and any officer, director, employee or agent of the Corporation.
4. Effect of Repeal. Neither the amendment nor repeal of this
----------------
Article EIGHTH, subparagraph 1, 2, or 3, nor the adoption of any provision of
this Certificate of Incorporation inconsistent with Article EIGHTH, subparagraph
1, 2, or 3, shall eliminate or reduce the effect of this Article EIGHTH,
subparagraphs 1, 2, and 3, in respect of any matter occurring before such
amendment, repeal or adoption of an inconsistent provision or in respect of any
cause of action, suit or claim relating to any such matter which would have
given rise to a right of indemnification or right to receive expenses pursuant
to this Article EIGHTH, subparagraph 1, 2, or 3, if such provision had not been
so amended or repealed or if a provision inconsistent therewith had not been so
adopted.
-4-
<PAGE>
5. Limitation on Liability. No director or officer shall be
-----------------------
personally liable to the Corporation or any stockholder for monetary damages for
breach of fiduciary duty as a director or officer, except for any matter in
respect of which such director or officer (A) shall be liable under Section 174
of the General Corporation Law of the State of Delaware or any amendment thereto
or successor provision thereto, or (B) shall be liable by reason that, in
addition to any and all other requirements for liability, he:
(i) shall have breached his duty of loyalty to the Corporation or its
stockholders;
(ii) shall not have acted in good faith or, in failing to act, shall not
have acted in good faith;
(iii) shall have acted in a manner involving intentional misconduct or a
knowing violation of law or, in failing to act, shall have acted in a
manner involving intentional misconduct or a knowing violation of law;
or
(iv) shall have derived an improper personal benefit.
If the General Corporation Law of the State of Delaware is amended
after the date hereof to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as so
amended.
NINTH: Subject to the limitations regarding Independent Directors in
the Seventh Article, to the extent permitted under the General Corporation Law
of the State of Delaware, any person (including, but not limited to,
stockholders, directors, officers and employees of the Corporation or any
affiliate of the Corporation) may engage in or possess an interest in other
business ventures of every nature and description, independently or with others,
whether such ventures are competitive with the Corporation or otherwise, and
neither the Corporation nor its stockholders shall have any right in or to such
independent ventures or to the income or profits derived therefrom.
TENTH: Notwithstanding any other provision of this Certificate of
Incorporation and any provision of law, the Corpo ration shall not do any of the
following:
-5-
<PAGE>
(a) engage in any business or activity other than as set forth in the
Third Article hereof;
(b) without the affirmative vote of all of the members of the Board
of Directors of the Corporation (which must include the affirmative vote of all
duly appointed or elected Independent Directors, except with respect to clause
(viii) below (and clause (ix) below to the extent relating to such clause
(viii)) for which the affirmative vote of only one duly appointed or elected
Independent Director is required), (i) dissolve or liquidate, in whole or in
part, or institute proceedings to be adjudicated bankrupt or insolvent, (ii)
consent to the institution of bankruptcy or insolvency proceedings against it,
(iii) file a petition seeking or consent to reorganization or relief under any
applicable federal or state law relating to bankruptcy, (iv) consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Corporation or a substantial part of its property, (v)
make a general assignment for the benefit of creditors, (vi) admit in writing
its inability to pay its debts generally as they become due, (vii) dividend,
lend or otherwise advance to the Lessee any monies and other funds held by the
Corporation that do not need to be retained by the Corporation with respect to
the ownership or acquisition of Trucks, debt service owed to the Lessee or under
the Securitization or the satisfaction of any other obligations of the
Corporation reasonably relating thereto, (viii) provide any guarantee,
indemnity, subrogation or contribution or grant any security interest,
including, without limitation, with respect to the Trucks, or (ix) take any
corporate action in furtherance of the actions set forth in clauses (i) through
(viii) of this paragraph; or
(c) merge or consolidate with any other corporation, company or
entity or sell, lease or otherwise transfer all or substantially all of its
assets or acquire all or substantially all of the assets or capital stock or
other ownership interest of any other corporation, company or entity, unless, in
the case of any such transaction, (i) all of the members of the Board of
Directors of the Corporation (which must include all duly appointed or elected
Independent Directors) affirmatively vote in favor of such transaction, (ii)
such transaction is expressly permitted by the Securitization Documents and
(iii) except in the case of a Lease or if the Corporation is the surviving
corporation in any such merger, consolidation, sale or other transfer, such
other corporation, company or entity expressly assumes all the Company's
obligations and has a certificate of incorporation that (x) contains provisions
identical to those in the Restricted Articles (as defined below) and (y) does
not contain any provision inconsistent with the Restricted Articles.
-6-
<PAGE>
ELEVENTH: The Corporation shall ensure at all times that (a) it
conducts its business from an office that is separate and distinct from those of
the other members of the Related Corporate Group, even if such office space is
subleased from, or is on or near premises occupied by any of the foregoing; (b)
it maintains separate corporate records and books of account from those of each
of the other members of the Related Corporate Group; (c) none of the
Corporation's assets will be commingled with those of any of the other members
of the Related Corporate Group; and (d) any employee, consultant or agent of the
Corporation and any other operating expense incurred by the Corporation will be
paid from the assets of the Corporation.
TWELFTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certifi cate of Incorporation in any
manner now or hereafter provided herein or by statute and all rights,
preferences and privileges conferred by this Certificate of Incorporation upon
stockholders, directors or any other person are granted subject to such right;
provided, however, that the Corporation shall not amend, alter, change or repeal
- -------- -------
any provision of the Third, Fifth, Seventh, Tenth, Eleventh, Twelfth or
Thirteenth Article of this Certificate of Incorporation (the "Restricted
Articles") without the affirmative vote of all duly appointed and elected
Independent Directors; and provided, further, that the Corporation shall not
-------- -------
amend, alter or change any provision of any Article other than the Restricted
Articles so as to be inconsistent with the Restricted Articles.
THIRTEENTH: When exercising any vote provided for in the Seventh and
Twelfth Articles or in clause (a) or (c) of the Tenth Article hereof, each
director shall cast its vote recognizing that it owes its fiduciary duty or
other obligation with respect to such vote to the Corporation (including,
without limitation, the Corporation's creditors) as well as to the stockholders
of the Corporation. When exercising any vote on whether the Corporation will
take any action described in paragraph (b) of the Tenth Article hereof, each
Director shall cast its vote recognizing that it owes its primary fiduciary duty
or other obligation with respect to such vote to the Corporation (including,
without limitation, the Corporation's creditors) and not to the stockholders of
the Corporation (except as may specifically be required by the law of any
applicable jurisdiction). Every stockholder of the Corporation shall be deemed
to have consented to the foregoing by virtue of such stockholder's consent to
this Certificate of Incorporation.
-7-
<PAGE>
EXHIBIT 3.4
RCTR, INC.
Incorporated Under the Laws of
the State of Delaware
BY-LAWS
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ARTICLE I
OFFICES
- -------
Section 1. The registered office of the Corporation in Delaware shall be at
1209 Orange Street in the City of Wilmington, County of New Castle. The
Corporation Trust Company shall be the resident agent of this corporation in
charge thereof.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the Board of Directors may from time
to time determine or the business of the corporation may require.
Section 3. The corporation shall maintain a business office through which its
business will be conducted separate from those of Ryder TRS, Inc. and its
affiliates.
ARTICLE II
MEETINGS OF STOCKHOLDERS
- ------------------------
Section 1. Meetings of stockholders shall be held at any place within or
outside the State of Delaware designated by the Board of Directors. In the
absence of any such designation, stockholders' meetings shall be held at the
principal executive office of the Corporation.
Section 2. The annual meeting of stockholders shall be held each year on a date
and at a time designated by the Board of Directors. At each annual meeting,
directors shall be elected and any other proper business may be transacted.
Section 3. A majority of the stock issued and outstanding and entitled to vote
at any meeting of stockholders, the holders of which are present in person or
represented by proxy, shall constitute a quorum for the transaction of business
except as otherwise provided by law, by the Certificate of Incorporation, or by
these By-Laws. A quorum, once established, shall not be broken by the
withdrawal of enough votes to leave
<PAGE>
less than a quorum and the votes present may continue to transact business until
adjournment. If, however, such quorum shall not be present or represented at any
meeting of the stockholders, a majority of the voting stock represented in
person or by proxy may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote thereat.
Section 4. When a quorum is present at any meeting, the vote of the holders of
a majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which by express provision of the statutes, or the Certificate of
Incorporation, or these By-Laws, a different vote is required in which case such
express provision shall govern and control the decision of such question.
Section 5. At each meeting of the stockholders, each stockholder having the
right to vote may vote in person or may authorize another person or persons to
act for him by proxy appointed by an instrument in writing subscribed by such
stockholder and bearing a date not more than three years prior to said meeting,
unless said instrument provides for a longer period. All proxies must be filed
with the Secretary of the Corporation at the beginning of each meeting in order
to be counted in any vote at the meeting. Each stockholder shall have one vote
for each share of stock having voting power, registered in his name on the books
of the corporation on the record date set by the Board of Directors as provided
in Article V, Section 6 hereof. All elections shall be had and all questions
decided by a plurality vote.
Section 6. Special meetings of the stockholders, for any purpose, or purposes,
unless otherwise prescribed by statute or by the Certificate of Incorporation,
may be called by the Board of Directors and shall be called by the President at
the request in writing of stockholders owning a majority in amount of the entire
capital stock of the corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting.
Business transacted at any special meeting of stockholders shall be limited to
the purposes stated in the notice.
Section 7. Whenever stockholders are required or permitted to take any action
at a meeting, a written notice of
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<PAGE>
the meeting shall be given which notice shall state the place, date and hour of
the meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. The written notice of any meeting shall be given to
each stockholder entitled to vote at such meeting not less than ten nor more
than sixty days before the date of the meeting. If mailed, notice is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation.
Section 8. The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 9. Unless otherwise provided in the Certificate of Incorporation, any
action required to be taken at any annual or special meeting of stockholders of
the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
- ---------
Section 1. The number of directors which shall constitute the whole Board shall
be not less than two nor more than nine. The directors need not be stockholders
or citizens of
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<PAGE>
the United States or residents of the State of Delaware. The corporation shall
at all times have at least two "Independent Directors" as set forth in the
Certificate of Incorporation. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 2 of this Article,
and each director elected shall hold office until his successor is
elected and qualified; provided, however, that unless otherwise restricted by
-------- -------
the Certificate of Incorporation or by law, any director or the entire Board of
Directors may be removed, either with or without cause, from the Board of
Directors at any meeting of stockholders by a majority of the stock represented
and entitled to vote thereat.
Section 2. Vacancies on the Board of Directors by reason of death, resignation,
retirement, disqualification, or increase in the authorized number of directors
may, subject to Section 1 above, be filled by a majority of the directors then
in office, although less than a quorum, or by a sole remaining director. The
directors so chosen shall hold office until the next annual election of
directors and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy, the directors then in office shall constitute less than a
majority of the whole Board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of stockholders holding
at least ten percent of the total number of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly created directorships, or to replace
the directors chosen by the directors then in office.
Section 3. The property and business of the corporation shall be managed by or
under the direction of its Board of Directors. In addition to the powers and
authorities by these By-Laws expressly conferred upon them, the Board may
exercise all such powers of the corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by these
By-Laws directed or required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
- ----------------------------------
Section 4. The directors may hold their meetings and have one or more offices,
and keep the books of the corporation outside of the State of Delaware.
Section 5. Regular meetings of the Board of Directors may be held without
notice at such time and place as shall from time to time be determined by the
Board.
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<PAGE>
Section 6. Special meetings of the Board of Directors may be called by the
Chairman of the Board of Directors on forty-eight hours' notice to each
director, either personally, by telegram or by telecopy; special meetings shall
be called by the President or the Secretary in like manner and on like notice on
the written request of two directors unless the Board consists of only one
director; in which case special meetings shall be called by the President or
Secretary in like manner or on like notice on the written request of the sole
director. No notice of the annual meeting of the Board of Directors will be
required if it is held immediately after the annual meeting of the stockholders
and if a quorum is present.
Section 7. At all meetings of the Board of Directors, one-half of the entire
Board of Directors shall be necessary and sufficient to constitute a quorum for
the transaction of business, and the vote of a majority of the directors present
at any meeting at which there is a quorum, shall be the act of the Board of
Directors, except as may be otherwise specifically provided by statute, by the
Certificate of Incorporation or by these By-Laws and except that (a) each
Independent Director must be present to form a quorum for any matter which,
pursuant to the Certificate of Incorporation or these By-Laws, requires the vote
of each Independent Director and (b) one Independent Director must be present to
form a quorum for any matter which, pursuant to the Certificate of Incorporation
or these By-Laws, requires the vote of one Independent Director. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present. Subject to
the foregoing restrictions relating to the Independent Directors, if only one
director is authorized, such sole director shall constitute a quorum.
Section 8. Unless otherwise restricted by the corporation's Certificate of
Incorporation or these By-Laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
Section 9. Unless otherwise restricted by the corporation's Certificate of
Incorporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such
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<PAGE>
participation in a meeting shall constitute presence in person at such meeting.
COMMITTEES OF DIRECTORS
- -----------------------
Section 10. The Board of Directors may, by resolution passed by a majority of
the whole Board, designate one or more committees of the Board of Directors,
each such committee to consist of one or more of the directors of the
corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
and subject to the requirements of Article III, shall have and may exercise all
the powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal for the
corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending, modifying
or repealing any provision of the Certificate of Incorporation or adopting new
provisions for the Certificate of Incorporation, adopting an agreement of merger
or consolidation, recommending to the stockholders the sale, lease or exchange
of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, amending, modifying or repealing the By-Laws of the
corporation or adopting new By-Laws of the corporation, filling new vacancies in
or removing members of the Board of Directors or taking any other action which,
pursuant to the Certificate of Incorporation, requires the vote of the
Independent Directors; and, unless the resolution or the Certificate of
Incorporation expressly so provides, no such committee shall have the power or
authority to authorize the issuance of stock.
Section 11. Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
- -------------------------
Section 12. Unless otherwise restricted by the Certificate of Incorporation or
these By-Laws, the Board of Directors shall have the authority to fix the
compensation of directors.
6
<PAGE>
ARTICLE IV
OFFICERS
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Section 1. The officers of this corporation shall be chosen by the Board of
Directors and shall include a President, a Vice President, a Secretary and a
Treasurer. The corporation may also have at the discretion of the Board of
Directors such other officers as are desired, including a Chairman of the Board,
one or more Vice Chairmen, one or more Assistant Secretaries and Assistant
Treasurers, and such other officers as may be appointed in accordance with the
provisions of Section 2 hereof. In the event there are two or more Vice
Presidents, then one or more may be designated as Executive Vice President,
Senior Vice President, or other similar or dissimilar title. At the time of the
election of officers, the directors may by resolution determine the order of
their rank. Any number of offices may be held by the same person, unless the
Certificate of Incorporation or these By-Laws otherwise provide.
Section 2. The Board of Directors may appoint such other officers and agents as
it shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board.
Section 3. The salaries of all officers and agents of the corporation shall be
fixed by the Board of Directors.
Section 4. The officers of the corporation shall hold office until their
successors are chosen and qualify in their stead. Any officer elected or
appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the Board of Directors. If the office of any
officer or officers becomes vacant for any reason, the vacancy shall be filled
by the Board of Directors.
CHAIRMAN OF THE BOARD
- ---------------------
Section 5. The Chairman of the Board, if such an officer be elected, shall be a
director and shall, if present, preside at all meetings of the Board of
Directors and of the stockholders and exercise and perform such other powers and
duties as may be from time to time assigned to him by the Board of Directors or
prescribed by these By-Laws. If there is no President, the Chairman of the
Board shall in addition be the Chief Executive Officer of the corporation and
shall have the powers and duties prescribed in Section 6 of this Article IV.
PRESIDENT
- ---------
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<PAGE>
Section 6. Subject to such supervisory powers, if any, as may be given by the
Board of Directors to the Chairman of the Board, if there be such an officer,
the President shall be the Chief Executive Officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. He shall
be an ex-officio member of all committees and shall have the general powers and
duties of management usually vested in the office of President and Chief
Executive Officer of corporations, and shall have such other powers and duties
as may be prescribed by the Board of Directors or these By-Laws.
VICE PRESIDENTS
- ---------------
Section 7. The Vice Presidents shall perform such duties as from time to time
may be prescribed for them, respectively, by the Board of Directors.
SECRETARY AND ASSISTANT SECRETARY
- ---------------------------------
Section 8. The Secretary shall attend all sessions of the Board of Directors
and all meetings of the stockholders and record all votes and the minutes of all
proceedings in a book to be kept for that purpose; and shall perform like duties
for the standing committees when required by the Board of Directors. He shall
give, or cause to be given, notice of all meetings of the stockholders and of
the Board of Directors, and shall perform such other duties as may be prescribed
by the Board of Directors or these By-Laws. He shall keep in safe custody the
seal of the corporation, and when authorized by the Board, affix the same to any
instrument requiring it, and when so affixed it shall be attested by his
signature or by the signature of an Assistant Secretary. The Board of Directors
may give general authority to any other officer to affix the seal of the
corporation and to attest the affixing by his signature.
Section 9. The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Directors, or if there be no
such determination, the Assistant Secretary designated by the Board of
Directors, shall, in the absence or disability of the Secretary, perform the
duties and exercise the powers of the Secretary and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
TREASURER AND ASSISTANT TREASURER
- ---------------------------------
Section 10. The Treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books
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<PAGE>
belonging to the corporation and shall deposit all moneys and other valuable
effects, in the name and to the credit of the corporation, in such depositories
as may be designated by the Board of Directors. He shall disburse the funds of
the corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
corporation. If required by the Board of Directors, he shall give the
corporation a bond, in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors, for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 11. The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board of Directors, or if
there be no such determination, the Assistant Treasurer designated by the Board
of Directors, shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
ARTICLE V
CERTIFICATES OF STOCK
- ---------------------
Section 1. Every holder of stock of the corporation shall be entitled to have a
certificate signed by, or in the name of the corporation by, the Chairman or
Vice Chairman of the Board of Directors, or the President or a Vice President,
and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant
Treasurer of the corporation, certifying the number of shares represented by the
certificate owned by such stockholder in the corporation. Certificates of stock
of the corporation shall be in the form approved by the Board of Directors.
Section 2. Any or all of the signatures on the certificate may be a facsimile.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent, or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if he were such
officer, transfer agent, or registrar at the date of issue.
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<PAGE>
Section 3. If the corporation shall be authorized to issue more than one class
of stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate, which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
LOST, STOLEN OR DESTROYED CERTIFICATES
- --------------------------------------
Section 4. The Board of Directors may direct a new certificate or certificates
to be issued in place of any certificate or certificates theretofore issued by
the corporation alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate of stock to
be lost, stolen or destroyed. When authorizing such issue of a new certificate
or certificates, the Board of Directors may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or to give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
- ------------------
Section 5. Upon surrender to the corporation, or the transfer agent of the
corporation, of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
- ------------------
Section 6. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting
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<PAGE>
of the stockholders, or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix a
record date which shall not be more than sixty nor less than ten days before the
date of such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
- -----------------------
Section 7. The corporation shall be entitled to treat the holder of record of
any share or shares of stock as the holder in fact thereof and accordingly shall
not be bound to recognize any equitable or other claim or interest in such share
on the part of any other person, whether or not it shall have express or other
notice thereof, except as expressly provided by the laws of the State of
Delaware.
ARTICLE VI
COVENANTS OF THE CORPORATION
- ----------------------------
Section 1. The corporation shall preserve and maintain its corporate existence,
rights, franchises and privileges in the jurisdiction of its incorporation, and
qualify and remain qualified in good standing as a foreign corporation in each
jurisdiction where the failure to preserve and maintain such existence, rights,
franchises, privileges and qualification could reasonably be expected to have a
Material Adverse Effect. For purposes of this Article VI, a "Material Adverse
Effect" means any event or condition which would have a material adverse effect
on (i) the condition (financial or otherwise), operations, businesses or
properties of the corporation or (ii) the ability of the corporation to perform
its obligations under the Master Motor Vehicle Lease Agreement (as amended,
modified or supplemented from time to time, the "Lease") dated on or about
October 17, 1996 by and between the corporation and Ryder TRS, Inc., a Delaware
corporation ("Ryder TRS") or other agreements to which it is a party.
Section 2. The corporation shall take all reasonable steps to continue its
identity as a separate legal entity and to make it apparent to third Persons (as
defined below) that it is
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<PAGE>
an entity with assets and liabilities distinct from those of Ryder TRS or of any
other member of the Related Corporate Group (as such term is defined in the
Certificate of Incorporation), and that it is not a division of any of the other
members of the Related Corporate Group. For purposes of this Article VI, a
"Person" means an individual, partnership, joint stock company, limited
liability company, corporation, trust or unincorporated organization, and a
government or agency or political subdivision thereof. In that regard, and
without limiting the foregoing in any manner, the Corporation shall:
(i) maintain its own board of directors and make independent decisions with
respect to its daily operations and business affairs and not be controlled
in making such decisions by any other member of the Related Corporate
Group or any other Person;
(ii) maintain at least two directors each of whom satisfies the eligibility
conditions for an Independent Director as set forth in the Certificate of
Incorporation, and maintain at all times at least one officer who is not
also an officer of Ryder TRS;
(iii) maintain at least one officer who is not also an officer of Ryder TRS, and
all other officers and directors of the Company (with the exception of
Independent Directors) may also be officers and directors of Ryder TRS,
provided that such officers and directors adhere to all statutes, rules,
bylaws or other obligations regarding conflicts of interest and
participation in decision-making by officers and directors who may have a
conflict of interest with respect to the subject matters of the decision;
(iv) maintain separate and clearly delineated office space owned by it or
evidenced by a written lease or sublease (even if located in an office
owned or leased by, or shared with, other members of the Related Corporate
Group, with the entrance to such office clearly identified as its office);
(v) maintain its assets in a manner which facilitates their identification and
segregation from those of any other members of the Related Corporate
Group;
(vi) maintain a separate telephone number which will be answered only in its
own name and separate stationery and other business forms;
(vii) conduct all intercompany transactions and dealings with the other members
of the Related Corporate Group on terms and conditions which the
corporation reasonably believes to be on an arm's-length basis, with
appropriate documentation and fair consideration;
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<PAGE>
(viii)(A) not guarantee any obligation of any of the other members of the
Related Corporate Group, or hold itself out as responsible for the debts of any
other member of the Related Corporate Group, without the approval of at least
one of the Independent Directors; nor (B) have any of its obligations guaranteed
by any other members of the Related Corporate Group or hold itself out as
responsible for the decisions or actions with respect to the business and
affairs of any other members of the Related Corporate Group, nor seek or obtain
credit or incur any obligation to any third-party based upon the
creditworthiness or assets of any other members of the Related Corporate Group
or any other Person;
(ix) not permit the commingling or pooling of its funds or other assets with
the assets of another member of the Related Corporate Group;
(x) maintain separate deposit, checking and other bank accounts to which no
other member of the Related Corporate Group has any access;
(xi) maintain financial records which are separate from those of the other
members of the Related Corporate Group and issue separate financial
statements prepared not less frequently than quarterly and prepared in
accordance with generally accepted accounting principles;
(xii) compensate all employees, consultants and agents, and other members of the
Related Corporate Group, to the extent applicable, for services provided
to the corporation by such employees, consultants and agents or other
members of the Related Corporate Group, in each case, from the
corporation's own funds;
(xiii)have agreed with each of the relevant members of the Related Corporate
Group to allocate among themselves shared overhead and corporate operating
services and expenses (including without limitation the services of shared
employees, consultants and agents and reasonable legal and auditing
expenses) on the basis of actual use or the value of services rendered,
and otherwise on a basis reasonably related to actual use or the value of
services rendered;
(xiv) pay for its own account for accounting and payroll services, rent, lease
and other expenses (or its allocable share of any such amounts provided by
one or more other members of the Related Corporate Group) and not have
such operating expenses (or the corporation's allocable share thereof)
paid by any of the other members of the Related Corporate Group, provided,
that the Lessee shall be permitted to pay the initial organizational
expenses of the corporation, and ensure that its creditors are not
encouraged to look to any other member of the
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<PAGE>
Related Corporate Group for payment of its obligations and expenses;
(xv) maintain adequate capitalization in light of its business and purpose;
(xvi) conduct all of its business and all communications (whether in writing or
orally and including, without limitation, letters, invoices, purchase orders and
contracts) solely in its own name through its duly authorized officers,
employees and agents;
(xvii) make or declare any dividends or other distributions of cash or property
to the holders of its equity securities or make redemptions or repurchases of
its equity securities, in accordance with applicable law;
(xviii) maintain at least one employee (which employee may be shared with an
affiliate of the corporation pursuant to a written agreement allocating the
compensation and other remuneration and benefits for such employee as among such
parties) in charge of day-to-day operations of the corporation; and
(xix) otherwise practice and adhere to corporate formalities such as complying
with its Certificate of Incorporation, these By-laws, corporate resolutions and
the General Corporation Law of the State of Delaware, the holding of regularly
scheduled board of directors meetings, and maintaining complete and correct
books and records and minutes of meetings and other proceedings of its
stockholders and board of directors.
Section 3. The corporation shall comply with the provisions of Article VI
notwithstanding any other provision of these By-Laws.
ARTICLE VII
GENERAL PROVISIONS
------------------
DIVIDENDS
- ---------
Section 1. Dividends upon the capital stock of the corporation, subject to the
provisions of the Certificate of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation.
14
<PAGE>
Section 2. Before payment of any dividend there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interests of the
corporation, and the directors may abolish any such reserve.
CHECKS
- ------
Section 3. All checks, drafts or other orders for the payment of money, notes
or other evidences of indebtedness issued in the name of the Corporation shall
be signed by such officers, employees or agents of the Corporation as shall from
time to time be designated by the Chairman of the Board, the President, the Vice
President-Finance, the Treasurer or an Assistant Treasurer.
All funds of the Corporation not otherwise employed shall be deposited from time
to time to the credit of the Corporation in such banks, trust companies or other
depositories as shall from time to time be designated by the Chairman of the
Board, the President, the Vice President-Finance, the Treasurer or an Assistant
Treasurer; and such officers may designate any type of depository arrangement
(including but not limited to depository arrangements resulting in net debits
against the Corporation) as from time to time offered or available.
FISCAL YEAR
- -----------
Section 4. The fiscal year of the corporation shall be fixed by resolution of
the Board of Directors.
SEAL
- ----
Section 5. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware". Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
NOTICES
- -------
Section 6. Whenever, under the provisions of the statutes or of the Certificate
of Incorporation or of these By-Laws, notice is required to be given to any
director or stockholder, it shall not be construed to mean personal notice, but
such notice may be given in writing, by mail, addressed to such director or
stockholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and
15
<PAGE>
such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may also be given by
telegram.
Section 7. Whenever any notice is required to be given under the provisions of
applicable statutes or of the Certificate of Incorporation or of these By-Laws,
a waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed to be
equivalent. The presence of any stockholder or director at any meeting will
shall constitute a waiver of notice thereof.
ANNUAL STATEMENT
- ----------------
Section 8. The Board of Directors shall present at each annual meeting, and at
any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
ARTICLE VIII
AMENDMENTS
- ----------
Section 1. These By-Laws may be altered, amended or repealed or new By-Laws may
be adopted by the stockholders or by the Board of Directors, when such power is
conferred upon the Board of Directors by the Certificate of Incorporation, at
any regular meeting of the stockholders or of the Board of Directors or at any
special meeting of the stockholders or of the Board of Directors if notice of
such alteration, amendment, repeal or adoption of new By-Laws be contained in
the notice of such special meeting; provided, however, that any such alteration,
-------- -------
amendment, repeal or adoption that relates to or effects in any way the criteria
for, or qualifications of, an Independent Director, or the requirement that the
corporation maintain at least two Independent Directors, or Article VI hereof,
must in each case, receive the prior affirmative vote or written consent of each
Independent Director. If the power to adopt, amend or repeal By-Laws is
conferred upon the Board of Directors by the Certificate of Incorporation, it
shall not divest or limit the power of the stockholders to adopt, amend or
repeal By-Laws.
Dated: October 17, 1996
16
<PAGE>
EXHIBIT 4.1
EXECUTION COPY
===============================================================================
INDENTURE
Between
RYDER TRS, INC.,
AND
THE BANK OF NEW YORK
Dated as of November 25, 1996
===============================================================================
<PAGE>
<TABLE>
<CAPTION>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- -------
<S> <C> <C>
310(a)(1) ...................... 7.10
(a)(2) ...................... 7.10
(a)(3) ...................... N.A.
(a)(4) ...................... N.A.
(a)(5) ...................... 7.10
(b) ...................... 7.08; 7.10
(c) ...................... N.A.
311(a) ...................... 7.11
(b) ...................... 7.11
(c) ...................... N.A.
312(a) ...................... 2.05
(b) ...................... 11.03
(c) ...................... 11.03
313(a) ...................... 7.06
(b)(1) ...................... N.A.
(b)(2) ...................... 7.06
(c) ...................... 11.02
(d) ...................... 7.06
314(a) ...................... 4.02; 4.09
11.02
(b) ...................... N.A.
(c)(1) ...................... 11.04
(c)(2) ...................... 11.04
(c)(3) ...................... N.A.
(d) ...................... N.A.
(e) ...................... 11.05
(f) ...................... 4.09
315(a) ...................... 7.01
(b) ...................... 7.05; 11.02
(c) ...................... 7.01
(d) ...................... 7.01
(e) ...................... 6.11
316(a)(last
sentence) ...................... 11.06
(a)(1)(A) ...................... 6.05
(a)(2)(B) ...................... 6.04
(a)(2) ...................... N.A.
(b) ...................... 6.07
317(a)(1) ...................... 6.08
(a)(2) ...................... 6.09
(b) ...................... 2.04
318(a) ...................... 11.01
N.A. means Not Applicable.
</TABLE>
Note: This Cross-Reference Table shall not, for any purpose, be
deemed to be part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE 1
Definitions and Incorporation by Reference
------------------------------------------
<S> <C> <C>
SECTION 1.01. Definitions .............................. 1
SECTION 1.02. Other Definitions ........................ 27
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act .......................... 27
SECTION 1.04. Rules of Construction .................... 28
<CAPTION>
ARTICLE 2
The Securities
--------------
<S> <C> <C>
SECTION 2.01. Form and Dating .......................... 29
SECTION 2.02. Execution and Authentication ............. 31
SECTION 2.03. Registrar and Paying Agent ............... 32
SECTION 2.04. Paying Agent to Hold Money in Trust ...... 33
SECTION 2.05. Securityholder Lists ..................... 33
SECTION 2.06. Transfer and Exchange .................... 33
SECTION 2.07. Replacement Securities ................... 42
SECTION 2.08. Outstanding Securities ................... 42
SECTION 2.09. Temporary Securities ..................... 43
SECTION 2.10. Cancellation ............................. 43
SECTION 2.11. Defaulted Interest ....................... 43
SECTION 2.12. CUSIP Numbers ............................ 44
<CAPTION>
ARTICLE 3
Redemption
----------
<S> <C> <C>
SECTION 3.01. Notices to Trustee ....................... 44
SECTION 3.02. Selection of Securities
To Be Redeemed ......................... 44
SECTION 3.03. Notice of Redemption ..................... 45
SECTION 3.04. Effect of Notice of Redemption ........... 46
SECTION 3.05. Deposit of Redemption Price .............. 46
SECTION 3.06. Securities Redeemed in Part .............. 46
SECTION 3.07. Optional Redemption ...................... 46
</TABLE>
<PAGE>
Table of Contents, Pg. 3
ARTICLE 4
Covenants
---------
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 4.01. Payment of Securities .................... 47
SECTION 4.02. SEC Reports .............................. 48
SECTION 4.03. Limitation on Indebtedness ............... 48
SECTION 4.04. Limitation on Restricted Payments ........ 51
SECTION 4.05. Limitation on Restrictions on
Distributions from Subsidiaries ........ 54
SECTION 4.06. Limitation on Sales of Assets and
Subsidiary Stock ....................... 55
SECTION 4.07. Limitation on Transactions with
Affiliates ............................. 59
SECTION 4.08. Change of Control ........................ 60
SECTION 4.09. Compliance Certificates; Notice of
Default................................. 62
SECTION 4.10. Further Instruments and Acts ............. 62
SECTION 4.11. Limitation on Liens ...................... 62
SECTION 4.12. Future Note Guarantors ................... 63
SECTION 4.13. Limitation on Lines of Business .......... 63
SECTION 4.14. Limitation on the Sale or Issuance of
Capital Stock of Restricted
Subsidiaries ........................... 63
<CAPTION>
ARTICLE 5
Successor Company
-----------------
<S> <C> <C>
SECTION 5.01. When Company May Merge or Transfer
Assets ................................. 64
<CAPTION>
ARTICLE 6
Defaults and Remedies
---------------------
<S> <C> <C>
SECTION 6.01. Events of Default ........................ 65
SECTION 6.02. Acceleration ............................. 67
SECTION 6.03. Other Remedies ........................... 68
SECTION 6.04. Waiver of Past Defaults .................. 68
SECTION 6.05. Control by Majority ...................... 69
SECTION 6.06. Limitation on Suits ...................... 69
SECTION 6.07. Rights of Holders to
Receive Payment ........................ 69
</TABLE>
<PAGE>
Table of Contents, Pg. 4
<TABLE>
<S> <C> <C>
SECTION 6.08. Collection Suit by Trustee ............... 70
SECTION 6.09. Trustee May File Proofs of Claim ......... 70
SECTION 6.10. Priorities ............................... 70
SECTION 6.11. Undertaking for Costs .................... 71
SECTION 6.12. Waiver of Stay or Extension Laws ......... 71
<CAPTION>
ARTICLE 7
Trustee
-------
<S> <C> <C>
SECTION 7.01. Duties of Trustee ........................ 71
SECTION 7.02. Rights of Trustee ........................ 73
SECTION 7.03. Individual Rights of Trustee ............. 74
SECTION 7.04. Trustee's Disclaimer ..................... 74
SECTION 7.05. Notice of Defaults ....................... 75
SECTION 7.06. Reports by Trustee to Holders ............ 75
SECTION 7.07. Compensation and Indemnity ............... 75
SECTION 7.08. Replacement of Trustee ................... 76
SECTION 7.09. Successor Trustee by Merger .............. 77
SECTION 7.10. Eligibility; Disqualification ............ 78
SECTION 7.11. Preferential Collection of
Claims Against Company.................. 78
<CAPTION>
ARTICLE 8
Discharge of Indenture; Defeasance
----------------------------------
<S> <C> <C>
SECTION 8.01. Discharge of Liability on Securities;
Defeasance ............................. 78
SECTION 8.02. Conditions to Defeasance ................. 80
SECTION 8.03. Application of Trust Money ............... 81
SECTION 8.04. Repayment to Company ..................... 81
SECTION 8.05. Indemnity for Government
Obligations ............................ 81
SECTION 8.06. Reinstatement ............................ 82
<CAPTION>
ARTICLE 9
Amendments
----------
<S> <C> <C>
SECTION 9.01. Without Consent of Holders ................ 82
SECTION 9.02. With Consent of Holders ................... 83
SECTION 9.03. Compliance with Trust Indenture Act ....... 84
SECTION 9.04. Revocation and Effect of Consents and
</TABLE>
<PAGE>
Table of Contents, Pg. 5
<TABLE>
<S> <C> <C>
Waivers ................................. 84
SECTION 9.05. Notation on or Exchange
of Securities ........................... 85
SECTION 9.06. Trustee to Sign Amendments ................ 85
SECTION 9.07. Payment for Consent ....................... 85
<CAPTION>
ARTICLE 10
Subordination
-------------
<S> <C> <C>
SECTION 10.01. Agreement to Subordinate .................. 86
SECTION 10.02. Liquidation, Dissolution, Bankruptcy ...... 86
SECTION 10.03. Default on Senior Indebtedness ............ 86
SECTION 10.04. Acceleration of Payment of Securities ..... 88
SECTION 10.05. When Distribution Must Be Paid Over ....... 88
SECTION 10.06. Subrogation ............................... 88
SECTION 10.07. Relative Rights ........................... 88
SECTION 10.08. Subordination May Not Be Impaired by
Company ................................. 89
SECTION 10.09. Rights of Trustee and Paying Agent ........ 89
SECTION 10.10. Distribution or Notice to Representative .. 89
SECTION 10.11. Article 10 Not To Prevent Events
of Default or Limit
Right To Accelerate ..................... 89
SECTION 10.12. Trust Moneys Not Subordinated ............. 90
SECTION 10.13. Trustee Entitled to Rely .................. 90
SECTION 10.14. Trustee to Effectuate Subordination ....... 91
SECTION 10.15. Trustee Not Fiduciary for Holders of
Senior Indebtedness ..................... 91
SECTION 10.16. Reliance by Holders of Senior
Indebtedness on Subordination
Provisions .............................. 91
SECTION 10.17. Trustee's Compensation Not Prejudiced ..... 92
SECTION 10.18. Termination of Subordination Provisions ... 92
<CAPTION>
ARTICLE 11
Miscellaneous
-------------
<S> <C> <C>
SECTION 11.01. Trust Indenture Act Controls .............. 91
SECTION 11.02. Notices ................................... 92
SECTION 11.03. Communication by Holders with Other
Holders ................................. 92
SECTION 11.04. Certificate of Opinion as to Conditions
Precedent ............................... 93
</TABLE>
<PAGE>
Table of Contents, Pg. 6
<TABLE>
<S> <C> <C>
SECTION 11.05. Statements Required in Certificate or
Opinion ................................. 93
SECTION 11.06. When Securities Disregarded ............... 93
SECTION 11.07. Rules by Trustee, Paying Agent and
Registrar ............................... 94
SECTION 11.08. Legal Holidays ............................ 94
SECTION 11.09. Governing Law ............................. 94
SECTION 11.10. No Recourse Against Others ................ 94
SECTION 11.11. Successors ................................ 94
SECTION 11.12. Multiple Originals ........................ 95
SECTION 11.13. Table of Contents; Headings ............... 95
</TABLE>
EXHIBIT A Form of Initial Security
EXHIBIT B Form of Exchange Security
EXHIBIT C Transferee Letter of Representation
EXHIBIT D Form of Note Guarantee
<PAGE>
INDENTURE dated as of November 25, 1996, between Ryder TRS, Inc.,
a Delaware corporation (the "Company"), and The Bank of New York, a New
York banking corporation (the "Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Company's 10% Senior
Subordinated Notes due 2006 (the "Initial Securities") and, when and if issued
as provided in the Exchange and Registration Rights Agreement of even date
herewith, the Company's 10% Senior Subordinated Notes Series A due 2006 (the
"Exchange Securities", and together with the Initial Securities, the
"Securities").
ARTICLE 1
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. Definitions.
------------
"Acquisition" means the acquisition by the Company and its assignee,
Leasco, of all or substantially all the assets of the Consumer Truck Rental
business unit of Ryder Truck Rental, Inc., a Florida corporation, on October 17,
1996.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary in a Related Business; (ii) the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Company or another Restricted Subsidiary; or (iii) Capital Stock
constituting a minority interest in any Person that at such time is a Restricted
Subsidiary; provided, however, that, in the case of clauses (ii) and (iii), such
-------- -------
Restricted Subsidiary is primarily engaged in a Related Business.
"Affiliate" of any specified Person means (i) any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person or (ii) any person who is a director or
officer (a) of such Person, (b) of any Subsidiary of such Person or (c) of any
Person described in clause (i) above. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Section 4.06 only,
<PAGE>
2
"Affiliate" shall also mean any beneficial owner of shares representing 5% or
more of the total voting power of the Voting Stock (on a fully diluted basis) of
the Company or of rights or warrants to purchase such Voting Stock (whether or
not currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Applicable Premium" means, with respect to a Security at any Redemption
Date, the greater of (i) 1.0% of the principal amount of such Security and
(ii) the excess of (A) the present value of all remaining required interest and
principal payments due on such Security, computed using a discount rate equal to
the Treasury Rate plus 75 basis points, over (B) the then-outstanding principal
amount of such Security.
"Asset Disposition" means any sale, lease, transfer or other disposition of
shares of Capital Stock of a Restricted Subsidiary (other than directors'
qualifying shares), property or other assets (each referred to for the purposes
of this definition as a "disposition") by the Company or any of its Restricted
Subsidiaries (including any disposition by means of a merger, consolidation or
similar transaction) other than (i) a disposition by a Restricted Subsidiary to
the Company or by the Company or a Restricted Subsidiary to a Wholly Owned
Subsidiary, (ii) a disposition of inventory, equipment or Vehicles in the
ordinary course of business, (iii) the sale of Temporary Cash Investments in the
ordinary course of business, (iv) the sale of used or obsolete equipment in the
ordinary course of business so long as the fair market value of the assets
disposed of pursuant to this clause (iv) does not exceed $500,000 in the
aggregate in any fiscal year, (v) for purposes of Section 4.06 only, a
disposition subject to Section 4.04,(vi) transfers required in connection with
the Securitization, (vii) Permitted Liens and (viii) Permitted Investments.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
assumed in making calculations in accordance with FAS 13) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of
<PAGE>
3
the numbers of years from the date of determination to the dates of each
successive scheduled principal payment of such Indebtedness or redemption or
similar payment with respect to such Preferred Stock multiplied by the amount of
such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in respect
of the Senior Credit Agreement and the other Senior Credit Documents,
Indebtedness Incurred pursuant to Section 4.03(b)(ii), the Securitization and
any Refinancing Indebtedness with respect thereto, as amended from time to time,
including principal, premium (if any), interest (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization relating
to the Company whether or not a claim for postfiling interest is allowed in such
proceedings), fees, charges, expenses, reimbursement obligations, guarantees and
all other amounts payable thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banking institutions are authorized or required by law to close
in New York City.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease.
"Change of Control" means the occurrence of any of the following events:
(i) prior to the first public offering of Voting Stock of the Company,
either (x) Permitted Holders cease to be the "beneficial owner" or "beneficial
owners" (as defined
<PAGE>
4
in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of
more than 35% of the total voting power of the Voting Stock of the Company, or
(y) Permitted Holders cease to be entitled by voting power, contract or
otherwise to elect or cause the election of directors of the Company having a
majority of the total voting power of the Board of Directors, in each case,
whether as a result of issuance of securities of the Company, any merger,
consolidation, liquidation or dissolution of the Company, any direct or indirect
transfer of securities by any Permitted Holder or otherwise (for purposes of
this clause (i) and clause (ii) below, Permitted Holders shall be deemed to
beneficially own any Voting Stock of an entity (the "specified entity") held by
any other entity (the "parent entity") so long as the Permitted Holders
beneficially own (as so defined), directly or indirectly, a majority of the
Voting Stock of the parent entity);
(ii) following the first public offering of Voting Stock of the Company,
any "Person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act), other than one or more Permitted Holders, is or becomes the beneficial
owner (as defined in clause (i) above, except that a Person shall be deemed to
have "beneficial owner ship" of all shares that any such Person has the right to
acquire within one year), directly or indirectly, of more than 35% of the Voting
Stock of the Company; provided that the Permitted Holders beneficially own (as
--------
defined in clause (i) above), directly or indirectly, in the aggregate a lesser
percentage of the Voting Stock of the Company than such other Person and do not
have the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors; or
(iii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together with any
new directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company was approved by a vote of a majority
of the directors of the Company then still in office who were either directors
at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors then in office.
"Code" means the Internal Revenue Code of 1986, as amended.
<PAGE>
5
"Company" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
indenture securities.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending prior to the date of such determination
to (ii) Consolidated Interest Expense for such four fiscal quarters (in each
case determined, for each fiscal quarter of the four fiscal quarters ending
prior to the Issue Date, on a pro forma basis to give effect to the Acquisition
as if it had occurred at the beginning of such period); provided, however, that
-------- -------
(A) if the Company or any Restricted Subsidiary has Incurred any Indebtedness
since the beginning of such period that remains outstanding on such date of
determination or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Incurrence of Indebtedness, EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to such Indebtedness as if such Indebtedness had
been Incurred on the first day of such period and the discharge of any other
Indebtedness repaid, repurchased, defeased or otherwise discharged with the
proceeds of such new Indebtedness as if such discharge had occurred on the first
day of such period, (B) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, the EBITDA for such
period shall be reduced by an amount equal to the EBITDA (if positive) directly
attributable to the assets that are the subject of such Asset Disposition for
such period or increased by an amount equal to the EBITDA (if negative) directly
attributable thereto for such period and Consolidated Interest Expense for such
period shall be reduced by an amount equal to the Consolidated Interest
Expense directly attributable to any Indebtedness of the Company or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to the Company and its continuing Restricted Subsidiaries in connection
with such Asset Disposition for such period (or, if the Capital Stock of any
Restricted Subsidiary is sold, the Consolidated Interest Expense for such period
directly attributable to the Indebtedness of such Restricted Subsidiary to the
extent the Company and its continuing Restricted Subsidiaries are no longer
liable for such Indebtedness after such sale), (C) if since the beginning of
such period the Company or any Restricted Subsidiary (by merger or otherwise)
shall have made an Investment in any
<PAGE>
6
Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary) or an
acquisition of assets, including any acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder, which
constitutes all or substantially all of an operating unit of a business, EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any Indebtedness)
as if such Investment or acquisition occurred on the first day of such period
and (D) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company or any
Restricted Subsidiary since the beginning of such period) shall have made any
Asset Disposition or any Investment or acquisition of assets that would have
required an adjustment pursuant to clause (B) or (C) above if made by the
Company or a Restricted Subsidiary during such period, EBITDA and Consolidated
Interest Expense for such period shall be calculated after giving pro forma
effect thereto as if such Asset Disposition, Investment or acquisition of assets
occurred on the first day of such period. For purposes of this definition,
whenever pro forma effect is to be given to an acquisition of assets, the amount
of income or earnings relating thereto and the amount of Consolidated Interest
Expense associated with any Indebtedness Incurred in connection therewith, the
pro forma calculations shall be determined in good faith by a responsible
financial or accounting Officer of the Company. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest
expense on such Indebtedness shall be calculated as if the rate in effect on the
date of determination had been the applicable rate for the entire period (taking
into account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term as at the date of determination in
excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total
consolidated interest expense of the Company and its Restricted Subsidiaries,
plus, to the extent incurred by the Company and its Subsidiaries in such period
but not included in such interest expense, (i) interest expense attributable to
Capitalized Lease Obligations and rent expense associated with Attributable
Debt, (ii) the earned discount or yield with respect to a sale of receivables
and any corresponding amount relating to the Securitization, (iii) amortization
of debt discount and debt issuance cost, (iv) capitalized interest, (v) noncash
interest expense, (vi) commissions, discounts and other fees and charges
attributable to letters of credit and bankers' acceptance
<PAGE>
7
financing, (vii) interest in respect of or other obligation of any other
Person that has been Guaranteed by the Company or any Restricted Subsidiary,
(viii) net costs associated with Hedging Obligations, (ix) Preferred Stock
dividends in respect of all Preferred Stock of Subsidiaries of the Company
and Disqualified Stock of the Company held by Persons other than the Company or
a Wholly Owned Subsidiary; and (x) the cash contributions to any employee stock
ownership plan or similar trust to the extent such contributions are used by
such plan or trust to pay interest or fees to any Person (other than the
Company) in connection with Indebtedness Incurred by such plan or trust;
provided, however, that there shall be excluded therefrom (i) any such interest
- -------- -------
expense of any Unrestricted Subsidiary to the extent the related Indebtedness is
not Guaranteed or paid by the Company or any Restricted Subsidiary, and (ii) any
write-off of debt issuance costs of the Company and its Restricted Subsidiaries
associated with the Indebtedness Incurred to finance the Acquisition. For
purposes of the foregoing, gross interest expense shall be determined after
giving effect to any net payments made or received by the Company and its
Subsidiaries with respect to Interest Rate Agreements.
"Consolidated Net Income" means, for any period, the consolidated net
income (loss) of the Company and its Restricted Subsidiaries; provided, however,
-------- -------
that there shall not be included in such Consolidated Net Income:
(i) any net income (loss) of any Person if such Person is not a Restricted
Subsidiary, except that (A) subject to the limitations contained in clause
(iv) below, the Company's equity in the net income of any such Person for such
period shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Person during such period to the
Company or a Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution to a Restricted
Subsidiary, to the limitations contained in clause (iii) below) and (B) the
Company's equity in a net loss of any such Person (other than an Unrestricted
Subsidiary) for such period shall be included in determining such Consolidated
Net Income,
(ii) any net income (loss) of any person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior to the
date of such acquisition,
<PAGE>
8
(iii) any net income (loss) of any Restricted Subsidiary if such Subsidiary
is subject to restrictions, directly or indirectly, on the payment of dividends
or the making of distributions by such Restricted Subsidiary, directly or
indirectly, to the Company, except that (A) subject to the limitations contained
in (iv) below, the Company's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated Net Income up
to the aggregate amount of cash that could have been distributed by such
Restricted Subsidiary during such period to the Company or another Restricted
Subsidiary as a dividend (subject, in the case of a dividend that could have
been made to another Restricted Subsidiary, to the limitation contained in this
clause) and (B) the Company's equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining such Consolidated
Net Income,
(iv) any gain (but not loss) realized upon the sale or other disposition
of any asset of the Company or its Consolidated Subsidiaries (including pursuant
to any Sale/ Leaseback Transaction) that is not sold or otherwise disposed of in
the ordinary course of business and any gain (but not loss) realized upon the
sale or other disposition of any Capital Stock of any Person,
(v) any extraordinary gain or loss, and
(vi) the cumulative effect of a change in accounting principles.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and the Restricted Subsidiaries, determined on a
Consolidated basis, as of the end of the most recent fiscal quarter of the
Company ending prior to the taking of any action for the purpose of which the
determination is being made, as (i) the par or stated value of all outstanding
Capital Stock of the Company plus (ii) paid-in capital or capital surplus
relating to such Capital Stock plus (iii) any retained earnings or earned
surplus less (A) any accumulated deficit and (B) any amounts attributable to
Disqualified Stock.
"Consolidation" means the consolidation of the accounts of each of the
Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; provided, however, that "Consolidation" will not include
-------- -------
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Unrestricted Subsidiary will be accounted for as an
<PAGE>
9
investment. The term "Consolidated" has a correlative meaning.
"CSI" means Chase Securities Inc., a Delaware corporation.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Definitive Securities" means Securities that are in the form of Exhibit A
or Exhibit B attached hereto that do not include the information called for by
footnote 1 thereof.
"Depository" means, with respect to the Securities issuable or issued in
whole or in part in global form, the person specified in Section 2.03 as the
Depository with respect to the Securities, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depository" shall mean or include such successor.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness and (ii)
any other Senior Indebtedness which, at the date of determination, has an
aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof, are committed to lend up to, at least
$5,000,000 and is specifically designated by the Company in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable or exercisable) or upon the happening of any
event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in whole or in part, in each case on or prior to the first anniversary of the
Stated Maturity of the Securities.
"Domestic Subsidiary" means any Restricted Subsidiary of the Company other
than a Foreign Subsidiary.
<PAGE>
10
"EBITDA" means, for any period, the Consolidated Net Income for such
period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) income tax expense, (ii) Consolidated Interest
Expense, (iii) depreciation and depletion expense and (iv) amortization of
intangibles and amortization of other non-cash charges or non-cash losses
(including financing and acquisition expenses incurred in connection with the
Acquisition).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange and Registration Rights Agreement" means the Exchange and
Registration Rights Agreement dated November 25, 1996, by and between the
Initial Purchaser and the Company, as such agreement may be amended, modified,
or supplemented from time to time in accordance with the terms thereof.
"Existing Subsidiaries" means Leasco, Ryder Move Management, Inc., Ryder
truck Rental One-Way, Inc., Ryder Relocation Services, Inc. and The Move Shop,
Inc.
"Foreign Subsidiary" means any Restricted Subsidiary of the Company that is
not organized under the laws of the United States of America or any state
thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United States
of America applied on a consistent basis.
"Global Security" means a Security that is in the form of Exhibit A or
Exhibit B hereto that includes the information called for by footnote 1 thereof.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other nonfinancial
obligation of any other Person and any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or such other
obligation of such other
<PAGE>
11
Person (whether arising by virtue of partnership arrangements, or by agreement
to keep-well, to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for purposes of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided, however, that the term
-------- -------
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a Security is
registered on the Registrar's books.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Incur" means issue, assume, Guarantee, incur or other wise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
-------- --------
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. Any Indebtedness issued at a
discount (including Indebtedness on which interest is payable through the
issuance of additional Indebtedness) shall be deemed incurred at the time of
original issuance of the Indebtedness at the initial accreted amount thereof.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(i) the principal of and premium (if any) in respect of indebtedness of
such Person for borrowed money,
(ii) the principal of and premium (if any) in respect of obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments,
(iii) all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations with respect
thereto), but shall not include commercial letters of credit or letters of
credit issued in connection with liabilities incurred in
<PAGE>
12
the ordinary course of business (including those issued to governmental
entities to self-insure under applicable worker's compensation statutes and
the $2,500,000 standby letter of credit issued to Ryder System, Inc. pursuant
to the Acquisition) prior to the time of a drawing that gives rise to a
reimbursement obligation,
(iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables), which purchase
price is due more than six months after the date of placing such property in
final service or taking final delivery and title thereto or the completion of
such services,
(v) all Capitalized Lease Obligations and all Attributable Debt of
such Person,
(vi) the redemption, repayment or other repurchase amount of such
Person with respect to any Disqualified Stock or, with respect to any
Subsidiary of the Company, any Preferred Stock (but excluding, in each case,
any accrued dividends),
(vii) all Indebtedness of other Persons secured by a Lien on any asset
of such Person, whether or not such Indebtedness is assumed by such Person;
provided, however, that the amount of Indebtedness of such Person shall be the
-------- -------
lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness of such other Persons,
(viii) all Indebtedness of other Persons to the extent Guaranteed by
such Person, and
(ix) to the extent not otherwise included in this definition, net
Hedging Obligations of such Person (such obligations to be equal at any time
to the termination value of such agreement or arrangement giving rise to such
Hedging Obligation that would be payable by such Person at such time).
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
"Initial Purchaser" means CSI.
<PAGE>
13
"Interest Rate Agreement" means with respect to any Person any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including by way of Guarantee or similar arrangement)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary" and Section 4.04, (i) "Investment" shall include the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of any Subsidiary of the Company at the
time that such Subsidiary is designated an Unrestricted Subsidiary; provided,
--------
however, that upon a redesignation of such Subsidiary as a Restricted
- --------
Subsidiary, the Company shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to
(x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation; and (ii) any property transferred
to or from an Unrestricted Subsidiary shall be valued at its fair market value
at the time of such transfer, in each case as determined in good faith by the
Board of Directors.
"Investors" means Questor and the other parties that purchased equity
interests in the Company on October 17, 1996.
"Issue Date" means the date on which the Securities are originally issued.
"Jay Alix & Associates, Inc." means Jay Alix & Associates, Inc., a Michigan
corporation.
"Leasco" means RCTR, Inc., a special purpose Delaware corporation that is a
Wholly Owned Subsidiary, and any other Wholly Owned Subsidiary that is
established for the purpose of entering into a Securitization with respect to
the Vehicles.
<PAGE>
14
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Management Agreement" means the Management Agreement dated October 15,
1996, between the Company and Questor Management Company (and its permitted
successors and assigns), as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof.
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other noncash form) therefrom, in each case net of (i) all
legal, title and recording tax expenses, commissions and other fees and expenses
incurred, and all Federal, state, provincial, foreign and local taxes required
to be paid or accrued as a liability under GAAP, as a consequence of such Asset
Disposition, (ii) all payments made on any Indebtedness that is secured by any
assets subject to such Asset Disposition, in accordance with the terms of any
Lien upon such assets, or that must by its terms, or in order to obtain a
necessary consent to such Asset Disposition, or by applicable law be repaid out
of the proceeds from such Asset Disposition, (iii) all distributions and other
payments required to be made to minority interest holders in Subsidiaries or
joint ventures as a result of such Asset Disposition and (iv) appropriate
amounts to be provided by the seller as a reserve, in accordance with GAAP,
against any liabilities associated with the assets disposed of in such Asset
Disposition and retained by the Company or any Restricted Subsidiary after such
Asset Disposition.
"Net Cash Proceeds" means, with respect to any issuance or sale of any
securities of the Company or any Subsidiary by the Company or any Subsidiary,
the cash proceeds of such issuance or sale net of attorneys' fees, accountants'
fees, underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees
<PAGE>
15
actually incurred in connection with such issuance or sale and net of taxes paid
or payable as a result thereof.
"Note Guarantee" means any guarantee that may from time to time be executed
and delivered by a Subsidiary of the Company pursuant to Section 4.12. Each
such Note Guarantee shall be substantially in the form of Exhibit D hereto.
"Note Guarantor" means any Subsidiary that has issued a Note Guarantee.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary or the Controller of the Company.
"Officer's Certificate" means a certificate signed by one Officer.
"Opinion of Counsel" means a written opinion from
legal counsel who is acceptable to the Trustee. The counsel may be an employee
of or counsel to the Company or the Trustee.
"Permitted Employee Payments" means Restricted Payments by the Company or
any Restricted Subsidiary in respect of (i) the repurchase of Capital Stock of
the Company or any Restricted Subsidiary from an employee of the Company or any
Restricted Subsidiary or their assigns, estates or heirs upon the death,
retirement or termination of such employee or (ii) loans or advances to
employees of the Company or any Subsidiary made in the ordinary course of
business.
"Permitted Holders" means the Investors, their respective Affiliates and
any Person acting in the capacity of an underwriter in connection with a public
or private offering of the Company's Capital Stock.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in (i) a Restricted Subsidiary, the Company or a Person that will,
upon the making of such Investment, become a Restricted Subsidiary; provided,
--------
however, that the primary business of such Restricted Subsidiary is a Related
- --------
Business; (ii) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related Business;
- -------- --------
(iii) Temporary Cash Investments; (iv) receivables owing to the Company or any
Restricted Subsidiary, if created or
<PAGE>
16
acquired in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms; provided, however, that such trade terms
-------- -------
may include such concessionary trade terms as the Company or any such Restricted
Subsidiary deems reasonable under the circumstances; (v) payroll, travel and
similar advances to cover matters that are expected at the time of such advances
ultimately to be treated as expenses for accounting purposes and that are made
in the ordinary course of business; (vi) loans or advances to employees made in
the ordinary course of business of the Company or such Restricted Subsidiary;
(vii) stock, obligations or securities received in settlement of debts created
in the ordinary course of business and owing to the Company or any Restricted
Subsidiary or in satisfaction of judgments; and (viii) securities received as
consideration in sales of assets made in compliance with Section 4.06.
"Permitted Liens" means:
(i) Liens for taxes, assessments or other governmental charges not yet
delinquent or that are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Company or such Subsidiary, as the case may be, in accordance with
GAAP;
(ii) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business in
respect of obligations that are not yet due or that are bonded or that are being
contested in good faith and by appropriate proceedings if adequate reserves with
respect thereto are maintained on the books of the Company or such Subsidiary,
as the case may be, in accordance with GAAP;
(iii) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(iv) pledges or deposits to secure the performance of bids, tenders, trade
or government contracts (other than for borrowed money), leases, licenses,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;
(v) easements (including reciprocal easement agreements), rights-of-way,
building, zoning and similar restrictions, utility agreements, covenants,
reservations,
<PAGE>
17
restrictions, encroachments, changes, and other similar encumbrances or title
defects incurred, or leases or subleases granted to others, in the ordinary
course of business, which do not in the aggregate materially detract from the
aggregate value of the properties of the Company and its Subsidiaries, taken as
a whole or materially interfere with or adversely affect in any material respect
the ordinary conduct of the business of the Company and its Subsidiaries on the
properties subject thereto, taken as a whole;
(vi) Liens incurred in connection with the Securitization;
(vii) Liens existing on the date of this Indenture;
(viii) (A) mortgages, liens, security interests, restrictions, encumbrances
or any other matters of record that have been placed by any developer, landlord
or other third party on property over which the Company or any Restricted
Subsidiary of the Company has easement rights or on any leased property and
subordination or similar agreements relating thereto and (B) any condemnation or
eminent domain proceedings affecting any real property;
(ix) Liens securing Hedging Obligations incurred in compliance with
Section 4.03;
(x) Liens arising out of judgments or awards (other than any judgment
that is described in Section 6.01(9) and constitutes an Event of Default
thereunder) in respect of which the Company shall in good faith be prosecuting
an appeal or proceedings for review and in respect of which it shall have
secured a subsisting stay of execution pending such appeal or proceedings for
review, provided that the Company shall have set aside on its books adequate
reserves, in accordance with GAAP, with respect to such judgment or award;
(xi) leases or subleases to third parties;
(xii) Liens securing Indebtedness incurred in compliance with Section
4.03(b)(vi) or (b)(viii); and
(xiii) Liens securing commercial bank indebtedness.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or
<PAGE>
18
any agency or political subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security that is due or overdue or is to become
due at the relevant time.
"Public Equity Offering" means an underwritten primary public offering of
common stock of the Company pursuant to an effective registration statement
under the Securities Act.
"Public Market" means any time after (i) a Public Equity Offering has been
consummated and (ii) at least 15% of the total issued and outstanding common
stock of the Company has been distributed by means of an effective registration
statement under the Securities Act.
"Purchase Agreement" means the Agreement for the purchase of $175,000,000
principal amount of Senior Subordinated Notes of the Company between the Company
and the Initial Purchaser and dated November 20, 1996.
"Questor" means Questor Partners Fund, L.P., a Delaware limited
partnership, and Questor Side-by-Side Partners, L.P., a Delaware limited
partnership.
"Questor Management Company" means Questor Management Company, a Delaware
corporation.
"Redemption Date" means the date on which the Securities are optionally
redeemed pursuant to Section 3.07.
"Refinancing Indebtedness" means Indebtedness that is Incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any defeasance
or discharge mechanism) (collectively, "refinances," and "refinanced" shall have
a correlative meaning) any Indebtedness existing on the date of this Indenture
or Incurred in compliance with this Indenture (including Indebtedness of the
Company that refinances Indebtedness of any Restricted Subsidiary (to the
<PAGE>
19
extent permitted in this Indenture) and Indebtedness of any Restricted
Subsidiary that refinances Indebtedness of another Restricted Subsidiary)
including Indebtedness that refinances Refinancing Indebtedness; provided,
--------
however, that (i) the Refinancing Indebtedness has a Stated Maturity no earlier
- -------
than the Stated Maturity of the Indebtedness being refinanced, (ii) the
Refinancing Indebtedness has an Average Life at the time such Refinancing
Indebtedness is Incurred that is equal to or greater than the Average Life of
the Indebtedness being refinanced and (iii) such Refinancing Indebtedness is
Incurred in an aggregate principal amount (or if issued with original issue
discount, an aggregate issue price) that is equal to or less than the aggregate
principal amount (or if issued with original issue discount, the aggregate
accreted value) then outstanding of the Indebtedness being refinanced, plus
fees, underwriting discounts, premiums and other costs and expenses incurred in
connection with such Refinancing Indebtedness; provided further, however, that
-------- ------- ------
Refinancing Indebtedness shall not include (A) Indebtedness of a Restricted
Subsidiary that is not a Guarantor that refinances Indebtedness of the Company
or (B) Indebtedness of the Company or a Restricted Subsidiary that refinances
Indebtedness of an Unrestricted Subsidiary.
"Registered Exchange Offer" shall have the meaning set forth in the
Exchange and Registration Rights Agreement.
"Related Business" means those businesses in which the Company or any of
its Subsidiaries are engaged on the date of this Indenture, or are reasonably
related or incidental thereto.
"Representative" means the trustee, agent or representative (if any) for an
issue of Senior Indebtedness.
"Restricted Securities Legend" means the legend set forth in Section
2.06(g) hereof.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired by the Company or a Restricted Subsidiary whereby
the Company or such Restricted Subsidiary transfers such property to a Person
and the Company or such Restricted Subsidiary leases it from such Person, other
than leases between the Company and a Wholly Owned Subsidiary or between Wholly
Owned Subsidiaries.
<PAGE>
20
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.
"Securities Custodian" means the custodian with respect to the Global
Security (as appointed by the Depository), or any successor entity thereto and
shall initially be the Trustee.
"Securitization" means a financing or series of financings consisting
principally of an asset-backed program based on rental Vehicles owned by Leasco
(funded by the issuance of commercial paper, medium term notes or other forms of
borrowing and including credit enhancement facilities), and which may consist of
or include such other forms of financing consistent with the foregoing as the
Board of Directors shall approve in good faith.
"Senior Credit Agreement" means the credit agreement dated as of October
17, 1996, as amended, waived or otherwise modified, among the Company, the
several lenders party thereto, The Chase Manhattan Bank, N.A., as administrative
agent and Citibank, U.S.A., Inc., as documentation and collateral agent (except
to the extent that any such amendment, waiver or other modification thereto
would be prohibited by the terms of this Indenture, unless otherwise agreed to
by the Trustee).
"Senior Credit Documents" means the collective reference to the Senior
Credit Agreement, the notes issued pursuant thereto and the Guarantee Agreement,
the Security Agreement, the Indemnity, Subrogation and Contribution Agreement,
the Pledge Agreement (each as defined in the Senior Credit Agreement) and each
of the security agreements and other instruments and documents executed and
delivered pursuant to any of the foregoing or pursuant to Section 5.16 of the
Senior Credit Agreement.
"Senior Indebtedness" means the following obligations, whether outstanding
on the date of this Indenture or there after issued, without duplication: (i)
all obligations consisting of Bank Indebtedness; (ii) all obligations consisting
of the principal of and premium, if any, and accrued and unpaid interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company regardless of whether
postfiling interest is allowed in such proceeding) in respect of (A)
indebtedness of the Company for money borrowed and (B) indebtedness evidenced by
notes,
<PAGE>
21
debentures, bonds or other similar instruments for the payment of which
the Company is responsible or liable as obligor, guarantor or otherwise; (iii)
all Capitalized Lease Obligations of the Company; (iv) all obligations of the
Company (A) for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (B) under interest rate
swaps, caps, collars, options and similar arrangements and foreign currency
hedges entered into in respect of any obligations described in clauses (i), (ii)
and (iii) (such obligations to be equal at any time to the termination value of
such agreements or arrangements that would be payable by such Person at such
time) or (C) issued or assumed as the deferred purchase price of property and
all conditional sale obligations of the Company and all obligations of the
Company under any title retention agreement; (v) all obligations of other
Persons of the type referred to in clauses (ii), (iii) and (iv) and all
dividends of other Persons for the payment of which, in either case, the Company
is responsible or liable, directly or indirectly, as obligor, guarantor or
otherwise, including guarantees of such obligations and dividends; and (vi) all
obligations of the Company consisting of modifications, renewals, extensions,
replacements, refinancings and refundings of any obligations described in
clauses (i), (ii), (iii), (iv) and (v); unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are not superior in right of payment to the Securities;
provided, however, that Senior Indebtedness shall not include (1) any obligation
- ------------------
of the Company to any Subsidiary, (2) any liability for Federal, state, local or
other taxes owed or owing by the Company, (3) any accounts payable and accruals
or other liabilities (other than those specified above) arising in the ordinary
course of business (including Guarantees thereof or instruments evidencing such
liabilities), (4) any Indebtedness, Guarantee or obligation of the Company that
is subordinate or junior to any other Indebtedness, Guarantee or obligation of
the Company or (5) any Indebtedness that is incurred in violation of this
Indenture. If any Designated Senior Indebtedness is disallowed, avoided or
subordinated pursuant to the provisions of Section 548 of Title 11 of the United
States Code or any applicable state fraudulent conveyance law, such Designated
Senior Indebtedness nevertheless will constitute Senior Indebtedness. "Senior
Indebtedness" of any Note Guarantor has a correlative meaning.
"Senior Subordinated Indebtedness" means, prior to the Subordination
Termination Date, the Securities and any other Indebtedness of the Company that
specifically provides that
<PAGE>
22
such Indebtedness is to rank pari passu with the Securities and is not
subordinated by its terms to any Indebtedness or other obligation of the Company
that is not Senior Indebtedness.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"S&P" means Standard & Poor's Ratings Service, a division of The McGraw-
Hill Companies, Inc., and its successors.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the date of this Indenture or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement.
"Subordination Termination Date" means the first date (but not earlier than
January 1, 1998) as of which (i) the Securitization has been consummated, (ii)
any consents required under the Senior Credit Documents in connection with the
conversion contemplated by Section 10.18 shall have been obtained and (iii) no
default or event of default shall have occurred and be continuing under the
Senior Credit Documents.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person or (ii) one or more
Subsidiaries of such Person.
"Temporary Cash Investments" means any of the following: (i) any
investment in direct obligations (x) of
<PAGE>
23
the United States of America or any agency thereof or obligations Guaranteed by
the United States of America or any agency thereof or (y) of any foreign country
recognized by the United States of America rated at least "A" by S&P or "A-1" by
Moody's, (ii) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company that is organized under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States of America having capital and surplus
aggregating in excess of $250,000,0000 (or the foreign currency equivalent
thereof) and whose long-term debt is rated "A" by S&P or "A-1" by Moody's, (iii)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) or (ii) above entered into with
a bank meeting the qualifications described in clause (ii) above, (iv)
investments in commercial paper, maturing not more than 270 days after the date
of acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United States of America or any
foreign country recognized by the United States of America with a rating at the
time as of which any investment therein is made of "P-1" (or higher) according
to Moody's or "A-1" (or higher) according to S&P, (v) investments in securities
with maturities of six months or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least "A" by S&P or "A" by Moody's, (vi) any money market deposit accounts
issued or offered by a domestic commercial bank or a commercial bank organized
and located in a country recognized by the United States of America, in each
case, having capital and surplus in excess of $250,000,000 (or the foreign
currency equivalent thereof), or investments in money market funds complying
with the risk limiting conditions of Rule 2a-7 (or any successor rule) of the
SEC under the Investment Company Act of 1940, as amended, and (vii) similar
investments approved by the Board of Directors in the ordinary course of
business.
"Term Loans" means term loans made pursuant to the Senior Credit Agreement.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb)
------
as in effect on the date of this Indenture, except as provided in Section 9.03.
<PAGE>
24
"Trade Payables" means, with respect to any Person, any accounts payable or
any indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by such Person arising in the ordinary course of business in
connection with the acquisition of goods or services.
"Transfer Restricted Securities" means Securities that bear or are required
to bear the legend set forth in Section 2.06 hereof.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) which
has become publicly available at least two Business Days prior to the Redemption
Date (or, if such Statistical Release is no longer published, any publicly
available source or similar market data)) most nearly equal to the period from
the Redemption Date to the Stated Maturity; provided, however, that if the
-------- ---------
period from the Redemption Date to the Stated Maturity is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the Redemption Date to the Stated Maturity
is less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial Code as in
effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary of
<PAGE>
25
the Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of
its Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any other Subsidiary of the Company that
is not a Subsidiary of the Subsidiary to be so designated; provided, however,
-------- -------
that either (A) the Subsidiary to be so designated has total consolidated assets
of $1,000 or less or (B) if such Subsidiary has consolidated assets greater than
$1,000, then such designation would be permitted under Section 4.04. The Board
of Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided, however, that immediately after giving effect to such
-------- -------
designation (x) the Company could Incur at least $1.00 of additional
Indebtedness under Section 4.03(a) and (y) no Default shall have occurred and be
continuing. Any such designation of a Subsidiary as a Restricted Subsidiary or
Unrestricted Subsidiary by the Board of Directors shall be evidenced to the
Trustee by promptly filing with the Trustee a copy of the resolution of the
Board of Directors giving effect to such designation and an Officer's
Certificate certifying that such designation complied with the foregoing
provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Vehicles" shall mean any trucks or other vehicles owned by the Company or
any Subsidiary and registered and based in the United States of America, the
body (including the "box" or storage component thereto) and equipment mounted
thereon and all accessions, attachments, and accessories of any type or
description attached to such trucks or vehicles.
"Voting Stock" of an entity means all classes of Capital Stock of such
entity then outstanding and normally entitled to vote in the election of
directors or all interests in such entity with the ability to control the
management or actions of such entity.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the Company all
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Company or another Wholly Owned Subsidiary.
<PAGE>
26
SECTION 1.02. Other Definitions.
------------------
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Affiliate Transaction" ........................... 4.07
"Bankruptcy Law"................................... 6.01
"Blockage Notice".................................. 10.03
"covenant defeasance option"....................... 8.01(b)
"Custodian"........................................ 6.01
"Event of Default"................................. 6.01
"legal defeasance option".......................... 8.01(b)
"Legal Holiday".................................... 11.08
"Offer"............................................ 4.06
"Offer Amount"..................................... 4.06
"Offer Period"..................................... 4.06
"pay the Securities"............................... 10.03
"Paying Agent"..................................... 2.03
"Payment Blockage Period".......................... 10.03
"Purchase Date".................................... 4.06
"Registrar"........................................ 2.03
"Restricted Payment"............................... 4.04
"Securities Act"................................... 2.01
"Successor Company"................................ 5.01
</TABLE>
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
--------------------------------------------------
This Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
<PAGE>
27
SECTION 1.04. Rules of Construction. Unless the context otherwise
----------------------
requires:
(1) a term has the meaning assigned to it;
(2) as used herein, accounting terms relating to the Company and its
Subsidiaries not defined in Section 1.01, and accounting terms partly defined
in Section 1.01 to the extent not defined, shall have the respective meanings
given to them under GAAP. All computations determining compliance with
financial covenants or terms, including definitions used therein, shall be
prepared in accordance with generally accepted accounting principles in effect
at the time of preparation of, and in conformity with those used to prepare,
the historical financial statements set forth in the Offering Memorandum in
respect of the Initial Securities dated November 20, 1996. If at any time the
computations for determining compliance with financial covenants or provisions
relating thereto utilize generally accepted accounting principles different
than those in effect at the Issue Date, the financial statements within which
such computations are delivered shall be accompanied by a reconciliation
statement with respect to such computations;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or junior
to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be shown
on a balance sheet of the issuer dated such date prepared in accordance with
GAAP consistently applied and accretion of principal on such security shall be
deemed to be the Incurrence of Indebtedness; and
(8) the principal amount of any Preferred Stock shall be (i) the maximum
liquidation value of such Preferred Stock or (ii) the maximum mandatory
redemption or mandatory repurchase price with respect to such Preferred Stock,
whichever is greater.
<PAGE>
28
ARTICLE 2
The Securities
--------------
SECTION 2.01. Form and Dating. The Initial Securities and the
----------------
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Indenture. Any Exchange Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit B, which is
incorporated in and expressly made a part of this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
Each Security shall be dated the date of its authentication. The terms of the
Securities set forth in Exhibit A and B are part of the terms of this Indenture.
(a) Global Securities. The Initial Securities are being offered and
------------------
sold by the Company pursuant to the Purchase Agreement.
Initial Securities offered and sold to "qualified institutional
buyers" (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")) ("QIBs") in accordance with Rule 144A under the
Securities Act ("Rule 144A") as provided in the Purchase Agreement, shall be
issued initially in the form of a single, permanent Global Security in
definitive, fully registered form without interest coupons with the legend
called for by footnote 1 to Exhibit A hereto (the "Restricted Global Security"),
which shall be deposited on behalf of the Initial Purchaser of the Initial
Securities represented thereby with the Trustee, as Securities Custodian for the
Depository, and registered in the name of the Depository or a nominee of the
Depository, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Restricted Global
Security may from time to time be increased or decreased by adjustments made on
the records of the Trustee, as Securities Custodian, and the Depository or its
nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.01(b) shall apply only to
----------------------
Global Securities deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(b), authenticate and
<PAGE>
29
deliver initially one or more Global Securities that (i) shall be registered in
the name of the Depository for such Global Security or Global Securities or the
nominee of such Depository and (ii) shall be held by the Trustee as custodian
for the Depository. After the issuance of Exchange Securities under a Registered
Exchange Offer, the Trustee shall have no duty to hold any Global Security as
custodian for the Depository or any other Security registered in the name of the
Depository or a nominee of the Depository.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository or by the Trustee as the custodian of the
Depository or under such Global Security, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices of such Depository governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.
(c) Certificated Securities. Except as otherwise provided herein,
------------------------
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities. Purchasers of Initial
Securities who are not QIBs (referred to herein as the "Non-Global Purchasers")
will receive certificated Initial Securities bearing the Restricted Securities
Legend ("Restricted Certificated Securities"); provided, however, that upon
-------- -------
transfer of such Restricted Certificated Securities to a QIB or in accordance
with Regulation S, such Restricted Certificated Securities will, unless the
relevant Global Security has previously been exchanged, be exchanged for an
interest in a Global Security pursuant to the provisions of Section 2.06 hereof.
Certificated Securities will include the Restricted Securities Legend unless
removed in accordance with this Section 2.01(c) or Section 2.06(g) hereof.
After a transfer of any Initial Securities during the period of the
effectiveness of, and pursuant to, a Shelf Registration Statement with respect
to the Initial Securities, all requirements pertaining to legends on such
<PAGE>
30
Initial Securities will cease to apply, the requirements requiring that any such
Initial Securities issued to certain Holders be issued in global form will cease
to apply, and certificated Initial Securities without legends will be made
available to the Holders of such Initial Securities. Upon the consummation of a
Registered Exchange Offer with respect to the Initial Securities pursuant to
which Holders of Initial Securities are offered Exchange Securities in exchange
for their Initial Securities, all requirements pertaining to such Initial
Securities that Initial Securities issued to certain Holders be issued in global
form will cease to apply and certificated Initial Securities with the Restricted
Securities Legend will be available to Holders of such Initial Securities that
do not exchange their Initial Securities, and Exchange Securities in
certificated form will be available to Holders that exchange such Initial
Securities in such Registered Exchange Offer.
SECTION 2.02. Execution and Authentication. One Officer shall sign
-----------------------------
the Securities for the Company by manual or facsimile signature. The Company's
seal shall be impressed, affixed, imprinted or reproduced on the Securities
may be in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall
be valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and make available for delivery (1)
Initial Securities for original issue in an aggregate principal amount of
$175,000,000, and (2) Exchange Securities for issue only in a Registered
Exchange Offer, pursuant to the Exchange and Registration Rights Agreement, for
Initial Securities for a like principal amount of Initial Securities exchanged
pursuant thereto, in each case upon a written order of the Company signed by one
Officer. Such order shall specify the amount of the Securities to be
authenticated, the date on which the original issue of Securities is to be
authenticated and whether the Securities are to be Initial Securities or
Exchange Securities. The aggregate principal amount of Securities outstanding
at any time may not exceed $175,000,000 except as provided in Section 2.07.
<PAGE>
31
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Securities. Unless limited by the terms of
such appoint ment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication by
the Trustee includes authentication by such agent. An authenticating agent has
the same rights as any Registrar, Paying Agent or agent for service of notices
and demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall maintain
---------------------------
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange.
The Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the provi
sions of this Indenture that relate to such agent. The Company shall notify the
Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall
be entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its Wholly Owned Subsidiaries that is a Domestic Subsidiary
may act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Securities.
The Company initially appoints The Depository Trust Company to act as
Depository with respect to the Global Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to each due
------------------------------------
date of the principal and interest on any Security, the Company shall deposit
with the Paying Agent a sum sufficient to pay such principal and interest when
so becoming due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money held by the Paying Agent for
the payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in
<PAGE>
32
making any such payment. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed by the Paying
Agent. Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
---------------------
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. (a) Transfer and Exchange of
---------------------- ------------------------
Definitive Securities. When Definitive Securities are presented to the
- ----------------------
Registrar or a co-registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
- -------- -------
exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar
or co-registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) in the case of Transfer Restricted Securities that are Definitive
Securities, are being transferred or exchanged pursuant to an effective
registration statement under the Securities Act or pursuant to clause (A),
(B) or (C) below, and are accompanied by the following additional
information and documents, as applicable:
<PAGE>
33
(A) if such Transfer Restricted Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder, without
transfer, a certification from such Holder to that effect (in substantially
the form set forth on the reverse of the Security); or
(B) if such Transfer Restricted Securities are being transferred to the
Company or to a "qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) in accordance with Rule 144A under the Securities Act, a
certification to that effect (in substantially the form set forth on the
reverse of the Security); or
(C) if such Transfer Restricted Securities are being transferred (w)
pursuant to an exemption from registration in accordance with Rule 144 or
Regulation S under the Securities Act; or (x) to an institutional "accredited
investor" within the meaning of Rules 501(a)(1), (2), (3) and (7) under the
Securities Act that is acquiring the security for its own account, or for the
account of such an institutional accredited investor, with respect to which it
exercises sole discretion, in each case in a minimum principal amount of the
Securities of $250,000 for investment purposes and not with a view to, or for
offer or sale in connection with, any distribution in violation of the
Securities Act; or (y) in reliance on another exemption from the registration
requirements of the Securities Act: (i) a certification to that effect (in
substantially the form set forth on the reverse of the Security), (ii) if the
Company or Registrar so requests, an Opinion of Counsel reasonably acceptable
to the Company and to the Registrar to the effect that such transfer is in
compliance with the Securities Act and (iii) in the case of clause (x), a
signed letter substantially in the form of Exhibit C hereto.
(b) Restrictions on Transfer of a Definitive Security for a
-------------------------------------------------------
Beneficial Interest in a Global Security. A Definitive Security may not be
- -----------------------------------------
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer Restricted Security,
certification, substantially in the
<PAGE>
34
form set forth on the reverse of the Security, that such Definitive Security
is being transferred to a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) in accordance with Rule 144A under the
Securities Act; and
(ii) whether or not such Definitive Security is a Transfer Restricted
Security, written instructions directing the Trustee to make, or to direct the
Securities Custodian to make, an adjustment on its books and records with
respect to such Global Security to reflect an increase in the aggregate
principal amount of the Securities represented by the Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Company shall issue and the Trustee shall authenticate, upon written order of
the Company in the form of an Officer's Certificate, a new Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer and
-------------------------------------------
exchange of Global Securities or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depository therefor.
(d) Transfer of a Beneficial Interest in a Global Security for a
------------------------------------------------------------
Definitive Security.
- --------------------
(i) Any person having a beneficial interest in a Global Security that
is being transferred or exchanged pursuant to an effective registration
statement under the Securities Act or pursuant to clause (A),(B) or (C) below
may upon request, and if accompanied by the information specified below,
exchange such beneficial interest for a Definitive Security of the same
aggregate principal amount. Upon receipt by the Trustee of written
instructions or such other form of instructions as is customary for the
Depository from the Depository or its nominee on behalf of any Person having a
beneficial interest in a Global Security and upon receipt by the Trustee of a
written order or such other form of instructions as is customary for the
Depository or the
<PAGE>
35
Person designated by the Depository as having such a beneficial interest in a
Transfer Restricted Security only, the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the Person
designated by the Depository as being the owner of a beneficial interest in a
Global Security, a certification from such Person to that effect (in
substantially the form set forth on the reverse of the Security); or
(B) if such beneficial interest is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act, a certification to that
effect (in substantially the form set forth on the reverse of the Security);
or
(C) if such beneficial interest is being transferred (w) pursuant to an
exemption from registration in accordance with Rule 144 or Regulation S under
the Securities Act; or (x) to an institutional "accredited investor" within
the meaning of Rules 501(a)(1), (2), (3) and (7) under the Securities Act that
is acquiring the security for its own account, or for the account of such an
institutional accredited investor, with respect to which it exercises sole
discretion, in each case in a minimum principal amount of the Securities of
$250,000 for investment purposes and not with a view to, or for offer or sale
in connection with, any distribution in violation of the Securities; or (y) in
reliance on another exemption from the registration requirements of the
Securities Act: (i) a certification to that effect from the transferee or
transferor (in substantially the form set forth on the reverse of the
Security), (ii) if the Company or Registrar so requests, an Opinion of Counsel
from the transferee or transferor reasonably acceptable to the Company and to
the Registrar to the effect that such transfer is in compliance with the
Securities Act, and (iii) in the case of clause (x), a signed letter
substantially in the form of Exhibit C hereto,
then the Trustee or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depository and the Securities Custodian, the aggregate principal
amount of the Global Security to be reduced on
<PAGE>
36
its books and records and, following such reduction, the Company will execute
and the Trustee will authenticate and make available for delivery to the
transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.06(d) shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect participants
or otherwise, shall instruct the Trustee. The Trustee shall make such
Definitive Securities available for delivery to the persons in whose names
such Securities are so registered in accordance with the instructions of the
Depository.
(e) Restrictions on Transfer and Exchange of Global Securities.
-----------------------------------------------------------
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), a Global Security
may not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Securities in Absence of Depository.
-----------------------------------------------------------------
If at any time:
(i) the Depository for the Securities notifies the Company that the
Depository is unwilling or unable to continue as Depository for the Global
Securities and a successor Depository for the Global Securities is not
appointed by the Company within 90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Trustee in
writing that they elect to cause the issuance of Definitive Securities under
this Indenture,
then the Company will execute, and the Trustee, upon receipt of an Officer's
Certificate requesting the authentication and delivery of Definitive Securities
to the Persons designated by the Company, will authenticate and make available
for delivery Definitive Securities, in an aggregate principal amount equal to
the principal amount of Global Securities, in exchange for such Global
Securities.
(g) Legend.
-------
<PAGE>
37
(i) Except as permitted by the following paragraph (ii), each Security
certificate evidencing the Global Securities and the Definitive Securities (and
all Securities issued in exchange therefor or substitution thereof) shall bear a
legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, ON ITS OWN
BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED
SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, IN A TRANSACTION
COMPLYING WITH THE REQUIREMENTS OF RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF RULES 501(A)(1), (A)(2), (A)(3) AND (A)(7) UNDER THE SECURITIES
ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT
OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000 FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S OR THE TRUSTEE'S RIGHT PRIOR
<PAGE>
38
TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF ANY OF THE
FOREGOING CLAUSES (A)-(F), A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF
THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global Security)
pursuant to Rule 144 under the Securities Act or an effective registration
statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Security that
does not bear the legend set forth above and rescind any restriction on the
transfer of such Transfer Restricted Security; and
(B) any such Transfer Restricted Security represented by a Global
Security shall not be subject to the provisions set forth in clause (i) of
this Section 2.06(g) (such sales or transfers being subject only to the
provisions of Section 2.06(c) hereof); provided, however, that with respect
to any request for an exchange of a Transfer Restricted Security that is
represented by a Global Security for a Definitive Security that does not
bear a legend, which request is made in reliance upon Rule 144, the Holder
thereof shall certify in writing to the Registrar that such request is
being made pursuant to Rule 144 (such certification to be substantially in
the form set forth on the reverse of the Security).
(h) Cancellation and/or Adjustment of Global Security. At such time
-------------------------------------------------
as all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or canceled, such Global Security
shall be returned to the Depository for cancellation or retained and canceled by
the Trustee. At any time prior to such cancellation, if any beneficial interest
in a Global Security is exchanged for Definitive Securities, redeemed,
repurchased or canceled, the principal amount of Securities represented by such
Global Security
<PAGE>
39
shall be reduced and an adjustment shall be made on the books and records of the
Trustee (if it is then the Securities Custodian for such Global Security) with
respect to such Global Security, by the Trustee or the Securities Custodian, to
reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of Securities.
-----------------------------------------------------------------
(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Definitive Securities and Global
Securities at the Registrar's or co-registrar's request.
(ii) No service charge shall be made for any registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
transfer tax, assessments, or similar governmental charge payable in
connection therewith.
(iii) The Registrar or co-registrar shall not be required to register the
transfer of or exchange of (a) any Definitive Security selected for redemption
in whole or in part pursuant to Article 3, except the unredeemed portion of
any Definitive Security being redeemed in part, or (b) any Security for a
period beginning 15 Business Days before the mailing of a notice of an offer
to repurchase or redeem Securities or 15 Business Days before an interest
payment date.
(iv) Prior to the due presentation for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, the Registrar or any co-
registrar may deem and treat the person in whose name a Security is registered
as the absolute owner of such Security for the purpose of receiving payment of
principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Company,
the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange pursuant to the
terms of this Indenture shall evidence the same debt and shall be entitled to
the same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
(j) No Obligation of the Trustee. (i) The Trustee shall have no
-----------------------------
responsibility or obligation to any beneficial
<PAGE>
40
owner of a Global Security, a member of, or a participant in the Depository or
other Person with respect to the accuracy of the records of the Depository or
its nominee or of any participant or member thereof, with respect to any
ownership interest in the Securities or with respect to the delivery to any
participant, member, beneficial owner or other Person (other than the
Depository) of any notice (including any notice of redemption) or the payment of
any amount, under or with respect to such Securities. All notices and
communications to be given to the Holders and all payments to be made to Holders
under the Securities shall be given or made only to or upon the order of the
registered Holders (which shall be the Depository or its nominee in the case of
a Global Security). The rights of beneficial owners in any Global Security in
global form shall be exercised only through the Depository subject to the
applicable rules and procedures of the Depository. The Trustee may rely and
shall be fully protected in relying upon information furnished by the Depository
with respect to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including without limitation any
transfers between or among Depository participants, members or beneficial
owners in any Global Security) other than to require delivery of such
certificates and other documentation or evidence as are expressly required by,
and to do so if and when expressly required by, the terms of this Indenture,
and to examine the same to determine substantial compliance as to form with
the express requirements hereof.
SECTION 2.07. Replacement Securities. If a mutilated Security is
-----------------------
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i)
satisfies the Company or the Trustee, within a reasonable time after he has
notice thereof, with respect to such loss, destruction or wrongful taking and
the Registrar does not register a transfer prior to receiving such notification,
(ii) so requests the Company or the Trustee prior to the Security being acquired
by a bona fide purchaser and (iii) satisfies any other reasonable requirements
of the Trustee. Such Holder shall furnish an indemnity bond sufficient in the
judgment of the Trustee to
<PAGE>
41
protect the Company, the Trustee, the Paying Agent, the Registrar and any co-
registrar from any loss that any of them may suffer if a Security is replaced.
The Company and the Trustee may charge the Holder for their expenses in
replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. Outstanding Securities. Securities outstanding at any
-----------------------
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. A Security does not cease to be outstanding because
the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest payable on that date with respect to the Securities
(or portions thereof) to be redeemed or maturing, as the case may be, and the
Paying Agent is not prohibited from paying such money to the Securityholders on
that date pursuant to the terms of this Indenture, then on and after that date
such Securities (or portions thereof) cease to be outstanding and interest on
them ceases to accrue.
SECTION 2.09. Temporary Securities. Until definitive Securities are
---------------------
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
Definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate Definitive Securities and make
them available for delivery in exchange for temporary Securities.
SECTION 2.10. Cancellation. The Company at any time may deliver
-------------
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
deliver canceled Securities to the Company.
<PAGE>
42
The Company may not issue new Securities to replace Securities it has redeemed,
paid or delivered to the Trustee for cancellation. The Trustee shall not
authenticate Securities in place of canceled Securities other than pursuant to
the terms of this Indenture.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
-------------------
payment of interest on the Securities, the Company shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the persons who
are Securityholders on a subsequent special record date. The Company shall fix
or cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. The Company in issuing the Securities
--------------
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided, however, that any such notice may state that no representation is made
- -------- -------
as to the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Company will promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE 3
Redemption
----------
SECTION 3.01. Notices to Trustee. If the Company elects to redeem
-------------------
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Company shall give each notice to the Trustee provided for in this
Section at least 60 days before the redemption date unless the Trustee consents
to a shorter period. Such notice shall be accompanied by an Officer's
<PAGE>
43
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein. If fewer than all the
Securities are to be redeemed, the record date relating to such redemption shall
be selected by the Company and given to the Trustee, which record date shall be
not less than 15 days after the date of notice to the Trustee. Any such notice
may be canceled at any time prior to notice of such redemption being mailed to
any Holder and shall thereby be void and of no effect.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than
---------------------------------------
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed by lot or by a method that complies with applicable legal and
securities exchange requirements, if any, and that the Trustee considers fair
and appropriate and in accordance with methods generally used at the time of
selection by fiduciaries in similar circumstances. The Trustee shall make the
selection from outstanding Securities not previously called for redemption. The
Trustee may select for redemption portions of the principal of Securities that
have denominations larger than $1,000. Securities and portions of them the
Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Company promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not more
---------------------
than 60 days before a date for redemption of Securities, the Company shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
<PAGE>
44
(5) if fewer than all the outstanding Securities are to be redeemed,
the certificate numbers and principal amounts of the particular Securities
to be redeemed;
(6) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the terms of this Indenture, interest on Securities (or portion thereof)
called for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the Securities
called for redemption are being redeemed;
(8) the CUSIP number, if any, printed on the Securities being
redeemed; and
(9) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
-------------------------------
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest, if any, to the redemption
date; provided that if the redemption date is after a regular record date and on
--------
or prior to the interest payment date, the accrued interest shall be payable to
the Securityholder of the redeemed Securities registered on the relevant record
date. Failure to give notice or any defect in the notice to any Holder shall
not affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to 10:00 a.m. on
----------------------------
the redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued inter est on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Company to the
Trustee for cancellation.
<PAGE>
45
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
----------------------------
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security
surrendered.
SECTION 3.07. Optional Redemption. (a) Except as set forth in the
--------------------
next two paragraphs, the Securities may not be redeemed prior to December 1,
2001. On and after that date, the Company may redeem the Securities in whole at
any time or in part from time to time at the following redemption prices
(expressed in percentages of principal amount), plus accrued interest to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the related interest payment date):
if redeemed during the 12-month period beginning on or after December
1 of the years set forth below:
<TABLE>
<CAPTION>
Redemption
Period Price
- ------ ---------
<S> <C>
2001................................................... 105.000%
2002................................................... 103.333%
2003................................................... 101.667%
2004 and thereafter.................................... 100.000%
</TABLE>
(b) Notwithstanding the foregoing, at any time prior to December
1, 1999, the Company may redeem in the aggregate up to 33 1/3% of the original
aggregate principal amount of Securities with the proceeds of one or more Public
Equity Offerings by the Company following which there is a Public Market, at a
redemption price (expressed as a percentage of principal amount) of 110% plus
accrued interest to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date); provided, however, that at least 66 2/3% of the original
-------- -------
aggregate principal amount of the Securities must remain outstanding after each
such redemption.
(c) At any time on or prior to December 1, 2001, the Securities may
be redeemed as a whole at the option of the Company upon the occurrence of a
Change of Control, upon not fewer than 30 nor more than 60 days' prior notice
(but in no event more than 180 days after the occurrence of such Change of
Control) mailed by first-class mail to each Holder's registered address, at a
redemption price equal to 100% of
<PAGE>
46
the principal amount thereof plus the Applicable Premium as of, and accrued but
unpaid interest, if any, to, the Redemption Date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date).
ARTICLE 4
Covenants
---------
SECTION 4.01. Payment of Securities. The Company shall promptly pay
----------------------
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company may not
------------
be required to be or remain subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, the Company shall file (if then permitted to do
so) with the SEC and provide (whether or not so filed with the SEC) the Trustee
and Holders and prospective Holders (upon request) with the annual reports and
the information, documents and other reports, in each case without exhibits,
which are specified in Sections 13 and 15(d) of the Exchange Act; provided,
--------
however, that the Company shall provide one copy of the exhibits to the
- -------
foregoing to the Trustee and shall (upon request) provide additional copies of
such exhibits to any Holder or prospective Securityholder. The Company also
shall comply with the other provisions of TIA (S) 314(a). Delivery of such
reports, information and documents to the Trustee is for informational purposes
only and the Trustee's receipt of such shall not constitute constructive notice
of any information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officer's
Certificates).
<PAGE>
47
SECTION 4.03. Limitation on Indebtedness. (a) The Company shall
--------------------------
not, and shall not permit any Restricted Subsidiary to, Incur any Indebtedness;
provided, however, that the Company may Incur Indebtedness if on the date of the
Incurrence of such Indebtedness the Consolidated Coverage Ratio would be greater
than 2.75:1.00. Notwithstanding the foregoing, the Company shall not permit
any Subsidiary to issue, to any party other than the Company, any Preferred
Stock.
(b) Notwithstanding Section 4.03(a), the Company and its Restricted
Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness under the Term Loans included in the Senior Credit
Agreement (as the same may be amended from time to time, without increasing
the committed amount thereunder, except as otherwise permitted by this
Section) and any Refinancing Indebtedness of the Company with respect thereto
in an aggregate principal amount on the date of Incurrence that, when added to
all other Indebtedness Incurred pursuant to this clause (i) and then
outstanding, shall not exceed $350,000,000 less the aggregate amount of all
prepayments of principal applied to reduce the then outstanding Indebtedness
under the Term Loans actually made since the Issue Date;
(ii) Indebtedness of the Company consisting of revolving credit,
working capital or letter of credit facilities in an aggregate principal
amount at any time outstanding not in excess of $150,000,000 (less the
aggregate amount of all repayments of principal actually made thereunder since
the Issue Date with Net Available Cash from Asset Dispositions pursuant to
Section 4.06(a)(iii)(A));
(iii) the Securitization; provided, however, that the amount of
Indebtedness outstanding under clauses (i) and (ii) above and this clause
(iii) shall not in the aggregate exceed $465,000,000 at any one time
outstanding;
(iv) Indebtedness (A) of the Company to any Wholly Owned Restricted
Subsidiary or to any Note Guarantor and (B) of any Restricted Subsidiary to
the Company or any other Wholly Owned Restricted Subsidiary; provided,
however, that any subsequent issuance or transfer of any Capital Stock or any
other event that results in any such Wholly Owned Subsidiary ceasing to be a
Wholly Owned Subsidiary or any other subsequent transfer of any such
Indebtedness (except to the Company or a Wholly Owned Subsidiary) will
<PAGE>
48
be deemed, in each case, an Incurrence of Indebtedness by the Company or such
Restricted Subsidiary, as the case may be;
(v) Indebtedness represented by the Securities, any Indebtedness (other
than the Indebtedness described in clause (i), (ii), (iii) or (iv) above)
outstanding on the date of this Indenture and any Refinancing Indebtedness
Incurred in respect of any Indebtedness described in this clause (v) or
paragraph (a) of this Section 4.03;
(vi) Indebtedness of the Company or any Restricted Subsidiary for the
deferred purchase price of newly acquired property (other than Vehicles) of
the Company and its Subsidiaries used in the ordinary course of business of
the Company and its Subsidiaries (provided such purchase money financing is
entered into within 180 days of the acquisition of such property) in an amount
(based on the remaining balance of the obligations therefor on the books of
the Company and its Restricted Subsidiaries) which shall not exceed
$20,000,000 in the aggregate at any one time outstanding, when taken together
with any Indebtedness outstanding under clause (viii) below;
(vii) Indebtedness of the Company or any Restricted Subsidiary (which may
comprise Bank Indebtedness) in an aggregate principal amount at any one time
outstanding not in excess of $20,000,000;
(viii) Indebtedness of the Company or any Restricted Subsidiary in the form
of Capitalized Lease Obligations in an aggregate amount not in excess of
$20,000,000 at any one time outstanding, when taken together with the
principal amount of any Indebtedness outstanding under Section 4.03(b)(vi);
provided, however, that any indebtedness incurred by a Restricted Subsidiary
-------- -------
pursuant to clause (vi) or (vii) above or this clause (viii) must be secured
and all such Indebtedness shall not exceed $20,000,000 in aggregate principal
amount at any time outstanding;
(ix) Indebtedness represented by the Note Guarantees and Guarantees of
Indebtedness Incurred pursuant to clause (i) or (ii) above;
(x) Indebtedness under Hedging Obligations; provided, however, that such
Hedging Obligations are entered into for bona fide hedging purposes of the
Company or Leasco in the ordinary course of business; and
<PAGE>
49
(xi) Indebtedness of a Restricted Subsidiary issued and outstanding on
or prior to the date on which such Restricted Subsidiary was acquired by the
Company (other than Indebtedness Incurred (A) as consideration in, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Restricted Subsidiary or was
acquired by the Company or (B) otherwise in connection with, or in
contemplation of, such acquisition) and any Refinancing Indebtedness with
respect thereto; provided, however, that on the date of any such acquisition
of a Restricted Subsidiary, the Company shall have been able to Incur at least
an additional $1.00 of Indebtedness under paragraph (a) of this Section 4.03.
(c) Notwithstanding the foregoing, the Company will not Incur any
Indebtedness pursuant to Section 4.03(b) if the proceeds thereof are used,
directly or indirectly, to Refinance any Subordinated Obligations unless such
Indebtedness shall be subordinated to the Securities to at least the same extent
as such Subordinated Obligations.
(d) Notwithstanding any other provision of this Section 4.03, the
maximum amount of Indebtedness that the Company or any Restricted Subsidiary may
Incur pursuant to this Section shall not be deemed to be exceeded solely as a
result of fluctuations in the exchange rates of currencies. For purposes of
determining the outstanding principal amount of any particular Indebtedness
Incurred pursuant to this Section 4.03, (1) Indebtedness Incurred pursuant to
the Senior Credit Agreement prior to or on the date of this Indenture shall be
treated as Incurred pursuant to Section 4.03(b)(i) or (ii), as the case may be,
(2) Indebtedness permitted by this Section 4.03 need not be permitted solely by
reference to one provision permitting such Indebtedness but may be permitted in
part by one such provision and in part by one or more other provisions of this
Section permitting such Indebtedness and (3) in the event that Indebtedness or
any portion thereof meets the criteria of more than one of the types of
Indebtedness described in this Section, the Company, in its sole discretion,
shall classify such Indebtedness and only be required to include the amount of
such Indebtedness in one of such clauses.
SECTION 4.04. Limitation on Restricted Payments. (a) The Company
----------------------------------
shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on
<PAGE>
50
or in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company) except dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and except
dividends or distributions payable to the Company or any Wholly Owned Restricted
Subsidiary (provided that if such Restricted Subsidiary is not wholly owned, to
its other shareholders on a pro rata basis), (ii) purchase, redeem, retire or
otherwise acquire for value any Capital Stock of the Company or any Restricted
Subsidiary held by Persons other than the Company or another Restricted
Subsidiary, (iii) purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to scheduled maturity, scheduled repayment or scheduled
sinking fund payment, any Subordinated Obligations (other than the purchase,
repurchase or other acquisition of Subordinated Obligations purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of acquisition) or
(iv) make any Investment (other than a Permitted Investment) in any Person (any
such dividend, distribution, purchase, redemption, repurchase, defeasance, other
acquisition, retirement or Investment being herein referred to as a "Restricted
Payment") if at the time the Company or such Restricted Subsidiary makes such
Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Company could not Incur at least an additional $1.00 of
Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount so expended, if other than in cash, to be
determined in good faith by the Company's Board of Directors, whose
determination shall be conclusive and evidenced by a resolution of the
Company's Board of Directors) declared or made subsequent to the Issue Date
would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during the period (treated
as one accounting period) from the Issue Date to the end of the most recent
fiscal quarter ending at least 45 days prior to the date of such Restricted
Payment (or, in case such Consolidated Net Income shall be a deficit, minus
100% of such deficit);
(B) the aggregate Net Cash Proceeds received by the Company from the
issuance or sale of its Capital Stock
<PAGE>
51
(other than Disqualified Stock) subsequent to the Issue Date (other than an
issuance or sale to a Restricted Subsidiary of the Company and other than an
issuance or sale to an employee stock ownership plan or other trust
established by the Company or any of its Subsidiaries for the benefit of their
employees to the extent the purchase by such plan or trust is financed by
Indebtedness of such plan or trust and for which the Company is liable as
Guarantor or otherwise);
(C) the amount by which Indebtedness of the Company is reduced on the
Company's balance sheet upon the conversion or exchange (other than by a
Subsidiary of the Company) subsequent to the Issue Date, of any Indebtedness
of the Company or its Restricted Subsidiaries convertible or exchangeable for
Capital Stock (other than Disqualified Stock) of the Company (less the amount
of any cash, or other property (other than Capital Stock), distributed by the
Company upon such conversion or exchange); and
(D) an amount equal to the sum of (i) the net reduction in Investments in
Unrestricted Subsidiaries resulting from dividends, repayments of loans or
advances, in each case to the Company or any Restricted Subsidiary from
Unrestricted Subsidiaries, and (ii) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of an Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is designated a Restricted Subsidiary; provided, however, that the
-------- -------
foregoing sum shall not exceed, in the case of any Unrestricted Subsidiary,
the amount of Investments previously made by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary, which amount was treated as a
Restricted Payment.
(b) The provisions of paragraph (a) of this Section 4.04 shall not
prohibit:
(i) any purchase or redemption of Capital Stock of the Company or
Subordinated Obligations made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the Company (other than
Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary
or an employee stock ownership plan or other trust established by the Company
or any of its Subsidiaries); provided, however, that such purchase or
-------- -------
redemption shall be excluded in the calculation of the amount of Restricted
Payments;
<PAGE>
52
(ii) any purchase or redemption of Subordinated Obligations made by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Indebtedness of the Company that is permitted to be Incurred pursuant to
Section 4.03; provided, however, that such purchase or redemption shall be
-------- -------
excluded in the calculation of the amount of Restricted Payments;
(iii) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted by Section 4.06; provided, however,
-------- -------
that such purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied with
paragraph (a) of this Section 4.04; provided, however, that such dividend
-------- -------
shall be included in the calculation of the amount of Restricted Payments; or
(v) Permitted Employee Payments in an aggregate amount not in excess
of $5,000,000 in the aggregate at any time (giving effect to any repayments);
provided, however, that such payments shall be included in the calculation of
-------- -------
the amount of Restricted Payments.
SECTION 4.05. Limitation on Restrictions on Distributions from
------------------------------------------------
Restricted Subsidiaries. The Company shall not, and shall not permit any
- ------------------------
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock or pay any Indebtedness or other obligations owed to the
Company, (ii) make any loans or advances to the Company or (iii) transfer any of
its property or assets to the Company, except:
(1) any encumbrance or restriction pursuant to an agreement in effect
at or entered into on the date of this Indenture;
(2) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by
such Restricted Subsidiary prior to the date on which such Restricted
Subsidiary was acquired by the Company (other than Indebtedness Incurred as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the
<PAGE>
53
transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary or was acquired by the
Company) and outstanding on such date;
(3) any encumbrance or restriction pursuant to an agreement effecting
a Refinancing of Indebtedness Incurred pursuant to an agreement referred to
in clause (1) or (2) above or this clause (3) or contained in any amendment
to an agreement referred to in clause (1) or (2) above or this clause (3);
provided, however, that the encumbrances and restrictions contained in any
such refinancing agreement or amendment are no less restrictive taken as a
whole (as conclusively determined in good faith by the Company's Board of
Directors, whose determination shall be conclusive and evidenced by a
resolution of the Company's Board of Directors) than encumbrances and
restrictions contained in such agreements;
(4) in the case of clause (iii), any encumbrance or restriction (A)
that restricts in a customary manner the subletting, assignment or transfer
of any property or asset that is subject to a lease, license or similar
contract, (B) by virtue of any transfer of, agreement to transfer, option
or right with respect to, or Lien on, any property or assets of the Company
or any Restricted Subsidiary not otherwise prohibited by this Indenture or
(C) contained in security agreements securing Indebtedness of a Restricted
Subsidiary to the extent such encumbrance or restrictions restrict the
transfer of the property subject to such security agreements;
(5) any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all the Capital Stock or assets of such Restricted Subsidiary
pending the closing of such sale or disposition; and
(6) in the case of Leasco, restrictions created in connection with the
Securitization that, in the good faith determination of the Board of
Directors, are necessary to effect the Securitization.
SECTION 4.06. Limitation on Sales of Assets. (a) The Company shall
------------------------------
not, and shall not permit any Restricted Subsidiary to, make any Asset
Disposition unless (i) the Company or such Restricted Subsidiary receives
consideration (including by way of relief from, or by any other Person assuming
sole responsibility for, any liabilities, contingent or otherwise) at the time
of such Asset
<PAGE>
54
Disposition at least equal to the fair market value of the shares and assets
subject to such Asset Disposition, (ii) at least 85% of the consideration
thereof received by the Company or such Restricted Subsidiary is in the form of
cash and (iii) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted Subsidiary, as the
case may be) (A) first, to the extent the Company elects (or is required by the
-----
terms of any Senior Indebtedness or Indebtedness (other than Preferred Stock) of
a Wholly Owned Subsidiary), to prepay, repay or purchase Senior Indebtedness or
such Indebtedness (other than Preferred Stock) (including the Securities after
the Subordination Termination Date) of a Wholly Owned Subsidiary (in each case
other than Indebtedness owed to the Company or an Affiliate of the Company)
within six months after the later of the date of such Asset Disposition or the
receipt of such Net Available Cash; (B) second, to the extent of the balance of
------
Net Available Cash after application in accordance with clause (A), to the
extent the Company or such Restricted Subsidiary elects, to reinvest in
Additional Assets (including by means of an Investment in Additional Assets by a
Restricted Subsidiary) with Net Available Cash received by the Company or
another Restricted Subsidiary within one year from the later of the date of such
Asset Disposition or the receipt of such Net Available Cash; (C) third, to the
-----
extent of the balance of such Net Available Cash after application in accordance
with clauses (A) and (B), to make an Offer to purchase Securities pursuant and
subject to the conditions of Section 4.06(b) and (D) fourth, to the extent of
------
the balance of such Net Available Cash after application in accordance with
clauses (A), (B) and (C) above, to fund (to the extent consistent with any other
applicable provision of the Indenture) any corporate purpose; provided, however,
-------- -------
that in connection with any prepayment, repayment or purchase of Indebtedness
pursuant to clause (A) or (C) above, the Company or such Restricted Subsidiary
shall retire such Indebtedness and shall cause the related loan commitment (if
any) to be permanently reduced in an amount equal to the principal amount so
prepaid, repaid or purchased. Notwithstanding the foregoing provisions, the
Company and the Restricted Subsidiaries shall not be required to apply any Net
Avail able Cash in accordance with this Section 4.06 except to the extent that
the aggregate Net Available Cash from all Asset Dispositions that is not applied
in accordance with this Section 4.06 exceeds $5,000,000.
For the purposes of this Section 4.06, the following are deemed to be
cash: (x) the assumption of Indebtedness of the Company (other than
Disqualified Stock of the Com
<PAGE>
55
pany) or any Restricted Subsidiary and the release of the Company or such
Restricted Subsidiary from all liability on such Indebtedness in connection with
such Asset Disposition and (y) securities received by the Company or any
Restricted Subsidiary from the transferee that are promptly converted by the
Company or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase
of Securities pursuant to Section 4.06(a)(iii)(A) or (a)(iii)(C), the Company
shall be required to purchase Securities tendered pursuant to an offer by the
Company for the Securities (the "Offer") at a purchase price of 100% of their
principal amount plus accrued and unpaid interest to the Purchase Date in
accordance with the procedures (including prorating in the event of
oversubscription) set forth in Section 4.06(c). If the aggregate purchase price
of the Securities tendered pursuant to the Offer is less than the Net Available
Cash allotted to the purchase of the Securities, the remaining Net Available
Cash shall be available to the Company for use in accordance with Section
4.06(a)(iii)(D) above. The Company shall not be required to make an Offer for
Securities pursuant to this Section if the Net Available Cash available therefor
(after application of the proceeds as provided in Section 4.06(a)(iii)(A) and
(a)(iii)(B)) is less than $5,000,000 for any particular Asset Disposition (which
lesser amounts shall be carried forward for purposes of determining whether an
Offer is required with respect to the Net Available Cash from any subsequent
Asset Disposition).
(c) (1) Promptly, and in any event within 10 days after the Company
becomes obligated to make an Offer, the Company shall be obligated to deliver to
the Trustee and send, by first-class mail to each Holder, a written notice
stating that the Holder may elect to have his Securities purchased by the
Company either in whole or in part (subject to prorationing as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain such information
concerning the business of the Company which the Company in good faith believes
will enable such Holders to make an informed decision (which at a minimum shall
include (i) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of the Company, the most recent
subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form
8-K of the Company filed
<PAGE>
56
subsequent to such Quarterly Report, other than Current Reports describing Asset
Dispositions otherwise described in the offering materials (or corresponding
successor reports), (ii) a description of material developments in the Company's
business subsequent to the date of the latest of such Reports, and (iii) if
material, appropriate pro forma financial information) and all instructions and
materials necessary to tender Securities pursuant to the Offer, together with
the address referred to in clause (3) below.
(2) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided above, the Company shall deliver to the
Trustee an Officer's Certificate as to (i) the amount of the Offer (the "Offer
Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.06(a). On such date, the
Company shall also irrevocably deposit with the Trustee or with a Paying Agent
(or, if the Company is acting as its own paying agent, segregate and hold in
trust) an amount equal to the Offer Amount to be invested in Temporary Cash
Investments and to be held for payment in accordance with the provisions of this
Section. Upon the expiration of the period for which the Offer remains open (the
"Offer Period"), the Company shall deliver to the Trustee for cancellation the
Securities or portions thereof which have been properly tendered to and are to
be accepted by the Company. The Trustee (or the Paying Agent, if not the
Trustee) shall, on the Purchase Date, mail or deliver payment to each tendering
Holder in the amount of the purchase price. In the event that the aggregate
purchase price of the Securities delivered by the Company to the Trustee is less
than the Offer Amount, the Trustee shall deliver the excess to the Company
immediately after the expiration of the Offer Period for application in
accordance with this Section.
(3) Holders electing to have a Security purchased shall be required to
surrender the Security, with an appropriate form duly completed, to the Company
at the address specified in the notice at least three Business Days prior to the
Purchase Date. Holders shall be entitled to withdraw their election if the
Trustee or the Company receives not later than one Business Day prior to the
Purchase Date, a facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security which was delivered by the Holder
for purchase and a statement that such Holder is withdrawing his election to
have such Security purchased. If at the expiration of the Offer Period the
aggregate principal amount of Securities
<PAGE>
57
surrendered by Holders exceeds the Offer Amount, the Company shall select the
Securities to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Securities in denominations of
$1,000, or integral multiples thereof, shall be purchased). Holders whose
Securities are purchased only in part will be issued new Securities equal in
principal amount to the unpurchased portion of the Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee which
are to be accepted for purchase, the Company shall also deliver an Officer's
Certificate stating that such Securities are to be accepted by the Company
pursuant to and in accordance with the terms of this Section. A Security shall
be deemed to have been accepted for purchase at the time the Trustee, directly
or through an agent, mails or delivers payment therefor to the surrendering
Holder.
(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.07. Limitation on Transactions with Affiliates. (a) The
-------------------------------------------
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, enter into or conduct any transaction or series of transactions
(including the purchase, sale, lease or exchange of any property or the
rendering of any service but excluding rentals of Vehicles (and related
ancillary services) in the ordinary course of business at then prevailing rates)
with any Affiliate of the Company (an "Affiliate Transaction") on terms (i) that
are less favorable to the Company or such Restricted Subsidiary, as the case may
be, than those that could be obtained at the time of such transaction in arm's-
length dealings with a Person who is not such an Affiliate and (ii) that, in the
event such Affiliate Transaction involves an aggregate amount in excess of
$2,500,000, are not in writing and have not been approved by a majority of the
members of the Board of Directors having no personal stake in such Affiliate
Transaction. In addition, any transaction (excluding rentals of Vehicles (and
related ancillary services) in the ordinary course of business at then
prevailing rates) involving
<PAGE>
58
aggregate payments or other transfers by the Company and its Restricted
Subsidiaries in excess of $7,500,000 shall also require an opinion from an
independent investment banking firm or appraiser of national prominence, as
appropriate, to the effect that the terms of such transaction are either (i) no
less favorable to the Company or such Restricted Subsidiary, as the case may be,
than those that could be obtained at the time of such transaction in arm's
length dealings with a Person who is not an Affiliate, or (ii) fair to the
Company or such Restricted Subsidiary, as the case may be, from a financial
point of view.
(b) The provisions of paragraph (a) of this Section 4.07 shall not
prohibit (i) any Restricted Payment permitted to be paid pursuant to Section
4.04, (ii) the performance of the Company's or a Subsidiary's obligations under
any employment contract, collective bargaining agreement, employee benefit
plan, related trust agreement or any other similar arrangement heretofore or
hereafter entered into in the ordinary course of business, (iii) payment of
compensation to employees, officers or directors in the ordinary course of
business, (iv) maintenance in the ordinary course of business of benefit
programs or arrangements for employees, officers or directors, including
vacation plans, health and life insurance plans, deferred compensation plans,
and retirement or savings plans and similar plans, (v) any transaction between
the Company and a Wholly Owned Subsidiary or between Wholly Owned Subsidiaries,
(vi) payment of management fees to Questor Management Company pursuant to the
terms of the Management Agreement in an aggregate amount of up to $850,000 in
any 12 month period unless (x) a Default or Event of Default shall have occurred
and be continuing or would result therefrom in which event no more than 50% of
such aggregate amount may be paid to Questor Management Company in any such
period or (y) a Change of Control shall have occurred, in which case no such
amount may be paid to Questor Management Company or (vii) fees paid in respect
of the letter agreement between the Company and Jay Alix & Associates, Inc.
dated as of October 15, 1996, as in effect on and as of the date of this
Indenture, without giving effect to any subsequent downward adjustment to the
1997 and 1998 EBITDA levels set forth therein.
SECTION 4.08. Change of Control. (a) Upon the occurrence of a Change
------------------
of Control, each Securityholder shall have the right to require the Company to
repurchase all or any part of such Holder's Securities at a purchase price in
cash equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of
<PAGE>
59
repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date), provided,
--------
however, that notwith standing the occurrence of a Change of Control, the
- -------
Company shall not be obligated to purchase the Securities pursuant to this
Section 4.08 in the event that it has exercised its right to redeem all the
Securities under Section 3.07 hereof.
In the event that at the time of such Change of Control the terms of
the Bank Indebtedness restrict or prohibit the repurchase of Securities pursuant
to this Section, then prior to the mailing of the notice to Holders provided for
in Section 4.08(b) below but in any event within 30 days following any Change of
Control, the Company shall (i) repay in full all Bank Indebtedness or offer to
repay in full all Bank Indebtedness and repay the Bank Indebtedness of each
lender who has accepted such offer or (ii) obtain the requisite consent under
the agreements governing the Bank Indebtedness to permit the repurchase of the
Securities as provided for in Section 4.08(b) below.
(b) Within 30 days following any Change of Control (except as provided
in the proviso to the first sentence of Section 4.08(a)), the Company shall mail
a notice to each Holder with a copy to the Trustee stating: (1) that a Change
of Control has occurred and that such Holder has the right to require the
Company to purchase such Holder's Securities at a purchase price in cash equal
to 101% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the date of purchase (subject to the right of Holders of record on a
record date to receive interest on the relevant interest payment date); (2) the
circumstances and relevant facts and financial information regarding such Change
of Control; (3) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and (4) the
instructions determined by the Company, consistent with this Section, that a
Holder must follow in order to have its Securities purchased.
(c) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appro priate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders shall be entitled to withdraw their
election if the Trustee or the Company receives not later than one Business Day
prior to the purchase date a facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Security which was delivered for
purchase by the Holder and a statement that
<PAGE>
60
such Holder is withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the Company
under this Section shall be delivered to the Trustee for cancellation, and the
Company shall pay the purchase price plus accrued and unpaid interest, if any,
to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.09. Compliance Certificate; Notice of Default. The Company
------------------------------------------
shall deliver to the Trustee within 120 days after the end of each fiscal year
of the Company an Officer's Certificate signed by the principal executive,
principal financial or principal accounting officer of the Company complying
with Section 314(a)(4) of the TIA and stating that a review of its activities
and the activities of its Subsidiaries during the preceding fiscal year has been
made under the supervision of the signing Officer with a view to determining
whether the Company has kept, observed, performed and fulfilled its obligations
under this Indenture and further stating, as to each Officer signing such
certificate, whether or not the signer knows of any failure by the Company or
any Subsidiary of the Company to comply with any conditions or covenants in this
Indenture, and, if such signer does know of such a failure to comply, the
certificate shall describe such failure with particularity and describe what
actions, if any, the Company proposes to take with respect to such failure. The
Company shall file with the Trustee written notice of the occurrence of any
Default or Event of Default within five Business Days of its becoming aware of
any such Default or Event of Default.
SECTION 4.10. Further Instruments and Acts. Upon request of the
-----------------------------
Trustee, the Company shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
<PAGE>
61
SECTION 4.11. Limitation on Liens. The Company shall not, and shall
--------------------
not permit any Restricted Subsidiary to, directly or indirectly, create or
permit to exist any Lien (other than Permitted Liens) on any of its property or
assets (including Capital Stock), whether owned on the date of this Indenture or
thereafter acquired, securing any Indebtedness, unless contemporaneously
therewith effective provision is made to secure the obligations due under this
Indenture and the Securities and, in respect of Liens on any Restricted
Subsidiary's property or assets, the Guarantee of such Restricted Subsidiary
equally and ratably with (subject to the subordination provisions of the
Securities prior to the Subordination Termination Date, or on a senior basis to,
in the case of Indebtedness subordinated in right of payment to the Securities
and such Guarantee) such obligation for so long as such obligation is so
secured; provided, however, that prior to the Subordination Termination Date, no
-------- -------
such equal and ratable security need be provided if the Indebtedness secured is
Senior Indebtedness of the Company.
SECTION 4.12. Future Note Guarantors. The Company shall cause each
-----------------------
Domestic Subsidiary other than Leasco (unless Leasco is a Guarantor under the
Senior Credit Agreement) that Incurs Indebtedness or is a guarantor of
Indebtedness Incurred pursuant to Section 4.03(b)(i) or (b)(ii) to execute and
deliver to the Trustee a Note Guarantee pursuant to which such Subsidiary shall
Guarantee payment of the Securities on the terms and conditions set forth in
this Indenture; provided, however, that there will be no such Note Guarantees
-------- -------
from the Existing Subsidiaries, unless (i) Leasco is or becomes a Guarantor
under the Senior Credit Agreement, in which case all Existing Subsidiaries will
become Note Guarantors, or (ii) any of the Existing Subsidiaries, other than
Leasco, and any subsequently acquired or organized Domestic Subsidiary (other
than any subsidiary of Leasco) or, to the extent that no adverse tax
consequences would result, Foreign Subsidiary becomes a Significant Subsidiary,
in which case each such Subsidiary in this clause (ii) that becomes a
Significant Subsidiary shall become a Note Guarantor.
SECTION 4.13. Limitation on Lines of Business. The Company shall
--------------------------------
not, and shall not permit any Restricted Subsidiary to, engage in any business,
other than a Related Business.
SECTION 4.14. Limitation on the Sale or Issuance of Capital Stock of
------------------------------------------------------
Restricted Subsidiaries. The Company shall not sell any shares of Capital Stock
- ------------------------
of a Restricted Subsidiary, and shall not permit any Restricted Subsidiary,
<PAGE>
62
directly or indirectly, to issue or sell any shares of its Capital Stock except:
(i) to the Company or a Wholly Owned Subsidiary; or (ii) if, immediately after
giving effect to such issuance or sale, such Restricted Subsidiary would no
longer constitute a Restricted Subsidiary. Notwithstanding the foregoing, the
Company is permitted to sell all the Capital Stock of a Subsidiary as long as
the Company is in compliance with Section 4.06.
ARTICLE 5
Successor Company
-----------------
SECTION 5.01. When Company May Merge or Transfer Assets. The Company
------------------------------------------
shall not consolidate with or merge with or into, or convey, transfer or lease
all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor Company")
shall be a corporation organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia and the
Successor Company (if not the Company) shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the
Securities and this Indenture;
(ii) immediately after giving effect to such transaction (and treating any
Indebtedness which becomes an obligation of the Successor Company or any
Restricted Subsidiary as a result of such transaction as having been Incurred
by the Successor Company or such Restricted Subsidiary at the time of such
transaction), no Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction, the Successor
Company would be able to incur an additional $1.00 of Indebtedness under
Section 4.03(a);
(iv) immediately after giving effect to such transaction, the Successor
Company shall have Consolidated Net Worth in an amount which is not less than
the Consolidated Net Worth of the Company immediately prior to such
transaction; and
(v) the Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and
<PAGE>
63
such supplemental indenture (if any) comply with this Indenture.
The Successor Company shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture, but the
predecessor Company in the case of a conveyance, transfer or lease of all or
substantially all its assets shall not be released from the obligation to pay
the principal of and interest on the Securities.
Notwithstanding the foregoing clauses (ii), (iii) and (iv), (1) any
Restricted Subsidiary may consolidate with, merge into or transfer all or part
of its properties and assets to the Company and (2) the Company may merge with
an Affiliate incorporated for the purpose of reincorporating the Company in
another jurisdiction to realize tax or other benefits.
ARTICLE 6
Defaults and Remedies
---------------------
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
------------------
(1) the Company defaults in any payment of interest on any Security when
the same becomes due and payable, whether or not such payment shall be
prohibited by Article 10, and such default continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of any Security
when the same becomes due and payable at its Stated Maturity, upon optional
redemption, upon required repurchase (including those pursuant to Sections
4.06 and 4.08), upon declaration or otherwise, whether or not such payment
shall be prohibited by Article 10;
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05, 4.06,
4.07, 4.08, 4.11, 4.12, 4.13 or 4.14 (other than a failure to purchase
Securities when required under Section 4.06 or 4.08) and such failure
continues for 30 days after the notice specified below;
<PAGE>
64
(5) the Company fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in (1), (2), (3) or
(4) above) and such failure continues for 60 days after the notice specified
below;
(6) Indebtedness of the Company or any Significant Subsidiary is not paid
within any applicable grace period after final maturity or the acceleration by
the holders thereof because of a default and the total amount of such
Indebtedness unpaid or accelerated exceeds $10,000,000 or its foreign currency
equivalent at the time;
(7) the Company or any Significant Subsidiary pursuant to or within the
meaning of any Bankruptcy Law (as defined below):
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property;
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to insolvency;
(8) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(A) is for relief against the Company or any Significant Subsidiary in
an involuntary case;
(B) appoints a Custodian of the Company or any Significant Subsidiary
or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess of
$10,000,000 or its foreign currency equivalent
<PAGE>
65
at the time is entered against the Company or any Significant Subsidiary and
either (A) an enforcement proceeding has been commenced by any creditor upon
such judgment or decree or (B) there is a period of 60 days following the
entry of such judgment or decree during which such judgment or decree is not
discharged, waived or the execution thereof stayed;
(10) any Note Guarantee by a Guarantor which is a Significant
Subsidiary shall cease to be in full force and effect (except as contemplated
by the terms thereof) or any such Note Guarantor or person acting by or on
behalf of such Guarantor shall deny or disaffirm its obligations under this
Indenture or any Note Guarantee and such Default continues for 10 days after
the notice specified below; or
(11) any Note Guarantor fails to comply with its obligations under the
Note Guarantee to which such Note Guarantor is a party, and such failure
continues after any applicable grace period.
The foregoing shall constitute Events of Default what-ever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
------------------
similar federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar
official under any Bankruptcy Law.
A Default under clause (4) or (5) is not an Event of Default until the
Trustee or the Holders of at least 25% in principal amount of the Securities
notify the Company of the Default and the Company does not cure such Default
within the time specified after receipt of such notice. Such notice must
specify the Default, demand that it be remedied and state that such notice is
a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officer's Certificate of
any Event of Default under clause (6) and any event which with the giving of
notice or the lapse of time would become an Event of Default under clause (4),
(5) or (9), its status and what action the Company is taking or proposes to
take with respect thereto.
<PAGE>
66
SECTION 6.02. Acceleration. If an Event of Default (other than an
-------------
Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least a majority in principal amount of the Securities by notice
to the Company and the Trustee, may declare the principal of and accrued but
unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.01(7) or (8) with respect to the
Company occurs, the principal of and interest on all the Securities shall ipso
----
facto become and be immediately due and payable without any declaration or other
- -----
act on the part of the Trustee or any Securityholders. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
---------------
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
------------------------
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Security or (ii) a Default in respect of a
provision that under Section 9.02 cannot be amended without the consent of each
Securityholder affected. When a Default is waived, it is deemed cured, but no
such waiver shall extend to any subsequent or other Default or impair any
consequent right.
<PAGE>
67
SECTION 6.05. Control by Majority. The Holders of a majority in
--------------------
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
-------- -------
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. A Securityholder may not pursue
--------------------
any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the Securities
make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security or
indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities do
not give the Trustee a direction inconsistent with the request during such
60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding
-------------------------------------
any other provision of this Indenture, the right of any Holder to receive
payment of principal of and interest on the Securities held by such Holder, on
or after the respective due dates expressed in the Securities, or to bring suit
for the enforcement of any such payment on or
<PAGE>
68
after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
---------------------------
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
---------------------------------
such proofs of claim and other papers or documents and take such other actions,
including participating as a member, voting or otherwise, of any committee of
creditors appointed in the matter, as may be necessary or advisable in order to
have the claims of the Trustee and the Securityholders allowed in any judicial
proceedings relative to the Company, any Subsidiary or Note Guarantor, their
creditors or their property and, unless prohibited by law or applicable
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other Person performing similar functions, and any Custodian in
any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
-----------
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness to the extent required by
Article 10;
THIRD: to Securityholders for amounts due and unpaid on the Securities
for principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal and
interest, respectively; and
FOURTH: to the Company.
<PAGE>
69
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date, the Trustee shall mail to each Securityholder and the Company a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
----------------------
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Company, a suit by the Trustee, a suit by a Holder pursuant to
Section 6.07 or a suit by Holders of more than 10% in principal amount of the
Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company (to the
---------------------------------
extent it may lawfully do so) shall not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE 7
Trustee
-------
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
------------------
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
<PAGE>
70
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, in the
case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall
examine the certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur
<PAGE>
71
financial liability in the performance of any of its duties hereunder or in
the exercise of any of its rights or powers, if it shall have reasonable
grounds to believe that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. Subject to Section 7.01: (a) The
------------------
Trustee may rely on any document believed by it to be genuine and to have been
signed or presented by the proper person. The Trustee need not investigate any
fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officer's Certificate or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
the Officer's Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights
or powers; provided, however, that the Trustee's conduct does not constitute
-------- -------
wilful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered
by it hereunder in good faith and in accordance with the advice or opinion of
such counsel.
(f) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, debenture,
note or other paper or document unless requested in writing to do so by the
Holders of not less than a majority in principal amount of the Securities at
the time outstanding, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or
<PAGE>
72
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney,
during reasonable business hours and subject to executing a confidentiality
undertaking in customary form with respect to confidential and/or proprietary
information of the Company; provided, however,that if the payment within a
-------- -------
reasonable time to the Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is, in the opinion of
the Trustee, not reasonably assured to the Trustee by the security afforded to
it by the terms of this Indenture, the Trustee may require reasonable
indemnity against such expense or liability as a condition to so proceeding.
(g) The Trustee shall not be deemed to have knowledge of any default
or fact the occurrence of which requires the Trustee to take any action (other
than a payment default hereunder) unless a Trust Officer actually knows of
such default or fact.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
-----------------------------
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-
registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
---------------------
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement of the Company in this Indenture or in any
document issued in connection with the sale of the Securities or in the
Securities other than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
-------------------
continuing and if it is known to a Trust Officer of the Trustee, the Trustee
shall mail to each Securityholder notice of the Default within 90 days after
it occurs. Except in the case of a Default in payment of principal of or
interest on any Security (including payments pursuant to the mandatory
redemption provisions of such Security, if any), the Trustee may withhold the
notice if and so long as a committee of its Trust Officers in good
<PAGE>
73
faith determines that withholding the notice is in the interests of
Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
------------------------------
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, but only upon the occurrence within the previous 12 months of
any events specified in TIA (S) 313(a), the Trustee shall mail to each
Securityholder a brief report dated as of May 15 that complies with TIA (S)
313(b).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall pay to
---------------------------
the Trustee, Paying Agent and Registrar from time to time such compensation as
shall be agreed in writing between the Company and the Trustee for its
services. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred or
made by it, including costs of collection, in addition to the compensation for
its services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts. The Company shall indemnify the Trustee, Paying
Agent, Registrar, and each of their officers, directors, agents and employees
(each in their respective capacities), for and hold each of them harmless
against any and all loss, demand, claim, liability or expense (including
attorneys' fees and expenses) incurred by them without negligence or bad faith
on their part in connection with the acceptance or administration of this
trust and the performance of their duties hereunder. The Trustee, Paying Agent
and Registrar shall notify the Company of any claim for which they may seek
indemnity promptly upon obtaining actual knowledge thereof; provided that any
--------
failure so to notify the Company shall not relieve the Company of its
indemnity obligations hereunder except to the extent the Company shall have
been adversely affected thereby. The Company shall defend the claim and the
indemnified party shall provide reasonable cooperation at the Company's
expense in the defense. Such indemnified parties may have separate counsel and
the Company shall pay the fees and expenses of such counsel; provided that the
--------
Company shall not be required to pay such
<PAGE>
74
fees and expenses if it assumes such indemnified parties' defense and, in such
indemnified parties' reasonable judgment, there is no conflict of interest
between the Company and such parties in connection with such defense. The
Company need not pay for any settlement made without its written consent. The
Company need not reimburse any expense or indemnify against any loss,
liability or expense incurred by an indemnified party through such party's own
wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section shall
survive the discharge of this Indenture. When the Trustee, Paying Agent or
Registrar incurs expenses after the occurrence of a Default specified in
Section 6.01(7) or (8) with respect to the Company, the expenses are intended
to constitute expenses of administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any
-----------------------
time by so notifying the Company in writing. The Holders of a majority in
principal amount of the Securities may remove the Trustee by so notifying the
Company and the Trustee and may appoint a successor Trustee with the consent
of the Company, which shall not be unreasonably withheld. The Company shall
remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of
a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
<PAGE>
75
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, subject to the
lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
----------------------------
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of
the successor to the Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Securities or in this
Indenture provided that the certificate of the Trustee shall have.
<PAGE>
76
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
------------------------------
all times satisfy the requirements of TIA (S) 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
(S) 310(b); provided, however, that there shall be excluded from the operation
-------- -------
of TIA (S) 310(b)(1) any indenture or indentures under which other securities
or certificates of interest or participation in other securities of the
Company are out standing if the requirements for such exclusion set forth in
TIA (S) 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company. The
--------------------------------------------------
Trustee shall comply with TIA (S) 311(a), excluding any creditor relationship
listed in TIA (S) 311(b). A Trustee who has resigned or been removed shall be
subject to TIA (S) 311(a) to the extent indicated.
ARTICLE 8
Discharge of Indenture; Defeasance
----------------------------------
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a)
-------------------------------------------------
When (i) the Company delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.07) for cancellation or (ii)
all outstanding Securities have become due and payable, whether at maturity or
as a result of the mailing of a notice of redemption pursuant to Article 3
hereof and the Company irrevocably deposits with the Trustee funds or U.S.
Government Obligations on which payment of principal and interest when due
will be sufficient to pay at maturity or upon redemption all outstanding
Securities, including interest thereon to maturity or such redemption date
(other than Securities replaced pursuant to Section 2.07), and if in either
case the Company pays all other sums payable hereunder by the Company, then
this Indenture shall, subject to Section 8.01(c), cease to be of further
effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officer's Certificate and
an Opinion of Counsel and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may
terminate (i) all its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.02
(subject to any requirement of the TIA), 4.03, 4.04, 4.05, 4.06, 4.07, 4.08,
<PAGE>
77
4.11, 4.12, 4.13, 4.14, 5.01(iii) and 5.01(iv) and the operation of Sections
6.01(4), 6.01(6), 6.01(7) (with respect to Subsidiaries of the Company only),
6.01(8) (with respect to Subsidiaries of the Company only) and 6.01(9)
("covenant defeasance option"). The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities
may not be accelerated because of an Event of Default specified in Section
6.01(4), 6.01(6), 6.01(7) (with respect to Subsidiaries of the Company only),
6.01(8) (with respect to Subsidiaries of the Company only) or 6.01(9) or
because of the failure of the Company to comply with (iii) and (iv) of Section
5.01.
Upon satisfaction of the conditions set forth herein and upon request
of the Company, the Trustee shall acknowledge in writing the discharge of
those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05
and 8.06 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
SECTION 8.02. Conditions to Defeasance. The Company may exercise its
-------------------------
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal, premium (if
any) and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any deposited
money without investment will provide cash at such times and in such amounts
as will be sufficient to pay principal and interest when due on all the
Securities to maturity or redemption, as the case may be;
<PAGE>
78
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(7) or (8) with respect to the
Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(5) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company
Act of 1940;
(6) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) 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 of Counsel shall confirm that,
the Securityholders 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;
(7) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders 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; and
(8) the Company delivers to the Trustee an Officer's Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article 8
have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date
in accordance with Article 3.
<PAGE>
79
SECTION 8.03. Application of Trust Money. The Trustee shall hold in
---------------------------
trust money or U.S. Government Obligations deposited with it pursuant to this
Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities. Money
and securities so held in trust are not subject to Article 10.
SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent
---------------------
shall promptly turn over to the Company upon written request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The Company shall
-------------------------------------
pay and shall indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against deposited U.S. Government Obligations or the principal
and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
--------------
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
--------- -------
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
<PAGE>
80
ARTICLE 9
Amendments
----------
SECTION 9.01. Without Consent of Holders. The Company and the
--------------------------
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the uncertificated
-------- -------
Securities are issued in registered form for purposes of Section 163(f) of the
Code or in a manner such that the uncertificated Securities are described in
Section 163(f)(2)(B) of the Code;
(4) to make any change in Article 10 that would limit or terminate the
benefits available to any holder of Senior Indebtedness (or Representatives
therefor) under Article 10;
(5) to add Guarantees with respect to the Securities or to secure the
Securities;
(6) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the Company;
(7) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA;
(8) to make any change that does not adversely affect the rights of
any Securityholder;
(9) to provide for the issuance and authorization of the Exchange
Securities; or
(10) to comply with any requirement of the SEC in connection with the
qualification of the Indenture under the TIA.
An amendment under this Section may not make any change that adversely
affects the rights under Article 10 of any holder of Senior Indebtedness then
outstanding unless the holders of such Senior Indebtedness (or any group or
<PAGE>
81
representative thereof authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. The Company and the Trustee
------------------------
may amend this Indenture or the Securities without notice to any Securityholder
but with the written consent of the Holders of at least a majority in principal
amount of the Securities. However, without the consent of each Securityholder
affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest on
any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption of any Security or
change the time at which any Security may be redeemed in accordance with
Article 3;
(5) make any Security payable in money other than that stated in the
Security;
(6) make any change in Article 10 that adversely affects the rights of
any Securityholder under Article 10;
(7) impair the right of any Holder to receive payment on such Holder's
Securities on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder's Securities; or
(8) make any change in Section 6.04 or 6.07 or the second sentence of
this Section.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
<PAGE>
82
An amendment under this Section may not make any change that adversely
affects the rights under Article 10 of any holder of Senior Indebtedness then
outstanding unless the holders of such Senior Indebtedness (or any group or
representative thereof authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment to
------------------------------------
this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
---------------------------------------------
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Security holder. An
amendment or waiver becomes effective once the requisite number of consents are
received by the Company or the Trustee.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
--------------------------------------
changes the terms of a Security, the Trustee
<PAGE>
may require the Holder of the Security to deliver it to the Trustee. The Trustee
may place an appropriate notation on the Security regarding the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms. Failure to
make the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
---------------------------
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officer's Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture and complies with the
provisions hereof (including Section 9.03).
SECTION 9.07. Payment for Consent. Neither the Company nor any
--------------------
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 10
Subordination
-------------
SECTION 10.01. Agreement To Subordinate. The Company agrees, and
-------------------------
each Securityholder by accepting a Security agrees, that, prior to the
Subordination Termination Date, the Indebtedness evidenced by the Securities is
subordinated in right of payment, to the extent and in the manner provided in
Article 10 (excluding Section 10.18), to the prior payment in full of all Senior
Indebtedness and that the subordination is for the benefit of and enforceable by
the holders of Senior Indebtedness. Prior to the Subordination Termination
Date, (i) the Company shall not incur, directly or indirectly, any Indebtedness
that is
<PAGE>
subordinate or junior in ranking in any respect to Senior Indebtedness unless
such Indebtedness is Senior Subordinated Indebtedness or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness and (ii)
the Securities shall in all respects rank pari passu with all other Senior
---- -----
Subordinated Indebtedness of the Company and only Indebtedness of the Company
that is Senior Indebtedness shall rank senior to the Securities in accordance
with the provisions set forth herein. For purposes of these subordination
provisions, the Indebtedness evidenced by the Securities is deemed to include
the liquidated damages payable pursuant to the provisions set forth in the
Securities and the Exchange and Registration Rights Agreement. All provisions of
this Article 10 shall be subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any payment
-------------------------------------
or distribution of the assets of the Company to creditors upon a total or
partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(1) holders of Senior Indebtedness shall be entitled to receive payment in
full of the Senior Indebtedness before Securityholders shall be entitled to
receive any payment of principal of or interest on the Securities; and
(2) until the Senior Indebtedness is paid in full, any payment or
distribution to which Securityholders would be entitled but for this Article
10 shall be made to holders of Senior Indebtedness as their interests may
appear.
SECTION 10.03. Default on Senior Indebtedness. Prior to the
-------------------------------
Subordination Termination Date, the Company may not pay the principal of,
premium (if any) or interest on the Securities or make any deposit pursuant to
Section 8.01 and may not repurchase, redeem or otherwise retire any Securities
(collectively, "pay the Securities") if (i) any Senior Indebtedness is not paid
when due or (ii) any other default on Senior Indebtedness occurs and the
maturity of such Senior Indebtedness is accelerated in accordance with its terms
unless, in either case, (x) the default has been cured or waived and any such
acceleration has been rescinded or (y) such Senior Indebtedness has been paid in
full; provided, however, that the Company may pay the Securities without regard
-------- -------
to the foregoing if the Company and the Trustee receive written notice approving
such payment from the Representative of the Designated Senior Indebtedness with
respect to which either of the events in clause (i) or
<PAGE>
(ii) of this sentence has occurred and is continuing. Prior to the Subordination
Termination Date, during the continuance of any default (other than a default
described in clause (i) or (ii) of the preceding sentence) with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Securities for a period (a "Payment
Blockage Period") commencing upon the receipt by the Trustee (with a copy to the
Company) of written notice (a "Blockage Notice") of such default from the
Representative of such Designated Senior Indebtedness specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter (or earlier if
such Payment Blockage Period is terminated (i) by written notice to the Trustee
and the Company from the Person or Persons who gave such Blockage Notice, (ii)
by repayment in full of such Designated Senior Indebtedness or (iii) because the
default giving rise to such Blockage Notice is no longer continuing).
Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the provisions contained in the first sentence of this Section),
unless the holders of such Designated Senior Indebtedness or the Representative
of such holders shall have accelerated the maturity of such Designated Senior
Indebtedness, the Company may resume payments on the Securities after such
Payment Blockage Period. Not more than one Blockage Notice may be given in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Indebtedness during such period; provided, however, that if
-------- -------
any Blockage Notice within such 360-day period is given by or on behalf of any
holders of Designated Senior Indebtedness (other than Bank Indebtedness), the
Representative of Bank Indebtedness may give another Blockage Notice within such
period; provided further, however, that in no event may the total number of days
---------------- -------
during which any Payment Blockage Period or Periods is in effect exceed 179 days
in the aggregate during any 360 consecutive day period.
SECTION 10.04. Acceleration of Payment of Securities. If payment of
--------------------------------------
the Securities is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Designated Senior Indebtedness
(or their Representative) of the acceleration. If any Designated Senior
Indebtedness is outstanding, the Company may not pay the Securities until five
Business Days after such holders or the Representative of the Designated Senior
Indebtedness receive notice of such acceleration and,
<PAGE>
thereafter, may pay the Securities only if this Article 10 otherwise permits
payment at that time.
SECTION 10.05. When Distribution Must Be Paid Over. If a distribution
------------------------------------
is made to Securityholders that because of the provisions of Article 10
(excluding Section 10.18) should not have been made to them, the Securityholders
who receive the distribution shall hold it in trust for holders of Senior
Indebtedness and pay it over to them as their interests may appear.
SECTION 10.06. Subrogation. After all Senior Indebtedness is paid in
------------
full and until the Securities are paid in full, Securityholders shall be
subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness. A distribution made under this
Article 10 to holders of Senior Indebtedness which otherwise would have been
made to Securityholders is not, as between the Company and Securityholders, a
payment by the Company on Senior Indebtedness.
SECTION 10.07. Relative Rights. This Article 10 (excluding Section
----------------
10.18) defines the relative rights of Securityholders and holders of Senior
Indebtedness prior to the Subordination Termination Date. Nothing in this
Indenture shall:
(1) impair, as between the Company and Securityholders, the obligation of
the Company, which is absolute and unconditional, to pay principal of and
interest on the Securities in accordance with their terms; or
(2) prevent the Trustee or any Securityholder from exercising its available
remedies upon a Default, subject to the rights of holders of Senior
Indebtedness to receive distributions otherwise payable to Securityholders.
SECTION 10.08. Subordination May Not Be Impaired by Company. Prior
---------------------------------------------
to the Subordination Termination Date, no right of any holder of Senior
Indebtedness to enforce the subordination of the Indebtedness evidenced by the
Securities shall be impaired by any act or failure to act by the Company or by
its failure to comply with this Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent. The Company shall
-----------------------------------
give prompt written notice to the Trustee of any fact known to the Company which
would prohibit the making of any payment to or by the Trustee in respect of the
Securities. Failure to give such notice shall not affect
<PAGE>
the subordination of the Securities (if they are at such time subordinate) to
Senior Indebtedness. Notwithstanding Section 10.03, the Trustee or Paying Agent
may continue to make payments on the Securities and shall not be charged with
knowledge of the existence of facts that would prohibit the making of any such
payments unless, not less than two Business Days prior to the date of such
payment, a Trust Officer of the Trustee receives notice satisfactory to it that
payments may not be made under this Article 10. The Company, the Registrar or
co-registrar, the Paying Agent, a Representative or a holder of Senior
Indebtedness may give the notice; provided, however, that, if an issue of Senior
-------- -------
Indebtedness has a Representative, only the Representative may give the notice.
The Trustee shall be entitled to rely on the delivery to it of a written notice
by a Person representing himself or itself to be a holder of any Senior
Indebtedness (or a Representative of such holder) to establish that such notice
has been given by a holder of such Senior Indebtedness or Representative
thereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. The
Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article 10 with respect to any Senior Indebtedness which may at any time be held
by it, to the same extent as any other holder of Senior Indebtedness; and
nothing in Article 7 shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article 10 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 7.07.
SECTION 10.10. Distribution or Notice to Representative. Whenever a
-----------------------------------------
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their Representative (if
any).
SECTION 10.11. Article 10 Not To Prevent Events of Default or Limit
----------------------------------------------------
Right To Accelerate. The failure to make a payment pursuant to the Securities
- --------------------
by reason of any provision in this Article 10 shall not be construed as pre
venting the occurrence of a Default. Nothing in this Article 10 shall have any
effect on the right of the Securityholders or the Trustee to accelerate the
maturity of the Securities.
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding
------------------------------
anything contained herein to the contrary,
<PAGE>
payments from money or the proceeds of U.S. Government Obligations held in trust
under Article 8 by the Trustee for the payment of principal of and interest on
the Securities shall not be subordinated to the prior payment of any Senior
Indebtedness or subject to the restrictions set forth in this Article 10, and
none of the Securityholders shall be obligated to pay over any such amount to
the Company or any holder of Senior Indebtedness of the Company or any other
creditor of the Company.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
-------------------------
distribution pursuant to this Article 10, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section
10.02 are pending, (ii) upon a certificate of the liquidating trustee or agent
or other Person making such payment or distribution to the Trustee or to the
Security holders or (iii) upon the Representatives for the holders of Senior
Indebtedness for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of the Senior Indebtedness and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 10. In the event that the Trustee determines, in
good faith, that evidence is required with respect to the right of any Person as
a holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article 10, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and other facts
pertinent to the rights of such Person under this Article 10, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article 10.
SECTION 10.14. Trustee To Effectuate Subordination. Each
------------------------------------
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness until the Subordination Termination Date and as provided in
this Article 10 and appoints the Trustee as attorney-in-fact for any and all
such purposes.
<PAGE>
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
--------------------------------------------
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
- -------------
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Securityholders or the Company or any
other Person, money or assets to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article 10 or otherwise. With respect to the
holders of Senior Indebtedness, the Trustee undertakes to perform or to observe
only such of its covenants or obligations as are specifically set forth in this
Article 10 and no implied covenants or obligations with respect to holders of
Senior Indebtedness shall be read into this Indenture against the Trustee.
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
---------------------------------------------
Subordination Provisions. Each Securityholder by accepting a Security
- -------------------------
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness; provided, however, that no such holder of Senior
-------- -------
Indebtedness shall be so deemed to have relied upon the foregoing subordination
provisions in acquiring or in continuing to hold such Senior Indebtedness on or
after the Subordination Termination Date.
SECTION 10.17. Trustee's Compensation Not Prejudiced. Nothing in this
--------------------------------------
Article shall apply to amounts due to the Trustee pursuant to other sections of
this Indenture.
SECTION 10.18. Termination of Subordination Provisions. On the
---------------------------------------
Subordination Termination Date, the foregoing provisions of this Article 10
shall terminate and cease to be effective with respect to all Senior
Indebtedness of the Company, whenever incurred, and on such date the Securities
shall become Senior Indebtedness of the Company.
<PAGE>
ARTICLE 11
Miscellaneous
-------------
SECTION 11.01. Trust Indenture Act Controls. If any provision of
-----------------------------
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 11.02. Notices. Any notice or communication shall be in
--------
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Ryder TRS, Inc.
3600 N.W. 82nd Avenue
Miami, FL 33166
Attention of:
President
with a copy to:
Questor Management Company
4000 Town Center, Suite 530
Southfield, Michigan 48075
Attention of:
Mr. Wallace Rueckel
and:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention of:
Cornelius T. Finnegan III, Esq.
<PAGE>
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention of:
Corporate Trust Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed
to the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.03. Communication by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and their agents shall have
the protection of TIA (S) 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions Precedent.
---------------------------------------------------
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officer's Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
<PAGE>
SECTION 11.05. Statements Required in Certificate or Opinion. Each
----------------------------------------------
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with; provided that
an Opinion of Counsel can rely as to matters of fact on an Officer's
Certificate or certificates of public officials.
SECTION 11.06. When Securities Disregarded. In determining whether
----------------------------
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee actually knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar. The
---------------------------------------------
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 11.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
---------------
Sunday or a day on which commercial banking institutions (including, without
limitation, the Federal Reserve System) are authorized or required by law to
close in New York City. If a payment date is a Legal Holiday, payment shall be
made on the next succeeding day that is not
<PAGE>
a Legal Holiday, and no interest shall accrue for the intervening period. If a
regular record date is a Legal Holiday, the record date shall not be affected.
SECTION 11.09. Governing Law. This Indenture and the Securities
--------------
shall be governed by, and construed in accordance with, the laws of the State of
New York but without giving effect to applicable principles of conflicts of law
to the extent that the application of the laws of another jurisdiction would be
required thereby.
SECTION 11.10. No Recourse Against Others. A director, officer,
---------------------------
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder waives and releases all
such liability. The waiver and release shall be part of the consideration for
the issue of the Securities.
SECTION 11.11. Successors. All agreements of the Company in this
-----------
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 11.12. Multiple Originals. The parties may sign any number
-------------------
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 11.13. Table of Contents; Headings. The table of contents,
----------------------------
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be
<PAGE>
considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
Ryder TRS, Inc.
Attest: by
/s/ Gerald R. Riordan /s/ Dean Anderson
- ------------------------ ------------------------
Title: President, Ryder TRS, Inc. Name: Dean Anderson
Title: Vice President
and Assistant-Secretary
The Bank of New York, as Trustee
by
/s/ Paul Schmalzel
-------------------------
Name: Paul J. Schmalzel
Title: Assistant Treasurer
<PAGE>
EXHIBIT A
[FORM OF FACE OF INITIAL SECURITY]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN./1/
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NETHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, ON ITS
OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED
SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY
OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT, IN A TRANSACTION COMPLYING WITH THE REQUIREMENTS
OF RULE 144A TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
- -----------------------------
/1/ This paragraph should only be added if the Security is issued in global
form.
<PAGE>
PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULES 501 (A)(1), (A)(2), (A)(3) AND
(A)(7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000 FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S OR THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN THE CASE OF ANY OF THE FOREGOING CLAUSES (A)-(F), A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.
RYDER TRS, INC.
10% SENIOR SUBORDINATED NOTE DUE 2006
CUSIP No. ________
$[ ]
RYDER TRS, INC., a Delaware corporation, promises to pay to [ ],
or registered assigns, the principal sum of $[ ] on December 1, 2006.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
2
<PAGE>
Additional provisions of this Security are set forth on the other side
of this Security.
[Seal] RYDER TRS, INC.,
by
-------------------------------
Dean Anderson
Vice President and
Assistant Secretary
Dated: November [ ], 1996
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
The Bank of New York
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture
by
-----------------------------
Authorized Signatory
3
<PAGE>
[FORM OF REVERSE SIDE OF INITIAL SECURITY)
10% Senior Subordinated Note due 2006
1. Interest
--------
Ryder TRS, Inc., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will use its best
efforts to have the Exchange Offer Registration Statement and, if applicable, a
Shelf Registration Statement (each a "Registration Statement") declared
effective by the Commission as promptly as practicable after the filing thereof.
If (i) the Exchange Offer Registration Statement is not filed with the
Commission on or prior to 45 days after the Issue Date; (ii) the Exchange Offer
Registration Statement is not declared effective within 135 days after the Issue
Date; (iii) the Exchange Offer is not consummated on or prior to 165 days after
the Issue Date; (iv) the Shelf Registration Statement is not filed with the
Commission within 45 days after the Shelf Notice is required to be delivered or
is not declared effective within 135 days after such date or (v) the Shelf
Registration Statement is filed and declared effective within 135 days after the
date the Shelf Notice is required to be delivered but shall thereafter cease to
be effective (at any time that the Company is obligated to maintain the
effectiveness thereof) without being succeeded within 30 days by an additional
or amended Registration Statement filed and declared effective (each such event
referred to in clauses (i) through (v), a "Registration Default"), the Company
will pay liquidated damages to each holder of Transfer Restricted Securities,
during the period of such Registration Default, in an amount equal to $0.192 per
week per $1,000 principal amount of the Securities constituting Transfer
Restricted Securities held by such holder until the applicable Registration
Statement is filed or declared effective, the Exchange Offer is consummated or
the Shelf Registration Statement again becomes effective, as the case may be.
All accrued liquidated damages shall be paid to holders in the same manner as
interest payments on the Securities on semi-annual payment dates which
correspond to interest payment dates for the Securities. Following the cure of
all Registration Defaults, the accrual of liquidated damages will cease. The
Trustee shall have no responsibility with respect to the determination of the
amount of any such liquidated damages.
The Company will pay interest semiannually on June 1 and December 1 of
each year. Interest on the Securities
4
<PAGE>
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from November 25, 1996. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. The Company shall pay interest
on overdue principal at the rate borne by the Securities plus 1% per annum, and
it shall pay interest on overdue installments of interest at the same rate to
the extent lawful.
2. Method of Payment
-----------------
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the May 15 or December 15 next preceding the interest payment
date even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may pay principal and
interest by check payable in such money. It may mail an interest check to a
Holder's registered address.
3. Paying Agent and Registrar
--------------------------
Initially, The Bank of New York, a New York banking corporation
("Trustee"), will act as Paying Agent and Registrar. The Company may appoint
and change any Paying Agent, Registrar or co-registrar without notice. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar or co-registrar.
4. Indenture
---------
The Company issued the Securities under an Indenture dated as of
November 25, 1996 ("Indenture"), between the Company and the Trustee. The terms
of the Securities include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S)
------
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured obligations of the Company
limited to $175,000,000 aggregate principal
5
<PAGE>
amount at any one time outstanding (subject to Section 2.07 of the Indenture).
This Security is one of the Initial Securities referred to in the Indenture. The
Securities include the Initial Securities and any Exchange Securities issued in
exchange for the Initial Securities pursuant to the Indenture. The Initial
Securities and the Exchange Securities are treated as a single class of
securities under the Indenture. The Indenture imposes certain limitations on the
issuance of debt by the Company, the payment of dividends and other
distributions and acquisitions or retirements of the Company's Capital Stock and
Subordinated Obligations, the incurrence by the Company and its Subsidiaries of
Liens on its property and assets which do not equally and ratably secure the
Securities, the sale or transfer of assets and Subsidiary Stock, investments by
the Company, the lines of business in which the Company may operate,
consolidations, mergers and transfers of all or substantially all of the
Company's assets and transactions with Affiliates. In addition, the Indenture
limits the ability of the Company and its Subsidiaries to restrict distributions
and dividends from Subsidiaries.
5. Optional Redemption
-------------------
Except as set forth in the next two paragraphs, the Securities may not
be redeemed prior to December 1, 2001. On and after that date, the Company may
redeem the Securities in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued interest, if any, to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
related interest payment date), if redeemed during the 12-month period beginning
on or after December 1 of the years set forth below:
Redemption
Period Price
- ---------------- ----------------
2001........................................................... 105.000%
2002........................................................... 103.333%
2003........................................................... 101.667%
2004 and thereafter............................................ 100.000%
Notwithstanding the foregoing, at any time prior to December 1, 1999,
the Company may redeem in the aggregate up to 33 1/3% of the original aggregate
principal amount of Securities with the proceeds of one or more Public Equity
Offerings by the Company following which there is a Public
6
<PAGE>
Market, at a redemption price (expressed as a percentage of principal amount) of
110% plus accrued interest, if any, to the redemption date (subject to the right
of Holders of record on the relevant record date to receive interest due on the
relevant interest payment date); provided, however, that at least 66 2/3% of the
-------- -------
original aggregate principal amount of the Securities must remain outstanding
after each such redemption.
At any time on or prior to December 1, 2001, the Securities may also
be redeemed as a whole at the option of the Company upon the occurrence of a
Change of Control, upon not fewer than 30 nor more than 60 days prior notice
(but in no event more than 180 days after the occurrence of such Change of
Control) mailed by first-class mail to each Holder's registered address, at a
redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued but unpaid interest, if any, to, the
Redemption Date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date).
6. Notice of Redemption
--------------------
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each Holder of Securities to be redeemed
at his registered address. Securities in denominations larger than $1,000 may
be redeemed in part but only in whole multiples of $1,000. If money sufficient
to pay the redemption price of and accrued interest on all Securities (or
portions thereof) to be redeemed on the redemption date is deposited with the
Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Securities
(or such portions thereof) called for redemption.
7. Put Provisions
--------------
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause the
Company to repurchase all or any part of the Securities of such Holder at a
purchase price in cash equal to 101% of the principal amount of the Securities
to be repurchased plus accrued and unpaid interest, if any, to the date of
repurchase (subject to the right of holders of record on the relevant record
date to receive interest due on the related interest payment date) as provided
in, and subject to the terms of, the Indenture.
7
<PAGE>
8. Subordination
-------------
Prior to the Subordination Termination Date, the Securities are
subordinated to Senior Indebtedness, as defined in the Indenture. To the extent
provided in the Indenture, Senior Indebtedness must be paid before the
Securities may be paid. The Company agrees, and each Securityholder by
accepting a Security agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give it effect and appoints the Trustee
as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
10. Persons Deemed Owners
---------------------
The registered Holder of this Security may be treated as the owner of
it for all purposes, subject to provisions for record dates with respect to
payment of interest.
11. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
12. Discharge and Defeasance
------------------------
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment
8
<PAGE>
of principal of and interest on the Securities to redemption or maturity, as the
case may be.
13. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to add guarantees with respect to the Securities or to secure the Securities,
or to add additional covenants or surrender rights and powers conferred on the
Company, or to comply with any request of the SEC in connection with qualifying
the Indenture under the Act, or to make any other change that does not adversely
affect the rights of any Securityholder, or to provide for the issuance and
authorization of the Exchange Securities.
14. Defaults and Remedies
---------------------
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest on the Securities; (ii) default in payment of principal
on the Securities at maturity, upon redemption pursuant to paragraph 5 or 6 of
the Securities, upon acceleration or otherwise, or failure by the Company to
redeem or purchase Securities when required; (iii) failure by the Company to
comply with other agreements in the Indenture or the Securities, in certain
cases subject to notice and lapse of time; (iv) certain accelerations (including
failure to pay within any grace period after final maturity) of other
Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds
$10,000,000 or its foreign currency equivalent; (v) certain events of bankruptcy
or insolvency with respect to the Company and the Significant Subsidiaries; (vi)
certain judgments or decrees for the payment of money in excess of $10,000,000
or its foreign currency equivalent against the Company or a Significant
Subsidiary; (vii) failure by any Note Guarantor to comply with its obligations
under any Note Guarantee to which such Note Guarantor is a party, after any
applicable grace period; and (viii) failure of any Note Guarantee by a Note
Guarantor which is a Significant Subsidiary to be in full force and effect
(except as contemplated by the terms thereof) or the
9
<PAGE>
denial or disaffirmation by any such Note Guarantor of its obligations under the
Indenture or any Note Guarantee if such Default continues for 10 days. If an
Event of Default (other than a Default relating to certain events of bankruptcy,
insolvency or reorganization of the Company) occurs and is continuing, the
Trustee or the Holders of at least a majority in principal amount of the
Securities may declare the principal of and accrued but unpaid interest on all
the the Securities to be due and payable immediately. Certain events of
bankruptcy, insolvency, or reorganization are Events of Default which will
result in the Securities being due and payable immediately upon the occurrence
of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities unless it receives reasonable indemnity or security. Subject
to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal or interest) if and so long as a
committee of its Trust Officers in good faith determines that withholding notice
is in the interest of the Holders.
15. Trustee Dealings with the Company
---------------------------------
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
--------------------------
A director, officer, employee or stockholder, as such, of the Company
or the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
17. Authentication
--------------
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating
10
<PAGE>
agent) manually signs the certificate of authentication on the other side of
this Security.
18. Abbreviations
-------------
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be made to:
Ryder TRS, Inc.
3600 N.W. 82nd Avenue
Miami, Florida 33166
Attention: Secretary
11
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
- --------------------------------------------------------------------------------
Date: Your Signature:
----------------- ----------------------------------------
Signature Guarantee:
------------------------------------------------------------
(Signature must be guaranteed by a participant in a
recognized signature guarantee medallion program)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this
Security.
12
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER RESTRICTED SECURITIES
This certificate relates to $_______ principal amount of Securities held in
(check applicable space) _____ book-entry or ____ definitive form by the
undersigned.
The undersigned (check one box below):
[_] has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depository a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated above);
[_] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is three years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
(1) [_] acquired for the undersigned's own account,
without transfer (in satisfaction of
Section 2.06(a)(ii)(A) or Section 2.06(d)(i)
(A) of the Indenture); or
(2) [_] transferred to the Company; or
(3) [_] transferred pursuant to and in compliance
with Rule 144A under the Securities Act of
1933, as amended; or
(4) [_] transferred pursuant to and in compliance
with Regulation S under the Securities Act
of 1933, as amended; or
(5) [_] transferred to an institutional "accredited
investor" (as defined in Rules 501(a)(1),
(2), (3) and (7) under the Securities Act of
1933, as amended), that has furnished to the
Trustee a signed letter containing
13
<PAGE>
certain representations and agreements (the
form of which letter appears as Exhibit C to
the Indenture; or
(6) [_] transferred pursuant to another available
exemption from the registration requirements
of the Securities Act of 1933, as amended.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (4), (5) or
-------- -------
(6) is checked, the Trustee or the Company may require, prior to registering any
such transfer of the Securities, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or Company has reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, as amended, such as the exemption provided by Rule 144
under such Act.
-----------------------------------------
Signature Guarantee: Signature
- ------------------------------- -----------------------------------------
Signature
Signature (Signature must be guaranteed
by a participant in a signature
guarantee medallion program)
- --------------------------------------------------------------------------------
14
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 or 4.08 of the Indenture, check the box:
[_]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount:
$
Date: Your Signature:
------------------ ----------------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:
------------------------------------------------------------
(Signature must be guaranteed by a participant in a
recognized signature guarantee medallion program)
15
<PAGE>
EXHIBIT B
[FORM OF FACE OF EXCHANGE SECURITY]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN./1/
RYDER TRS, INC.
10% SENIOR SUBORDINATED NOTE SERIES A DUE 2006
No. CUSIP No.
---------
$[ ]
RYDER TRS, INC., a Delaware corporation, promises to pay
to [ ], or registered assigns, the principal sum of $[ ] on
December 1, 2006.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
- ----------------------
/1/ This paragraph should only be added if the Security is issued in global
form.
<PAGE>
Additional provisions of this Security are set forth on the other side
of this Security.
[Seal] RYDER TRS, INC.,
by
----------------------------------
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
The Bank of New York
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture
by
------------------------
Authorized Signatory
2
<PAGE>
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY)
10% Senior Subordinated Note Series A due 2006
1. Interest
--------
Ryder TRS, Inc., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay interest
semiannually on June 1 and December 1 of each year. Interest on the Securities
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from November 25, 1996. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. The Company shall pay interest
on overdue principal at the rate borne by the Securities plus 1% per annum, and
it shall pay interest on overdue installments of interest at the same rate to
the extent lawful.
2. Method of Payment
-----------------
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the May 15 or November 15 next preceding the interest payment
date even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may pay principal and
interest by check payable in such money. It may mail an interest check to a
Holder's registered address.
3. Paying Agent and Registrar
--------------------------
Initially, The Bank of New York, a New York banking corporation
("Trustee"), will act as Paying Agent and Registrar. The Company may appoint
and change any Paying Agent, Registrar or co-registrar without notice. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar or co-registrar.
4. Indenture
---------
The Company issued the Securities under an Indenture dated as of
November 25, 1996 ("Indenture"), between the Company and the Trustee. The terms
of the Securities include
3
<PAGE>
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) as in effect
------
on the date of the Indenture (the "Act"). Terms defined in the Indenture and not
defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the Act for a statement of those terms.
The Securities are general unsecured obligations of the Company
limited to $175,000,000 aggregate principal amount at any one time outstanding
(subject to Section 2.07 of the Indenture). This Security is one of the Initial
Securities referred to in the Indenture. The Securities include the Initial
Securities and any Exchange Securities issued in exchange for the Initial
Securities pursuant to the Indenture. The Initial Securities and the Exchange
Securities are treated as a single class of securities under the Indenture. The
Indenture imposes certain limitations on the issuance of debt by the Company,
the payment of dividends and other distributions and acquisitions or retirements
of the Company's Capital Stock and Subordinated Obligations, the incurrence by
the Company and its Subsidiaries of Liens on its property and assets which do
not equally and ratably secure the Securities, the sale or transfer of assets
and Subsidiary Stock, investments by the Company, the lines of business in which
the Company may operate, consolidations, mergers and transfers of all or
substantially all of the Company's assets and transactions with Affiliates. In
addition, the Indenture limits the ability of the Company and its Subsidiaries
to restrict distributions and dividends from Subsidiaries.
5. Optional Redemption
-------------------
Except as set forth in the next two paragraphs, the Securities may not
be redeemed prior to December 1, 2001. On and after that date, the Company may
redeem the Securities in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued interest, if any, to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
related interest payment date), if redeemed during the 12-month period beginning
on or after December 1 of the years set forth below:
4
<PAGE>
<TABLE>
<CAPTION>
Redemption
Period Price
- ------ ----------
<S> <C>
2001......................................................... 105.000%
2002......................................................... 103.333%
2003......................................................... 101.667%
2004 and thereafter.......................................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to December 1, 1999,
the Company may redeem in the aggregate up to 33 1/3% of the original aggregate
principal amount of Securities with the proceeds of one or more Public Equity
Offerings by the Company following which there is a Public Market, at a
redemption price (expressed as a percentage of principal amount) of 110% plus
accrued interest, if any, to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date); provided, however, that at least 66 2/3% of the
original aggregate principal amount of the Securities must remain outstanding
after each such redemption.
At any time on or prior to December 1, 2001, the Securities may also
be redeemed as a whole at the option of the Company upon the occurrence of a
Change of Control, upon not fewer than 30 nor more than 60 days prior notice
(but in no event more than 180 days after the occurrence of such Change of
Control) mailed by first-class mail to each Holder's registered address, at a
redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued but unpaid interest, if any, to, the
Redemption Date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date).
6. Notice of Redemption
--------------------
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each Holder of Securities to be redeemed
at his registered address. Securities in denominations larger than $1,000 may
be redeemed in part but only in whole multiples of $1,000. If money sufficient
to pay the redemption price of and accrued interest on all Securities (or
portions thereof) to be redeemed on the redemption date is deposited with the
Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Securities
(or such portions thereof) called for redemption.
5
<PAGE>
7. Put Provisions
--------------
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause the
Company to repurchase all or any part of the Securities of such Holder at a
purchase price in cash equal to 101% of the principal amount of the Securities
to be repurchased plus accrued and unpaid interest, if any, to the date of
repurchase (subject to the right of holders of record on the relevant record
date to receive interest due on the related interest payment date) as provided
in, and subject to the terms of, the Indenture.
8. Subordination
-------------
Prior to the Subordination Termination Date, the Securities are
subordinated to Senior Indebtedness, as defined in the Indenture. To the extent
provided in the Indenture, Senior Indebtedness must be paid before the
Securities may be paid. The Company agrees, and each Securityholder by
accepting a Security agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give it effect and appoints the Trustee
as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
10. Persons Deemed Owners
---------------------
The registered Holder of this Security may be treated as the owner of
it for all purposes, subject to provisions for record dates with respect to
payment of interest.
11. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent
6
<PAGE>
shall pay the money back to the Company at its written request unless an
abandoned property law designates another Person. After any such payment,
Holders entitled to the money must look only to the Company and not to the
Trustee for payment.
12. Discharge and Defeasance
------------------------
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal of and interest on the Securities to redemption or
maturity, as the case may be.
13. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to add guarantees with respect to the Securities or to secure the Securities,
or to add additional covenants or surrender rights and powers conferred on the
Company, or to comply with any request of the SEC in connection with qualifying
the Indenture under the Act, or to make any other change that does not adversely
affect the rights of any Securityholder.
14. Defaults and Remedies
---------------------
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest on the Securities; (ii) default in payment of principal
on the Securities at maturity, upon redemption pursuant to paragraph 5 or 6 of
the Securities, upon acceleration or otherwise, or failure by the Company to
redeem or purchase Securities when required; (iii) failure by the Company to
comply with other agreements in the Indenture or the Securities, in certain
cases subject to notice and lapse of time; (iv) certain accelerations (including
failure to pay within any grace period after final maturity) of other
Indebtedness of the Company if the amount
7
<PAGE>
accelerated (or so unpaid) exceeds $10,000,000 or its foreign currency
equivalent; (v) certain events of bankruptcy or insolvency with respect to the
Company and the Significant Subsidiaries; (vi) certain judgments or decrees for
the payment of money in excess of $10,000,000 or its foreign currency equivalent
against the Company or a Significant Subsidiary; (vii) failure by any Note
Guarantor to comply with its obligations under any Note Guarantee to which such
Note Guarantor is a party, after any applicable grace period; and (viii) failure
of any Note Guarantee by a Note Guarantor which is a Significant Subsidiary to
be in full force and effect (except as contemplated by the terms thereof) or the
denial or disaffirmation by any such Note Guarantor of its obligations under the
Indenture or any Note Guarantee if such Default continues for 10 days. If an
Event of Default (other than a Default relating to certain events of bankruptcy,
insolvency or reorganization of the Company) occurs and is continuing, the
Trustee or the Holders of at least a majority in principal amount of the
Securities may declare the principal of and accrued but unpaid interest on all
the Securities to be due and payable immediately. Certain events of
bankruptcy, insolvency, or reorganization are Events of Default which will
result in the Securities being due and payable immediately upon the occurrence
of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities unless it receives reasonable indemnity or security. Subject
to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal or interest) if and so long as a
committee of its Trust Officers in good faith determines that withholding notice
is in the interest of the Holders.
15. Trustee Dealings with the Company
---------------------------------
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
--------------------------
A director, officer, employee or stockholder, as such, of the Company
or the Trustee shall not have any
8
<PAGE>
liability for any obligations of the Company under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Authentication
--------------
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations
-------------
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be made to:
Ryder TRS, Inc.
3600 N.W. 82nd Avenue
Miami, Florida 33166
Attention: Secretary
9
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
- --------------------------------------------------------------------------------
Date: Your Signature:
------------------- ----------------------------------------
Signature Guarantee:
------------------------------------------------------------
(Signature must be guaranteed by a participant in a
recognized signature guarantee medallion program)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 or 4.08 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount:
$
Date: Your Signature:
------------------- --------------------------------------
(Sign exactly as your name appears on
the other side of the Security)
Signature Guarantee:
-----------------------------------------------------------
(Signature must be guaranteed by a participant in a
recognized signature guarantee medallion program)
11
<PAGE>
EXHIBIT C
Transferee Letter of Representation
Ryder TRS, Inc.
c/o The Bank of New York
101 Barclay Street
New York, New York 10286
Dear Sirs:
This certificate is delivered to request a transfer of $ ______
principal amount of the 10% Senior Subordinated Notes due 2006 (the
"Securities") of Ryder TRS, Inc. (the "Company").
Upon transfer, the Securities would be registered in the name of the
new beneficial owner as follows:
Name:
---------------------------------------------------
Address:
------------------------------------------------
Taxpayer ID Number:
-------------------------------------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rules
501(a)(1), (2), (3) and (7) under the Securities Act of 1933, as amended (the
"Securities Act")) purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Notes and we are acquiring the Securities not with a view to, or for offer or
sale in connection with, any distribution in violation of the Securities Act.
We have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Securities and invest in or purchase securities similar to the Securities in
the normal course of our business. We and any accounts for which we are acting
are each able to bear the economic risk of our or its investment.
2. We understand that the Securities have not been registered under
the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf
of any investor account for which we are purchasing Securities to offer, sell
or otherwise transfer such Securities prior to the date which is three years
after the later of the date of original issue and the last date on
<PAGE>
which the Company or any affiliate of the Company was the owner of such
Securities (or any predecessor thereto) (the "Resale Restriction Termination
Date") only (a) to the Company, (b) pursuant to a registration statement which
has been declared effective under the Securities Act, (c) in a transaction
complying with the requirements of Rule 144A under the Securities Act, to a
person we reasonably believe is a qualified institutional buyer under Rule 144A
(a "QIB") that purchases for its own account or for the account of a QIB and to
whom notice is given that the transfer is being made in reliance on Rule 144A,
(d) pursuant to offers and sales that occur outside the United States within
the meaning of Regulation S under the Securities Act, (e) to an institutional
"accredited investor" within the meaning of Rules 501(a)(1), (2), (3) and (7)
under the Securities Act that is purchasing for its own account or for the
account of such an institutional "accredited investor", in each case in a
minimum principal amount of Securities of $250,000 or (f) pursuant to any other
available exemption from the registration requirements of the Securities Act,
subject in each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account or
accounts be at all times within our or their control and in compliance with any
applicable state securities laws. The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the Securities is proposed to be made pursuant to clause (e)
above prior to the Resale Restriction Termination Date, the transferor shall
deliver a letter from the transferee substantially in the form of this letter
to the Company and the Trustee, which shall provide, among other things, that
the transferee is an institutional "accredited investor" within the meaning of
Rules 501(a)(1), (2), (3) and (7) under the Securities Act and that it is
acquiring such Securities for investment purposes and not for distribution in
violation of the Securities Act. Each purchaser acknowledges that the Company
and the Trustee reserve the right prior to the offer, sale or other transfer
prior to the Resale Termination Date of the Securities pursuant to clause (d),
(e) or (f) above to require the delivery of an opinion of counsel,
certifications and/or other information satisfactory to the Company and the
Trustee.
TRANSFEREE:
--------------------------
BY
-----------------------------------
2
<PAGE>
EXHIBIT D
FORM OF NOTE GUARANTEE
----------------------
NOTE GUARANTEE, dated as of , , made by (the
"Guarantor"), the undersigned subsidiary of Ryder TRS, Inc., in favor of the
Holders and the Trustee (as defined in the Indenture referred to below).
Reference is made to the Indenture dated as of November 25, 1996 (as
amended, restated, supplemented, modified or waived from time to time, the
"Indenture"), between Ryder TRS, Inc. (the "Company") and the Trustee.
W I T N E S S E T H:
WHEREAS, under the terms of the Indenture, the Guarantor is required
to enter into this Guarantee;
NOW, THEREFORE, in consideration of the promises therein, the
Guarantor hereby agrees with and for the benefit of the Holders as follows:
ARTICLE I
Definitions
-----------
SECTION 1.01. Defined Terms. As used in this Guarantee, terms defined
-------------
in the Indenture or in the preamble or recital hereto are used herein as therein
defined, except that the term "Holders" in this Guarantee shall refer to the
term "Holders" as defined in the Indenture and the Trustee acting on behalf or
for the benefit of such holders.
ARTICLE II
Representations and Warranties of the Guarantor
-----------------------------------------------
SECTION 2.01. Representations and Warranties. The Guarantor hereby
------------------------------
represents and warrants to the Holders as follows:
(a) Due Existence; Compliance. The Guarantor is a corporation,
-------------------------
limited partnership or other entity duly organized, validly existing and in good
standing, where applicable, under the laws of the jurisdiction in which it was
incorporated or organized and has all requisite power and authority under such
laws to own or lease and operate its properties and to carry on its business as
now conducted and as proposed to be conducted, and to execute, deliver and
perform its obligations under this Guarantee. The Guarantor is duly qualified
or licensed to do business as a foreign
<PAGE>
corporation or entity and is in good standing, where applicable, in all
jurisdictions in which it owns or leases property, or in which the conduct of
its business requires it to so qualify or be licensed, except to the extent that
the failure to so qualify or be in good standing would have no material adverse
effect on the business, operations, properties, prospects or condition
(financial or otherwise) of the Guarantor. The Guarantor is in compliance in all
material respects with all applicable law, rules, regulations and orders.
(b) Corporate Authorities; No Conflicts. The execution, delivery and
-----------------------------------
performance by the Guarantor of this Guarantee is within its corporate, limited
partnership or other powers and has been duly authorized by all necessary
corporate and stockholder approvals or partnership or other approvals and (i)
does not contravene its organizational documents or any law, rule, regulation,
judgment, order or decree applicable to or binding on the Guarantor and (ii)
does not contravene, and will not result in the creation of any lien under, any
provision of any contract, indenture, mortgage or agreement to which the
Guarantor is a party, or by which it or any of its properties are bound, other
than liens permitted under the Indenture.
(c) Government Approvals and Authorizations. No authorization or
---------------------------------------
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution, delivery and
performance by or enforcement against the Guarantor of this Guarantee (except
such governmental approvals or authorizations as have been duly obtained or made
and remain in full force and effect).
(d) Legal, Valid and Binding. This Guarantee is the legal, valid and
------------------------
binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms.
(e) Immunities. Neither the Guarantor nor its property has any
----------
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) under applicable law.
(f) No Filing. To ensure the legality, validity, enforceability or
---------
admissibility in evidence of this Guarantee in each of the jurisdictions in
which the Guarantor is incorporated or organized and the State of Delaware or
any other jurisdiction in which the Guarantor conducts business, it is not
necessary that this Guarantee be filed or recorded with any court or other
authority in such jurisdiction, or
2
<PAGE>
that any stamp or similar tax be paid on or with respect to this Guarantee, or,
if such actions are necessary, they have been taken.
ARTICLE III
Guarantee
---------
SECTION 3.01. Guarantee. The Guarantor hereby unconditionally and
---------
irrevocably guarantees to each Holder of the Securities (a) the full and
punctual payment of principal of and interest on the Securities when due,
whether at maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Company under the Indenture and the Securities and
(b) the full and punctual performance within applicable grace periods of all
other obligations of the Company under the Indenture and the Securities (all the
foregoing being hereinafter collectively called the "Obligations"). The
Guarantor further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice or further assent from it, and that it will
remain bound under this Article III notwithstanding any extension or renewal of
any Obligation.
The Guarantor waives presentation to, demand of payment from and
protest to the Company of any of the Obligations and also waives notice of
protest for nonpayment. The Guarantor waives notice of any default under the
Securities or the Obligations. The obligations of the Guarantor hereunder shall
not be affected by (a) the failure of any Holder to assert any claim or demand
or to enforce any right or remedy against the Company or any other person under
the Indenture, the Securities or any other agreement or otherwise; (b) any
extension or renewal of any thereof; (c) any rescission, waiver, amendment or
modification of any of the terms or provisions of the Indenture, the Securities
or any other agreement; or (d) the failure of any Holder to exercise any right
or remedy against any other Guarantor of the Obligations.
The Guarantor further agrees that its Guarantee herein constitutes a
guarantee of payment, performance and compliance when due (and not a guarantee
of collection) and waives any right to require that any resort be had by any
Holder to any security held for payment of the obligations.
Except as otherwise provided herein, the obligations of the Guarantor
hereunder shall not be subject to any reduction, limitation, impairment or
termination for any reason (other than payment of the Obligations in full),
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of
3
<PAGE>
setoff, counterclaim, recoupment or termination whatsoever or by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of the
Guarantor herein shall not be discharged or impaired or otherwise affected by
the failure of any Holder to assert any claim or demand or to enforce any remedy
under the Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the Obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of the Guarantor or would otherwise
operate as a discharge of the Guarantor as a matter of law or equity.
The Guarantor further agrees that its Guarantee herein shall continue
to be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on any Obligation is rescinded or
must otherwise be restored by any Holder upon the bankruptcy or reorganization
of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder has at law or in equity against the Guarantor by virtue
hereof, upon the failure of the Company to pay the principal of or interest on
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, by redemption or otherwise, or to perform or comply with any other
Obligation, the Guarantor hereby promises to and will, upon receipt of written
demand by the Trustee or the Holders of a majority of the Securities (the
"Majority Securityholders"), forthwith pay, or cause to be paid, in cash, to the
Holders an amount equal to the sum of (i) the unpaid principal amount of such
Obligations, (ii) accrued and unpaid interest on such Obligations (but only to
the extent not prohibited by law) and (iii) all other monetary Obligations of
the Company to the Holders.
The Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any Obligations guarantied
hereby until payment in full of all Obligations. The Guarantor further agrees
that, as between such Guarantor, on the one hand, and the Holders, on the other
hand, (x) the maturity of the Obligations guarantied hereby may be accelerated
for the purposes of such Guarantor's Guarantee herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations guarantied hereby, and (y) in the event of any declaration of
acceleration of such Obligations, such Obligations (whether or not due and
4
<PAGE>
payable) shall forthwith become due and payable by such Guarantor for the
purposes of this Section.
The Guarantor also agrees to pay any and all reasonable costs and
expenses (including attorneys' fees) incurred by any Holder in enforcing any
rights under this Section.
SECTION 3.02. Limitation on Liability. (a) Any term or provision of
-----------------------
this Guarantee to the contrary notwithstanding, the maximum aggregate amount of
the Obligations guarantied hereunder by the Guarantor shall not exceed the
maximum amount that can be hereby guarantied without rendering this Guarantee,
as it relates to such Guarantor, voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer.
(b) This Guarantee shall terminate and be of no further force or
effect upon the sale or other transfer (i) by the Guarantor of all or
substantially all of its assets or (ii) by the Company of all of its stock or
other equity interests in the Guarantor, to a Person that is not an Affiliate of
the Company; provided, however, that such sale or transfer constitutes an Asset
Disposition as defined in the Indenture. Upon notice to the Trustee that such a
sale or transfer described in this clause 3.02(b) has occurred, the Trustee
shall return the original Guarantee to the Guarantor.
SECTION 3.03. Successors and Assigns. Subject to Section 3.02(b)
----------------------
hereof, this Article III shall be binding upon the Guarantor and its successors
and assigns and shall inure to the benefit of the successors and assigns of the
Holders and, in the event of any transfer or assignment of rights by any
Holder, the rights and privileges conferred upon that party in this Guarantee
and in the Securities shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions of this
Guarantee.
SECTION 3.04. No Waiver, etc. Neither a failure nor a delay on the
--------------
part of the Holders or the Trustee in exercising any right, power or privilege
under this Article III shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Holders and the
Trustee herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article III
or at law, in equity, by statute or otherwise.
5
<PAGE>
SECTION 3.05. Modification, etc. No modification, amendment or
-----------------
waiver of any provision of this Article, nor the consent to any departure by
the Guarantor therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Majority Securityholders, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which it was given. No notice to or demand on the Guarantor in any case
shall entitle such Guarantor or any other guarantor to any other or further
notice or demand in the same, similar or other circumstances.
ARTICLE IV
Subordination
-------------
SECTION 4.01. Subordination. Prior to the Subordination Termination
-------------
Date, the Obligations of the Guarantor under this Guarantee are subordinate to
the obligations of the Guarantor under any Guarantee of the Senior Credit
Agreement and any other Senior Indebtedness of the Company to the extent and in
the manner that the Indebtedness evidenced by the Securities is subordinate to
the obligations of the Company under the Senior Credit Agreement and other
Senior Indebtedness of the Company under Article 10 of the Indenture. By
acceptance of this Guarantee, the Holders agree to be bound by the foregoing
provisions. On and after the Subordination Termination Date, the subordination
provided for in the first sentence of this Section 4.01 shall terminate and
cease to be effective and the Obligations of the Guarantor under this Guarantee
shall no longer be subordinated to any other obligations of the Guarantor.
ARTICLE V
Miscellaneous
-------------
SECTION 5.01. Notices. All notices and other communications
-------
pertaining to this Guarantee or any Security shall be in writing and shall be
deemed to have been duly given upon the receipt thereof. Such notices shall be
delivered by hand, or mailed, certified or registered mail with postage prepaid
(a) if to the Guarantor, at its address set forth below, and (b) if to the
Holders or the Trustee, as provided in the Indenture.
SECTION 5.02. Parties. Nothing expressed or mentioned in this
-------
Guarantee is intended or shall be construed to give any Person, firm or
corporation, other than the Holders and the Trustee and the holders of any
Senior Indebtedness, any legal or equitable right, remedy or claim
6
<PAGE>
under or in respect of this Guarantee or any provision herein contained.
SECTION 5.03. Governing Law. This Agreement shall be governed by the
-------------
laws of the State of New York regardless of the laws that might otherwise govern
under applicable principles of conflict of laws thereof.
SECTION 5.04. Severability Clause. In case any provision in this
-------------------
Guarantee shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and such provision shall be ineffective only to the extent of
such invalidity, illegality or unenforceability.
SECTION 5.05. Waivers, Amendments and Remedies. The failure to insist
--------------------------------
in any one or more instances upon strict performance of any of the provisions of
this Guarantee or to take advantage of any rights hereunder shall not be
construed as a waiver of any such provisions or the relinquishment of any such
rights, but the same shall continue and remain in full force and effect. Except
as otherwise expressly limited in this Guarantee, all remedies under this
Guarantee shall be cumulative and in addition to every other remedy provided for
herein or by law.
SECTION 5.06. Entire Agreement. This Guarantee is intended by the
----------------
parties to be a final expression of their agreement in respect of the subject
matter contained herein and supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
SECTION 5.07. Headings. The headings of the Articles and the
--------
sections in this Guarantee are for convenience of reference only and shall not
be deemed to alter or affect the meaning or interpretation of any provisions
hereof.
IN WITNESS WHEREOF, the Guarantor has duly executed this Guarantee as
of the date first above written.
[NAME OF GUARANTOR],
By
------------------------------
Name:
Title:
Address:
7
<PAGE>
EXHIBIT 4.2
EXECUTION COPY
===============================================================================
CREDIT AGREEMENT
dated as of October 17, 1996
Among
RYDER TRS, INC.,
THE LENDERS NAMED HEREIN,
THE CHASE MANHATTAN BANK,
as Administrative Agent,
and
CITICORP, U.S.A., INC.,
as Documentation Agent and
as Collateral Agent.
===============================================================================
[CS&M Reference No. 6700-461]
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
SECTION 1.01. Defined Terms ...................................... 2
SECTION 1.02. Terms Generally .................................... 24
ARTICLE II
The Credits
SECTION 2.01. Commitments ......................................... 24
SECTION 2.02. Loans ............................................... 24
SECTION 2.03. Borrowing Procedure ................................. 26
SECTION 2.04. Evidence of Debt; Repayment of Loans ................ 27
SECTION 2.05. Fees ................................................ 27
SECTION 2.06. Interest on Loans ................................... 28
SECTION 2.07. Default Interest .................................... 28
SECTION 2.08. Alternate Rate of Interest .......................... 29
SECTION 2.09. Termination and Reduction of Commitments ............ 29
SECTION 2.10. Conversion and Continuation of Borrowings .......... 29
SECTION 2.11. Repayment of Term Borrowings ........................ 32
SECTION 2.12. Optional Prepayment ................................. 32
SECTION 2.13. Mandatory Prepayments ............................... 32
SECTION 2.14. Reserve Requirements; Change in Circumstances ....... 34
SECTION 2.15. Change in Legality .................................. 35
SECTION 2.16. Indemnity ........................................... 36
SECTION 2.17. Pro Rata Treatment .................................. 36
SECTION 2.18. Sharing of Setoffs .................................. 36
SECTION 2.19. Payments ............................................ 37
SECTION 2.20. Taxes ............................................... 37
SECTION 2.21. Assignment of Commitments Under Certain
Circumstances; Duty to Mitigate .................... 39
SECTION 2.22. Letters of Credit ................................... 40
<PAGE>
Contents, p. 2
Page
----
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers ................................ 44
SECTION 3.02. Authorization ....................................... 44
SECTION 3.03. Enforceability ...................................... 44
SECTION 3.04. Governmental Approvals .............................. 44
SECTION 3.05. Financial Statements ................................ 44
SECTION 3.06. No Material Adverse Change .......................... 45
SECTION 3.07. Title to Properties; Possession Under Leases ........ 45
SECTION 3.08. Subsidiaries ........................................ 45
SECTION 3.09. Litigation; Compliance with Laws .................... 45
SECTION 3.10. Agreements .......................................... 46
SECTION 3.11. Federal Reserve Regulations ......................... 46
SECTION 3.12. Investment Company Act; Public Utility Holding
Company Act ........................................ 46
SECTION 3.13. Use of Proceeds ..................................... 46
SECTION 3.14. Tax Returns ......................................... 46
SECTION 3.15. No Material Misstatements ........................... 46
SECTION 3.16. Employee Benefit Plans .............................. 47
SECTION 3.17. Environmental Matters ............................... 47
SECTION 3.18. Insurance ........................................... 48
SECTION 3.19. Security Documents .................................. 48
SECTION 3.20. Location of Leased Premises; No Real Property ....... 48
SECTION 3.21. Labor Matters ....................................... 48
SECTION 3.22. Solvency ............................................ 49
SECTION 3.23. Lease; Acquisition Agreements ....................... 49
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Credit Events ................................... 49
SECTION 4.02. First Credit Event .................................. 50
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and Properties ................ 53
SECTION 5.02. Insurance ........................................... 53
SECTION 5.03. Obligations and Taxes ............................... 55
SECTION 5.04. Financial Statements, Reports, etc. ................. 55
SECTION 5.05. Litigation and Other Notices ........................ 56
<PAGE>
Contents, p. 3
Page
----
SECTION 5.06. Employee Benefits .................................. 57
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections ....................................... 57
SECTION 5.08. Use of Proceeds .................................... 57
SECTION 5.09. Compliance with Environmental Laws ................. 57
SECTION 5.10. Preparation of Environmental Reports ............... 57
SECTION 5.11. Audits ............................................. 58
SECTION 5.12. Interest Rate Protection ........................... 58
SECTION 5.13. Consents of Lessors ................................ 58
SECTION 5.14. Securitization ..................................... 58
SECTION 5.15. Vehicle Fleet ...................................... 59
SECTION 5.16. Further Assurances ................................. 60
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness ....................................... 60
SECTION 6.02. Liens .............................................. 63
SECTION 6.03. Sale and Lease-Back Transactions ................... 63
SECTION 6.04. Investments, Loans and Advances .................... 63
SECTION 6.05. Mergers, Consolidations, Sales of Assets and
Acquisitions ...................................... 64
SECTION 6.06. Dividends and Distributions; Restrictions on
Ability of Subsidiaries to Pay Dividends ........... 65
SECTION 6.07. Transactions with Affiliates ........................ 65
SECTION 6.08. Business of Borrower and Subsidiaries................ 65
SECTION 6.09. Other Indebtedness and Agreements ................... 65
SECTION 6.10. Capital Stock ...................................... 66
SECTION 6.11. Interest Coverage Ratio ............................. 67
SECTION 6.12. Total Debt Ratio .................................... 68
SECTION 6.13. Consolidated EBITDA.................................. 69
SECTION 6.14. Fixed Charge Coverage Ratio ......................... 70
SECTION 6.15. Capital Expenditures ................................ 70
SECTION 6.16. Bank Accounts ....................................... 70
SECTION 6.17. Fiscal Year ......................................... 70
SECTION 6.18. Vehicle Sales........................................ 70
ARTICLE VII
Events of Default 71
ARTICLE VIII
The Administrative Agent and the Collateral Agent 73
<PAGE>
Page
----
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices ............................................ 75
SECTION 9.02. Survival of Agreement .............................. 75
SECTION 9.03. Binding Effect ..................................... 76
SECTION 9.04. Successors and Assigns ............................. 76
SECTION 9.05. Expenses; Indemnity ................................ 79
SECTION 9.06. Right of Setoff .................................... 80
SECTION 9.07. Applicable Law ..................................... 80
SECTION 9.08. Waivers; Amendment ................................. 81
SECTION 9.09. Interest Rate Limitation ........................... 81
SECTION 9.10. Entire Agreement ................................... 82
SECTION 9.11. WAIVER OF JURY TRIAL ............................... 82
SECTION 9.12. Severability ....................................... 82
SECTION 9.13. Counterparts ....................................... 82
SECTION 9.14. Headings ........................................... 82
SECTION 9.15. Jurisdiction; Consent to Service of Process ........ 83
SECTION 9.16. Confidentiality .................................... 83
Exhibits and Schedules
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Guarantee Agreement
Exhibit E Form of Indemnity, Subrogation and Contribution
Agreement
Exhibit F Form of Pledge Agreement
Exhibit G Form of Security Agreement
Exhibit H-1 Form of Opinion of Willkie Farr & Gallagher
(Borrower, Loan Documents)
Exhibit H-2 Form of Opinion of Willkie Farr & Gallagher
(Substantive Consolidation, True Lease)
Exhibit H-3 Form of Memorandum from Willkie Farr & Gallagher
(True Sale)
Exhibit I Form of Borrowing Base Certificate
Schedule 2.01 Commitments
Schedule 3.07 Title
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.17 Environmental Matters
Schedule 3.18 Insurance
Schedule 3.20 Leased Real Property
<PAGE>
Contents, p. 5
Schedule 6.01(a) Indebtedness
Schedule 6.02(a) Liens
Schedule 9.04 Restricted Assignees
<PAGE>
EXECUTION COPY
CREDIT AGREEMENT dated as of October 17,
1996, among RYDER TRS, INC., a Delaware corporation
formerly known as RCTR Holdings, Inc. (the
"Borrower"), the Lenders (as defined in Article I),
THE CHASE MANHATTAN BANK, a New York banking
corporation, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"), and
CITICORP, U.S.A., INC., a Delaware corporation, as
documentation agent and as collateral agent for the
Lenders (in such capacities, the "Collateral Agent"
and, together with the Administrative Agent, the
"Agents").
Pursuant to the Asset and Stock Purchase Agreement dated as of
September 19, 1996, by and between Ryder Truck Rental, Inc., a Florida
corporation (the "Seller"), and the Borrower, on the Closing Date (such term and
each other capitalized term used but not defined herein having the meaning given
such term in Article I) substantially all the assets of the Seller's Consumer
Truck Rental business unit ("CTR") will be acquired (the "Acquisition") from the
Seller by the Borrower (or in the case of CTR's vehicle fleet, by RCTR, Inc., a
special purpose Delaware corporation that is a wholly owned Subsidiary of the
Borrower ("Leasco"), as the assignee of the Borrower), for an aggregate purchase
price in cash equal to $579,362,684 (the "Purchase Price"). In connection with
the Acquisition, (a) Questor Partners Fund, L.P., a Delaware limited
partnership, and Questor Side-by-Side Partners, L.P., a Delaware limited
partnership (collectively, "Questor"), together with certain other investors
arranged by Questor (such investors, together with Questor, the "Investors"),
will make capital contributions (of which no less than 50% will be made by
Questor) in cash to the Borrower in an aggregate amount of $123,000,000 (the
"Capital Contributions") in consideration of the issuance to the Investors of
all the common stock of the Borrower; (b) the Borrower will borrow $100,000,000
under the Subordinated Facility; and (c) fees and expenses incurred by the
Borrower and the Subsidiaries in connection with the Transactions in an amount
not greater than $27,500,000 will be paid (the "Transaction Costs").
The Borrower has requested the Lenders to extend credit in the form of
(a) Term Loans on the Closing Date, in an aggregate principal amount equal to
$350,000,000, and (b) Revolving Loans at any time and from time to time prior to
the Maturity Date, in an aggregate principal amount at any time outstanding not
in excess of $150,000,000. The Borrower has requested the Issuing Banks to issue
letters of credit, in an aggregate face amount at any time outstanding not in
excess of $50,000,000, to support payment obligations incurred in the ordinary
course of business by the Borrower and the Subsidiaries.
The proceeds of the Term Loans are to be used, together with (a) the
net proceeds of the borrowings under the Subordinated Facility, (b) the Capital
Contributions and (c) the proceeds of Revolving Loans in an amount not greater
than $41,000,000 to be drawn or made available under Letters of Credit on the
Closing Date, solely (i) to pay the Purchase Price, (ii) to issue (A) certain
ordinary course standby letters of credit in an aggregate face amount of
$10,000,000 and (B) a standby letter of credit in the face amount of $2,500,000
required to be issued to the Seller under the terms of certain of the
Acquisition Agreements, (iii) to provide initial working capital in the amount
of $10,000,000 and (iv) to pay the Transaction Costs. The proceeds of the
Revolving Loans (other than Revolving Loans used for the purposes specified in
the preceding sentence) are to be used solely for general corporate purposes in
the ordinary course of the Borrower's business.
<PAGE>
2
The Lenders are willing to extend such credit to the Borrower and the
Issuing Banks are willing to issue letters of credit for the account of the
Borrower on the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Term Loan or ABR Revolving Loan.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest at
a rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ABR Term Borrowing" shall mean a Borrowing comprised of ABR Term
Loans.
"ABR Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Account" shall mean any right to payment for goods sold or leased or
for services rendered, whether or not earned by performance.
"Account Debtor" shall mean, with respect to any Account, the obligor
with respect to such Account.
"Acquisition" shall have the meaning given such term in the preamble to
this Agreement.
"Acquisition Agreements" shall mean the Purchase Agreement, the
Stockholders' Agreement, the Vehicle Title Nominee Agreement and the Service
Agreements, the Trademark License Agreement, the Software License Agreement, the
Copyright License Agreement, the Patent License Agreement, the Shared Facility
Licenses, the Assumption Agreement and the Office Sublease Agreement (each such
term as defined in the Purchase Agreement) and any other agreement, instrument
or other document to be entered into or delivered by, between or among the
Borrower, the Seller and any of their respective Affiliates in connection with
the Acquisition, as each such agreement, instrument or document may be amended,
modified or supplemented from time to time in accordance with the terms thereof
and hereof.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate
in effect for such Interest Period and (b) Statutory Reserves.
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A.
<PAGE>
3
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Agents' Fees" shall have the meaning assigned to such term in
Section 2.05(b).
"Aggregate Credit Exposure" shall mean the sum of the Aggregate
Revolving Credit Exposure and the Aggregate Term Loan Exposure.
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount
of the Lenders' Revolving Credit Exposures.
"Aggregate Term Loan Exposure" shall mean the aggregate amount of the
Lenders' Term Loan Exposures.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. If for any reason the Administrative Agent shall have determined
(which determination shall be conclusive absent manifest error) that it is
unable to ascertain the Base CD Rate or the Federal Funds Effective Rate or both
for any reason, including the inability or failure of the Administrative Agent
to obtain sufficient quotations in accordance with the terms of the definition
thereof, the Alternate Base Rate shall be determined without regard to clause
(b) or (c), or both, of the preceding sentence, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate, the Base CD Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively. The term "Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by the Administrative Agent as its prime
rate in effect at its principal office in New York City; each change in the
Prime Rate shall be effective on the date such change is publicly announced as
being effective. The term "Base CD Rate" shall mean the sum of (a) the product
of (i) the Three-Month Secondary CD Rate and (ii) Statutory Reserves and (b) the
Assessment Rate. The term "Federal Funds Effective Rate" shall mean, for any
day, the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day,
the average of the quotations for the day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"Applicable Percentage" of any Lender at any time shall mean the
percentage of the Total Term Loan Commitments or Total Revolving Credit
Commitments, as the case may be, represented by such Lender's Term Loan
Commitment or Revolving Credit Commitment, respectively. In the event the Term
Loan Commitments or Revolving Credit Commitments shall have expired or been
terminated, the Applicable Percentages shall be determined on the basis of the
Term Loan Commitments or Revolving Credit Commitments most recently in effect.
"Appraised Fair Market Value" shall mean at the time of any
determination thereof the fair market value, in dollars, of all Eligible Real
Estate, determined by an independent appraiser reasonably satisfactory to the
Collateral Agent.
<PAGE>
4
"Assessment Rate" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Administrative Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by the Administrative Agent to the
Federal Deposit Insurance Corporation (or any successor thereto) for insurance
by such Corporation (or such successor) of time deposits made in dollars at the
Administrative Agent's domestic offices.
"Asset Sale" shall mean any sale, lease, transfer, assignment, loss,
damage or destruction (in the case of loss, damage or destruction, to the extent
covered by insurance) or other disposition (by merger or otherwise) of assets
(including trademarks and other intangibles), business units, individual
business assets or property of the Borrower or any of the Subsidiaries,
including the sale, transfer or disposition of any capital stock or real
property, to any person other than the Borrower or any wholly owned Subsidiary
of the Borrower; provided, however, that none of the following shall be deemed
to be an Asset Sale: (a) the sale of inventory or equipment (other than
Vehicles) in the ordinary course of business, (b) the sale of Vehicles in the
ordinary course of business to the extent permitted by Section 6.18, (c) the
sale in the ordinary course of business of damaged, worn out or obsolete assets
that are no longer necessary for the proper conduct of the Borrower's or any
Subsidiary's business, so long as the fair market value of the assets disposed
of pursuant to this clause (c) does not exceed $250,000 in the aggregate in any
fiscal year, (d) the sale of Permitted Investments in the ordinary course of
business or (e) the sale of common stock of the Borrower to the extent permitted
by clause (b) of the definition of the term "Equity Issuance".
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States of America.
"Book Value" shall mean at the time of any determination thereof the
book value, in dollars, of all Eligible Non-Vehicle Revenue-Producing Equipment,
Eligible Non-Vehicle Non-Revenue-Producing Equipment or Eligible
Non-Revenue-Producing Vehicles, as the case may be, as determined on a
consolidated basis for the Borrower and the Subsidiaries in accordance with
GAAP.
"Borrowing" shall mean a group of Loans of a single Type made by the
Lenders on a single date and as to which a single Interest Period is in effect.
"Borrowing Base" shall mean, with respect to the Borrower, an amount
equal to the sum of (i) the sum, without duplication, obtained after multiplying
the applicable advance rate percentage set forth on Annex 1 to the Borrowing
Base Certificate by each of the following: (a) Eligible Accounts Receivable,
(b) the Original Cost of Eligible Revenue-Producing Vehicles (provided that
Orderly Liquidation Expenses shall be deducted from the amount obtained after
multiplying such advance rate percentage by such Original Cost), (c) the Book
Value of Eligible Non-Vehicle Revenue-Producing Equipment, (d) the Book Value of
Eligible Non-Revenue-Producing Vehicles, (e) the Appraised Fair Market Value of
Eligible Real Estate and (f) the Book Value of Eligible Non-Vehicle Non-Revenue-
Producing Equipment, plus (ii) the Eligible Other Assets Amount. The Borrowing
Base shall be computed monthly in accordance with Section 5.04(e). The Borrowing
Base at any time in effect shall be determined by reference to the Borrowing
Base Certificate most recently delivered hereunder. In the event of any material
change in the value of any of the assets specified in the foregoing clauses (b)
through (f), the Agents may, as applicable, (a) decrease the percentage of such
assets included in the calculation of the Borrowing Base (after no less than 10
<PAGE>
5
Business Days' notice to and consultation with the Borrower) or (b) with the
approval of the Supermajority Lenders, increase the percentage of such assets
included in the calculation of the Borrowing Base. On and after consummation of
the Securitization, there shall automatically be excluded from the calculation
of the Borrowing Base any of the assets specified in the foregoing clauses (a)
through (f) to the extent such assets are utilized in the Securitization.
"Borrowing Base Certificate" shall have the meaning assigned to such
term in Section 4.02(t).
"Borrowing Request" shall mean a request by the Borrower in accordance
with the terms of Section 2.03 and substantially in the form of Exhibit C.
"Business Day" shall mean any day other than a Saturday, Sunday or day
on which banks in New York City are authorized or required by law to close;
provided, however, that when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"Capital Contributions" shall have the meaning given such term in the
preamble to this Agreement.
"Capital Expenditure" shall mean (a) any expenditure (whether paid in
cash or other consideration or accrued as a liability) by the Borrower or any
Subsidiary that, in accordance with GAAP, is or should be included in "additions
to property, plant or equipment" or similar items reflected in the consolidated
statement of cash flows of the Borrower and the Subsidiaries and (b) to the
extent not covered by clause (a), any Capital Lease Obligation of the Borrower
or any Subsidiary.
"Capital Lease Obligations" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
A "Change in Control" shall be deemed to have occurred if (a) any
person or group (within the meaning of Rule 13d-5 of the Securities Exchange Act
of 1934 as in effect on the date hereof) shall own or control at any time
directly or indirectly, beneficially or of record, shares representing a greater
percentage of either (i) the outstanding common stock of the Borrower or
(ii) the aggregate ordinary voting power represented by all the outstanding
capital stock of the Borrower, than the percentage of such shares directly owned
and controlled, beneficially and of record, collectively by the Permitted
Holders; (b) the Permitted Holders shall cease to directly own and control at
any time, beneficially and of record, collectively at least 51% (or, at any time
after an IPO, at least 35%) of (i) the outstanding common stock of the Borrower
or (ii) the aggregate ordinary voting power represented by all the outstanding
capital stock of the Borrower (excluding, at any time prior to an IPO, (A) up to
10% of such common stock or voting power to the extent such common stock or the
capital stock representing such voting power is beneficially owned by the
Management Investors and (B) up to 10% of such common stock or voting power to
the extent such common stock or the capital stock representing such voting power
is beneficially owned by the lenders under the Subordinated Facility (or their
respective permitted successors and assigns, other than the Borrower or any of
its Affiliates) as a result of the issuance to such lenders of warrants as
provided in the Subordinated Facility as in effect on the date hereof); (c) a
majority of the voting seats (other than vacant seats) on the board of directors
of the Borrower shall at any time be occupied by persons who were
<PAGE>
6
neither (i) nominated by a Permitted Holder or by a majority of the board of
directors of the Borrower nor (ii) appointed by directors so nominated; (d) any
change in control (or similar event, however denominated) with respect to the
Borrower or any Subsidiary shall occur under and as defined in the agreement or
indenture in respect of the Subordinated Facility or the Subordinated Notes, as
the case may be, or in any other agreement, indenture or other instrument in
respect of Indebtedness to which the Borrower or any Subsidiary is a party; (e)
any person or group, other than one or more Permitted Holders, shall otherwise
directly or indirectly Control the Borrower; or (f) the Borrower shall (i) cease
to own and control, directly or indirectly, beneficially and of record, 100% of
each class of outstanding capital stock of each Subsidiary free and clear of all
Liens (other than any Lien under the Security Documents) or (ii) cease to have
the power (regardless of whether such power is exercised) to elect 100% of the
board of directors of each Subsidiary.
"Closing Date" shall mean the date of the first Credit Event.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all the "Collateral" as defined in any Security
Document.
"Commitment" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment and Term Loan Commitment.
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Borrower dated September 1996.
"Consolidated Capital Expenditures" shall mean, for any period, the sum
of all Vehicle Consolidated Capital Expenditures and Non-Vehicle Consolidated
Cash Capital Expenditures for such period.
"Consolidated Cash Flow Available for Fixed Charges" shall mean, for
any period, (a) the sum of (i) Consolidated EBITDA for such period, (ii) Vehicle
Sale Proceeds for such period, (iii) Non-Vehicle Sale Proceeds for such period
and (iv) Consolidated Lease Expense for such period (excluding interest expense,
if any, associated with Capital Lease Obligations) minus (b) the sum of
(i) Consolidated Capital Expenditures for such period and (ii) income taxes paid
in cash for such period, each such component determined on a consolidated basis
for the Borrower and the Subsidiaries in accordance with GAAP.
"Consolidated Cash Interest Expense" shall mean, for any period, the
gross interest expense paid in cash by the Borrower and the Subsidiaries during
such period, determined on a consolidated basis in accordance with GAAP, but
excluding in any event fees and expenses paid in connection with the
Transactions; provided, however, that, with respect to the following periods,
Consolidated Cash Interest Expense shall be deemed equal to (a) for the four
consecutive fiscal quarters ended March 31, 1997, Consolidated Cash Interest
Expense for the two-fiscal-quarter period ended on such date, multiplied by 2,
and (b) for the four consecutive fiscal quarters ended June 30, 1997,
Consolidated Cash Interest Expense for the three-fiscal-quarter period ended on
such date, multiplied by 1-1/3. For the fiscal quarter ended December 31, 1996,
Consolidated Cash Interest Expense shall be deemed equal to the product of (a)
Consolidated Cash Interest Expense for the period from and including the Closing
Date to and including December 31, 1996, times (b) the product of (i) 92 divided
by (ii) the difference between 92 and the
<PAGE>
7
number of days in the period from and including October 1, 1996, to but
excluding the Closing Date. For purposes of the foregoing, gross interest
expense shall be determined after giving effect to any net payments made or
received by the Borrower and the Subsidiaries with respect to Interest Rate
Protection Agreements.
"Consolidated Current Assets" shall mean, at any date of determination,
all assets (other than cash and Permitted Investments) that would, in accordance
with GAAP, be classified on a consolidated balance sheet of the Borrower and the
Subsidiaries as current assets at such date of determination.
"Consolidated Current Liabilities" shall mean, at any date of
determination, all liabilities (other than the current portion of long-term
Indebtedness and payments with respect to Revolving Loans) that would, in
accordance with GAAP, be classified on a consolidated balance sheet of the
Borrower and the Subsidiaries as current liabilities at such date of
determination.
"Consolidated EBITDA" shall mean, for any period for any person,
Consolidated Net Income of such person for such period, plus, to the extent
deducted in computing such Consolidated Net Income for such period, (a) the sum
of (i) all income tax expense, (ii) total interest expense and
(iii) depreciation, depletion, amortization of intangibles and other non-cash
charges or non-cash losses, including financing and acquisition expenses
incurred in connection with the Transactions, minus, to the extent added in
computing such Consolidated Net Income for such period, the (b) sum of (i) any
interest income, (ii) any non-cash income or non-cash gains, (iii) any
extraordinary gains and (iv) all income from Vehicle Sales and Non-Vehicle
Sales, each such component determined on a consolidated basis with respect to
such person and its subsidiaries in accordance with GAAP; provided, however,
that, with respect to the following periods, Consolidated EBITDA of the Borrower
shall be deemed to be equal to (A) for the fiscal quarter ended March 31, 1996,
$22,000,000, (B) for the fiscal quarter ended June 30, 1996, $49,000,000 and (C)
for the fiscal quarter ended September 30, 1996, $55,000,000. For the fiscal
quarter ended December 31, 1996, Consolidated EBITDA of the Borrower shall be
deemed to equal the product of (a) Consolidated EBITDA of the Borrower for the
period from and including the Closing Date to and including December 31, 1996,
times (b) the product of (i) 92 divided by (ii) the difference between 92 and
the number of days in the period from and including October 1, 1996, to but
excluding the Closing Date.
"Consolidated Lease Expense" shall mean, for any period, all payment
obligations of the Borrower and the Subsidiaries during such period under
agreements for the lease, hire or use of any real or personal property,
including Capital Lease Obligations and obligations in the nature of operating
leases (including the interest expense, if any, associated therewith), as
determined on a consolidated basis for the Borrower and the Subsidiaries in
accordance with GAAP and other than any such payment obligation of the Borrower
under the Lease.
"Consolidated Net Income" shall mean, for any period for any person,
net income or loss of such person and its subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, provided that there
shall be excluded from such calculation of net income or loss (a) the income of
any person in which any other person (other than such person or any of its
subsidiaries or any director holding qualifying shares in accordance with
applicable law) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to such person or any of its
wholly owned subsidiaries by such other person during such period, (b) the
income (or loss) of any other person accrued prior to the date it becomes a
subsidiary of such person or is merged into or consolidated with such person or
any of its subsidiaries or the date that such other person's assets are acquired
by such person or any of its subsidiaries, (c) the income of any subsidiary of
such person to the extent that the declaration or payment
<PAGE>
8
of dividends or similar distributions by such subsidiary of that income is not
at the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that subsidiary, (d) any after-tax gains or losses attributable to
sales of assets out of the ordinary course of business and (e) to the extent not
included in clauses (a) through (d) above, any non-cash extraordinary gains or
non-cash extraordinary losses.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Credit Event" shall have the meaning assigned to such term in Section
4.01.
"CTR" shall have the meaning given such term in the preamble to this
Agreement.
"Dealer" shall mean any person engaged, by or on behalf of the Borrower
or any Subsidiary (whether as an independent, commissioned agent or an
employee), in the Qualifying Rental of Vehicles or the bona fide sale or rental
of other equipment and products of the Borrower or any Subsidiary, including
through stores owned or operated by the Borrower or any Subsidiary.
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"dollars" or "$" shall mean lawful money of the United States of
America.
"Domestic Subsidiaries" shall mean all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia.
"Eligible Accounts Receivable" shall mean at the time of any
determination thereof all Accounts that satisfy the following criteria at the
time of creation and continue to meet the same at the time of such
determination: (a) all payments on such Account are by the terms of such Account
due not later than 60 days after the date stated in the original related
invoice; (b) such Account has been invoiced and is not, and not more than 50% of
the aggregate amount of Accounts from the same Account Debtor and any Affiliates
thereof are, more than 120 days past due; (c) such Account is denominated in
dollars; (d) such Account arose from a completed, outright and lawful sale of
goods, Qualifying Rental of Vehicles or, in connection with the Qualifying
Rental of Vehicles, the rental of equipment or from the completed performance
and acceptance of services by the Borrower or a Guarantor, all in the ordinary
course of business at prices and on terms and conditions no less favorable to
the Borrower or such Guarantor than could be obtained on an arm's length basis;
(e) such Account is owned solely by the Borrower or a Guarantor, is subject to a
perfected first priority security interest in favor of the Collateral Agent for
the benefit of the Secured Parties pursuant to the Security Documents and is not
subject to any other Lien; (f) such Account arose in the ordinary course of
business of the Borrower or a Guarantor and, to the best knowledge of the
Borrower and its Subsidiaries, no event of death, bankruptcy, insolvency or
inability to pay creditors generally of the Account Debtor thereunder has
occurred, and no notice thereof has been received; (g) such Account complies in
all material respects with the requirements of all applicable laws and
regulations, whether Federal, state or local; (h) with respect to such Account,
the Account Debtor (i) is a United States person (or, if such person is not a
United States person, such Account is supported by a letter of credit approved
by the Administrative Agent in favor of the Borrower or a Guarantor) or (ii) is
<PAGE>
9
not the United States of America or any department, agency or instrumentality
thereof, unless the Borrower or a Guarantor duly assigns its rights to payment
of such Account to the Collateral Agent pursuant to the Assignment of Claims Act
of 1940, as amended, which assignment and related documents and filings shall be
in form and substance satisfactory to the Collateral Agent; (i) such Account
constitutes an "account" or "chattel paper" within the meaning of the Uniform
Commercial Code of the state in which the Account is located; (j) such Account
complies with all requirements of applicable law, including the Federal Consumer
Credit Protection Act, the Federal Truth in Lending Act and Regulation Z of the
Board; (k) with respect to such Account (if such Account is for an amount
greater than $250,000), the Account Debtor has not been disapproved by the
Required Lenders (based, in such Lenders' reasonable judgment, upon the
creditworthiness of such Account Debtor), provided that this clause (k) shall
not apply to any Accounts of the Seller Parent or any of its Controlled
Affiliates so long as the Seller Parent's long-term, non-credit enhanced senior
unsecured indebtedness is rated at least both BBB by Standard & Poor's Ratings
Service and BAA2 by Moody's Investors Service, Inc.; (l) to the best knowledge
of the Borrower and the Subsidiaries, such Account is in full force and effect
and constitutes a legal, valid and binding obligation of the Account Debtor
enforceable in accordance with its terms; (m) the Account Debtor with respect to
such Account has not asserted that such Account is, and neither the Borrower nor
any of its Subsidiaries is aware of any basis upon which such Account could be,
subject to any defense, offset, deduction, credit or dispute (other than any
commission payable to any Dealer in the ordinary course of business); and
(n) such Account is payable directly to (i) the Collateral Proceeds Account (as
defined in the Security Agreement) or (ii) a Collection Deposit Account or
Lockbox (as defined in the Security Agreement) that is subject to a Lockbox and
Depository Agreement (as defined in the Security Agreement) duly executed and
delivered to the Collateral Agent. Notwithstanding the foregoing, all Accounts
of any single Account Debtor (unless otherwise agreed to by the Required
Lenders) and its Affiliates which, in the aggregate, exceed 5% of the total
amount of all Eligible Accounts Receivable at the time of any determination,
shall be deemed not to be Eligible Accounts Receivable to the extent of such
excess, provided that the foregoing percentage limitation shall not apply to any
Accounts of the Seller Parent or any of its Controlled Affiliates so long as the
Seller Parent's long-term, non-credit enhanced senior unsecured indebtedness is
rated at least both BBB by Standard & Poor's Ratings Service and BAA2 by Moody's
Investors Service, Inc. In addition, notwithstanding the foregoing, in
determining the amount of Accounts to be included as Eligible Accounts
Receivable, the face amount of Accounts shall be reduced by (a) the amount of
all accrued and actual returns, discounts, claims, credits or credits pending,
charges, price adjustments, commissions or other amounts due to Dealers or
similar persons, freight or finance charges or other allowances (including any
amount that the Borrower or a Guarantor, as applicable, may be obligated to
rebate to a customer pursuant to the terms of any agreement or understanding
(written or oral)) and (b) the aggregate amount of all cash received in respect
of Accounts but not yet applied by the Borrower or the applicable Guarantor to
reduce the amount of the Accounts.
"Eligible Non-Revenue-Producing Vehicles" shall mean at the time of any
determination thereof, without duplication, all Vehicles that satisfy all the
requirements set forth in the definition of the term "Eligible Revenue-Producing
Vehicles" other than clause (e) of such definition. The standards of eligibility
for such Vehicles may be changed from time to time solely by the Collateral
Agent in good faith and in the exercise of its reasonable judgment, with any
such changes to be effective after no less than 10 Business Days' notice to and
consultation with the Borrower.
"Eligible Non-Vehicle Non-Revenue-Producing Equipment" shall mean at
the time of any determination thereof, without duplication, all equipment of the
Borrower or a Guarantor (other than Vehicles) that satisfy all the requirements
set forth in the definition of the term "Eligible Non-Vehicle Revenue-Producing
Equipment" other than clause (d) of such definition. The standards of
eligibility for
<PAGE>
10
such Vehicles may be changed from time to time solely by the Collateral Agent in
good faith and in the exercise of its reasonable judgment, with any such changes
to be effective after no less than 10 Business Days' notice to and consultation
with the Borrower.
"Eligible Non-Vehicle Revenue-Producing Equipment" shall mean at the
time of any determination thereof, without duplication, all equipment of the
Borrower or a Guarantor (other than Vehicles) to the extent that: (a) the
Borrower or a Guarantor has good and unencumbered title thereto (subject to
Permitted Liens); (b) the Collateral Agent on behalf of the Secured Parties
possesses a valid first priority perfected security interest therein pursuant to
the Security Documents; (c) such equipment is located in the United States of
America; (d) the Dealer for such equipment is making such equipment available
for bona fide sale or rent in the ordinary course of such Dealer's business, and
such equipment is not stolen, lost or damaged beyond repair; (e) such equipment
is capitalized as an asset on the consolidated balance sheet of the Borrower in
accordance with GAAP; and (f) such equipment is not leased by a third party to
the Borrower or a Subsidiary. The standards of eligibility for such equipment
may be changed from time to time solely by the Collateral Agent in good faith
and in the exercise of its reasonable judgment, with any such changes to be
effective after no less than 10 Business Days' notice to and consultation with
the Borrower.
"Eligible Other Assets Amount" shall mean, for any given date, the
amount set forth on Schedule 1.01(a), provided that upon and after the earlier
of (a) the issuance of the Subordinated Notes and (b) the consummation of the
Securitization, the Eligible Other Assets Amount shall equal $0.
"Eligible Real Estate" shall mean at the time of any determination
thereof, without duplication, all real properties owned in fee by the Borrower
or a Guarantor to the extent that: (a) the Borrower or such Guarantor has good
and unencumbered title thereto (subject to Permitted Liens); (b) the Collateral
Agent on behalf of the Secured Parties possesses a valid first priority
perfected security interest therein pursuant to a mortgage or deed of trust and
other security documents in favor of the Collateral Agent, in each case in form
and substance reasonably satisfactory to the Collateral Agent; (c) such mortgage
or deed of trust and other security documents shall have been filed and recorded
as specified by the Collateral Agent and satisfactory evidence of such filing
and recording shall have been received by the Collateral Agent; (d) the
Collateral Agent shall have received such documents, including satisfactory
title insurance policies (together with endorsements, coinsurance and
reinsurance with respect thereto), surveys, abstracts, appraisals and legal
opinions, as are reasonably requested by the Collateral Agent with respect to
such real property; (e) arrangements reasonably satisfactory to the Collateral
Agent shall have been made with respect to the potential receipt and application
of proceeds from casualty or other damage to or condemnation of such real
property; and (f) such real property is located in the United States of America.
The standards of eligibility for such real property may be changed from time to
time solely by the Collateral Agent in good faith and in the exercise of its
reasonable judgment, with any such changes to be effective after no less than 10
Business Days' notice to and consultation with the Borrower.
"Eligible Revenue-Producing Vehicles" shall mean at the time of any
determination thereof, without duplication, all Vehicles to the extent that,
with respect to each such Vehicle: (a) the Borrower, a Guarantor or Leasco has
good and unencumbered title thereto (subject to Permitted Liens, it being
acknowledged that Vehicles owned by Leasco do not constitute part of the
Collateral except, after the Step-Up Date, if required as provided in Section
5.15(d)); (b) the Collateral Agent on behalf of the Secured Parties possesses a
valid first priority perfected security interest therein pursuant to the
Security Documents, other than, subject to Section 5.15(d), in the case of the
Vehicles owned by Leasco; (c) in the case of Vehicles owned by Leasco, all the
outstanding capital stock of Leasco shall have been pledged to the Collateral
Agent by the Borrower and the Borrower shall have complied with Section 5.15;
(d) such
<PAGE>
11
Vehicle is located in the United States of America; (e) the Dealer for such
Vehicle is making such Vehicle available for Qualifying Rentals in the ordinary
course of such Dealer's business, and such Vehicle is not stolen, lost or
damaged beyond repair; (f) such Vehicle is capitalized as an asset on the
consolidated balance sheet of the Borrower in accordance with GAAP (subject to
the terms set forth in the proviso to Section 5.04(a)); (g) the Borrower or a
Guarantor has taken (or, in the case of the Borrower, has caused Leasco to take)
all actions with respect to such Vehicle as required by the Security Agreement,
including the provisions of Article VI thereof; and (h) such Vehicle is not
leased by a third party to the Borrower or a Subsidiary. The standards of
eligibility for such Vehicles may be changed from time to time solely by the
Collateral Agent in good faith and in the exercise of its reasonable judgment,
with any such changes to be effective after no less than 10 Business Days'
notice to and consultation with the Borrower.
"environment" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
"Environmental Claim" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action or
other cause of action by, or on behalf of, any Governmental Authority or any
person for damages, injunctive or equitable relief, personal injury (including
sickness, disease or death), Remedial Action costs, tangible or intangible
property damage, natural resource damages, nuisance, pollution or any adverse
effect on the environment caused by any Hazardous Material, or for fines,
penalties or restrictions, resulting from or based upon (a) the existence, or
the continuation of the existence, of a Release (including sudden or non-sudden,
accidental or non- accidental Releases), (b) exposure to any Hazardous Material,
(c) the presence, use, handling, transportation, storage, treatment or disposal
of any Hazardous Material or (d) the violation or alleged violation of any
Environmental Law or Environmental Permit.
"Environmental Law" shall mean any and all applicable present and
future treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions or binding agreements issued, promulgated or entered into
by any Governmental Authority, relating in any way to the environment,
preservation or reclamation of natural resources, the management, Release or
threatened Release of any Hazardous Material or to public health and safety
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. (S)(S) 9601 et seq. (collectively
"CERCLA"), the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42
U.S.C. (S)(S) 6901 et seq., the Federal Water Pollution Control Act, as amended
by the Clean Water Act of 1977, 33 U.S.C. (S)(S) 1251 et seq., the Clean Air Act
of 1970, as amended 42 U.S.C. (S)(S) 7401 et seq., the Toxic Substances Control
Act of 1976, 15 U.S.C. (S)(S) 2601 et seq., the Occupational Safety and Health
Act of 1970, as amended, 29 U.S.C. (S)(S) 651 et seq., the Emergency Planning
and Community Right-to-Know Act of 1986, 42 U.S.C. (S)(S) 11001 et seq., the
Safe Drinking Water Act of 1974, as amended, 42 U.S.C. (S)(S) 300(f) et seq.,
the Hazardous Materials Transportation Act, 49 U.S.C. (S)(S) 5101 et seq., and
any similar or implementing state or local law, and all amendments or
regulations promulgated under any of the foregoing.
"Environmental Permit" shall mean any permit, approval, authorization,
certificate, license, or variance required by or from any Governmental Authority
pursuant to any Environmental Law.
"Equity Issuance" shall mean any issuance or sale by the Borrower or
any Subsidiary of any shares of capital stock or other equity securities of the
Borrower or any Subsidiary, as applicable, or any
<PAGE>
12
obligations convertible into or exchangeable for, or giving any person a right,
option or warrant to acquire such securities or such convertible or exchangeable
obligations, except in each case for (a) any issuance or sale to the Borrower or
any wholly owned Subsidiary of the Borrower and (b) sales or issuances of common
stock of the Borrower to Management Investors or directors of the Borrower or
any Subsidiary under any Option Plan, to the extent that the proceeds from all
sales and issuances described in this clause (b) do not exceed in the aggregate
$5,000,000 during the term of this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with any Loan Party or Leasco, is treated as a
single employer under Section 414(b) or (c) of the Code, or solely for purposes
of Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan and with respect to which the PBGC has neither waived the reporting
requirements nor publicly announced that it will not impose monetary penalties
for failure to meet the reporting requirements; (b) the adoption of any
amendment to a Plan that would require the provision of security pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (e) the incurrence of any liability under Title IV of ERISA with respect
to the termination of any Plan or the withdrawal or partial withdrawal of any
Loan Party, Leasco or any of their respective ERISA Affiliates from any Plan or
Multiemployer Plan; (f) the receipt by any Loan Party, Leasco or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (g) the receipt by any Loan Party, Leasco or any ERISA Affiliate of
any notice concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA; (h) the occurrence of a
"prohibited transaction" with respect to a Plan pursuant to which any Loan
Party, Leasco or any of their respective subsidiaries is a "disqualified person"
(within the meaning of Section 4975 of the Code) or with respect to which any
Loan Party, Leasco or any of their respective subsidiaries could otherwise be
liable; and (i) any other event or condition with respect to a Plan or
Multiemployer Plan that could reasonably be expected to result in liability of
any Loan Party or Leasco (other than for the payment of premiums to the PBGC or
the payment of contributions to any such Plan or Multiemployer Plan made in the
ordinary course of business).
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Eurodollar Revolving Loan or
Eurodollar Term Loan.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
"Eurodollar Term Borrowing" shall mean a Borrowing comprised of
Eurodollar Term Loans.
<PAGE>
13
"Eurodollar Term Loan" shall mean any Term Loan bearing interest at a
rate determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Excess Cash Flow" shall mean, for any fiscal year, the excess of:
(a) the sum, without duplication, of (i) Consolidated EBITDA
of the Borrower for such fiscal year, (ii) extraordinary cash income,
if any, during such fiscal year to the extent that such extraordinary
cash income (A) is not included in Consolidated EBITDA and (B) is not
required to be utilized in connection with a payment made (or to be
made) by the Borrower pursuant to clause (c), (d), (f) or (g) of
Section 2.13, (iii) Vehicle Sale Proceeds for such fiscal year, (iv)
Non-Vehicle Sale Proceeds for such fiscal year and (v) an amount equal
to any decrease in Working Capital during such fiscal year (provided
that, for the fiscal year ended December 31, 1997, the first
$15,000,000 of any such decrease in Working Capital during such fiscal
year shall be excluded from this clause (v)), over
(b) the sum, without duplication, of (i) the amount of any
income taxes payable by the Borrower and the Subsidiaries with respect
to such fiscal year, (ii) Consolidated Cash Interest Expense paid
during such fiscal year, (iii) Consolidated Capital Expenditures made
in accordance with Section 6.15 during such fiscal year, (iv) scheduled
principal repayments of Indebtedness made by the Borrower or any
Subsidiary to any person other than an Affiliate of the Borrower or any
Subsidiary during such fiscal year, (v) optional prepayments of the
principal of Loans during such fiscal year, but only to the extent such
prepayments by their terms cannot be reborrowed or redrawn and do not
occur in connection with the Securitization or any other refinancing of
all or any portion of the Loans, and (vi) an amount equal to any
increase in Working Capital during such fiscal year.
"Exchange Notes" shall have the meaning given such term in the Loan
Agreement relating to the Subordinated Facility and dated as of the date hereof
among the Borrower, the lenders named therein and The Chase Manhattan Bank, as
administrative agent.
"Fee Letter" shall mean the Fee Letter dated September 18, 1996, among
the Borrower, the Administrative Agent and the Collateral Agent.
"Fees" shall mean the Commitment Fees, the Agents' Fees, the LC
Participation Fees and the Issuing Bank Fees.
"Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer, Treasurer or Controller of such
corporation.
"Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of
(a) Consolidated Cash Flow Available for Fixed Charges for such period to
(b) Fixed Charges for such period.
"Fixed Charges" shall mean, for any period, the sum of (a) Consolidated
Lease Expense (excluding interest expense, if any, associated with Capital Lease
Obligations) for such period, (b) Consolidated Cash Interest Expense for such
period and (c) scheduled principal payments of
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14
Indebtedness made by the Borrower or any Subsidiary to any person other than the
Borrower or any wholly owned Subsidiary of the Borrower during such period.
"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantee" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; provided, however, that the
term "Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business.
"Guarantee Agreement" shall mean the Guarantee Agreement, substantially
in the form of Exhibit D, made by the Guarantors in favor of the Collateral
Agent for the benefit of the Secured Parties.
"Guarantors" shall mean each person listed on Schedule 1.01(a) and each
other person that becomes a party to a Guarantee Agreement as the Guarantor, and
the permitted successors and assigns of each such person.
"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes, hazardous or toxic substances or wastes, pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls ("PCBs") or PCB-containing materials or
equipment, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money, (b) all obligations of such
person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such person under conditional sale or other title retention
agreements relating to property or assets purchased by such person (excluding
trade accounts payable and accrued obligations incurred in the ordinary course
of business), (d) all obligations of such person issued or assumed as the
deferred purchase price of property or services (excluding trade accounts
payable and accrued obligations incurred in the ordinary course of business),
(e) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such person, whether or not the
obligations secured thereby have been assumed (provided that if the obligations
so secured have not been assumed by such person, such obligations shall be
deemed to be in an amount equal to the fair market value of such property, as
determined in good faith by the board of directors of such person), (f) all
Guarantees by such person of Indebtedness of others, (g) all Capital Lease
Obligations of such person, (h) all obligations of such person in respect of
Interest Rate Protection Agreements, foreign currency exchange agreements or
other interest
<PAGE>
15
or exchange rate hedging arrangements (such obligations to be equal at any time
to the termination value of such agreements or arrangements that would be
payable by such person at such time) and (i) all obligations of such person as
an account party in respect of letters of credit and bankers' acceptances. The
Indebtedness of any person shall include the Indebtedness of any partnership in
which such person is a general partner.
"Indemnity, Subrogation and Contribution Agreement" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit E, among the Borrower, the Guarantors and the Collateral Agent.
"Interest Coverage Ratio" shall mean, for any period, the ratio of
(a) Consolidated EBITDA of the Borrower for such period to (b) Consolidated Cash
Interest Expense for such period.
"Interest Payment Date" shall mean, with respect to any Loan, the last
day of the Interest Period applicable to the Borrowing of which such Loan is a
part and, in the case of a Eurodollar Borrowing with an Interest Period of more
than three months' duration, each day that would have been an Interest Payment
Date had successive Interest Periods of three months' duration been applicable
to such Borrowing, and, in addition, the date of any prepayment of such
Borrowing or conversion of such Borrowing to a Borrowing of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
Borrower may elect and (b) as to any ABR Borrowing, the period commencing on the
date of such Borrowing and ending on the earliest of (i) the next succeeding
March 31, June 30, September 30 or December 31, (ii) the Maturity Date and
(iii) the date such Borrowing is converted to a Borrowing of a different Type in
accordance with Section 2.10 or repaid or prepaid in accordance with Section
2.11 or 2.12; provided, however, that if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such
next succeeding Business Day would fall in the next calendar month, in which
case such Interest Period shall end on the next preceding Business Day. Interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or
similar agreement or arrangement designed to protect the Borrower or any of the
Subsidiaries against fluctuations in interest rates and not entered into for
speculation.
"Investors" shall have the meaning given such term in the preamble to
this Agreement.
"IPO" shall mean a fully distributed initial public offering of common
stock of the Borrower pursuant to an effective registration statement under the
Securities Act of 1933.
"Issuing Bank" shall mean, as the context may require, The Chase
Manhattan Bank, Citicorp, U.S.A., Inc. or any of their respective Affiliates.
"Issuing Bank Fees" shall have the meaning assigned to such term in
Section 2.05(c).
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16
"L/C Commitment" shall mean, with respect to any Issuing Bank, the
commitment of such Issuing Bank to issue Letters of Credit pursuant to Section
2.22.
"L/C Disbursement" shall mean a payment or disbursement made by an
Issuing Bank pursuant to a Letter of Credit.
"L/C Exposure" shall mean at any time the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate principal amount of all L/C Disbursements that have not yet been
reimbursed at such time. The L/C Exposure of any Revolving Credit Lender at any
time shall mean its Applicable Percentage of the aggregate L/C Exposure at such
time.
"L/C Participation Fee" shall have the meaning assigned to such term in
Section 2.05(c) .
"Leasco" shall have the meaning given such term in the preamble to this
Agreement.
"Lease" shall mean the Master Motor Vehicle Lease Agreement dated as of
the date hereof between Leasco, as lessor, and the Borrower, as lessee.
"Lenders" shall mean (a) the financial institutions listed on Schedule
2.01 (other than any such financial institution that has ceased to be a party
hereto pursuant to an Assignment and Acceptance) and (b) any financial
institution that has become a party hereto pursuant to an Assignment and
Acceptance.
"Letter Agreement" shall mean the letter agreement dated October 15,
1996, between the Borrower and Jay Alix & Associates, Inc., as the same may be
amended, modified or supplemented from time to time in accordance with the terms
hereof and thereof.
"Letter of Credit" shall mean any letter of credit issued pursuant to
Section 2.22.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing, the
rate (rounded upwards, if necessary, to the next 1/16 of 1%) at which dollar
deposits approximately equal in principal amount to, the Administrative Agent's
portion of such Eurodollar Borrowing and for a maturity comparable to such
Interest Period are offered to the principal London office of the Administrative
Agent in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"Loan Documents" shall mean this Agreement, the Letters of Credit, the
Guarantee Agreement, the Security Documents and the Indemnity, Subrogation and
Contribution Agreement.
"Loan Parties" shall mean the Borrower and the Guarantors.
"Loans" shall mean the Revolving Loans and the Term Loans.
<PAGE>
17
"Management Agreement" shall mean the Management Agreement dated as of
the date hereof between the Borrower and Questor Management (and its permitted
successors and assigns thereunder), as the same may be amended, modified or
supplemented from time to time in accordance with the terms hereof and thereof.
"Management Investors" shall mean management and other employees of the
Borrower and the Subsidiaries who are on the Closing Date or become in the
future purchasers of common stock of the Borrower pursuant to any Option Plan.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean (a) a materially adverse effect on
the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and the Subsidiaries taken as a whole, (b) material
impairment of the ability of the Borrower or any other Loan Party to perform any
of its obligations under any Loan Document to which it is or will be a party or
(c) material impairment of the rights of or benefits available to the Lenders
under any Loan Document.
"Maturity Date" shall mean the fifth anniversary of the Closing Date.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean (a) with respect to any Asset Sale,
Vehicle Sale or Non-Vehicle Sale, the cash proceeds thereof net of
(i) reasonable costs of sale (including payment of the outstanding principal
amount of, premium or penalty, if any, interest and other amounts on any
Indebtedness (other than Loans) required to be repaid under the terms thereof as
a result of such Sale), (ii) taxes paid or payable in the year such Sale occurs
as a result thereof and (iii) amounts provided as a reserve, in accordance with
GAAP, against any liabilities under any indemnification obligations associated
with such Sale, provided that, to the extent and at the time any such amounts
are released from such reserve, such amounts shall constitute Net Cash Proceeds,
and (b) with respect to any Equity Issuance or any issuance or other disposition
of Indebtedness for borrowed money, the cash proceeds thereof net of reasonable
underwriting commissions or placement fees and expenses directly incurred in
connection therewith.
"Non-Vehicle Consolidated Cash Capital Expenditures" shall mean, for
any period, the sum of all Capital Expenditures (other than Vehicle Capital
Expenditures) paid in cash during such period.
"Non-Vehicle Sale" shall mean any sale, lease, transfer, assignment,
loss, damage or destruction (in the case of loss, damage or destruction, to the
extent covered by insurance) or other disposition (by merger or otherwise) to
any person (other than the Borrower or any wholly owned Subsidiary of the
Borrower) of equipment previously made available by a Dealer for bona fide sale
or rent in the ordinary course of such Dealer's business.
"Non-Vehicle Sale Proceeds" shall mean, for any period, all Net Cash
Proceeds received during such period by the Borrower or any Subsidiary from
Non-Vehicle Sales.
"Obligations" shall mean all obligations defined as "Obligations" in
the Guarantee Agreement and the Security Documents.
<PAGE>
18
"Option Plans" shall mean any employee stock option or stock purchase
plan or other employee benefit plan of the Borrower or any Subsidiary in
existence from time to time.
"Orderly Liquidation Expenses" shall mean at the time of any
determination thereof the aggregate amount, in dollars, of expenses and costs
that would be incurred in connection with the orderly liquidation of all
Eligible Revenue-Producing Vehicles at such time, as reasonably determined by
the Collateral Agent, including recapture costs, Vehicle preparatory costs
(including maintenance and removal of decals), divisional utility costs,
administrative charges, sales commissions and appropriate reserves.
"Original Cost" shall mean at the time of any determination thereof an
amount equal to the sum, in dollars, of (a) the purchase price of each Eligible
Revenue-Producing Vehicle paid by the Borrower or any Subsidiary (or, in the
case of Vehicles acquired by the Borrower or a Subsidiary in connection with the
Acquisition, the Seller) and shown on the dealer's invoice; (b) the cost,
including transportation and installation expenses, of ancillary equipment
(including the "box" or storage component) installed on any such Vehicle in the
ordinary course of business which enhances the value of such Vehicle; and
(c) sales taxes on any amounts referred to in the foregoing clauses (a) and (b),
net of any Vehicle incentive payments credited against the costs referred to in
the foregoing clauses (a), (b) and (c).
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"Percentage of Excess Cash Flow" shall mean, for any fiscal year, an
amount equal to 75% of Excess Cash Flow for such fiscal year; provided, however,
that, for any such fiscal year, such amount shall be reduced to 50% of Excess
Cash Flow for such fiscal year if the Total Debt Ratio on the last day of such
fiscal year is equal to or less than 2.00 to 1.00.
"Perfection Certificate" shall mean the Perfection Certificate
substantially in the form of Annex 2 to the Security Agreement.
"Permitted Holder" shall mean Questor and any Affiliate thereof that is
reasonably satisfactory to the Administrative Agent.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within one year from the date of acquisition
thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Standard &
Poor's Ratings Service or from Moody's Investors Service, Inc.;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within one year from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of
any commercial bank organized under the laws of the United States of
America or any State thereof that has a combined capital and surplus
and undivided profits of not less than $250,000,000 and is rated (or
the long-term, non-credit enhanced senior unsecured indebtedness of the
holding company of such
<PAGE>
19
commercial bank is rated) A or better by Standard & Poor's Ratings
Service or A2 or better by Moody's Investors Service, Inc.; and
(d) other investment instruments approved in writing by the
Required Lenders and offered by financial institutions which have a
combined capital and surplus and undivided profits of not less than
$250,000,000.
"Permitted Lien" shall have the meaning given such term in
Section 6.02.
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which any Loan Party,
Leasco or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Pledge Agreement" shall mean the Pledge Agreement, substantially in
the form of Exhibit F, between the Borrower and the Subsidiaries parties thereto
and the Collateral Agent for the benefit of the Secured Parties.
"Properties" shall have the meaning given such term in Section 3.17.
"Purchase Agreement" shall mean the Asset and Stock Purchase Agreement
dated as of September 19, 1996, by and between the Seller and the Borrower, as
the same may be amended, modified or supplemented from time to time in
accordance with the terms thereof and hereof.
"Purchase Price" shall have the meaning given such term in the preamble
to this Agreement.
"Qualifying Rental" shall mean, with respect to any Vehicle, the bona
fide rental of such Vehicle by any person, other than an Affiliate of the
Borrower or any Subsidiary, for a period of no more than 90 days, provided that
such initial period of no more than 90 days may be extended or renewed for
successive periods of no more than 90 days if (a) the aggregate length of such
initial rental period and all extensions and renewals thereof does not exceed
one year, (b) there is no significant penalty or purchase obligation for any
failure to extend or renew such rental and (c) such Vehicle is not identified
with such person's name, color or logo (other than any legally required placard
indicating the identity of such person).
"Questor" shall have the meaning given such term in the preamble to
this Agreement.
"Questor Management" shall mean Questor Management Company, a Delaware
corporation.
"Register" shall have the meaning given such term in Section 9.04(d).
"Regulation G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
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20
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
"Remedial Action" shall mean (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions
required by any Governmental Authority or voluntarily undertaken to: (i) clean
up, remove, treat, abate or in any other way address any Hazardous Material in
the environment; (ii) prevent the Release or threat of Release, or minimize the
further Release of any Hazardous Material so it does not migrate or endanger or
threaten to endanger public health, welfare or the environment; or (iii) perform
studies and investigations in connection with, or as a precondition to, (i) or
(ii) above.
"Repayment Date" shall have the meaning given such term in
Section 2.11.
"Required Lenders" shall mean, at any time, Lenders having Loans, L/C
Exposure and unused Revolving Credit Commitments and Term Loan Commitments
representing at least 50% of the sum of all Loans outstanding, L/C Exposure and
unused Revolving Credit Commitments and Term Loan Commitments at such time.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.
"Revolving Credit Borrowing Base" shall mean at the time of any
determination thereof the difference between (a) the Borrowing Base at such time
and (b) the Aggregate Term Loan Exposure at such time.
"Revolving Credit Commitment" shall mean, with respect to each Lender,
the commitment of such Lender to make Revolving Loans hereunder as set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Revolving Credit Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to Section 2.09 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04.
"Revolving Credit Exposure" shall mean, with respect to any Lender at
any time, the aggregate principal amount at such time of all outstanding
Revolving Loans of such Lender, plus the aggregate amount at such time of such
Lender's L/C Exposure.
"Revolving Credit Lender" shall mean a Lender with a Revolving Credit
Commitment.
"Revolving Loans" shall mean the revolving loans made by the Lenders to
the Borrower pursuant to clause (b) of Section 2.01. Each Revolving Loan shall
be a Eurodollar Revolving Loan or an ABR Revolving Loan.
<PAGE>
21
"Secured Parties" shall have the meaning given such term in the
Security Agreement.
"Securitization" shall have the meaning given such term in
Section 5.14.
"Securitization Prepayments" shall have the meaning given such term in
Section 5.14.
"Security Agreement" shall mean the Security Agreement, substantially
in the form of Exhibit G, between the Borrower and the Subsidiaries parties
thereto and the Collateral Agent for the benefit of the Secured Parties.
"Security Documents" shall mean the Security Agreement, the Pledge
Agreement and each of the security agreements and other instruments and
documents executed and delivered pursuant to any of the foregoing or pursuant to
Section 5.16.
"Seller" shall have the meaning given such term in the preamble to this
Agreement.
"Seller Parent" shall mean Ryder System, Inc., a Florida corporation,
and its successors and assigns.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent or any Lender (including any branch,
Affiliate, or other fronting office making or holding a Loan) is subject (a)
with respect to the Base CD Rate, for new negotiable nonpersonal time deposits
in dollars of over $100,000 with maturities approximately equal to three months,
and (b) with respect to the Adjusted LIBO Rate, for Eurocurrency Liabilities (as
defined in Regulation D of the Board). Such reserve percentages shall include
those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to
constitute Eurocurrency Liabilities and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"Step-Up Date" shall mean the day immediately following the nine-month
anniversary of the Closing Date.
"Step-Up Period" shall mean the period, if any, commencing on and
including the Step-Up Date and ending on and excluding the day the
Securitization is consummated; provided, however, that if the Securitization is
consummated prior to the Step-Up Date, then there shall be no Step-Up Period.
"Stockholders' Agreement" shall mean the Stockholders' Agreement dated
as of the date hereof among Questor and the other Investors, as the same may be
amended, modified or supplemented from time to time in accordance with the terms
thereof and hereof.
"Subordinated Facility" shall mean the senior subordinated unsecured
credit facility created pursuant to the Loan Agreement dated as of the date
hereof among the Borrower, the lenders named therein and The Chase Manhattan
Bank, as administrative agent.
<PAGE>
22
"Subordinated Notes" shall mean any senior subordinated notes issued
after the Closing Date in a public offering or in a Rule 144A or other private
placement to refinance the Subordinated Facility.
"subsidiary" shall mean, with respect to any person (herein referred to
as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held, or (b) that is, at the time any
determination is made, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Subsidiary" shall mean any subsidiary of the Borrower.
"Supermajority Lenders" shall mean, at any time, Lenders having Loans,
L/C Exposure and unused Revolving Credit Commitments and Term Loan Commitments
representing at least 75% of the sum of all Loans outstanding, L/C Exposure and
unused Revolving Credit Commitments and Term Loan Commitments at such time.
"Term Borrowing" shall mean a Borrowing comprised of Term Loans.
"Term Loan Borrowing Base" shall mean at the time of any determination
thereof the difference between (a) the Borrowing Base at such time and (b) the
Aggregate Revolving Credit Exposure at such time.
"Term Loan Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Term Loans hereunder as set forth on Schedule
2.01, or in the Assignment and Acceptance pursuant to which such Lender assumed
its Term Loan Commitment, as applicable, as the same may be (a) reduced from
time to time pursuant to Section 2.09 and (b) reduced or increased from time to
time pursuant to assignments by or to such Lender pursuant to Section 9.04.
"Term Loan Exposure" shall mean, with respect to any Lender at any
time, the aggregate principal amount at such time of all outstanding Term Loans
of such Lender.
"Term Loans" shall mean the term loans made by the Lenders to the
Borrower pursuant to Section 2.01. Each Term Loan shall be a Eurodollar Term
Loan or an ABR Term Loan.
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day shall not be a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so reported
on such day or such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 a.m., New York City time,
on such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it.
"Total Debt" shall mean, at any date and without duplication, the
aggregate amount of all Indebtedness of the Borrower and the Subsidiaries at
such date as determined on a consolidated basis in
<PAGE>
23
accordance with GAAP (other than Indebtedness of the type described in clause
(h) or (i) of the definition of the term "Indebtedness", except to the extent
such Indebtedness consists of unreimbursed drawings under letters of credit).
"Total Debt Ratio" shall mean, for any period, the ratio of (a) Total
Debt on the last day of such period to (b) Consolidated EBITDA of the Borrower
for such period.
"Total Revolving Credit Commitment" shall mean, at any time, the
aggregate amount of the Revolving Credit Commitments, as in effect at such time.
"Total Term Loan Commitments" shall mean, at any time, the aggregate
amount of the Term Loan Commitments, as in effect at such time.
"Transaction Costs" shall have the meaning given such term in the
preamble to this Agreement.
"Transactions" shall have the meaning given such term in Section 3.02.
"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, the term "Rate" shall include
the Adjusted LIBO Rate and the Alternate Base Rate.
"Vehicle" shall mean any truck or other vehicle owned by the Borrower
or any Subsidiary and registered and based in the United States of America, the
body (including the "box" or storage component) and equipment mounted thereon
and all accessions, attachments and accessories of any type or description
attached to such truck or vehicle.
"Vehicle Consolidated Capital Expenditures" shall mean, for any period,
the sum of all Capital Expenditures made in such period for the acquisition of
Vehicles, which such Capital Expenditures shall include credits, allowances and
similar items received by the Borrower or any Subsidiary for Vehicle trade- ins.
"Vehicle Sale" shall mean any sale, lease (other than pursuant to a
Qualifying Rental), transfer, assignment, loss, damage or destruction (in the
case of loss, damage or destruction, to the extent covered by insurance) or
other disposition (by merger or otherwise) of Vehicles to any person other than
the Borrower or any wholly owned Subsidiary of the Borrower.
"Vehicle Sale Proceeds" shall mean, for any period, the sum of (a) all
Net Cash Proceeds received during such period by the Borrower or any Subsidiary
from Vehicle Sales and (b) the aggregate amount of credits, allowances and
similar items received during such period by the Borrower or any Subsidiary for
Vehicle trade-ins.
"Vehicle Title Nominee Agreement" shall mean the Vehicle Title Nominee
Agreement dated as of the Closing Date between the Seller and Leasco, as the
same may be amended, modified or supplemented from time to time in accordance
with the terms thereof and hereof.
"wholly owned Subsidiary" of any person shall mean a subsidiary of such
person of which securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the equity or 100% of the ordinary
voting power or 100% of the general partnership interests are, at the time
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24
any determination is being made, owned, controlled or held by such person or one
or more wholly owned subsidiaries of such person or by such person and one or
more wholly owned subsidiaries of such person.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Working Capital" shall mean, at any date of determination,
Consolidated Current Assets at such date minus Consolidated Current Liabilities
at such date.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided, however, that for purposes of determining compliance
with the covenants contained in Article VI, all accounting terms herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with GAAP as in effect on the date of this Agreement and applied on a
basis consistent with the application used in the financial statements referred
to in Section 3.05(a).
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, (a) to make a Term Loan to the Borrower on
the Closing Date in a principal amount not to exceed the lesser of (i) such
Lender's Term Loan Commitment and (ii) such Lender's Applicable Percentage of
the Term Loan Borrowing Base in effect at such time, and (b) to make Revolving
Loans to the Borrower, at any time and from time to time on or after the date
hereof, and until the earlier of the Maturity Date and the termination of the
Revolving Credit Commitment of such Lender in accordance with the terms hereof,
in an aggregate principal amount at any time outstanding that will not result in
such Lender's Revolving Credit Exposure exceeding the lesser of (i) such
Lender's Revolving Credit Commitment and (ii) such Lender's Applicable
Percentage of the Revolving Credit Borrowing Base in effect at such time. Within
the limits set forth in clause (b) of the preceding sentence and subject to the
terms, conditions and limitations set forth herein, the Borrower may borrow, pay
or prepay and reborrow Revolving Loans. Amounts paid or prepaid in respect of
Term Loans may not be reborrowed.
SECTION 2.02. Loans. (a) Each Loan shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their
applicable Term Loan Commitments or Revolving Credit Commitments, as the case
may be; provided, however, that the failure of any Lender to make any Loan shall
not in itself relieve any other Lender of its obligation to lend hereunder (it
being understood, however, that no Lender shall be responsible for the failure
of any other Lender to make any Loan required
<PAGE>
25
to be made by such other Lender). Except for Loans deemed made pursuant to
Section 2.02(f), the Loans comprising any Borrowing shall be in an aggregate
principal amount that is (i) an integral multiple of $1,000,000 and not less
than $5,000,000 or (ii) equal to the remaining available balance of the
applicable Commitments.
(b) Subject to Sections 2.08 and 2.15, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement. Borrowings of more than one Type may be outstanding at the same
time; provided, however, that the Borrower shall not be entitled to request any
Borrowing that, if made, would result in more than 15 Eurodollar Borrowings
outstanding hereunder at any time. For purposes of the foregoing, Borrowings
having different Interest Periods, regardless of whether they commence on the
same date, shall be considered separate Borrowings.
(c) Except with respect to Loans made pursuant to Section 2.02(f), each
Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds to such account in New
York City as the Administrative Agent may designate not later than 11:00 a.m.,
New York City time, and the Administrative Agent shall by 12:00 (noon), New York
City time, credit the amounts so received to an account in the name of the
Borrower, maintained with the Administrative Agent or the Collateral Agent and
designated by the Borrower in the applicable Borrowing Request or, if a
Borrowing shall not occur on such date because any condition precedent herein
specified shall not have been met, return the amounts so received to the
respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent at (i) in the case of the Borrower, the
interest rate applicable at the time to the Loans comprising such Borrowing and
(ii) in the case of such Lender, a rate determined by the Administrative Agent
to represent its cost of overnight or short-term funds (which determination
shall be conclusive absent manifest error). If such Lender shall repay to the
Administrative Agent such corresponding amount, (i) such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement, and
(ii) if the Borrower also shall have made such corresponding amount available to
the Administrative Agent, the Administrative Agent will promptly return such
corresponding amount to the Borrower.
(e) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request any Borrowing if the Interest Period requested
with respect thereto would end after the Maturity Date.
(f) If the applicable Issuing Bank shall not have received from the
Borrower the payment required to be made by Section 2.22(e) within the time
specified in such Section, such Issuing Bank will promptly
<PAGE>
26
notify the Administrative Agent of the L/C Disbursement and the Administrative
Agent will promptly notify each Revolving Credit Lender of such L/C Disbursement
and its Applicable Percentage thereof. Each Revolving Credit Lender shall pay by
wire transfer of immediately available funds to the Administrative Agent not
later than 2:00 p.m., New York City time, on such date (or, if such Revolving
Credit Lender shall have received such notice later than 12:00 (noon), New York
City time, on any day, not later than 10:00 a.m., New York City time, on the
immediately following Business Day), an amount equal to such Lender's Applicable
Percentage of such L/C Disbursement (it being understood that such amount shall
be deemed to constitute an ABR Revolving Loan of such Lender and such payment
shall be deemed to have reduced the L/C Exposure), and the Administrative Agent
will promptly pay to the applicable Issuing Bank amounts so received by it from
the Revolving Credit Lenders. The Administrative Agent will promptly pay to the
applicable Issuing Bank any amounts received by it from the Borrower pursuant to
Section 2.22(e) prior to the time that any Revolving Credit Lender makes any
payment pursuant to this paragraph (f); any such amounts received by the
Administrative Agent thereafter will be promptly remitted by the Administrative
Agent to the Revolving Credit Lenders that shall have made such payments and to
the applicable Issuing Bank, as their interests may appear. If any Revolving
Credit Lender shall not have made its Applicable Percentage of such L/C
Disbursement available to the Administrative Agent as provided above, such
Lender and the Borrower severally agree to pay interest on such amount, for each
day from and including the date such amount is required to be paid in accordance
with this paragraph to but excluding the date such amount is paid, to the
Administrative Agent for the account of the applicable Issuing Bank at (i) in
the case of the Borrower, a rate per annum equal to the interest rate applicable
to Revolving Loans pursuant to Section 2.06(a), and (ii) in the case of such
Lender, for the first such day, a rate determined by the Administrative Agent to
represent its cost of overnight or short-term funds (which determination shall
be conclusive absent manifest error), and for each day thereafter, the Alternate
Base Rate. If both the Borrower and such Lender shall make any such interest
payment to the Administrative Agent, then the Administrative Agent will promptly
return to the Borrower any such interest payment made to the Administrative
Agent by the Borrower.
SECTION 2.03. Borrowing Procedure. In order to request a Borrowing
(other than a deemed Borrowing pursuant to Section 2.02(f), as to which this
Section 2.03 shall not apply), the Borrower shall hand deliver or telecopy to
the Administrative Agent a duly completed Borrowing Request (a) in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three
Business Days before a proposed Borrowing, and (b) in the case of an ABR
Borrowing, not later than 12:00 noon, New York City time, one Business Day
before a proposed Borrowing. Each Borrowing Request shall be irrevocable, shall
be signed by or on behalf of the Borrower and shall specify the following
information: (i) with respect to any Borrowing on the Closing Date, whether such
Borrowing then being requested is to be a Term Borrowing or a Revolving Credit
Borrowing; (ii) whether such Borrowing is to be a Eurodollar Borrowing or an ABR
Borrowing; (iii) the date of such Borrowing (which shall be a Business Day);
(iv) the number and location of the account to which funds are to be disbursed
(which shall be an account that complies with the requirements of Section
2.02(c)); (v) the amount of such Borrowing; (vi) if such Borrowing is to be a
Eurodollar Borrowing, the Interest Period with respect thereto; and (vii) the
expected Aggregate Credit Exposure on the date of such Borrowing (after giving
effect to such Borrowing) and the Borrowing Base as set forth in the most
recently provided Borrowing Base Certificate; provided, however, that,
notwithstanding any contrary specification in any Borrowing Request, each
requested Borrowing shall comply with the requirements set forth in Section
2.02. If no election as to the Type of Borrowing is specified in any such
notice, then the requested Borrowing shall be an ABR Borrowing. If no Interest
Period with respect to any Eurodollar Borrowing is specified in any such notice,
then the Borrower shall be deemed to have selected an Interest Period of one
month's duration. The Administrative
<PAGE>
27
Agent shall promptly advise the applicable Lenders of any notice given pursuant
to this Section 2.03 (and the contents thereof), and of each Lender's portion of
the requested Borrowing.
SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the principal amount of each Term Loan of such Lender as
provided in Section 2.11 and the then unpaid principal amount of each Revolving
Loan on the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower or any Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs
(b) and (c) above shall be prima facie evidence of the existence and amounts of
the obligations therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the Borrower to repay
the Loans in accordance with their terms.
(e) Notwithstanding any other provision of this Agreement, in the event
any Lender shall request and receive a promissory note payable to such Lender
and its registered assigns, the interests represented by such note shall at all
times (including after any assignment of all or part of such interests pursuant
to Section 9.04) be represented by one or more promissory notes payable to the
payee named therein or its registered assigns.
SECTION 2.05. Fees. (a) The Borrower agrees to pay to each Lender,
through the Administrative Agent, on the last day of March, June, September and
December in each year and on each date on which any Commitment of such Lender
shall expire or be terminated as provided herein, a commitment fee (a
"Commitment Fee") of .375% per annum on the average daily unused amount of the
Commitments of such Lender during the preceding quarter (or other period
commencing with the date hereof or ending with the Maturity Date or the date on
which the Commitments of such Lender shall expire or be terminated); provided,
however, that such Commitment Fee shall increase to .500% per annum for all
periods (or portions thereof) occurring during the Step-Up Period. All
Commitment Fees shall be computed on the basis of the actual number of days
elapsed in a year of 360 days. The Commitment Fee due to each Lender shall
commence to accrue on the date hereof and shall cease to accrue on the date on
which the Commitment of such Lender shall expire or be terminated as provided
herein.
(b) The Borrower agrees to pay to the Administrative Agent and the
Collateral Agent, for their own respective accounts, the administrative fees and
the collateral monitoring fees, respectively, set forth in the Fee Letter at the
times and in the amounts specified therein (the "Agents' Fees").
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(c) The Borrower agrees to pay (i) to each Revolving Credit Lender,
through the Administrative Agent, on the last day of March, June, September and
December of each year and on the date on which the Revolving Credit Commitment
of such Lender shall be terminated as provided herein, a fee (an "L/C
Participation Fee") calculated on such Lender's Applicable Percentage of the
average daily aggregate L/C Exposure (excluding the portion thereof attributable
to unreimbursed L/C Disbursements) during the preceding quarter (or shorter
period commencing with the date hereof or ending with the Maturity Date or the
date on which all Letters of Credit have been canceled or have expired and the
Revolving Credit Commitments of all Lenders shall have been terminated) at a
rate equal to the difference between (A) the applicable margin from time to time
used to determine the interest rate on Revolving Credit Borrowings comprised of
Eurodollar Loans pursuant to Section 2.06 and (B) .25%, and (ii) to the
applicable Issuing Bank with respect to each Letter of Credit, on the last day
of March, June, September and December of each year and on the date on which
such Letter of Credit is canceled, expires or is drawn in full, (A) a fronting
fee of .25% per annum on the outstanding face amount of such Letter of Credit
during the preceding quarter (or shorter period commencing with the date hereof
or ending with the date on which such Letter of Credit is canceled, expires or
is drawn in full) and (B) the customary administrative fees of such Issuing Bank
(collectively, the "Issuing Bank Fees"). All L/C Participation Fees and Issuing
Bank Fees shall be computed on the basis of the actual number of days elapsed in
a year of 360 days.
All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders, except that the Issuing Bank Fees shall be paid directly to
the applicable Issuing Bank. Once paid, none of the Fees shall be refundable
under any circumstances.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when the Alternate Base Rate is determined by
reference to the Prime Rate and over a year of 360 days at all other times) at a
rate per annum equal to the Alternate Base Rate plus 1.00%; provided, however,
that such margin over the Alternate Base Rate shall increase to 1.50% per annum
for all periods (or portions thereof) occurring during the Step-Up Period.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus 2.00%; provided, however, that such margin over the Adjusted LIBO Rate
shall increase to 2.50% per annum for all periods (or portions thereof)
occurring during the Step-Up Period.
Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement. The
applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
SECTION 2.07. Default Interest. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, or under any other Loan Document,
the Borrower shall on demand from time to time pay interest, to the extent
permitted by law, on such defaulted amount to but excluding the date of actual
payment (after as well as before judgment) (a) in the case of overdue principal
on any ABR Borrowing, at the rate otherwise applicable to the Loans comprising
such Borrowing pursuant to Section 2.06(a) plus 2.00% per annum,
<PAGE>
29
(b) in the case of overdue principal on any Eurodollar Borrowing, (i) during the
remaining portion, if any, of the Interest Period for such Borrowing, at the
rate otherwise applicable to the Loans comprising such Borrowing pursuant to
Section 2.06(b) plus 2.00% per annum and (ii) at all times after the last day of
the Interest Period for such Borrowing, at the rate that would have been
applicable to such Loans pursuant to Section 2.06(a) had such Loans been ABR
Loans plus 2.00% per annum and (c) in all other cases, at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when determined by reference to the Prime Rate
and over a year of 360 days at all other times) equal to the sum of the
Alternate Base Rate plus 2.00%.
SECTION 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans comprising
such Borrowing are not generally available in the London interbank market, or
that the rates at which such dollar deposits are being offered will not
adequately and fairly reflect the cost to any Lender of making or maintaining
its Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall,
as soon as practicable thereafter, give written or telecopy notice of such
determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a Eurodollar Borrowing pursuant to
Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing. Each
determination by the Administrative Agent hereunder shall be conclusive absent
manifest error.
SECTION 2.09. Termination and Reduction of Commitments. (a) The Term
Loan Commitments shall automatically terminate at 5:00 p.m., New York City time,
on the Closing Date. The Revolving Credit Commitments shall automatically
terminate on the Maturity Date. The L/C Commitments shall automatically
terminate on the date that is five Business Days prior to the Maturity Date.
Notwithstanding the foregoing, all the Commitments shall automatically terminate
at 5:00 p.m., New York City time, on November 30, 1996, if the initial Credit
Event shall not have occurred by such time.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Term Loan Commitments or the Revolving Credit Commitments; provided,
however, that (i) each partial reduction of the Term Loan Commitments or the
Revolving Credit Commitments shall be in an integral multiple of $1,000,000 and
in a minimum amount of $5,000,000 and (ii) the Total Revolving Credit Commitment
shall not be reduced to an amount that is less than the Aggregate Revolving
Credit Exposure at the time.
(c) Each reduction in the Term Loan Commitments or the Revolving Credit
Commitments hereunder shall be made ratably among the Lenders in accordance with
their respective applicable Commitments. The Borrower shall pay to the
Administrative Agent for the account of the applicable Lenders, on the date of
each termination or reduction, the Commitment Fees on the amount of the
Commitments so terminated or reduced accrued to but excluding the date of such
termination or reduction.
SECTION 2.10. Conversion and Continuation of Borrowings. The Borrower
shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 12:00 (noon), New York City time, one
Business Day prior to conversion, to convert any Eurodollar Borrowing into an
ABR Borrowing, (b) not later than 10:00 a.m., New York City time, three Business
Days prior to conversion
<PAGE>
30
or continuation, to convert any ABR Borrowing into a Eurodollar Borrowing or to
continue any Eurodollar Borrowing as a Eurodollar Borrowing for an additional
Interest Period, and (c) not later than 10:00 a.m., New York City time, three
Business Days prior to conversion, to convert the Interest Period with respect
to any Eurodollar Borrowing to another permissible Interest Period, subject in
each case to the following:
(i) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective principal amounts
of the Loans comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting
Borrowing shall satisfy the limitations specified in Sections 2.02(a)
and 2.02(b) regarding the principal amount and maximum number of
Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the
new Loan of such Lender resulting from such conversion and reducing the
Loan (or portion thereof) of such Lender being converted by an
equivalent principal amount; accrued interest on any Eurodollar Loan
(or portion thereof) being converted shall be paid by the Borrower at
the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a time other
than the end of the Interest Period applicable thereto, the Borrower
shall pay, upon demand, any amounts due to the Lenders pursuant to
Section 2.16;
(v) any portion of a Borrowing maturing or required to be
repaid in less than one month may not be converted into or continued as
a Eurodollar Borrowing;
(vi) any portion of a Eurodollar Borrowing that cannot be
converted into or continued as a Eurodollar Borrowing by reason of the
immediately preceding clause shall be automatically converted at the
end of the Interest Period in effect for such Borrowing into an ABR
Borrowing;
(vii) no Interest Period may be selected for any Eurodollar Term
Borrowing that would end later than a Repayment Date occurring on or
after the first day of such Interest Period if, after giving effect to
such selection, the aggregate outstanding amount of (A) the Eurodollar
Term Borrowings with Interest Periods ending on or prior to such
Repayment Date and (B) the ABR Term Borrowings would not be at least
equal to the principal amount of Term Borrowings to be paid on such
Repayment Date; and
(viii) upon notice to the Borrower from the Administrative Agent
given at the request of the Required Lenders, after the occurrence and
during the continuance of a Default or Event of Default, no outstanding
Loan may be converted into, or continued as, a Eurodollar Loan.
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Borrowing that the Borrower requests be converted or continued, (ii) whether
such Borrowing is to be converted to or continued as a Eurodollar Borrowing or
an ABR Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Borrowing is to be
converted to or continued as a Eurodollar Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect
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31
to any conversion to or continuation as a Eurodollar Borrowing, the Borrower
shall be deemed to have selected an Interest Period of one month's duration. The
Administrative Agent shall advise the Lenders of any notice given pursuant to
this Section 2.10 and of each Lender's portion of any converted or continued
Borrowing. If the Borrower shall not have given notice in accordance with this
Section 2.10 to continue any Borrowing into a subsequent Interest Period (and
shall not otherwise have given notice in accordance with this Section 2.10 to
convert such Borrowing), such Borrowing shall, at the end of the Interest Period
applicable thereto (unless repaid pursuant to the terms hereof), automatically
be continued into a new Interest Period as an ABR Borrowing.
SECTION 2.11. Repayment of Term Borrowings. (a) The Term Borrowings
shall be payable as to principal in 16 consecutive installments payable on the
dates set forth below or, if any such date is not a Business Day, on the next
succeeding Business Day (each a "Repayment Date") and in the amounts set forth
below:
Repayment Date Amount
-------------- ------
March 31, 1998 $ 5,000,000
June 30, 1998 5,000,000
September 30, 1998 5,000,000
December 31, 1998 5,000,000
March 31, 1999 5,000,000
June 30, 1999 5,000,000
September 30, 1999 5,000,000
December 31, 1999 5,000,000
March 31, 2000 5,000,000
June 30, 2000 5,000,000
September 30, 2000 5,000,000
December 31, 2000 5,000,000
March 31, 2001 5,000,000
June 30, 2001 5,000,000
September 30, 2001 5,000,000
Maturity Date 275,000,000
(b) To the extent not previously paid, all Term Borrowings shall be due
and payable on the Maturity Date. Each payment of Term Borrowings pursuant to
this Section 2.11 shall be accompanied by accrued interest on the principal
amount paid to but excluding the date of payment.
(c) All repayments pursuant to this Section 2.11 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.
SECTION 2.12. Optional Prepayment. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing, in whole or in
part, upon at least three Business Days' (in the case of Eurodollar Borrowings)
or one Business Day (in the case of ABR Borrowings) prior written or telecopy
notice (or telephone notice promptly confirmed by written or telecopy notice) to
the Administrative Agent before 11:00 a.m., New York City time; provided,
however, that each partial prepayment shall be in an amount that is an integral
multiple of $1,000,000 and not less than $5,000,000.
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(b) Optional prepayments of Term Loans shall be applied pro rata
against the remaining scheduled installments of principal due in respect of the
Term Loans.
(c) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such Borrowing by the amount
stated therein on the date stated therein. All prepayments under this Section
2.12 shall be subject to Section 2.16 but otherwise without premium or penalty.
All prepayments under this Section 2.12 shall be accompanied by accrued interest
on the principal amount being prepaid to the date of payment.
SECTION 2.13. Mandatory Prepayments. (a) In the event of any
termination of all the Revolving Credit Commitments, the Borrower shall prepay
all its outstanding Revolving Credit Borrowings and replace or cash
collateralize all outstanding Letters of Credit on the date of such termination.
In the event of any partial reduction of the Revolving Credit Commitments, then
(i) at or prior to the effective date of such reduction, the Administrative
Agent shall notify the Borrower and the Revolving Credit Lenders of the
Aggregate Revolving Credit Exposure after giving effect thereto and (ii) if the
Aggregate Revolving Credit Exposure would exceed the Total Revolving Credit
Commitment after giving effect to such reduction, then the Borrower shall, on
the date of such reduction and in an amount sufficient to eliminate such excess,
first, prepay the then outstanding Revolving Loans (if any) and second, to the
extent of any remaining excess (after the prepayment of Revolving Loans),
replace outstanding Letters of Credit or deposit an amount in cash in a cash
collateral account established with the Collateral Agent for the benefit of the
Secured Parties.
(b) If on any date the Aggregate Credit Exposure shall exceed the
Borrowing Base, the Borrower shall on such date apply an amount equal to such
excess first, to prepay the then outstanding Revolving Loans (if any) and
second, to the extent of any remaining excess (after the prepayment of Revolving
Loans), to replace outstanding Letters of Credit or deposit an amount in cash in
a cash collateral account established with the Collateral Agent for the benefit
of the Secured Parties and third, to the extent of any remaining excess (after
the prepayment of Revolving Loans and such replacement of Letters of Credit or
deposit in a cash collateral account), to prepay the then outstanding Term
Loans. Mandatory prepayments of Term Loans pursuant to the foregoing sentence
shall be applied against the remaining scheduled installments of principal due
in respect of the Term Loans under Section 2.11 in the inverse order of
maturity.
(c) Not later than the third Business Day following the completion of
any Asset Sale, the Borrower shall apply 100% of the Net Cash Proceeds received
with respect thereto to prepay outstanding Loans in accordance with Section
2.13(h); provided, however, that, so long as no Default or Event of Default
shall have occurred and be continuing or would result therefrom, any insurance
proceeds included in such Net Cash Proceeds shall not be required to be so
applied to prepay outstanding Loans to the extent such insurance proceeds are
reinvested in the Borrower's business within one year of the receipt thereof.
(d) In the event and on each occasion that an Equity Issuance occurs,
the Borrower shall, substantially simultaneously with (and in any event not
later than the third Business Day next following) the occurrence of such Equity
Issuance, apply 100% of the Net Cash Proceeds therefrom (or 75% of such Net Cash
Proceeds if, on the date of, and after giving effect to, such Equity Issuance,
the Total Debt Ratio does not exceed 3.00 to 1.00) to prepay outstanding Loans
in accordance with Section 2.13(h).
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(e) If the Securitization shall not have been consummated prior to the
Step-Up Date, then, no later than the earlier of (i) 90 days after the end of
each fiscal year of the Borrower, commencing with the fiscal year ending on
December 31, 1997, and (ii) the date on which the financial statements with
respect to such fiscal year are delivered pursuant to Section 5.04(a), the
Borrower shall prepay outstanding Loans in accordance with Section 2.13(h) in an
aggregate principal amount equal to the applicable Percentage of Excess Cash
Flow for the fiscal year then ended.
(f) In the event that any Loan Party or any subsidiary of a Loan Party
shall receive Net Cash Proceeds from the issuance or other disposition of
Indebtedness for money borrowed of any Loan Party or any subsidiary of a Loan
Party (other than (i) Indebtedness created under the Securitization, as to which
Section 2.13(g) shall be applicable, (ii) any cash proceeds from the issuance of
any Subordinated Notes that are applied to prepayment of loans under the
Subordinated Facility or (iii) Indebtedness for money borrowed permitted
pursuant to Section 6.01), the Borrower shall, substantially simultaneously with
(and in any event not later than the third Business Day next following) the
receipt of such Net Cash Proceeds by such Loan Party or such subsidiary, apply
an amount equal to 100% of such Net Cash Proceeds to prepay outstanding Loans in
accordance with Section 2.13(h).
(g) An amount equal to 100% of the Net Cash Proceeds from the
Securitization shall be applied by the Borrower, on the day of the receipt of
such Net Cash Proceeds, to the extent required to make the Securitization
Prepayments in full.
(h) Except as specified in paragraphs (a), (b) and (g) above, mandatory
prepayments of outstanding Loans under this Agreement shall be allocated first,
to prepay the then-outstanding Term Loans (if any) and second, to the extent of
any remaining amount (after the prepayment of Term Loans), to prepay the
then-outstanding Revolving Loans. Any such mandatory prepayment of Term Loans
shall be applied first, against the next two scheduled installments of principal
due after the date of such prepayment in respect of Term Loans under Section
2.11 and second, against such remaining scheduled installments of principal in
the inverse order of maturity. Any such mandatory prepayments of Revolving Loans
shall not reduce the Revolving Credit Commitments.
(i) The Borrower shall deliver to the Administrative Agent, at the time
of each prepayment required under this Section 2.13, (i) a certificate signed by
a Financial Officer of the Borrower setting forth in reasonable detail the
calculation of the amount of such prepayment and (ii) to the extent practicable,
at least three days prior written notice of such prepayment. Each notice of
prepayment shall specify the pre-payment date, the Type of each Loan being
prepaid and the principal amount of each Loan (or portion thereof) to be
prepaid. All prepayments of Borrowings under this Section 2.13 shall be subject
to Section 2.16, but shall otherwise be without premium or penalty.
(j) Amounts to be applied pursuant to this Section 2.13 to the
prepayment of Term Loans and Revolving Loans shall be applied, as applicable,
first to reduce outstanding ABR Term Loans and ABR Revolving Loans. Any amounts
remaining after each such application shall, at the option of the Borrower, be
applied to prepay Eurodollar Term Loans or Eurodollar Revolving Loans, as the
case may be, immediately and/or shall be deposited in the Prepayment Account (as
defined below). The Administrative Agent shall apply any cash deposited in the
Prepayment Account (i) allocable to Term Loans to prepay Eurodollar Term Loans
and (ii) allocable to Revolving Loans to prepay Eurodollar Revolving Loans, in
each case on the last day of their respective Interest Periods (or, at the
direction of the Borrower, on any earlier date) until all outstanding Term Loans
or Revolving Loans, as the case may be, have been prepaid or until all the
allocable cash on deposit with respect to such Loans has been exhausted. For
purposes of
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34
this Agreement, the term "Prepayment Account" shall mean an account established
by the Borrower with the Administrative Agent and over which the Administrative
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal for application in accordance with this paragraph (j). The
Administrative Agent will, at the request of the Borrower, invest amounts on
deposit in the Pre-payment Account in Permitted Investments that mature prior to
the last day of the applicable Interest Periods of the Eurodollar Term
Borrowings or Eurodollar Revolving Borrowings to be prepaid, as the case may be;
provided, however, that (i) the Administrative Agent shall not be required to
make any investment that, in its sole judgment, would require or cause the
Administrative Agent to be in, or would result in any, violation of any law,
statute, rule or regulation and (ii) the Administrative Agent shall have no
obligation to invest amounts on deposit in the Prepayment Account if a Default
or Event of Default shall have occurred and be continuing. The Borrower shall
indemnify the Administrative Agent for any losses relating to the investments so
that the amount available to prepay Eurodollar Borrowings on the last day of the
applicable Interest Period is not less than the amount that would have been
available had no investments been made pursuant thereto. Other than any interest
earned on such investments, the Prepayment Account shall not bear interest.
Interest or profits, if any, on such investments shall be deposited in the
Prepayment Account and reinvested and disbursed as specified above. If the
maturity of the Loans has been accelerated pursuant to Article VII, the
Administrative Agent may, in its sole discretion, apply all amounts on deposit
in the Prepayment Account to satisfy any of the Obligations. The Borrower hereby
grants to the Administrative Agent, for its benefit and the benefit of the
Issuing Banks and the Lenders, a security interest in the Prepayment Account to
secure the Obligations.
SECTION 2.14. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision of this Agreement, if after the date
of this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Lender or
any Issuing Bank of the principal of or interest on any Eurodollar Loan made by
such Lender or any Fees or other amounts payable hereunder (other than changes
in respect of taxes imposed on the overall net income of such Lender or Issuing
Bank by the jurisdiction in which such Lender or Issuing Bank has its principal
office or by any political subdivision or taxing authority therein), or shall
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by any Lender or such Issuing Bank (except any such reserve requirement
which is reflected in the Adjusted LIBO Rate) or shall impose on such Lender or
such Issuing Bank or the London interbank market any other condition affecting
this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit
or participation therein, and the result of any of the foregoing shall be to
increase the cost to such Lender or such Issuing Bank of making or maintaining
any Eurodollar Loan or increase the cost to any Lender of issuing or maintaining
any Letter of Credit or purchasing or maintaining a participation therein or to
reduce the amount of any sum received or receivable by such Lender or such
Issuing Bank hereunder (whether of principal, interest or otherwise) by an
amount deemed by such Lender or such Issuing Bank to be material, then the
Borrower will pay to such Lender or such Issuing Bank, as the case may be, upon
demand such additional amount or amounts as will compensate such Lender or
Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.
(b) If any Lender or Issuing Bank shall have reasonably determined that
the adoption after the date hereof of any law, rule, regulation, agreement or
guideline regarding capital adequacy, or any change after the date hereof in any
such law, rule, regulation, agreement or guideline (whether such law, rule,
regulation, agreement or guideline has been adopted) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by
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35
any Lender (or any lending office of such Lender) or any Issuing Bank or any
Lender's or Issuing Bank's holding company with any request or directive
regarding capital adequacy (whether or not having the force of law) of any
Governmental Authority has or would have the effect of reducing the rate of
return on such Lender's or Issuing Bank's capital or on the capital of such
Lender's or Issuing Bank's holding company, if any, as a direct consequence of
this Agreement or the Loans made or participations in Letters of Credit
purchased by such Lender pursuant hereto or the Letters of Credit issued by such
Issuing Bank pursuant hereto to a level below that which such Lender or Issuing
Bank or such Lender's or Issuing Bank's holding company could have achieved but
for such applicability, adoption, change or compliance (taking into
consideration such Lender's or Issuing Bank's policies and the policies of such
Lender's or Issuing Bank's holding company with respect to capital adequacy) by
an amount deemed by such Lender or Issuing Bank to be material, then from time
to time the Borrower shall pay to such Lender or Issuing Bank, as the case may
be, such additional amount or amounts as will compensate such Lender or Issuing
Bank or such Lender's or Issuing Bank's holding company for any such reduction
suffered.
(c) A certificate of a Lender or Issuing Bank setting forth in
reasonable detail the amount or amounts necessary to compensate such Lender or
Issuing Bank or its holding company, as applicable, as specified in paragraph
(a) or (b) above and the events giving rise to such compensation shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender or Issuing Bank the amount shown as due on any
such certificate delivered by it within 10 Business Days after its receipt of
the same.
(d) Failure or delay on the part of any Lender or any Issuing Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Lender's or Issuing Bank's right to demand such compensation. The
protection of this Section shall be available to each Lender and Issuing Bank
regardless of any possible contention of the invalidity or inapplicability of
the law, rule, regulation, agreement, guideline or other change or condition
that shall have occurred or been imposed.
SECTION 2.15. Change in Legality. (a) Notwithstanding any other
provision of this Agreement, if, after the date hereof, any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made by such
Lender hereunder (or be continued for additional Interest Periods and
ABR Loans will not thereafter (for such duration) be converted into
Eurodollar Loans), whereupon any request for a Eurodollar Borrowing (or
to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a
Eurodollar Borrowing for an additional Interest Period) shall, as to
such Lender only, be deemed a request for an ABR Loan (or a request to
continue an ABR Loan as such for an additional Interest Period or to
convert a Eurodollar Loan into an ABR Loan, as the case may be), unless
such declaration shall be subsequently withdrawn; and
(ii) such Lender may require that all outstanding Eurodollar
Loans made by it be converted to ABR Loans, in which event all such
Eurodollar Loans shall be automatically converted to ABR Loans as of
the effective date of such notice as provided in paragraph (b) below.
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36
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower.
SECTION 2.16. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor,
(ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of
the Interest Period with respect to any Eurodollar Loan, in each case other than
on the last day of the Interest Period in effect therefor, or (iii) any
Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be
made pursuant to a conversion or continuation under Section 2.10) not being made
after notice of such Loan shall have been given by the Borrower hereunder (any
of the events referred to in this clause (a) being called a "Breakage Event") or
(b) any default in the making of any payment or prepayment required to be made
hereunder. In the case of any Breakage Event, such loss shall be an amount equal
to the excess, as reasonably determined by such Lender, of (i) its cost of
obtaining funds for the Eurodollar Loan that is the subject of such Breakage
Event for the period from the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan over
(ii) the amount of interest likely to be realized by such Lender in redeploying
the funds released or not utilized by reason of such Breakage Event for such
period. A certificate of any Lender setting forth in reasonable detail any
amount or amounts which such Lender is entitled to receive pursuant to this
Section 2.16 and a description of such Breakage Event shall be delivered to the
Borrower and shall be conclusive absent manifest error.
SECTION 2.17. Pro Rata Treatment. Except as required under Section
2.15, each Borrowing, each payment or prepayment of principal of any Borrowing,
each payment of interest on the Loans, each payment of the Commitment Fees, each
reduction of the Term Loan Commitments or the Revolving Credit Commitments and
each conversion of any Borrowing to or continuation of any Borrowing as a
Borrowing of any Type shall be allocated pro rata among the Lenders in
accordance with their respective applicable Term Loan Commitments or Revolving
Credit Commitments, as the case may be (or, if such Commitments shall have
expired or been terminated, in accordance with the respective principal amounts
of their outstanding Term Loans or Revolving Loans, as the case may be). Each
Lender agrees that in computing such Lender's portion of any Borrowing to be
made hereunder, the Administrative Agent may, in its discretion, round each
Lender's percentage of such Borrowing to the next higher or lower whole dollar
amount.
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, obtain payment (voluntary or involuntary) in respect of any
Loan or Loans or L/C Disbursement as a result of which the unpaid principal
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37
portion of its Term Loans and Revolving Loans and participations in L/C
Disbursements shall be proportionately less than the unpaid principal portion of
the Term Loans and Revolving Loans and participations in L/C Disbursements of
any other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the
purchase price for, a participation in the Term Loans and Revolving Loans and
L/C Exposure, as the case may be, of such other Lender, so that the aggregate
unpaid principal amount of the Term Loans and Revolving Loans and L/C Exposure
and participations in Term Loans and Revolving Loans and L/C Exposure held by
each Lender shall be in the same proportion to the aggregate unpaid principal
amount of all Term Loans and Revolving Loans and L/C Exposure then outstanding
as the principal amount of its Term Loans and Revolving Loans and L/C Exposure
prior to such exercise of banker's lien, setoff or counterclaim or other event
was to the principal amount of all Term Loans and Revolving Loans and L/C
Exposure outstanding prior to such exercise of banker's lien, setoff or
counterclaim or other event; provided, however, that if any such purchase or
purchases or adjustments shall be made pursuant to this Section 2.18 and the
payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustment restored without interest. The
Borrower expressly consents to the foregoing arrangements and agrees that any
Lender holding a participation in a Term Loan or Revolving Loan or L/C
Disbursement deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrower to such Lender by reason thereof as fully as if such Lender had
made a Loan directly to the Borrower in the amount of such participation.
SECTION 2.19. Payments. (a) The Borrower shall make each payment
(including principal of or interest on any Borrowing or any L/C Disbursement or
any Fees or other amounts) hereunder and under any other Loan Document not later
than 12:00 (noon), New York City time, on the date when due in immediately
available dollars, without setoff, defense or counterclaim. Each such payment
(other than Agents' Fees and Issuing Bank Fees, which shall be paid directly to
the Administrative Agent, the Collateral Agent or the applicable Issuing Bank,
as the case may be), shall be made to the Administrative Agent at its offices at
270 Park Avenue, New York, New York.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments by or on behalf of the
Borrower or any Loan Party hereunder and under any other Loan Document shall be
made, in accordance with Section 2.19, free and clear of and without deduction
for any and all current or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding (i) income
taxes imposed on the net income of the Administrative Agent, the Collateral
Agent, any Lender or any Issuing Bank (or any transferee or assignee thereof,
including a participation holder (any such entity a "Transferee")) and (ii)
franchise taxes imposed on the net income of the Administrative Agent, the
Collateral Agent, any Lender or any Issuing Bank (or Transferee), in each case
by the jurisdiction under the laws of which the Administrative Agent, the
Collateral Agent, such Lender or such Issuing Bank (or Transferee) is organized
or any political subdivision thereof (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities, collectively or
individually, being called "Taxes"). If the Borrower or any Loan Party shall be
required to deduct any Taxes from or in respect of any sum payable hereunder or
under any other Loan Document to the Administrative Agent, the Collateral Agent,
any Lender or any Issuing Bank (or any Transferee), (i) the sum payable shall be
increased by the amount (an "additional
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38
amount") necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.20) the
Administrative Agent, the Collateral Agent, such Lender or such Issuing Bank (or
Transferee), as the case may be, shall receive an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower or such
Loan Party shall make such deductions and (iii) the Borrower or such Loan Party
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrower agrees to pay to the relevant
Governmental Authority in accordance with applicable law any current or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or under any other
Loan Document or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or any other Loan Document ("Other Taxes").
(c) The Borrower will indemnify the Administrative Agent, the
Collateral Agent, each Lender and each Issuing Bank (or Transferee) for the full
amount of Taxes and Other Taxes paid by the Administrative Agent, the Collateral
Agent, such Lender or such Issuing Bank (or Transferee), as the case may be, and
any liability (including penalties, interest and expenses (including reasonable
attorney's fees and expenses)) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant Governmental Authority. A certificate as to the amount of such
payment or liability prepared by the Administrative Agent, the Collateral Agent,
a Lender or an Issuing Bank (or Transferee), or the Administrative Agent on its
behalf, absent manifest error, shall be final, conclusive and binding for all
purposes. Such indemnification shall be made within 30 days after the date the
Administrative Agent, the Collateral Agent, any Lender or any Issuing Bank (or
Transferee), as the case may be, makes written demand therefor.
(d) As soon as practicable after the date of any payment of Taxes or
Other Taxes by the Borrower or any other Loan Party to the relevant Governmental
Authority, the Borrower or such other Loan Party will deliver to the
Administrative Agent, at its address referred to in Section 9.01, the original
or a certified copy of a receipt issued by such Governmental Authority
evidencing payment thereof.
(e) Each Lender and Issuing Bank (or Transferee) that is organized
under the laws of a jurisdiction other than the United States, any State thereof
or the District of Columbia (a "Non-U.S. Lender") shall deliver to the Borrower
and the Administrative Agent two copies of either United States Internal Revenue
Service Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender or Issuing
Bank claiming exemption from U.S. Federal withholding tax under Section 871(h)
or 881(c) of the Code with respect to payments of "portfolio interest", a Form
W-8, or any subsequent versions thereof or successors thereto (and, if such
Non-U.S. Lender or Issuing Bank delivers a Form W-8, a certificate representing
that such Non-U.S. Lender or Issuing Bank is not a bank for purposes of Section
881(c) of the Code, is not a 10-percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Code) of the Borrower and is not a controlled
foreign corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Code)), properly completed and duly executed by such Non-U.S.
Lender or Issuing Bank claiming complete exemption from, or reduced rate of,
U.S. Federal withholding tax on payments by the Borrower under this Agreement
and the other Loan Documents. Such forms shall be delivered by each Non-U.S.
Lender or Issuing Bank on or before the date it becomes a party to this
Agreement (or, in the case of a Transferee that is a participation holder, on or
before the date such participation holder becomes a Transferee hereunder) and on
or before the date, if any, such Non-U.S. Lender or Issuing Bank changes its
applicable lending office by designating a different lending office (a "New
Lending Office"). In
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addition, each Non-U.S. Lender or Issuing Bank shall deliver such forms promptly
upon the obsolescence or invalidity of any form previously delivered by such
Non-U.S. Lender or Issuing Bank.
(f) The Borrower shall not be required to indemnify any Non-U.S. Lender
or Issuing Bank or to pay any additional amounts to any Non-U.S. Lender or
Issuing Bank, in respect of United States Federal withholding tax pursuant to
paragraph (a) or (c) above to the extent that (i) the obligation to withhold
amounts with respect to United States Federal withholding tax existed on the
date such Non-U.S. Lender or Issuing Bank became a party to this Agreement (or,
in the case of a Transferee that is a participation holder, on the date such
participation holder became a Transferee hereunder) or, with respect to payments
to a New Lending Office, the date such Non-U.S. Lender or Issuing Bank
designated such New Lending Office with respect to a Loan or a Letter of Credit;
provided, however, that this paragraph (f) shall not apply (x) to any Transferee
or New Lending Office that becomes a Transferee or New Lending Office as a
result of an assignment, participation, transfer or designation made at the
request of the Borrower and (y) to the extent the indemnity payment or
additional amounts any Transferee, or any Lender or Issuing Bank (or
Transferee), acting through a New Lending Office, would be entitled to receive
(without regard to this paragraph (f)) do not exceed the indemnity payment or
additional amounts that the person making the assignment, participation or
transfer to such Transferee, or Lender or Issuing Bank (or Transferee) making
the designation of such New Lending Office, would have been entitled to receive
in the absence of such assignment, participation, transfer or designation,
(ii) the obligation to pay such additional amounts would not have arisen but for
a failure by such Non-U.S. Lender or Issuing Bank to comply with the provisions
of paragraph (e) above (other than a failure by reason of a change in law or
treaty occurring after the date referred to in clause (i) above that imposes or
increases U.S. Federal withholding tax on payments by the Borrower or any Loan
Party under this Agreement and the other Loan Documents) or (iii) a
representation or warranty made or deemed to be made by a Non-U.S. Lender or
Issuing Bank pursuant to the provisions of paragraph (e) above proving to have
been incorrect, false or misleading in any material respect when so made or
deemed to have been made.
(g) Nothing contained in this Section 2.20 shall require any Lender or
Issuing Bank (or any Transferee) or the Administrative Agent or the Collateral
Agent to make available any of its tax returns (or any other information that it
deems to be confidential or proprietary).
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate. (a) In the event (i) any Lender or Issuing Bank delivers a
certificate requesting compensation pursuant to Section 2.14, (ii) any Lender or
Issuing Bank delivers a notice described in Section 2.15 or (iii) the Borrower
is required to pay any additional amount to any Lender or Issuing Bank or any
Governmental Authority on account of any Lender or Issuing Bank pursuant to
Section 2.20, the Borrower may, at its sole expense and effort (including with
respect to the processing and recordation fee referred to in Section 9.04(b)),
upon notice to such Lender or Issuing Bank and the Administrative Agent, require
such Lender or Issuing Bank to transfer and assign, without recourse (in
accordance with and subject to the restrictions contained in Section 9.04), all
of its interests, rights and obligations under this Agreement to an assignee
that shall assume such assigned obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (x) such assignment
shall not conflict with any law, rule or regulation or order of any court or
other Governmental Authority having jurisdiction, (y) the Borrower shall have
received the prior written consent of the Administrative Agent (and, if a
Revolving Credit Commitment is being assigned, of the Issuing Banks), which
consent shall not unreasonably be withheld, and (z) the Borrower or such
assignee shall have paid to the affected Lender or Issuing Bank in immediately
available funds an amount equal to the sum of the principal of and interest
accrued to the date of such payment on the outstanding Loans or L/C
Disbursements of such Lender or Issuing Bank, respectively, plus all Fees
<PAGE>
40
and other amounts accrued for the account of such Lender or Issuing Bank
hereunder (including any amounts under Section 2.14 and Section 2.16); provided
further that, if prior to any such transfer and assignment the circumstances or
event that resulted in such Lender's or Issuing Bank's claim for compensation
under Section 2.14 or notice under Section 2.15 or the amounts paid pursuant to
Section 2.20, as the case may be, cease to cause such Lender or Issuing Bank to
suffer increased costs or reductions in amounts received or receivable or
reduction in return on capital, or cease to have the consequences specified in
Section 2.15, or cease to result in amounts being payable under Section 2.20, as
the case may be (including as a result of any action taken by such Lender or
Issuing Bank pursuant to paragraph (b) below), or if such Lender or Issuing Bank
shall waive its right to claim further compensation under Section 2.14 in
respect of such circumstances or event or shall withdraw its notice under
Section 2.15 or shall waive its right to further payments under Section 2.20 in
respect of such circumstances or event, as the case may be, then such Lender or
Issuing Bank shall not thereafter be required to make any such transfer and
assignment hereunder.
(b) If (i) any Lender or Issuing Bank shall request compensation under
Section 2.14, (ii) any Lender or Issuing Bank delivers a notice described in
Section 2.15 or (iii) the Borrower is required to pay any additional amount to
any Lender or Issuing Bank or any Governmental Authority on account of any
Lender or Issuing Bank, pursuant to Section 2.20, then such Lender or Issuing
Bank shall use reasonable efforts (which shall not require such Lender or
Issuing Bank to incur an unreimbursed loss or unreimbursed cost or expense or
otherwise take any action inconsistent with its internal policies or legal or
regulatory restrictions or suffer any disadvantage or burden deemed by it to be
significant) (x) to file any certificate or document reasonably requested in
writing by the Borrower or (y) to assign its rights and delegate and transfer
its obligations hereunder to another of its offices, branches or affiliates, if
such filing or assignment would reduce its claims for compensation under Section
2.14 or enable it to withdraw its notice pursuant to Section 2.15 or would
reduce amounts payable pursuant to Section 2.20, as the case may be, in the
future. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender or Issuing Bank in connection with any such filing or
assignment, delegation and transfer.
SECTION 2.22. Letters of Credit. (a) General. The Borrower may request
the issuance of a Letter of Credit for its own account, in a form reasonably
acceptable to the Agents and the applicable Issuing Bank, at any time and from
time to time while the Revolving Credit Commitments remain in effect. This
Section shall not be construed to impose an obligation upon any Issuing Bank to
issue any Letter of Credit that is inconsistent with the terms and conditions of
this Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. In order to request the issuance of a Letter of Credit (or to amend,
renew or extend an existing Letter of Credit), the Borrower shall hand deliver
or telecopy to the applicable Issuing Bank and the Administrative Agent
(reasonably in advance of the requested date of issuance, amendment, renewal or
extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, the date of
issuance, amendment, renewal or extension, the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) below), the amount of
such Letter of Credit, the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare such Letter of Credit.
Following receipt of such notice and prior to the issuance of the requested
Letter of Credit or the applicable amendment, renewal or extension, the
Administrative Agent shall notify the Borrower and the applicable Issuing Bank
of the amount of the Aggregate Revolving Credit Exposure after giving effect to
(i) the issuance, amendment, renewal or extension of such Letter of Credit,
(ii) the issuance or expiration of any other Letter of Credit that is to be
issued or will expire prior to the requested date of issuance of such Letter of
Credit and (iii) the borrowing or repayment of any Revolving Credit Loans that
(based upon
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41
notices delivered to the Administrative Agent by the Borrower) are to be
borrowed or repaid prior to the requested date of issuance of such Letter of
Credit. A Letter of Credit shall be issued, amended, renewed or extended only
if, and upon issuance, amendment, renewal or extension of each Letter of Credit
the Borrower shall be deemed to represent and warrant that, after giving effect
to such issuance, amendment, renewal or extension, (A) the L/C Exposure shall
not exceed $50,000,000 and (B) the Aggregate Revolving Credit Exposure shall not
exceed the lesser of (x) the Total Revolving Credit Commitment and (y) the
Revolving Credit Borrowing Base in effect at such time.
(c) Expiration Date. Each Letter of Credit shall expire at the close of
business on the earlier of the date one year after the date of the issuance of
such Letter of Credit and the date that is five Business Days prior to the
Maturity Date, unless such Letter of Credit expires by its terms on an earlier
date.
(d) Participations. By the issuance of a Letter of Credit and without
any further action on the part of the applicable Issuing Bank or the Lenders,
the applicable Issuing Bank hereby grants to each Revolving Credit Lender, and
each such Lender hereby acquires from the applicable Issuing Bank, a
participation in such Letter of Credit equal to such Lender's Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit, effective upon the issuance of such Letter of Credit. In consideration
and in furtherance of the foregoing, each Revolving Credit Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the applicable Issuing Bank, such Lender's Applicable Percentage
of each L/C Disbursement made by such Issuing Bank and not reimbursed by the
Borrower (or, if applicable, another party pursuant to its obligations under any
other Loan Document) forthwith on the date due as provided in Section 2.02(f).
Each Revolving Credit Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or an Event of Default, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If an Issuing Bank shall make any L/C Disbursement
in respect of a Letter of Credit, the Borrower shall pay to the Administrative
Agent an amount equal to such L/C Disbursement not later than two hours after
the Borrower shall have received notice from such Issuing Bank that payment of
such draft will be made, or, if the Borrower shall have received such notice
later than 10:00 a.m., New York City time, on any Business Day, not later than
10:00 a.m., New York City time, on the immediately following Business Day.
(f) Obligations Absolute. The Borrower's obligations to reimburse L/C
Disbursements as provided in paragraph (e) above shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement, under any and all circumstances whatsoever,
and irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or any Loan Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure
from all or any of the provisions of any Letter of Credit or any Loan
Document;
(iii) the existence of any claim, setoff, defense or other right
that the Borrower, any other party guaranteeing, or otherwise obligated
with, the Borrower, any Subsidiary or other Affiliate thereof or any
other person may at any time have against the beneficiary under any
Letter of
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42
Credit, any Issuing Bank, the Administrative Agent, the Collateral
Agent or any Lender or any other person, whether in connection with
this Agreement, any other Loan Document or any other related or
unrelated agreement or transaction;
(iv) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect; and
(v) any other act or omission to act or delay of any kind of
any Issuing Bank, the Lenders, the Administrative Agent, the Collateral
Agent or any other person or any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might,
but for the provisions of this Section, constitute a legal or equitable
discharge of the Borrower's obligations hereunder.
Without limiting the generality of the foregoing, it is expressly
understood and agreed that the absolute and unconditional obligation of the
Borrower hereunder to reimburse L/C Disbursements will not be excused by the
gross negligence or wilful misconduct of any Issuing Bank. However, the
foregoing shall not be construed to excuse any Issuing Bank from liability to
the Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
such Issuing Bank's gross negligence or wilful misconduct in determining whether
drafts and other documents presented under a Letter of Credit comply with the
terms thereof; it is understood that each Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary and, in
making any payment under any Letter of Credit (i) an Issuing Bank's exclusive
reliance on the documents presented to it under such Letter of Credit as to any
and all matters set forth therein, including reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary thereunder equals the amount of such draft and whether or not any
document presented pursuant to such Letter of Credit proves to be insufficient
in any respect, if such document on its face appears to be in order, and whether
or not any other statement or any other document presented pursuant to such
Letter of Credit proves to be forged or invalid or any statement therein proves
to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance
in any immaterial respect of the documents presented under such Letter of Credit
with the terms thereof shall, in each case, be deemed not to constitute wilful
misconduct or gross negligence of an Issuing Bank.
(g) Disbursement Procedures. The applicable Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. Such Issuing Bank shall
as promptly as possible give telephonic notification, confirmed by telecopy, to
the Administrative Agent and the Borrower of such demand for payment and whether
such Issuing Bank has made or will make an L/C Disbursement thereunder; provided
that any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse the Issuing Bank and the Revolving
Credit Lenders with respect to any such L/C Disbursement. The Administrative
Agent shall promptly give each Revolving Credit Lender notice thereof.
(h) Interim Interest. If an Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the Borrower shall
reimburse such L/C Disbursement in full on such date, the unpaid amount thereof
shall bear interest for the account of such Issuing Bank, for each day from and
including the date of such L/C Disbursement, to but excluding the earlier of the
date of payment by the
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43
Borrower or the date on which interest shall commence to accrue thereon as
provided in Section 2.02(f), at the rate per annum that would apply to such
amount if such amount were an ABR Loan.
(i) Resignation or Removal of an Issuing Bank. An Issuing Bank may
resign at any time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and the Borrower, and may be removed at any
time by the Borrower by notice to the Issuing Bank, the Administrative Agent and
the Lenders. Subject to the next succeeding paragraph, upon the acceptance of
any appointment as an Issuing Bank hereunder by a Lender that shall agree to
serve as successor Issuing Bank, such successor shall succeed to and become
vested with all the interests, rights and obligations of the retiring Issuing
Bank and the retiring Issuing Bank shall be discharged from its obligations to
issue additional Letters of Credit hereunder. At the time such removal or
resignation shall become effective, the Borrower shall pay all accrued and
unpaid fees pursuant to Section 2.05(c)(ii) as evidenced by a certificate of
such Issuing Bank setting forth the calculation of such fees in reasonable
detail. The acceptance of any appointment as an Issuing Bank hereunder by a
successor Lender shall be evidenced by an agreement entered into by such
successor, in a form satisfactory to the Borrower and the Administrative Agent,
and, from and after the effective date of such agreement, (i) such successor
Lender shall have all the rights and obligations of the previous Issuing Bank
under this Agreement and the other Loan Documents and (ii) references herein and
in the other Loan Documents to the term "Issuing Bank" shall be deemed to refer
to such successor or to any previous Issuing Bank, or to such successor and all
previous Issuing Banks, as the context shall require. After the resignation or
removal of an Issuing Bank hereunder, the retiring Issuing Bank shall remain a
party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement and the other Loan Documents with respect to
Letters of Credit issued by it prior to such resignation or removal, but shall
not be required to issue additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, the Borrower shall, on the Business Day it receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Credit Lenders holding participations in
outstanding Letters of Credit representing at least 50% of the aggregate undrawn
amount of all outstanding Letters of Credit) thereof and of the amount to be
deposited, deposit in an account with the Collateral Agent, for the benefit of
the Revolving Credit Lenders, an amount in cash equal to the L/C Exposure as of
such date. Such deposit shall be held by the Collateral Agent as collateral for
the payment and performance of the Obligations. The Collateral Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal,
over such account. Other than any interest earned on the investment of such
deposits in Permitted Investments, which investments shall be made at the option
and sole discretion of the Collateral Agent, such deposits shall not bear
interest. Interest or profits, if any, on such investments shall accumulate in
such account. Moneys in such account shall (i) automatically be applied by the
Administrative Agent to reimburse the Issuing Banks for L/C Disbursements for
which they have not been reimbursed, (ii) be held for the satisfaction of the
reimbursement obligations of the Borrower for the L/C Exposure at such time and
(iii) if the maturity of the Loans has been accelerated (but subject to the
consent of Revolving Credit Lenders holding participations in outstanding
Letters of Credit representing at least 50% of the aggregate undrawn amount of
all outstanding Letters of Credit), be applied to satisfy the Obligations. If
the Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower within three Business
Days after all Events of Default have been cured or waived.
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44
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Administrative Agent, the
Collateral Agent, the Issuing Banks and each of the Lenders that:
SECTION 3.01. Organization; Powers. The Borrower and each of the
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has all
requisite power and authority to own its property and assets and to carry on its
business as now conducted and as proposed to be conducted, (c) is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required, except where the failure so to qualify could not
reasonably be expected to result in a Material Adverse Effect, and (d) has the
corporate power and authority to execute, deliver and perform its obligations
under each of the Loan Documents and each other agreement or instrument
contemplated hereby to which it is or will be a party and, in the case of the
Borrower, to borrow hereunder.
SECTION 3.02. Authorization. The execution, delivery and performance by
each Loan Party and Leasco, as applicable, of each of the Loan Documents and the
Lease, the borrowings hereunder, the Acquisition and the other transactions
contemplated hereby and by the other Loan Documents, the Lease and the
Acquisition Agreements (collectively, the "Transactions") (a) have been duly
authorized by all requisite corporate and, if required, stockholder action,
(b) will not violate any provision of the certificate or articles of
incorporation or other constitutive documents or by-laws of the Borrower or any
Subsidiary and (c) will not (i) violate (A) any material provision of any law,
statute, rule or regulation, (B) any order of any Governmental Authority or (C)
any material provision of any indenture, agreement or other instrument to which
the Borrower or any Subsidiary is a party or by which any of them or any of
their property is or may be bound, (ii) be in conflict with, result in a breach
of or constitute (alone or with notice or lapse of time or both) a default
under, or give rise to any right to accelerate or to require the prepayment,
repurchase or redemption of any obligation under, any such indenture, agreement
or other instrument or (iii) result in the creation or imposition of any Lien
upon or with respect to any property or assets now owned or hereafter acquired
by the Borrower or any Subsidiary (other than any Lien created hereunder, under
the Security Documents or as permitted by Section 6.02(a)).
SECTION 3.03. Enforceability. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each other Loan Document when
executed and delivered by each Loan Party party thereto will constitute, a
legal, valid and binding obligation of such Loan Party enforceable against such
Loan Party in accordance with its terms.
SECTION 3.04. Governmental Approvals. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except for
(a) the filing of Uniform Commercial Code financing statements and filings with
the United States Patent and Trademark Office and the United States Copyright
Office and (b) such as have been made or obtained and are in full force and
effect.
SECTION 3.05. Financial Statements. (a) The Borrower has heretofore
furnished to the Lenders (i) the consolidated and combined balance sheets and
related statements of income and cash flow for CTR at and for the years ended
December 31, 1995 and 1994, and the six months ended June 30, 1996, together
with the notes and schedules thereto, which include statements of divisional
equity, such financial
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45
statements having been audited by and accompanied by the opinion of KPMG Peat
Marwick, independent public accountants, and (ii) the internal unaudited
consolidated and combined statements of income for CTR for the months ended July
31, 1996 and 1995, and August 31, 1996 and 1995. Such financial statements
(including the notes and schedules thereto) present fairly the results of
operations and, in the case of the financial statements referred to in clause
(i), the financial condition and cash flows, of CTR for such periods and at such
dates. The balance sheets (including the notes and schedules thereto) referred
to in clause (i) disclose all material liabilities, direct or contingent, of CTR
at the dates thereof. Such financial statements referred to in clause (i) were
prepared in accordance with GAAP applied on a consistent basis.
(b) The Borrower has heretofore delivered to the Lenders its unaudited
pro forma consolidated balance sheet as of the Closing Date, prepared giving
effect to the Transactions as if they had occurred on such date. Such pro forma
balance sheet has been prepared in good faith by the Borrower utilizing due
care, based on assumptions substantially similar to those used to prepare the
pro forma financial information contained in the Confidential Information
Memorandum (which assumptions are believed by the Borrower on the date hereof
and on the Closing Date to be reasonable), is based on the Statement of Net Book
Assets (as defined in the Purchase Agreement) delivered by the Seller to the
Borrower pursuant to Section 2.5(a) of the Purchase Agreement, accurately
reflects all adjustments required to be made to give effect to the Transactions
and, based on such Statement of Net Book Assets, presents fairly on a pro forma
basis the estimated consolidated financial position of the Borrower and its
consolidated Subsidiaries as of the Closing Date, assuming that the Transactions
had actually occurred on such date.
SECTION 3.06. No Material Adverse Change. There has been no material
adverse change in the business, assets, operations, prospects, condition,
financial or otherwise, or material agreements of the Borrower and the
Subsidiaries, taken as a whole, since June 30, 1996.
SECTION 3.07. Title to Properties; Possession Under Leases. (a) The
Borrower and each of the Subsidiaries has good and marketable title to, or valid
leasehold interests in, all its material properties and assets, except (i) for
minor defects in title that do not interfere with its ability to conduct its
business as currently conducted or to utilize such properties and assets for
their intended purposes (ii) that Vehicles covered by the Vehicle Title Nominee
Agreement are titled in the name of the Seller and (iii) as set forth on
Schedule 3.07. Leasco enjoys beneficial ownership of all such Vehicles titled in
the name of the Seller pursuant to the Vehicle Title Nominee Agreement. All
material properties and assets of the Borrower and the Subsidiaries are free and
clear of Liens, other than Permitted Liens.
(b) The Borrower and each of the Subsidiaries has complied with all
obligations under all material leases to which it is a party and all such leases
are in full force and effect, except as set forth on Schedule 3.07. The Borrower
and each of the Subsidiaries enjoys peaceful and undisturbed possession under
all such material leases.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the Closing
Date a list of all Subsidiaries and the percentage ownership interest of the
Borrower therein. The shares of capital stock or other ownership interests so
indicated on Schedule 3.08 are fully paid and non-assessable and are owned by
the Borrower, directly or indirectly, free and clear of all Liens. As of the
Closing Date, the Borrower has no direct or indirect Foreign Subsidiaries.
SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set
forth on Schedule 3.09, there are no actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
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46
Subsidiary or any business, property or rights of any such person (i) that
involve any Loan Document or the Transactions or (ii) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.
(b) Neither the Borrower nor any of the Subsidiaries or any of their
respective material properties or assets is in violation of, nor will the
continued operation of their material properties and assets as currently
conducted violate, any law, rule or regulation, or is in default with respect to
any judgment, writ, injunction, decree or order of any Governmental Authority,
where such violation or default could reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.10. Agreements. (a) Neither the Borrower nor any of the
Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(b) Neither the Borrower nor any of the Subsidiaries is in default in
any manner under any provision of any indenture or other agreement or instrument
evidencing Indebtedness, or any other material agreement or instrument to which
it is a party or by which it or any of its properties or assets are or may be
bound, where such default could reasonably be expected to result in a Material
Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) Neither the Borrower
nor any of the Subsidiar- ies is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or
carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that entails a violation of, or that is inconsistent
with, the provisions of the Regulations of the Board, including Regulation G, U
or X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act. Neither the Borrower nor any Subsidiary is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. The Borrower will use the proceeds of
the Loans and will request the issuance of Letters of Credit only for the
purposes specified in the preamble to this Agreement.
SECTION 3.14. Tax Returns. Each of the Borrower and the Subsidiaries
has filed or caused to be filed all Federal, state, local and foreign tax
returns or materials required to have been filed by it and has paid or caused to
be paid all taxes due and payable by it and all assessments received by it,
except taxes that are being contested in good faith by appropriate proceedings
and for which the Borrower or such Subsidiary, as applicable, shall have set
aside on its books adequate reserves.
SECTION 3.15. No Material Misstatements. None of the Confidential
Information Memorandum nor any other information, report, financial statement,
exhibit or schedule furnished in writing by or on behalf of the Borrower to the
Administrative Agent, the Collateral Agent or any Lender in connection with the
negotiation of any Loan Document or included therein or delivered pursuant
thereto (collectively, "information") contained, contains or will contain any
material misstatement of fact or omitted, omits or
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47
will omit to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were, are or will be made,
not misleading, provided that (a) the statements therein describing documents
and agreements are summaries only and as such are qualified in their entirety by
reference to such documents and agreements, (b) as to information therein that
is specified as having been supplied by persons other than the Borrower or an
Affiliate of the Borrower, the foregoing representation is limited to the
knowledge of the Borrower, (c) to the extent any such information was based upon
or constitutes a forecast or projection, the Borrower represents only that it
acted in good faith and utilized reasonable assumptions and due care in the
preparation of such information and (d) to the extent any such information was
subsequently replaced, prior to the date hereof, by other information expressly
correcting such earlier information (and either the Administrative Agent or the
Collateral Agent was expressly informed by or on behalf of the Borrower that
such other information was correcting such earlier information), the foregoing
representation does not apply to such earlier information.
SECTION 3.16. Employee Benefit Plans. Each of the Borrower and its
ERISA Affiliates is in compliance in all material respects with the applicable
provisions of ERISA, the Code and the regulations and published interpretations
thereunder with respect to Plans and Multiemployer Plans. Neither the Borrower
nor any of its ERISA Affiliates maintains or contributes to or is or has within
the past five years been required to maintain or contribute to a Plan or a
Multiemployer Plan.
SECTION 3.17. Environmental Matters. Except as set forth in
Schedule 3.17:
(a) The properties owned or operated by the Borrower and the
Subsidiaries (the "Properties") do not contain any Hazardous Materials in
amounts or concentrations which (i) constitute or constituted a violation of,
(ii) require Remedial Action under, or (iii) could give rise to liability under,
Environmental Laws, which violations, Remedial Actions and liabilities, in the
aggregate, could reasonably be expected to result in a Material Adverse Effect;
(b) The Properties and all operations of the Borrower and the
Subsidiaries are in compliance, and in the last five years have been in
compliance, with all Environmental Laws and all necessary Environmental Permits
have been obtained and are in effect, except to the extent that such
non-compliance or failure to obtain any necessary permits, in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect;
(c) There have been no Releases or threatened Releases at or from the
Properties or otherwise in connection with the operations of the Borrower or the
Subsidiaries, which Releases or threatened Releases, in the aggregate, could
reasonably be expected to result in a Material Adverse Effect;
(d) Neither the Borrower nor any of the Subsidiaries has received any
notice of an Environmental Claim in connection with the Properties or the
operations of the Borrower or the Subsidiaries or with regard to any person
whose liabilities for environmental matters the Borrower or the Subsidiaries has
retained or assumed, in whole or in part, contractually, by operation of law or
otherwise, which, in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, nor do the Borrower or the Subsidiaries have reason to
believe that any such notice will be received or is being threatened; and
(e) Hazardous Materials have not been transported from the Properties
in connection with the operations of the Borrower or the Subsidiaries or in
connection with the operations of any person for which the Borrower or the
Subsidiaries retained or assumed any liability, contractually, by operation of
law or otherwise, nor have Hazardous Materials been generated, treated, stored
or disposed of at, on or under any
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48
of the Properties in a manner that could give rise to liability under any
Environmental Law, nor have the Borrower or the Subsidiaries retained or assumed
any liability, contractually, by operation of law or otherwise, with respect to
the generation, treatment, storage or disposal of Hazardous Materials, which
transportation, generation, treatment, storage or disposal, or retained or
assumed liabilities, in the aggregate, could reasonably be expected to result in
a Material Adverse Effect.
SECTION 3.18. Insurance. Schedule 3.18 sets forth a true, complete and
correct description of all insurance maintained by or for the Borrower or any
Subsidiary as of the date hereof and the Closing Date. As of each such date,
such insurance is in full force and effect and all premiums due and payable on
the Closing Date have been duly paid. The Borrower and the Subsidiaries have
insurance in such amounts and covering such risks and liabilities as are in
accordance with normal industry practice.
SECTION 3.19. Security Documents. (a) The Pledge Agreement is effective
to create in favor of the Collateral Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and, when the Collateral is
delivered to the Collateral Agent, the Pledge Agreement shall constitute a fully
perfected first priority Lien on, and security interest in, all right, title and
interest of the pledgors thereunder in such Collateral, in each case prior and
superior in right to any other person.
(b) The Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
offices specified on Schedule 6 to the Perfection Certificate, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in such Collateral
(other than the Intellectual Property, as defined in the Security Agreement), in
each case prior and superior in right to any other person, other than with
respect to any Permitted Liens.
(c) When the Security Agreement is filed in the United States Patent
and Trademark Office and the United States Copyright Office, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in the Intellectual
Property (as defined in the Security Agreement), in each case prior and superior
in right to any other person (it being understood that subsequent recordings in
the United States Patent and Trademark Office and the United States Copyright
Office may be necessary to perfect a lien on registered trademarks, trademark
applications and copyrights acquired by the grantors after the date hereof).
SECTION 3.20. Location of Leased Premises; No Real Property. Schedule
3.20 lists completely and correctly as of the Closing Date all real property
leased by the Borrower or any of the Subsidiaries and the addresses thereof.
Neither the Borrower nor any of the Subsidiaries owns any real property as of
the Closing Date.
SECTION 3.21. Labor Matters. As of the date hereof and the Closing
Date, there are no strikes, lockouts or slowdowns against the Borrower or any
Subsidiary pending or, to the knowledge of the Borrower, threatened. The hours
worked by and payments made to employees of the Borrower and the Subsidiaries
have not been in violation of the Fair Labor Standards Act or any other
applicable Federal, state, local or foreign law dealing with such matters. All
payments due from the Borrower or any Subsidiary, or for which any claim may be
made against the Borrower or any Subsidiary, on account of wages and employee
health and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of the Borrower or such Subsidiary. The consummation of
the Transactions will not
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49
give rise to any right of termination or right of renegotiation on the part of
any union under any collective bargaining agreement to which the Borrower or any
Subsidiary is bound.
SECTION 3.22. Solvency. Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the making
of each Loan made on the Closing Date and after giving effect to the application
of the proceeds of such Loans, (i) the fair value of the assets of each Loan
Party, at a fair valuation, will exceed its debts and liabilities, subordinated,
contingent or otherwise; (ii) the present fair saleable value of the property of
each Loan Party will be greater than the amount that will be required to pay the
probable liability of its debts and other liabilities, subordinated, contingent
or otherwise, as such debts and other liabilities become absolute and matured;
(iii) each Loan Party will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (iv) each Loan Party will not have unreasonably small
capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted following the Closing
Date.
SECTION 3.23. Lease; Acquisition Agreements. The Lease has been duly
executed and delivered by each of the Borrower and Leasco and constitutes, and
each of the Acquisition Agreements when executed and delivered by the parties
thereto on or prior to the Closing Date will constitute, a legal, valid and
binding obligation of each such party enforceable against each such party in
accordance with its terms.
ARTICLE IV
Conditions of Lending
The obligations of the Lenders to make Loans and of the Issuing Banks
to issue Letters of Credit hereunder are subject to the satisfaction of the
following conditions:
SECTION 4.01. All Credit Events. On the date of each Borrowing,
including on the date of each issuance of a Letter of Credit (each such event
being called a "Credit Event"):
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03 (or such notice shall have been deemed
given in accordance with Section 2.03) or, in the case of the issuance of a
Letter of Credit, the applicable Issuing Bank and the Administrative Agent shall
have received a notice requesting the issuance of such Letter of Credit as
required by Section 2.22(b).
(b) Except in the case of a Borrowing that does not increase the
aggregate principal amount of Loans outstanding of any Lender, the
representations and warranties set forth in Article III hereof shall be true and
correct in all material respects on and as of the date of such Credit Event
(including, with respect to Borrowings on the Closing Date, after giving effect
to the Acquisition) with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly relate to an
earlier date.
(c) The Borrower and each other Loan Party shall be in compliance with
all the terms and provisions set forth herein and in each other Loan Document on
its part to be observed or performed, and at the time of and immediately after
such Credit Event, no Event of Default or Default shall have occurred and be
continuing.
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50
Each Credit Event shall be deemed to constitute a representation and
warranty by the Borrower on the date of such Credit Event as to the matters
specified in paragraphs (b) (except as aforesaid) and (c) of this Section 4.01.
SECTION 4.02. First Credit Event. On the Closing Date:
(a) The Administrative Agent shall have received, on behalf of itself,
the Collateral Agent, the Lenders and the Issuing Banks, the favorable written
opinions (or, in the case of Exhibit H-3, the written memorandum) of Willkie
Farr & Gallagher, counsel for the Borrower, substantially to the effect set
forth in Exhibits H-1, H-2 and H-3, in each case (i) dated the Closing Date,
(ii) addressed to the Issuing Banks, the Administrative Agent, the Collateral
Agent, and the Lenders and (iii) covering such other matters relating to the
Loan Documents, the Lease and the Transactions as the Administrative Agent or
the Collateral Agent shall reasonably request, and the Borrower hereby requests
such counsel to deliver such opinions and memorandum.
(b) All legal matters incident to this Agreement, the Borrowings and
extensions of credit hereunder and the other Loan Documents shall be
satisfactory to the Lenders, to the Issuing Banks and to Cravath, Swaine &
Moore, counsel for the Administrative Agent and the Collateral Agent.
(c) The Administrative Agent shall have received (i) a copy of the
certificate or articles of incorporation, including all amendments thereto, of
each Loan Party and Leasco, certified as of a recent date by the Secretary of
State of the state of its organization, and a certificate as to the good
standing of each Loan Party and Leasco as of a recent date, from such Secretary
of State; (ii) a certificate of the Secretary or Assistant Secretary of each
Loan Party and Leasco dated the Closing Date and certifying (A) that attached
thereto is a true and complete copy of the by-laws of such Loan Party or Leasco,
as applicable, as in effect on the Closing Date and at all times since a date
prior to the date of the resolutions described in clause (B) below, (B) that
attached thereto is a true and complete copy of resolutions duly adopted by the
Board of Directors of such Loan Party or Leasco, as applicable, authorizing the
execution, delivery and performance of the Loan Documents and the Lease to the
extent each is a party thereto and, in the case of the Borrower, the borrowings
hereunder, and that such resolutions have not been modified, rescinded or
amended and are in full force and effect, (C) that the certificate or articles
of incorporation of such Loan Party or Leasco, as applicable, have not been
amended since the date of the last amendment thereto shown on the certificate of
good standing furnished pursuant to clause (i) above and (D) as to the
incumbency and specimen signature of each officer executing any Loan Document,
the Lease or any other document delivered in connection herewith on behalf of
such Loan Party or Leasco, as applicable; (iii) a certificate of another officer
as to the incumbency and specimen signature of the Secretary or Assistant
Secretary executing the certificate pursuant to (ii) above; and (iv) such other
documents as the Lenders, the Issuing Banks or Cravath, Swaine & Moore, counsel
for the Administrative Agent and the Collateral Agent, may reasonably request.
(d) The Administrative Agent shall have received a certificate, dated
the Closing Date and signed by a Financial Officer of the Borrower, confirming
compliance with the conditions precedent set forth in paragraphs (b) and (c) of
Section 4.01.
(e) The Administrative Agent (and the Collateral Agent in the case of
the portion of the Agents' Fees payable to the Collateral Agent) shall have
received all Fees and other amounts due and payable on or prior to the Closing
Date, including, to the extent invoiced, reimbursement or payment of all
reasonable
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51
out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder or under any other Loan Document.
(f) The Pledge Agreement shall have been duly executed by the Loan
Parties parties thereto, shall have been delivered to the Collateral Agent and
shall be in full force and effect, and all the outstanding capital stock of the
Borrower and the Subsidiaries shall have been duly and validly pledged
thereunder to the Collateral Agent for the ratable benefit of the Secured
Parties and certificates representing such shares, accompanied by instruments of
transfer and stock powers endorsed in blank, shall be in the actual possession
of the Collateral Agent.
(g) The Security Agreement shall have been duly executed by the Loan
Parties parties thereto, shall have been delivered to the Collateral Agent and
shall be in full force and effect on such date and each document (including each
Uniform Commercial Code financing statement) required by law or reasonably
requested by the Administrative Agent to be filed, registered or recorded in
order to create in favor of the Collateral Agent for the benefit of the Secured
Parties a valid, legal and perfected first-priority security interest in and
lien on the Collateral (subject to any Permitted Lien) described in such
agreement shall have been delivered to the Collateral Agent.
(h) The Collateral Agent shall have received the results of a search of
the Uniform Commercial Code filings (or equivalent filings) made with respect to
the Loan Parties in the states (or other jurisdictions) in which the chief
executive office of each such person is located, any offices of such persons in
which records have been kept relating to Accounts and the other jurisdictions in
which Uniform Commercial Code filings (or equivalent filings) are to be made
pursuant to the preceding paragraph, together with copies of the financing
statements (or similar documents) disclosed by such search, and accompanied by
evidence satisfactory to the Collateral Agent that the Liens indicated in any
such financing statement (or similar document) would be permitted under Section
6.02 or have been released.
(i) The Collateral Agent shall have received a Perfection Certificate
with respect to the Loan Parties dated the Closing Date and duly executed by a
Responsible Officer of the Borrower.
(j) The Guarantee Agreement shall have been duly executed by the Loan
Parties parties thereto, shall have been delivered to the Collateral Agent and
shall be in full force and effect.
(k) The Indemnity, Subrogation and Contribution Agreement shall have
been duly executed by the Loan Parties parties thereto, shall have been
delivered to the Collateral Agent and shall be in full force and effect.
(l) The Administrative Agent shall have received a copy of, or a
certificate as to coverage under, the insurance policies required by Section
5.02 and the applicable provisions of the Security Documents, each of which
shall be endorsed or otherwise amended to include a "standard" or "New York"
lender's loss payable endorsement and to name the Collateral Agent as additional
insured, in form and substance reasonably satisfactory to the Collateral Agent.
(m) The Acquisition shall have been consummated or shall be consummated
simultaneously with or immediately following the first Credit Event in
accordance with applicable law, in accordance with the Purchase Agreement and
the other Acquisition Agreements (without giving effect to any waiver of any
material condition set forth in, or any material amendment, supplement or other
modification to, the Purchase Agreement or the other Acquisition Agreements not
approved by the Lenders) and on other terms
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52
reasonably satisfactory to the Lenders, and the Lenders shall be satisfied that
(i) no material adverse change has occurred since the date hereof with respect
to the capitalization, structure and equity ownership of the Borrower and the
Subsidiaries after giving effect to the Transactions, (ii) the aggregate amount
of Transaction Costs shall not exceed $27,500,000 and (iii) the current
liabilities of CTR being assumed by the Borrower and the Subsidiaries in
connection with the Acquisition will not exceed the current assets of CTR being
acquired by the Borrower and the Subsidiaries in connection with the
Acquisition.
(n) Prior to or simultaneously with the first Credit Event, the Capital
Contributions shall have been made, in exchange for the issuance to the
Investors of all the issued and outstanding capital stock of the Borrower.
(o) The Borrower shall have received not less than $100,000,000 in
gross cash proceeds from the borrowings under the Subordinated Facility. The
terms and conditions of the Subordinated Facility (including terms and
conditions relating to the interest rate, fees, amortization, maturity,
subordination, covenants, events of default and remedies) shall be reasonably
satisfactory in all respects to the Lenders.
(p) After giving effect to the Transactions, the Borrower and the
Subsidiaries shall have outstanding no Indebtedness for borrowed money or
preferred stock other than (i) Indebtedness under the Loan Documents, (ii) loans
under the Subordinated Facility and (iii) other Indebtedness permitted under
Section 6.01, the terms and conditions of which (including terms and conditions
relating to the interest rate, fees, amortization, maturity, subordination,
covenants, events of default and remedies) shall be satisfactory in all respects
to the Lenders.
(q) The Administrative Agent shall be reasonably satisfied as to the
amount and nature of any environmental and employee health and safety exposures
to which the Borrower and the Subsidiaries may be subject after giving effect to
the Transactions, and with the plans of the Borrower with respect thereto.
(r) The Lenders shall be reasonably satisfied in all respects with the
tax position and the contingent tax and other liabilities of, and with any tax
sharing agreements among, the Borrower and the Subsidiaries after giving effect
to the Transactions, and with the plans of the Borrower with respect thereto.
(s) The Agents shall be reasonably satisfied with the results of an
examination of the Borrowing Base, and the auditing systems and controls with
respect thereto, after giving effect to the Transactions.
(t) The Collateral Agent shall have received (i) a Certificate in the
form of Exhibit J (a "Borrowing Base Certificate") showing the Borrowing Base as
of the Closing Date (giving pro forma effect to the Transactions), such
Certificate to be certified as complete and correct on behalf of the Borrower by
a Financial Officer of the Borrower, and (ii) such supporting documentation and
additional reports with respect to the Borrowing Base as the Collateral Agent
shall reasonably request.
(u) The Lenders shall have received a solvency letter from Houlihan,
Lokey, Howard & Zukin, Inc., in form and substance reasonably satisfactory to
the Agents, together with such other evidence reasonably requested by the
Lenders, with respect to the solvency of the Borrower and the Subsidiaries on a
consolidated basis after giving effect to the Transactions.
(v) The Lenders shall have received a written certification of a
Financial Officer of the Borrower as to the amount of the Consolidated EBITDA of
CTR for the period beginning July 1, 1996, and ending on the last day of the
month immediately preceding the Closing Date, which such amount shall not be
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53
materially inconsistent with the forecast for such period prepared by the
Borrower and contained in the Confidential Information Memorandum.
(w) The consummation of the Transactions shall not (i) violate any
applicable law, statute, rule or regulation or (ii) conflict with, or result in
a default or event of default under, any material agreement of the Borrower or
any of the Subsidiaries.
(x) The Agents shall be reasonably satisfied with the Vehicle Title
Nominee Agreement and the Stockholders' Agreement (the Agents acknowledging that
the most recent draft of each such agreement made available to their counsel is
satisfactory), and the other Acquisition Agreements (other than the Purchase
Agreement) shall have been executed and delivered in the form attached to the
Purchase Agreement.
(y) The Collateral Agent shall have received evidence, in form and
substance reasonably satisfactory to it, that on or prior to the Closing Date,
Leasco has been adequately capitalized, and that Leasco has established a
schedule and a process to retitle all the Vehicles from the name of the Seller
to its name prior to the first anniversary of the Closing Date.
ARTICLE V
Affirmative Covenants
The Borrower covenants and agrees with each Lender that so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan, all Fees and all other expenses
or amounts payable under any Loan Document shall have been paid in full and all
Letters of Credit have been canceled or have expired and all amounts drawn
thereunder have been reimbursed in full, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and will cause each of the
Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as otherwise expressly permitted under
Section 6.05.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated (or in
any manner reasonably incidental thereto); comply in all material respects with
all applicable laws, rules, regulations and decrees and orders of any
Governmental Authority, whether now in effect or hereafter enacted; and at all
times maintain and preserve all property material to the conduct of such
business and keep such property in good repair, working order and condition and
from time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times.
SECTION 5.02. Insurance. (a) Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers; maintain such
other insurance, to such extent and against such risks, including fire and other
risks insured against by extended coverage, as is customary with companies
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54
in the same or similar businesses operating in the same or similar locations,
including public liability insurance against claims for personal injury or death
or property damage occurring upon, in, about or in connection with the use of
any properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law.
(b) Cause all such policies of the Borrower and the Loan Parties to be
endorsed or otherwise amended to include a "standard" or "New York" lender's
loss payable endorsement, in form and substance satisfactory to the
Administrative Agent and the Collateral Agent, which endorsement shall provide
that, from and after the Closing Date, if the insurance carrier shall have
received written notice from the Administrative Agent or the Collateral Agent of
the occurrence of an Event of Default, the insurance carrier shall pay all
proceeds otherwise payable to the Borrower or the other Loan Parties under such
policies directly to the Collateral Agent; cause all such policies to provide
that none of the Borrower, the Administrative Agent, the Collateral Agent or any
other party shall be a coinsurer thereunder and to contain a "Replacement Cost
Endorsement", without any deduction for depreciation, and such other provisions
as the Administrative Agent or the Collateral Agent may reasonably require from
time to time to protect their interests; deliver original or certified copies of
all such certificates of insurance to the Collateral Agent; cause each such
policy to provide that it shall not be canceled, modified or not renewed (i) by
reason of nonpayment of premium upon not less than 10 days' prior written notice
thereof by the insurer to the Administrative Agent and the Collateral Agent
(giving the Administrative Agent and the Collateral Agent the right to cure
defaults in the payment of premiums) or (ii) for any other reason upon not less
than 30 days' prior written notice thereof by the insurer to the Administrative
Agent and the Collateral Agent; deliver to the Administrative Agent and the
Collateral Agent, prior to the cancellation, modification or nonrenewal of any
such policy of insurance, a copy of a renewal or replacement policy (or other
evidence of renewal of a policy previously delivered to the Administrative Agent
and the Collateral Agent) together with evidence satisfactory to the
Administrative Agent and the Collateral Agent of payment of the premium
therefor.
(c) Notify the Administrative Agent and the Collateral Agent
immediately whenever any separate insurance concurrent in form or contributing
in the event of loss with that required to be maintained under this Section 5.02
is taken out by the Borrower; and promptly deliver to the Administrative Agent
and the Collateral Agent a duplicate original copy of such policy or policies.
(d) In connection with the covenants set forth in this Section 5.02, it
is understood and agreed that:
(i) none of the Administrative Agent, the Collateral
Agent, the Lenders, the Issuing Bank or their respective
agents or employees shall be liable for any loss or damage
insured by the insurance policies required to be maintained
under this Section 5.02, it being understood that (A) the
Borrower and the other Loan Parties shall look solely to their
insurance companies or any other parties other than the
aforesaid parties for the recovery of such loss or damage and
(B) such insurance companies shall have no rights of
subrogation against the Administrative Agent, the Collateral
Agent, the Lenders, the Issuing Bank or their agents or
employees. If, however, the insurance policies do not provide
waiver of subrogation rights against such parties, as required
above, then the Borrower hereby agrees, to the extent
permitted by law, to waive its, and to cause each of the
Subsidiaries to waive its, right of recovery, if any, against
the Administrative Agent, the Collateral Agent, the Lenders,
the Issuing Bank and their agents and employees; and
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55
(ii) the designation of any form, type or amount of
insurance coverage by the Administrative Agent, the Collateral
Agent or the Required Lenders under this Section 5.02 shall in
no event be deemed a representation, warranty or advice by the
Administrative Agent, the Collateral Agent or the Lenders that
such insurance is adequate for the purposes of the business of
the Borrower and the Subsidiaries or the protection of their
properties and the Administrative Agent, the Collateral Agent
and the Required Lenders shall have the right from time to
time to require the Borrower and the other Loan Parties to
keep other insurance in such form and amount as the
Administrative Agent, the Collateral Agent or the Required
Lenders may reasonably request, provided that such insurance
shall be obtainable on commercially reasonable terms.
SECTION 5.03. Obligations and Taxes. Pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, might
give rise to a Lien upon such properties or any part thereof; provided, however,
that such payment and discharge shall not be required with respect to any such
tax, assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and the Borrower
shall have set aside on its books adequate reserves with respect thereto in
accordance with GAAP and such contest operates to suspend collection of the
contested obligation, tax, assessment or charge and enforcement of a Lien.
SECTION 5.04. Financial Statements, Reports, etc. Furnish to the
Agents:
(a) within 90 days after the end of each fiscal year, the
consolidated and combined balance sheet and related statements of
income, stockholders' equity and cash flows showing the financial
condition of the Borrower and its consolidated Subsidiaries as of the
close of such fiscal year and the results of its operations and the
operations of such Subsidiaries during such year, all audited by
Coopers & Lybrand LLP or other independent public accountants of
recognized national standing acceptable to the Required Lenders and
accompanied by an opinion of such accountants (which shall not be
qualified in any material respect) to the effect that such consolidated
financial statements fairly present the financial condition and results
of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;
provided, however, that such financial statements will contain
footnotes or other information to the effect that: (i) Leasco's
business consists of the purchase and lease of vehicles; and (ii)
Leasco is a separate corporate entity with its own separate creditors
which, upon liquidation of Leasco, will be entitled to be satisfied out
of Leasco's assets prior to any value in Leasco becoming available to
Leasco's equity holders;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year (or, in the case of the fiscal
quarter ended March 31, 1997, within 50 days after such date), the
consolidated and combined balance sheet and related statements of
income, stockholders' equity and cash flows showing the financial
condition of the Borrower and its consolidated Subsidiaries as of the
close of such fiscal quarter and the results of its operations and the
operations of such Subsidiaries during such fiscal quarter and the then
elapsed portion of the fiscal year, all certified by one of its
Financial Officers as fairly presenting the financial condition and
results of operations of the Borrower and its consolidated Subsidiaries
on a consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments;
<PAGE>
56
(c) within 20 days after the end of each of the first two
months of each fiscal quarter, the consolidated and combined balance
sheet and related statements of income, stockholders' equity and cash
flows showing the financial condition of the Borrower and its
consolidated Subsidiaries as of the close of such month and the results
of its operations and the operations of such Subsidiaries during such
month and the then elapsed portion of the fiscal year, all certified by
one of its Financial Officers as fairly presenting the financial
condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied, subject to normal year-end audit
adjustments;
(d) concurrently with any delivery of financial statements
under sub-paragraph (a), (b) or (c) above, a certificate of the
accounting firm or Financial Officer opining on or certifying such
statements (which certificate, when furnished by an accounting firm,
may be limited to accounting matters and disclaim responsibility for
legal interpretations) (i) certifying that no Event of Default or
Default has occurred or, if such an Event of Default or Default has
occurred, specifying the nature and extent thereof and any corrective
action taken or proposed to be taken with respect thereto and (ii) with
respect to the financial statements delivered under sub-paragraph (a)
or (b) above, setting forth computations in reasonable detail
satisfactory to the Administrative Agent demonstrating whether or not
there has been compliance with the covenants contained in Sections 6.11
through 6.15;
(e) within 12 days after the end of each calendar month (i) a
Borrowing Base Certificate showing the Borrowing Base as of the close
of business on the last day of such calendar month, each such
Certificate to be certified as complete and correct on behalf of the
Borrower by a Financial Officer of the Borrower, and (ii) such
supporting documentation and additional reports with respect to the
Borrowing Base as the Collateral Agent shall reasonably request;
(f) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials
filed by the Borrower or any Subsidiary with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or
all of the functions of said Commission, or with any national
securities exchange, or distributed to its shareholders, as the case
may be;
(g) the additional historical financial statements and other
information concerning CTR referred to in Section 6.14 of the Purchase
Agreement within five days after the Borrower has received such
financial statements and other information from the Seller; and
(h) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
the Borrower or any Subsidiary, or compliance with the terms of any
Loan Document or the Lease, as the Administrative Agent, the Collateral
Agent or any Lender may reasonably request.
SECTION 5.05. Litigation and Other Notices. Furnish to the
Administrative Agent, the Collateral Agent, each Issuing Bank and each Lender
prompt written notice of the following:
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) taken or proposed to
be taken with respect thereto;
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57
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Borrower or any of its Affiliates
that could reasonably be expected to result in a Material Adverse
Effect; and
(c) any development that has resulted in, or could reasonably
be expected to result in, a Material Adverse Effect (such notice to be
provided promptly upon any Responsible Officer of the Borrower becoming
aware of any such development).
SECTION 5.06. Employee Benefits. (a) Comply in all material respects
with the applicable provisions of ERISA, the Code and the regulations and
published interpretations thereunder with respect to Plans and Multiemployer
Plans and (b) furnish to the Administrative Agent (i) as soon as possible after,
and in any event within 10 days after any Responsible Officer of the Borrower or
any of its ERISA Affiliates knows or has reason to know that, any ERISA Event
has occurred that, alone or together with any other ERISA Event could reasonably
be expected to result in a Material Adverse Effect, a statement of a Financial
Officer of the Borrower setting forth details as to such ERISA Event and the
action, if any, that the Borrower proposes to take with respect thereto.
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of law are made of
all dealings and transactions in relation to its business and activities. Each
Loan Party and Leasco will, and will cause each of its Subsidiaries to, permit
any representatives designated by the Administrative Agent, the Collateral Agent
or any Lender to visit and inspect the financial records and the properties of
the Borrower or any Subsidiary (including such records and properties as relate
to the Borrowing Base and the assets included therein) at reasonable times, upon
reasonable notice and as often as reasonably requested and at the Borrower's
expense if a Default or Event of Default shall have occurred and be continuing
and to make extracts from and copies of such financial records, and permit any
representatives designated by the Administrative Agent, the Collateral Agent or
any Lender to discuss the affairs, finances and condition of the Borrower or any
Subsidiary (including as such matters relate to the Borrowing Base and the
assets included therein) with the officers thereof and independent accountants
therefor, provided that the business of the Borrower and the Subsidiaries shall
not be unreasonably disrupted by any such visit and inspection.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans and
request the issuance of Letters of Credit only for the purposes set forth in the
preamble to this Agreement.
SECTION 5.09. Compliance with Environmental Laws. Comply, and cause, to
the best of its ability, all lessees and other persons occupying its Properties
to comply, in all material respects with all Environmental Laws and
Environmental Permits applicable to its operations and Properties; obtain and
renew all material Environmental Permits necessary for its operations and
Properties; and conduct any Remedial Action in accordance with Environmental
Laws; provided, however, that neither the Borrower nor any of the Subsidiaries
shall be required to undertake any Remedial Action to the extent that its
obligation to do so is being contested in good faith and by proper proceedings
and appropriate reserves are being maintained with respect to such
circumstances.
SECTION 5.10. Preparation of Environmental Reports. If a Default caused
by reason of a breach of Section 3.17 or 5.09 shall have occurred and be
continuing, at the request of the Required Lenders through the Administrative
Agent, provide to the Lenders within 45 days after such request, at the expense
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of the Borrower, an environmental site assessment report for the Properties
which are the subject of such default prepared by an environmental consulting
firm acceptable to the Administrative Agent and indicating the presence or
absence of Hazardous Materials and the estimated cost of any compliance or
Remedial Action in connection with such Properties.
SECTION 5.11. Audits. (a) From time to time upon reasonable notice from
the Collateral Agent or the Required Lenders, permit the Collateral Agent or the
Lenders or professionals (including investment bankers, consultants,
accountants, lawyers and appraisers) retained by the Collateral Agent or the
Lenders to conduct evaluations and appraisals of (i) the Borrower's practices in
the computation of the Borrowing Base, (ii) the assets included in the Borrowing
Base and (iii) the monitoring systems (computer and otherwise) and financial
records relating to the Borrowing Base and such assets, and pay the reasonable
fees and expenses of such professionals, provided that (A) so long as no Default
or Event of Default shall have occurred and be continuing, there shall be no
more than one such evaluation and appraisal by any of the Collateral Agent or
such Lenders or professionals in any fiscal quarter of the Borrower and (B) the
business of the Borrower and the Subsidiaries shall not be unreasonably
disrupted by any such evaluation and appraisal.
(b) In connection with any evaluation and appraisal relating to the
computation of the Borrowing Base, agree to maintain such additional reserves
(for purposes of computing the Borrowing Base) in respect of the assets
specified in clauses (a) through (f) of the definition of the term "Borrowing
Base" and make such other adjustments to its parameters for including such
assets in the calculation of the Borrowing Base as the Collateral Agent or the
Required Lenders shall in good faith and in the exercise of its or their
reasonable judgement require based upon the results of such evaluation and
appraisal and after taking into account any other changes previously made with
respect to the calculation of the Borrowing Base.
SECTION 5.12. Interest Rate Protection. As promptly as practicable, and
in any event within 90 days after the Closing Date (or, with respect to any
portion of the aggregate principal amount of the Subordinated Notes that exceeds
the aggregate principal amount of the Subordinated Facility, within 30 days
after the issuance of the Subordinated Notes), enter into with one or more
persons that are at the time Lenders (or Affiliates of Lenders), and for a
period of two and one-half years from the Closing Date maintain at all times in
full force and effect, Interest Rate Protection Agreements or fixed-rate
securities or loans at rates, on terms and in form reasonably satisfactory to
the Agents to set at fixed rates the interest cost to the Borrower with respect
to at least 50% of the sum of (a) the outstanding principal amount of the Term
Loans and (b) the outstanding principal amount of the Subordinated Facility or
the Subordinated Notes, as the case may be.
SECTION 5.13. Consents of Lessors. Use its reasonable efforts to obtain
within 60 days following the Closing Date estoppel certificates or similar
agreements reasonably satisfactory to the Collateral Agent executed by the
lessors of all Properties.
SECTION 5.14. Securitization. As soon as practicable after the Closing
Date, use its best efforts (a) to prepay all outstanding Term Loans, together
with accrued interest thereon to but excluding the date of prepayment, and
(b) to permanently reduce the Revolving Credit Commitments to $75,000,000 and,
in connection therewith, prepay Revolving Loans and replace or cash
collateralize Letters of Credit as required by Section 2.13(a) (collectively,
the "Securitization Prepayments"), in each case with the proceeds of a
structured financing (the "Securitization") consisting of a securitization of
the rental Vehicles owned by Leasco (funded by the issuance of highly rated
commercial paper, medium-term notes or other forms of borrowing). Upon
consummation of the Securitization and the making of the related Securitization
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Prepayments, the sum of the amount of (a) cash and Permitted Investments then
held by the Borrower and its wholly owned Subsidiaries and (b) the unused
availability under the Revolving Credit Facility (after giving effect to the
then-applicable Borrowing Base and the Revolving Credit Borrowings remaining
outstanding after the Securitization Prepayments) and under the Securitization,
shall be not less than $25,000,000. The Borrowing Base will be reduced upon
consummation of the Securitization as set forth in the last sentence of the
definition thereof and, in connection with such reduction in the Borrowing Base,
the Borrower shall make any mandatory prepayments required by the terms of
Section 2.13(b). The Borrower will be responsible for all fees and expenses in
connection with the Securitization. The Borrower shall consummate the
Securitization only if the Securitization Prepayments shall be made concurrently
therewith and the Borrower shall have complied with the other terms set forth in
this Section and elsewhere in this Agreement.
SECTION 5.15. Vehicle Fleet. (a) Leasco Distribution. Use its best
efforts to cause Leasco to dividend (or, in the event such dividends cannot
lawfully be made in accordance with applicable law, to lend or otherwise advance
(to the extent lawful to so lend or advance), subject to Section 6.04(b)) to the
Borrower all monies and other funds held by Leasco that do not need to be
retained by Leasco with respect to the ownership or acquisition of Vehicles,
debt service owed under the Securitization or the satisfaction of any other
obligations of Leasco reasonably relating thereto.
(b) Ordinary Course Retitling. Retitle the Vehicles covered by the
Vehicle Title Nominee Agreement from the name of the Seller to Leasco, any other
wholly owned Subsidiary of the Borrower or the Borrower in the ordinary course
of business and in any event not later than, subject to paragraph (c) below, the
earlier of (i) one year after the Closing Date and (ii) the last day under the
Vehicle Title Nominee Agreement by which such Vehicles must be so retitled (such
last day being, as of the Closing Date, six months after the Closing Date).
(c) Retitling Upon Ratings Downgrade. If at any time prior to the
consummation of the Securitization the long-term, non-credit-enhanced senior
unsecured indebtedness of the Seller Parent is rated less than either BBB by
Standard & Poor's Ratings Service or BAA2 by Moody's Investors Service, Inc.,
then, at the request of the Agents or the Required Lenders, cause Leasco to
transfer the title to any Vehicle covered by the Vehicle Title Nominee Agreement
from the name of the Seller to the name of Leasco within 30 days of such request
(or, if such transfer cannot be completed within such 30-day period, cause
Leasco to deliver to the Collateral Agent within such 30-day period fully
completed and executed documentation sufficient to cause any such Vehicle to be
so transferred, subject only to customary governmental filing and processing
requirements).
(d) Guarantee; Security Interest. If the Securitization is not
consummated by the Step-Up Date, then at any time thereafter, upon the request
of the Agents or the Required Lenders made prior to consummation of the
Securitization, (i) cause Leasco to (A) execute the Guarantee Agreement, the
Indemnity, Subrogation and Contribution Agreement and each applicable Security
Document in favor of the Collateral Agent and (B) acknowledge in a writing
satisfactory to the Collateral Agent that the reference to "Citicorp, U.S.A.,
Inc. or its successors or assigns, as collateral agent" on the titles to all
Vehicles owned by Leasco is a reference to the Collateral Agent on behalf of the
Secured Parties and (ii) otherwise comply with the terms of Section 5.16 with
respect to the foregoing.
(e) Non-Securitization Vehicles. Any Vehicles owned by Leasco that
are not utilized in the Securitization shall be transferred by Leasco to the
Borrower or another Subsidiary at the time the
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Securitization is consummated (it being understood that, on and after such
transfer, such Vehicles shall constitute Collateral).
(f) Leasco Affairs. Cause Leasco to conduct its affairs strictly in
accordance with, and to otherwise comply with, its certificate of incorporation
and by-laws.
SECTION 5.16. Further Assurances. Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing Uniform Commercial Code and other financing
statements) that may be required under applicable law, or that the Required
Lenders, the Administrative Agent or the Collateral Agent may reasonably
request, in order to effectuate the transactions contemplated by the Loan
Documents and in order to grant, preserve, protect and perfect the validity and
first priority of the security interests created or intended to be created by
the Security Documents. The Borrower will cause any subsequently acquired or
organized Domestic Subsidiary (or, to the extent no adverse tax consequences to
the Borrower or any Subsidiary would result, Foreign Subsidiary) to execute the
Guarantee Agreement, the Indemnity Subrogation and Contribution Agreement and
each applicable Security Document in favor of the Collateral Agent. In addition,
from time to time, the Borrower will, at its cost and expense, promptly secure
the Obligations by pledging or creating, or causing to be pledged or created,
perfected security interests with respect to such of its assets and properties
(other than the Vehicles owned by Leasco, except as set forth in Section
5.15(d)) as the Administrative Agent, the Collateral Agent or the Required
Lenders shall designate (it being understood that it is the intent of the
parties that the Obligations shall be secured by, among other things,
substantially all the assets of the Borrower and the Subsidiaries (including
properties acquired subsequent to the Closing Date), other than such Vehicles,
except as set forth in Section 5.15(d)). Such security interests and Liens will
be created under the Security Documents and other security agreements and other
instruments and documents in form and substance satisfactory to the Collateral
Agent, and the Borrower shall deliver or cause to be delivered to the Lenders
all such instruments and documents (including legal opinions, title insurance
policies and lien searches) as the Collateral Agent shall reasonably request to
evidence compliance with this Section. The Borrower agrees to provide such
evidence as the Collateral Agent shall reasonably request as to the perfection
and priority status of each such security interest and Lien.
ARTICLE VI
Negative Covenants
The Borrower covenants and agrees with each Lender that, so long as
this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document have been paid in full
and all Letters of Credit have been cancelled or have expired and all amounts
drawn thereunder have been reimbursed in full, unless the Required Lenders shall
otherwise consent in writing, the Borrower will not, and will not cause or
permit any of the Subsidiaries to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist
any Indebtedness, except:
(a) in the case of the Borrower, Indebtedness for borrowed
money existing on the date hereof and set forth in Schedule 6.01,
including the Subordinated Facility or any Exchange Notes issuable
pursuant to the terms of the Subordinated Facility as in effect on the
date hereof;
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(b) Indebtedness of the Borrower the net proceeds of which are
used substantially concurrently to refinance Indebtedness described in
clause (a) so long as (i) such refinancing Indebtedness is in an
aggregate principal amount not greater than the aggregate principal
amount of the Indebtedness being refinanced plus the amount of any
premiums required to be paid thereon and fees and expenses associated
therewith (provided that the aggregate principal amount of any
Subordinated Notes issued to refinance the Subordinated Facility may
exceed the aggregate principal amount of the Subordinated Facility),
(ii) such Indebtedness has a later or equal final maturity and a longer
or equal weighted average life than the Indebtedness being refinanced,
(iii) the interest rate applicable to such Indebtedness shall be a
market interest rate (as determined in good faith by the Board of
Directors of the Borrower) as of the time of the incurrence thereof and
(iv) each of the covenants, events of default and other provisions
thereof (including any Guarantees thereof and, if the Indebtedness
being refinanced is subordinated, the subordination provisions thereof)
shall be no less favorable to the Lenders than those contained in the
Indebtedness being refinanced unless each of such provisions is
approved in writing by the Required Lenders;
(c) Indebtedness created hereunder and under the other Loan
Documents;
(d) in the case of Leasco, Indebtedness created under the
Securitization, provided that the Securitization Prepayments shall have
been made in full concurrently therewith and the other terms of Section
5.14 and elsewhere in this Agreement shall have been complied with;
(e) in the case of the Borrower and the Subsidiaries,
intercompany loans and advances permitted by Section 6.04(b);
(f) in the case of the Borrower and the Subsidiaries,
Indebtedness consisting of purchase money Indebtedness or Capital Lease
Obligations incurred in the ordinary course of business after the
Closing Date to finance Capital Expenditures, provided that (i) a
description of the assets financed thereby shall have been furnished to
the Administrative Agent for any assets for which the purchase price is
greater than $500,000, (ii) the Indebtedness incurred shall not exceed
85% of the purchase price of the assets financed thereby and (iii) the
aggregate principal amount of any Indebtedness or Capital Lease
Obligations incurred pursuant to this paragraph (f) outstanding at any
time shall not exceed $10,000,000;
(g) in the case of the Borrower, Indebtedness pursuant to
Interest Rate Protection Agreements, the effect of which shall be to
set at fixed rates the interest cost to the Borrower with respect to up
to 100% of the sum of (i) the outstanding principal amount of the Term
Loans and (ii) the outstanding principal amount of the Subordinated
Facility or the Subordinated Notes, as the case may be, in each case in
form, on terms and with parties reasonably satisfactory to the
Administrative Agent;
(h) in the case of the Borrower and the Subsidiaries,
Indebtedness in respect of performance bonds, bid bonds, appeal bonds,
surety bonds and similar obligations and trade letters of credit, in
each case provided in the ordinary course of business, including those
incurred to secure health, safety and environmental obligations in the
ordinary course of business, provided that the issuance or existence of
any such trade letter of credit shall not extend or otherwise improve
the payment terms of the underlying obligations to which such letter of
credit relates
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beyond the terms that would have otherwise been granted had such letter
of credit not been issued or existed; and
(i) in the case of the Borrower and the Subsidiaries (other
than Leasco, unless, after the Step-Up Date, Leasco shall have,
pursuant to Section 5.15(d), executed the Security Agreement in favor
of the Collateral Agent), unsecured Indebtedness in addition to that
permitted by clauses (a) through (h) above in an aggregate principal
amount not to exceed $5,000,000 at any time outstanding, so long as
such Indebtedness is created under agreements or instruments imposing
covenants on the Borrower and the Subsidiaries no less favorable to
them than the covenants imposed under this Agreement.
SECTION 6.02. Liens. Create, incur, assume or permit to exist any Lien
on any property or assets (including stock or other securities of any person,
including any Subsidiary) now owned or hereafter acquired by it or on any income
or revenues or rights in respect of any thereof, except (each of the following,
a "Permitted Lien"):
(a) Liens on property or assets of the Borrower and the
Subsidiaries existing on the date hereof and set forth in Schedule 6.02
(including, subject to Section 5.15(b), the nominee interest of the
Seller pursuant to the Vehicle Title Nominee Agreement in the Vehicles
covered thereby), provided that such Liens shall secure only those
obligations which they secure on the date hereof;
(b) any Lien created under the Loan Documents;
(c) any Lien created under the Securitization on Vehicles
owned by Leasco, provided that the proviso to Section 6.01(d) shall
have been satisfied;
(d) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary, provided that
(i) such Lien is not created in contemplation of or in connection with
such acquisition, (ii) such Lien does not apply to any other property
or assets of the Borrower or any Subsidiary and (iii) such property or
asset is not acquired by the Borrower or such Subsidiary in connection
with the Acquisition;
(e) Liens for taxes, assessments or governmental charges not
yet due and payable or which are being contested in compliance with
Section 5.03;
(f) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business and securing obligations that are not due yet and payable or
which are being contested in compliance with Section 5.03;
(g) pledges and deposits made in the ordinary course of
business in compliance with workmen's compensation, unemployment
insurance and other social security laws or regulations;
(h) pledges and deposits to secure the performance of bids,
trade contracts (other than for Indebtedness), leases (other than
Capital Lease Obligations), statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
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(i) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate,
are not substantial in amount and do not materially impair the current
use or value of the property subject thereto;
(j) purchase money security interests in real property,
improvements thereto or equipment (including Vehicles) hereafter
acquired (or, in the case of improvements, constructed) by the Borrower
or any Subsidiary, provided that (i) such security interests secure
Indebtedness permitted by Section 6.01(f), (ii) such security interests
are incurred, and the Indebtedness secured thereby is created, within
90 days after such acquisition (or construction), (iii) the
Indebtedness secured thereby does not exceed 85% of the lesser of the
cost and the fair market value of such real property, improvements or
equipment at the time of such acquisition (or construction) and
(iv) such security interests do not apply to any other property or
assets of the Borrower or any Subsidiary;
(k) Liens arising out of judgments or awards (other than any
judgment that is described in clause (i) of Article VII and constitutes
an Event of Default thereunder) in respect of which the Borrower shall
in good faith be prosecuting an appeal or proceedings for review and in
respect of which it shall have secured a subsisting stay of execution
pending such appeal or proceedings for review, provided that the
Borrower shall have set aside on its books adequate reserves, in
accordance with GAAP, with respect to such judgment or award; and
(l) Liens to secure Capital Lease Obligations permitted by
Section 6.01(f), provided that such Liens (i) do not extend to any
other property or assets of the Borrower or any Subsidiary and (ii) do
not interfere with the business of the Borrower and the Subsidiaries in
any material respect.
SECTION 6.03. Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred, provided that the Borrower
and the Subsidiaries may enter into any such transaction to the extent the
Capital Lease Obligation and Liens associated therewith would be permitted by
Sections 6.01(f) and 6.02(l), respectively.
SECTION 6.04. Investments, Loans and Advances. Purchase, hold or
acquire any capital stock, evidences of indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other person, except:
(a) investments existing on the date hereof by the Borrower in
the capital stock of the Subsidiaries;
(b) investments, loans or advances made by the Borrower or any
of its wholly owned Subsidiaries in or to the Borrower or any other
such wholly owned Subsidiary, provided in each case that (i) any such
loans or advances that, individually or in the aggregate, are in excess
of $100,000, shall be evidenced by a promissory note pledged to the
Collateral Agent for the benefit of the Secured Parties pursuant to the
Pledge Agreement (other than any such loans or advances made by Leasco
to the Borrower pursuant to the Borrower's obligations under Section
5.15(a), except, after the Step-Up Date, if required as provided in
Section 5.15(d)) and (ii) any such loans
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or advances shall be subordinated to the prior payment in full of the
Obligations on terms reasonably satisfactory to the Administrative
Agent;
(c) Permitted Investments;
(d) loans or advances to employees and officers of the
Borrower or any Subsidiary in the ordinary course of business in an
aggregate amount to any single employee or officer not in excess of
$100,000 (or, if and to the extent such loans or advances shall be used
by such employee or officer for relocation expenses, $250,000) and in
an aggregate amount for all employees and officers of the Borrower and
the Subsidiaries not in excess of $1,250,000 at any one time
outstanding;
(e) the capital stock of (or partnership interest in) any
subsidiary formed after the date hereof by the Borrower, provided that
(i) such capital stock (or partnership interest) is pledged to the
Collateral Agent for the benefit of the Secured Parties pursuant to the
Pledge Agreement and (ii) the Borrower and such subsidiary comply with
the provisions of Section 5.16;
(f) the acquisition by the Borrower of capital stock of the
Borrower owned by Management Investors or directors of the Borrower or
any Subsidiary upon the termination, death, disability or retirement of
any such Management Investor or director and in accordance with the
terms of any Option Plan under which such capital stock was issued, in
aggregate amounts not exceeding (i) $500,000 in any fiscal year or
(ii) $2,500,000 in the aggregate during the term of this Agreement,
provided that, in each case, no Default or Event of Default shall have
occurred and be continuing or would result therefrom; and
(g) investments arising from transactions by the Borrower or
any of the Subsidiaries with customers or suppliers in the ordinary
course of business, including endorsements of negotiable instruments,
debt obligations and other investments received in connection with the
bankruptcy or reorganization of customers and suppliers and in
settlement of delinquent obligations of, and other disputes with,
customers or suppliers, arising in the ordinary course of business and
in the exercise of the reasonable business judgment of the Borrower or
such Subsidiary.
SECTION 6.05. Mergers, Consolidations, Sales of Assets and
Acquisitions. Merge into or consolidate with any other person, or permit any
other person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions) all or
any substantial part of its assets (whether now owned or hereafter acquired) or
any capital stock of any Subsidiary, or purchase, lease or otherwise acquire (in
one transaction or a series of transactions) all or any substantial part of the
assets of any other person, except that (a) the Borrower and any Subsidiary may
sell Permitted Investments for cash at fair market value, (b) the Borrower and
any Subsidiary may purchase and sell inventory and Vehicles in the ordinary
course of business (subject, in the case of Vehicles, to Section 6.18), (c) if
at the time thereof and immediately after giving effect thereto no Default or
Event of Default shall have occurred and be continuing or would result
therefrom, (i) any wholly owned Subsidiary of the Borrower may merge into or
consolidate with the Borrower in a transaction in which the Borrower is the
surviving corporation and (ii) any wholly owned Subsidiary of the Borrower may
merge into or consolidate with any other wholly owned Subsidiary of the Borrower
that is a Domestic Subsidiary in a transaction in which the surviving entity is
a wholly owned Subsidiary of the Borrower that is a Domestic Subsidiary and no
person other than the Borrower or a wholly owned Subsidiary of the Borrower that
is
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a Domestic Subsidiary receives any consideration and (d) Leasco may lease
Vehicles to the Borrower pursuant to the terms of the Lease.
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends. (a) Declare or pay, directly or indirectly, any
dividend or make any other distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, with respect to
any shares of its capital stock or directly or indirectly redeem, purchase,
retire or otherwise acquire for value (or permit any Subsidiary to purchase or
acquire) any shares of any class of its capital stock or set aside any amount
for any such purpose; provided, however, that (i) any Subsidiary may declare and
pay dividends or make other distributions to the Borrower, (ii) the Borrower may
declare and pay dividends solely in shares of common stock of the Borrower and
(iii) the Borrower may redeem, purchase, retire or otherwise acquire its capital
stock to the extent permitted by Section 6.04(f) (with, for purposes of the
dollar limitations in Section 6.04(f), transactions pursuant to this clause
(iii) being aggregated with transactions pursuant to Section 6.04(f)).
(b) Permit its subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such subsidiary to (i) pay any dividends or
make any other distributions on its capital stock or any other interest or (ii)
make or repay any loans or advances to the Borrower or the parent of such
subsidiary, other than, in the case of Leasco, (A) as set forth on the date
hereof in paragraph (b) of Article Fourth and paragraph (b)(vii) of Article
Tenth of its certificate of incorporation or (B) as required under the
definitive credit documentation for the Securitization.
SECTION 6.07. Transactions with Affiliates. Sell or transfer any
property or assets to, or purchase or acquire any property or assets from, or
otherwise engage in any other transactions with, any of its Affiliates, except
that the Borrower or any Subsidiary may engage in any of the foregoing
transactions in the ordinary course of business at prices and on terms and
conditions no less favorable to the Borrower or such Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties; provided,
however, that (a) management fees may be paid to Questor Management in
accordance with the terms of the Management Agreement in an aggregate amount of
up to $212,500 in any quarter of any fiscal year (or, in the case of the fiscal
year ending December 31, 1996, in an aggregate amount for such year of up to the
product of (i) $212,500 times (ii) the product of (A) the number of days in the
period from and including the Closing Date to and including December 31, 1996,
divided by (B) 91), unless (x) a Default or Event of Default shall have occurred
and be continuing or would result therefrom, in which event no more than 50% of
such aggregate amount may be paid to Questor Management in any such period, or
(y) a Change of Control shall have occurred, in which event no such amount may
be paid to Questor Management (unless, in the case of this clause (y), otherwise
permitted by this Section 6.07), and (b) fees may be paid to Jay Alix &
Associates, Inc. in accordance with the terms of the Letter Agreement.
SECTION 6.08. Business of Borrower and Subsidiaries. In the case of
each of the Borrower and the Subsidiaries, engage at any time in any business or
business activity other than the business currently conducted by it (after
giving effect to the consummation of the Transactions) and business activities
reasonably incidental thereto.
SECTION 6.09. Other Indebtedness and Agreements. (a)(i) Make any
distribution, whether in cash, property, securities or a combination thereof,
other than scheduled payments of principal and interest as and when due (to the
extent not prohibited by applicable subordination provisions) or the issuance of
any Exchange Notes pursuant to the terms of the Subordinated Facility as in
effect on the date hereof, in
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66
respect of, or pay, or offer or commit to pay, or directly or indirectly redeem,
repurchase, retire or otherwise acquire for consideration, or set apart any sum
for the aforesaid purposes, any of the Subordinated Facility or the Subordinated
Notes, as the case may be, or any other Indebtedness for borrowed money of the
Borrower or any Subsidiary, (ii) make any payment or prepayment of any such
Indebtedness that would violate the terms of this Agreement or of such
Indebtedness, any agreement, indenture, instrument or other document evidencing,
relating to or securing the payment or performance of such Indebtedness or any
subordination agreement or provision applicable to such Indebtedness or (iii)
pay in cash any amount in respect of such Indebtedness that may at the
Borrower's or such Subsidiary's option be paid in kind thereunder, other than
(A) Indebtedness under this Agreement and (B) any refinancing of Indebtedness to
the extent permitted by Section 6.01(b).
(b) Permit any waiver, supplement, modification, amendment, termination
or release of any agreement, indenture, instrument or other document pursuant to
which any Indebtedness or preferred stock of the Borrower or any Subsidiary is
outstanding in an aggregate principal amount in excess of $500,000, to the
extent that any such waiver, supplement, modification, amendment, termination or
release would be adverse to the Lenders in any material respect.
(c) Permit any waiver, supplement, modification, amendment, termination
or release of (i) the certificate of incorporation or by-laws of the Borrower or
any Subsidiary or (ii) the Purchase Agreement, any other Acquisition Agreement,
the Management Agreement, the Letter Agreement or the Lease, in each case to the
extent that any such waiver, supplement, modification, amendment, termination or
release would be adverse to the Lenders in any material respect; provided,
however, that the period of time under the Vehicle Title Nominee Agreement
within which Vehicles covered thereby must be retitled from the name of the
Seller may be extended from time to time by an aggregate (based on all such
extensions) of not more than six months; provided, further, that the Lease and
the certificate of incorporation and by-laws of Leasco may be amended as
necessary in connection with the consummation of the Securitization.
SECTION 6.10. Capital Stock. Issue any shares of any class of capital
stock or any additional partnership interests, except (a) in the case of any
Domestic Subsidiary, capital stock or partnership interests that are issued to
the Borrower or any wholly owned Subsidiary of the Borrower that is a Domestic
Subsidiary and that are pledged to the Collateral Agent for the benefit of the
Secured Parties under the Pledge Agreement and (b) in the case of the Borrower,
the issuance of capital stock in a manner that does not result in a Change of
Control.
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SECTION 6.11. Interest Coverage Ratio. Permit the Interest Coverage
Ratio for any period of four consecutive fiscal quarters ending on any date set
forth below to be less than the ratio set forth below opposite such date:
Date Ratio
---- -----
March 31, 1997 2.70 to 1
June 30, 1997 2.70 to 1
September 30, 1997 2.70 to 1
December 31, 1997 2.75 to 1
March 31, 1998 2.75 to 1
June 30, 1998 2.75 to 1
September 30, 1998 2.75 to 1
December 31, 1998 3.00 to 1
March 31, 1999 3.00 to 1
June 30, 1999 3.00 to 1
September 30, 1999 3.00 to 1
December 31, 1999 3.35 to 1
March 31, 2000 3.35 to 1
June 30, 2000 3.35 to 1
September 30, 2000 3.35 to 1
December 31, 2000 3.50 to 1
March 31, 2001 3.50 to 1
June 30, 2001 3.50 to 1
September 30, 2001 3.50 to 1
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68
SECTION 6.12. Total Debt Ratio. Permit the Total Debt Ratio for any
period of four consecutive fiscal quarters ending on any date set forth below to
be greater than the ratio set forth below opposite such date:
Date Ratio
---- -----
March 31, 1997 4.15 to 1
June 30, 1997 4.15 to 1
September 30, 1997 4.15 to 1
December 31, 1997 3.80 to 1
March 31, 1998 3.80 to 1
June 30, 1998 3.80 to 1
September 30, 1998 3.80 to 1
December 31, 1998 3.50 to 1
March 31, 1999 3.50 to 1
June 30, 1999 3.50 to 1
September 30, 1999 3.50 to 1
December 31, 1999 3.15 to 1
March 31, 2000 3.15 to 1
June 30, 2000 3.15 to 1
September 30, 2000 3.15 to 1
December 31, 2000 3.00 to 1
March 31, 2001 3.00 to 1
June 30, 2001 3.00 to 1
September 30, 2001 3.00 to 1
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SECTION 6.13. Consolidated EBITDA. Permit Consolidated EBITDA of the
Borrower for any period of four consecutive fiscal quarters ending on any date
set forth below to be less than the amount set forth below opposite such date:
Date Amount
---- ------
December 31, 1996 $118,000,000
March 31, 1997 118,000,000
June 30, 1997 118,000,000
September 30, 1997 118,000,000
December 31, 1997 120,000,000
March 31, 1998 120,000,000
June 30, 1998 120,000,000
September 30, 1998 120,000,000
December 31, 1998 132,000,000
March 31, 1999 132,000,000
June 30, 1999 132,000,000
September 30, 1999 132,000,000
December 31, 1999 142,000,000
March 31, 2000 142,000,000
June 30, 2000 142,000,000
September 30, 2000 142,000,000
December 31, 2000 152,000,000
March 31, 2001 152,000,000
June 30, 2001 152,000,000
September 30, 2001 152,000,000
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70
SECTION 6.14. Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio for any period of four consecutive fiscal quarters ending on
December 31, March 31, June 30 and September 30 of any year, beginning on
December 31, 1997 (each such period of four consecutive fiscal quarters, a
"Measurement Period"), to be less than 1.00 to 1, provided that the Borrower may
permit the Fixed Charge Coverage Ratio to be less than 1.00 to 1 for any such
Measurement Period if (a) the Fixed Charge Coverage Ratio for such Measurement
Period shall be at least .900 to 1 and (b) the Fixed Charge Coverage Ratio for
each of the three immediately preceding Measurement Periods (or, if there have
not yet been three such Measurement Periods under this Section 6.14, then for
all such Measurement Periods that there have been at such time) shall have been
not less than 1.00 to 1.
SECTION 6.15. Capital Expenditures. (a) Incur Consolidated Capital
Expenditures in excess of, for any fiscal year ending on a date set forth below,
the amount set forth below opposite such date (subject to paragraph (c) below):
Fiscal Year Maximum Consolidated
Ending December 31, Capital Expenditures
------------------- --------------------
1997 $119,000,000
1998 137,000,000
1999 153,000,000
2000 168,000,000
2001 135,000,000
(b) Incur Non-Vehicle Consolidated Capital Expenditures in excess of,
for any fiscal year ending on December 31, beginning December 31, 1997,
$20,000,000.
(c) The amount of Capital Expenditures permitted in any fiscal year
ending after December 31, 1997, under the preceding paragraph (a) shall be
increased by the total amount of unused permitted Capital Expenditures for the
immediately preceding year (less an amount equal to any unused permitted Capital
Expenditures carried forward to such preceding year pursuant to this paragraph
(c)), provided that any amount carried forward pursuant to this paragraph (c)
shall not exceed (i) $10,000,000 for any of the fiscal years ended December 31,
1998, 1999 and 2000 and (ii) $15,000,000 for the fiscal year ended December 31,
2001.
SECTION 6.16. Bank Accounts. Establish or maintain any bank account or
similar account with any financial institution that is not a Lender, other than
(a) the accounts specified in Section 2 of the Perfection Certificates, (b) the
Collection Deposit Accounts (as defined in the Security Agreement) and (c) any
deposit account used exclusively for the payment of payroll of any Loan Party or
any Subsidiary.
SECTION 6.17. Fiscal Year. Change the end of its fiscal year from
December 31 to any other date.
SECTION 6.18. Vehicle Sales. Sell, lease (other than pursuant to
Qualifying Rentals), transfer, assign or otherwise dispose of (in one
transaction or in a series of transactions) (a) more than 7,500 Vehicles in any
fiscal year or (b) any Vehicle, if after giving effect to such sale, lease,
transfer, assignment or other disposition of such Vehicle, there would be less
than 24,000 Eligible Revenue-Producing Vehicles.
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ARTICLE VII
Events of Default
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made in or
in connection with any Loan Document or the borrowings or issuances of
Letters of Credit hereunder, or any representation, warranty, statement
or information contained in any report, certificate, financial
statement or other instrument furnished in connection with or pursuant
to any Loan Document, shall prove to have been false or misleading in
any material respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of
any Loan or the reimbursement with respect to any L/C Disbursement when
and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise;
(c) default shall be made in the payment of any interest on
any Loan or any Fee or L/C Disbursement or any other amount (other than
an amount referred to in (b) above) due under any Loan Document, when
and as the same shall become due and payable, and such default shall
continue unremedied for a period of three Business Days;
(d) default shall be made in the due observance or performance
by the Borrower or any Subsidiary of any covenant, condition or
agreement contained in Section 5.01(a), 5.05 or 5.08 or in Article VI;
(e) default shall be made in the due observance or performance
by the Borrower or any Subsidiary of any covenant, condition or
agreement contained in any Loan Document (other than those specified in
(b), (c) or (d) above) and such default shall continue unremedied for a
period of 20 days after notice thereof from the Administrative Agent,
the Collateral Agent or any Lender to the Borrower;
(f) the Borrower or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
Indebtedness in a principal amount in excess of $1,000,000, when and as
the same shall become due and payable, or (ii) fail to observe or
perform any other term, covenant, condition or agreement contained in
any agreement or instrument evidencing or governing any such
Indebtedness (subject, unless such failure is with respect to any
payment or other monetary obligation or any financial covenant or
similar financial maintenance term, condition or agreement thereunder,
to the initial grace period applicable thereto) if the effect of any
failure referred to in this clause (ii) is to cause, or to permit the
holder or holders of such Indebtedness or a trustee on its or their
behalf (with or without the giving of notice, the lapse of time or
both) to cause, such Indebtedness to become due prior to its stated
maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Borrower or any
Subsidiary, or of a substantial part of the property or assets of the
Borrower or a Subsidiary, under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other Federal, state
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or foreign bankruptcy, insolvency, receivership or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or
for a substantial part of the property or assets of the Borrower or a
Subsidiary or (iii) the winding-up or liquidation of the Borrower or
any Subsidiary; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any
of the foregoing shall be entered;
(h) the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title
11 of the United States Code, as now constituted or hereafter amended,
or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or
the filing of any petition described in (g) above, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any
Subsidiary or for a substantial part of the property or assets of the
Borrower or any Subsidiary, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors, (vi) become
unable, admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for the purpose of
effecting any of the foregoing;
(i) one or more judgments for the payment of money in an
aggregate amount in excess of $1,000,000 shall be rendered against the
Borrower, any Subsidiary or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to levy upon assets or properties
of the Borrower or any Subsidiary to enforce any such judgment;
(j) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other such ERISA
Events, could reasonably be expected to result in liability of the
Borrower and its ERISA Affiliates in an aggregate amount exceeding
$1,000,000 and the same shall remain undischarged for a period of 30
days;
(k) any security interest purported to be created by any
Security Document shall cease to be, or shall be asserted by the
Borrower or any other Loan Party not to be, a valid, perfected, first
priority (except as otherwise expressly provided in this Agreement or
such Security Document) security interest in the securities, assets or
properties covered thereby, except to the extent that any such loss of
perfection or priority results from the failure of the Collateral Agent
to maintain possession of certificates representing securities pledged
under the Pledge Agreement; or
(l) there shall have occurred a Change in Control;
then, and in every such event (other than an event with respect to the Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Borrower, take either or both of
the following actions, at the same or different times: (i) terminate forthwith
the Commitments and (ii) declare the Loans then outstanding to be forthwith due
and payable in whole or in part, whereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and any
unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder
and under any other Loan
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73
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrower anything contained herein or in any other Loan Document
to the contrary notwithstanding; and in any event with respect to the Borrower
described in paragraph (g) or (h) above, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan Document, shall
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrower anything contained herein or in any other Loan Document to the contrary
notwithstanding.
ARTICLE VIII
The Administrative Agent and the Collateral Agent
In order to expedite the transactions contemplated by this Agreement,
The Chase Manhattan Bank is hereby appointed to act as Administrative Agent and
Citicorp, U.S.A., Inc. is hereby appointed to act as Documentation Agent and as
Collateral Agent, in each case on behalf of the Lenders and the Issuing Banks
(for purposes of this Article VIII, the Administrative Agent, the Documentation
Agent and the Collateral Agent are referred to collectively as the "Agents").
Each of the Lenders and each assignee of any such Lender hereby irrevocably
authorizes the Agents to take such actions on behalf of such Lender or assignee
or Issuing Bank and to exercise such powers as are specifically delegated to the
Agents by the terms and provisions hereof and of the other Loan Documents,
together with such actions and powers as are reasonably incidental thereto. The
Administrative Agent is hereby expressly authorized by the Lenders and the
Issuing Banks, without hereby limiting any implied authority, (a) to receive on
behalf of the Lenders and the Issuing Banks all payments of principal of and
interest on the Loans, all payments in respect of L/C Disbursements and all
other amounts due to the Lenders hereunder, and promptly to distribute to each
Lender or Issuing Bank its proper share of each payment so received; (b) to give
notice on behalf of each of the Lenders to the Borrower of any Event of Default
specified in this Agreement of which the Administrative Agent has actual
knowledge acquired in connection with its agency hereunder; and (c) to
distribute to each Lender copies of all notices, financial statements and other
materials delivered by the Borrower or any other Loan Party pursuant to this
Agreement or the other Loan Documents as received by the Administrative Agent.
Without limiting the generality of the foregoing, the Agents are hereby
expressly authorized to execute any and all documents (including releases) with
respect to the Collateral and the rights of the Secured Parties with respect
thereto, as contemplated by and in accordance with the provisions of this
Agreement and the Security Documents.
Neither the Agents nor any of their respective directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by the
Borrower or any other Loan Party of any of the terms, conditions, covenants or
agreements contained in any Loan Document. The Agents shall not be responsible
to the Lenders for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or any other Loan Documents, instruments or
agreements. The Agents shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written instructions signed by the
Required Lenders and, except as otherwise specifically provided herein, such
instructions and any action or inaction pursuant thereto shall be binding on all
the Lenders. Each Agent shall, in the absence of
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74
knowledge to the contrary, be entitled to rely on any instrument or document
believed by it in good faith to be genuine and correct and to have been signed
or sent by the proper person or persons. Neither the Agents nor any of their
respective directors, officers, employees or agents shall have any
responsibility to the Borrower or any other Loan Party on account of the failure
of or delay in performance or breach by any Lender or Issuing Bank of any of its
obligations hereunder or to any Lender or Issuing Bank on account of the failure
of or delay in performance or breach by any other Lender or Issuing Bank or the
Borrower or any other Loan Party of any of their respective obligations
hereunder or under any other Loan Document or in connection herewith or
therewith. Each of the Agents may execute any and all duties hereunder by or
through agents or employees and shall be entitled to rely upon the advice of
legal counsel selected by it with respect to all matters arising hereunder and
shall not be liable for any action taken or suffered in good faith by it in
accordance with the advice of such counsel.
The Lenders hereby acknowledge that neither Agent shall be under any
duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement unless it shall be requested in writing to do
so by the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Lenders and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor. If no successor shall have been so appointed by
the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a
bank with an office in New York, New York, having a combined capital and surplus
of at least $500,000,000 or an Affiliate of any such bank. Upon the acceptance
of any appointment as Agent hereunder by a successor bank, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent shall be discharged from its duties
and obligations hereunder. After the Agent's resignation hereunder, the
provisions of this Article and Section 9.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
With respect to the Loans made by it hereunder, each Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not an Agent, and
the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in the
amount of its pro rata share (based on its Commitments hereunder) of any
expenses incurred for the benefit of the Lenders by the Agents, including
counsel fees and compensation of agents and employees paid for services rendered
on behalf of the Lenders, that shall not have been reimbursed by the Borrower
and (b) to indemnify and hold harmless each Agent and any of its directors,
officers, employees or agents, on demand, in the amount of such pro rata share,
from and against any and all liabilities, taxes, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by or asserted
against it in its capacity as Agent or any of them in any way relating to or
arising out of this Agreement or any other Loan Document or any action taken or
omitted by it or any of them under this Agreement or any other Loan Document, to
the extent the same shall not have been reimbursed by the Borrower or any other
Loan Party, provided that no Lender shall be liable to an Agent or any such
other indemnified person for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements that are determined by a court of
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75
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or wilful misconduct of such Agent or any of its directors,
officers, employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to Ryder TRS, Inc., 8669 N.W. 36th
Street, Miami, Florida 33166, Attention of President (Telecopy No.
(305) 470-7946), with a copy to Questor Management Company, 4000 Town
Center, Suite 530, Southfield, Michigan 48075, Attention of President
(Telecopy No. (810) 213-2215);
(b) if to the Administrative Agent, to The Chase Manhattan
Bank Loan and Agency Services, Grand Central Tower, 140 East 45th
Street, New York, New York 10017, Attention of Gloria Javier (Telecopy
No. (212) 622-0002), with a copy to The Chase Manhattan Bank, 270 Park
Avenue, New York 10017, Attention of Andris Kalnins (Telecopy No. (212)
270-5127);
(c) if to the Collateral Agent, to Citicorp, U.S.A., Inc., 399
Park Avenue, 10th Floor, New York, New York 10043, Attention of
Shapleigh B. Smith (Telecopy No. (212) 793-1290), with a copy to
Citicorp, U.S.A., Inc., 399 Park Avenue, 10th Floor, New York, New York
10043, Attention of Melissa Quan Soon (Telecopy No. (212) 793-4806);
and
(d) if to a Lender, to it at its address (or telecopy number)
set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant
to which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in
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76
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Lenders and the Issuing Banks and
shall survive the making by the Lenders of the Loans and the issuance of Letters
of Credit by the Issuing Banks, regardless of any investigation made by the
Lenders or the Issuing Banks or on their behalf, and shall continue in full
force and effect as long as the principal of or any accrued interest on any Loan
or any Fee or any other amount payable under this Agreement or any other Loan
Document is outstanding and unpaid or any Letter of Credit is outstanding and so
long as the Commitments have not been terminated. The provisions of Sections
2.14, 2.16, 2.20 and 9.05 shall remain operative and in full force and effect
regardless of the expiration of the term of this Agreement, the consummation of
the transactions contemplated hereby, the repayment of any of the Loans, the
expiration of the Commitments, the expiration of any Letter of Credit, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Loan Document, or any investigation made by or on behalf of the
Administrative Agent, the Collateral Agent, any Lender or any Issuing Bank.
SECTION 9.03. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower, the Administrative Agent and
the Collateral Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective permitted successors and
assigns.
SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the permitted successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower, the Administrative
Agent, the Collateral Agent, the Issuing Banks or the Lenders that are contained
in this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of
its interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided,
however, that (i) except in the case of an assignment to a Lender or an
Affiliate of such Lender, (x) the Borrower (unless a Default or Event of Default
shall have occurred and be continuing) and the Administrative Agent (and, in the
case of any assignment of a Revolving Credit Commitment, the Issuing Banks) must
give their prior written consent to such assignment (which consent shall not be
unreasonably withheld) and (y) the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not, unless otherwise agreed to by the Borrower and
the Administrative Agent, be less than $5,000,000 (or, if less, the entire
remaining amount of such Lender's Commitment), (ii) the parties to each such
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500, (iii)
the assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire and (iv) notwithstanding the foregoing, no
such assignment may be made to any of the persons identified on Schedule 9.04
hereto without the prior written consent of the Borrower. Upon acceptance and
recording pursuant to paragraph (e) of this Section 9.04, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement and (B) the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this
<PAGE>
77
Agreement, such Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 2.14, 2.16, 2.20 and 9.05, as well as to
any Fees accrued for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Term Loan Commitment and Revolving Credit Commitment, and the outstanding
balances of its Term Loans and Revolving Loans, in each case without giving
effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance; (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 3.05(a) or delivered pursuant to Section 5.04 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Administrative Agent,
the Collateral Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes the Administrative
Agent and the Collateral Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Administrative
Agent and the Collateral Agent, respectively, by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive and the Borrower, the Administrative Agent, the Issuing Banks, the
Collateral Agent and the Lenders may treat each person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Banks, the Collateral
Agent and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of the Borrower, the Issuing
Banks and the Administrative Agent to such assignment, the Administrative Agent
shall (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof
<PAGE>
78
to the Lenders and the Issuing Banks. No assignment shall be effective unless it
has been recorded in the Register as provided in this paragraph (e).
(f) Each Lender may without the consent of the Borrower, the Issuing
Banks or the Administrative Agent sell participations to one or more banks or
other entities in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to
it); provided, however, that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
participating banks or other entities shall be entitled to the benefit of the
cost protection provisions contained in Sections 2.14, 2.16 and 2.20 to the same
extent as if they were Lenders (provided that such participating banks or other
entities shall have no greater rights than those of such Lender), (iv) except in
the case of a participation sold to a Lender or an Affiliate of such Lender or
unless otherwise agreed to by the Borrower and the Administrative Agent, the
amount of the Commitment of such Lender subject to each such participation
(determined as of the date such participation is sold) shall be not less than
$5,000,000 (or, if less, the entire remaining amount of such Lender's
Commitment), (v) no such participation may be sold to any of the persons
identified on Schedule 9.04 without the prior written consent of the Borrower
and (vi) the Borrower, the Administrative Agent, the Collateral Agent, the
Issuing Banks and the Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to the Loans or L/C Disbursements and to
approve any amendment, modification or waiver of any provision of this Agreement
(other than amendments, modifications or waivers decreasing any fees payable
hereunder or the amount of principal of or the rate at which interest is payable
on the Loans, extending any scheduled principal payment date or date fixed for
the payment of interest on the Loans, increasing or extending the Commitments or
releasing any Guarantor or all or any substantial part of the Collateral (except
for any such release expressly permitted by the Loan Documents).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; provided that each such assignee or participant or
proposed assignee or participant shall execute an agreement whereby such
assignee or participant shall agree (subject to customary exceptions) to
preserve the confidentiality of such confidential information on terms no less
restrictive than those applicable to the Lenders pursuant to Section 9.16.
(h) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any such pledge or assignment to a Federal Reserve Bank,
and this Section shall not apply to any such pledge or assignment of a security
interest, provided that no such pledge or assignment of a security interest
shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or assignee for such Lender as a party hereto.
(i) In order to facilitate any assignment, pledge or participation made
pursuant to this Section 9.04, the Borrower shall, at the request of the
assigning, pledging or participating Lender, duly execute and deliver to such
Lender a promissory note or notes evidencing the Loans made to the Borrower by
such Lender hereunder (subject to the requirements of Section 2.04(e)).
<PAGE>
79
(j) The Borrower shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of the Administrative Agent,
the Issuing Banks and each Lender, and any attempted assignment without such
consent shall be null and void.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Administrative Agent, the
Collateral Agent and the Issuing Banks in connection with the syndication of the
credit facilities provided for herein and the preparation and administration of
this Agreement and the other Loan Documents or in connection with any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions hereby or thereby contemplated shall be
consummated) or incurred by the Administrative Agent, the Collateral Agent or
any Lender in connection with the enforcement or protection of its rights in
connection with this Agreement and the other Loan Documents or in connection
with the Loans made or Letters of Credit issued hereunder, including the
reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel
for the Administrative Agent and the Collateral Agent, and, in connection with
any such enforcement or protection, the reasonable fees, charges and
disbursements of any other counsel for the Administrative Agent, the Collateral
Agent or any Lender.
(b) The Borrower agrees to indemnify the Administrative Agent, the
Collateral Agent, each Lender and each Issuing Bank, each Affiliate of any of
the foregoing persons and each of their respective directors, officers,
employees and agents (each such person being called an "Indemnitee") against,
and to hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees, charges and
disbursements, incurred by or asserted against any Indemnitee arising out of, in
any way connected with, or as a result of (i) the execution or delivery of this
Agreement or any other Loan Document or any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective obligations
thereunder or the consummation of the Transactions and the other transactions
contemplated thereby, (ii) the use of the proceeds of the Loans or issuance of
Letters of Credit, (iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing ("Proceedings"), whether or not any Indemnitee
is a party thereto, or (iv) any actual or alleged presence or Release of
Hazardous Materials on any property owned or operated by the Borrower or any of
the Subsidiaries, or any Environmental Claim related in any way to the Borrower
or the Subsidiaries; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted solely from
the gross negligence or wilful misconduct of such Indemnitee.
(c) If for any reason the indemnification set forth in paragraph (b)
above is unavailable to any Indemnitee or insufficient to hold it harmless, then
the Borrower shall contribute to the amount paid or payable to such Indemnitee
as a result of such loss, claim, damage, liability or expense in such proportion
as is appropriate to reflect not only the relative benefits received by the
Borrower, on the one hand, and such Indemnitee, on the other hand, but also the
relative fault of the Borrower, on the one hand, and such Indemnitee, on the
other hand, as well as any relevant equitable considerations. It is hereby
agreed that the relative benefits to the Borrower, on the one hand, and all
Indemnities, on the other hand, shall be deemed to be in the same proportion as
(i) the total value received or proposed to be received by the Borrower in
connection with the Commitments (whether or not any Loans are made) bears to
(ii) the Fees. The indemnity, reimbursement and contribution obligations of the
Borrower under paragraph (b) above and under this paragraph (c) shall be in
addition to any liability which the Borrower may otherwise have to an Indemnitee
and shall be binding upon and inure to the benefit of any successors, assigns,
heirs and personal representatives of the Borrower and any Indemnitee.
<PAGE>
80
(d) Promptly after receipt by an Indemnitee of notice of the
commencement of any Proceedings, such Indemnitee will, if a claim in respect
thereof is to be made against the Borrower, notify the Borrower in writing of
the commencement thereof; provided that (i) the omission so to notify the
Borrower will not relieve it from any liability which it may have hereunder
except to the extent it has been materially prejudiced by such failure and (ii)
the omission so to notify the Borrower will not relieve it from any liability
which it may have to an Indemnitee otherwise than on account of the indemnity
agreement provided for hereunder. In case any such Proceedings are brought
against any Indemnitee and it notifies the Borrower of the commencement thereof,
the Borrower will be entitled to participate therein, and, to the extent that it
may elect by written notice delivered to such Indemnitee, to assume the defense
thereof, with counsel reasonably satisfactory to such Indemnitee, provided that,
if the defendants in any such Proceedings include both such Indemnitee and the
Borrower and such Indemnitee shall have concluded that there may be legal
defenses available to it which are different from or additional to those
available to the Borrower, such Indemnitee shall have the right to select
separate counsel to assert such legal defenses and to otherwise participate in
the defense of such Proceedings on behalf of such Indemnitee. Upon receipt of
notice from the Borrower to such Indemnitee of its election so to assume the
defense of such Proceedings and approval by such Indemnitee of counsel, the
Borrower shall not be liable to such Indemnitee for expenses incurred by such
Indemnitee in connection with the defense thereof (other than reasonable costs
of investigation) unless (i) such Indemnitee shall have employed separate
counsel in connection with the assertion of legal defenses in accordance with
the proviso to the next preceding sentence (it being understood, however, that
the Borrower shall not be liable for the reasonable expenses of more than one
separate counsel (plus no more than one separate local counsel in any
jurisdiction), approved by the Agents, representing the Indemnitees who are
parties to such Proceedings), (ii) the Borrower shall not have employed counsel
reasonably satisfactory to such Indemnitee to represent such Indemnitee within a
reasonable time after notice of commencement of the Proceedings, (iii) the
Borrower shall have authorized in writing the employment of counsel for such
Indemnitee or (iv) the use of counsel chosen by the Borrower to represent such
Indemnitee would present such counsel with a conflict of interest; and except
that, if clause (i) or (iii) is applicable, such liability shall be only in
respect of the counsel referred to in such clause (i) or (iii).
(e) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the expiration
of any Letter of Credit, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent, the Collateral Agent, any
Lender or any Issuing Bank. All amounts due under this Section 9.05 shall be
payable on written demand therefor.
SECTION 9.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, except to the extent prohibited by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness or obligations at any time owing by such
Lender to or for the credit or the account of the Borrower against any of and
all the obligations of the Borrower now or hereafter existing under this
Agreement and other Loan Documents held by such Lender, irrespective of whether
or not such Lender shall have made any demand under this Agreement or such other
Loan Document and although such obligations may be unmatured. The rights of each
Lender under this Section 9.06 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN
<PAGE>
81
OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH
LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM
CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL
CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO
MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Collateral Agent, any Lender or any Issuing Bank in
exercising any power or right hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Banks and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower or any other Loan Party therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders; provided, however, that
no such agreement shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan or any date for reimbursement of an L/C Disbursement,
or waive or excuse any such payment or any part thereof, or decrease the rate of
interest on any Loan or L/C Disbursement, without the prior written consent of
each Lender affected thereby, (ii) change or extend the Commitment or decrease
or extend the date for payment of the Commitment Fees of any Lender, without the
prior written consent of such Lender, (iii) amend or modify the provisions of
Section 2.17 or 9.04(j), the provisions of this Section, the definition of the
term "Required Lenders" or the term "Supermajority Lenders" or release any
Guarantor or all or any substantial part of the Collateral (except for any such
release expressly permitted by the Loan Documents), without the prior written
consent of each Lender, (iv) change the application to the scheduled
installments of principal due in respect of the Term Loans or the Revolving
Loans of any optional or mandatory prepayment under Sections 2.12 and 2.13,
respectively, without the prior written consent of Lenders holding Term Loans or
Revolving Loans, as applicable, representing at least 50% of the sum of all Term
Loans or Revolving Loans, as applicable, outstanding at such time, (v) change
the Step-Up Date, for purposes of Section 5.15(d), to any date subsequent to the
day immediately following the nine-month anniversary of the Closing Date,
without the prior written consent of the Supermajority Lenders, or (vi) change
the Step-Up Period, for purposes of Section 2.05(a) or 2.06, to any period
beginning later than the Step-Up Date or ending earlier than the day before the
Securitization is consummated, without the prior written consent of each Lender;
provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent, the Collateral Agent or any
Issuing Bank hereunder or under any other Loan Document without the prior
written consent of the Administrative Agent, the Collateral Agent or such
Issuing Bank.
<PAGE>
82
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan or
participation in any L/C Disbursement, together with all fees, charges and other
amounts which are treated as interest on such Loan or participation in such L/C
Disbursement under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan or participation in
accordance with applicable law, the rate of interest payable in respect of such
Loan or participation hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of such Loan or
participation but were not payable as a result of the operation of this Section
9.09 shall be cumulated and the interest and Charges payable to such Lender in
respect of other Loans or participations or periods shall be increased (but not
above the Maximum Rate therefor) until such cumulated amount, together with
interest thereon at the Federal Funds Effective Rate to the date of repayment,
shall have been received by such Lender.
SECTION 9.10. Entire Agreement. This Agreement, the Fee Letter and the
other Loan Documents constitute the entire contract among the parties relative
to the subject matter hereof. Any other previous agreement among the parties
with respect to the subject matter hereof is superseded by this Agreement and
the other Loan Documents. Nothing in this Agreement or in the other Loan
Documents, expressed or implied, is intended to confer upon any party other than
the parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
9.03. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
<PAGE>
83
SECTION 9.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against the Borrower or its properties in the courts of
any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.16. Confidentiality. The Administrative Agent, the Collateral
Agent, each Issuing Bank and each of the Lenders agrees to keep confidential
(and to use its best efforts to cause its respective agents and representatives
to keep confidential) the Information (as defined below) and all copies thereof,
extracts therefrom and analyses or other materials based thereon, except that
the Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender
shall be permitted to disclose Information (a) to such of its respective
officers, directors, employees, agents, affiliates and representatives or direct
or indirect contractual counterparties in swap agreements in each case who need
to know such Information, provided that any such contractual counterparty shall
agree to keep such Informational confidential, (b) to the extent requested by
any regulatory authority, (c) to the extent otherwise required by applicable
laws and regulations or by any subpoena or similar legal process, (d) in
connection with any suit, action or proceeding relating to the enforcement of
its rights hereunder or under the other Loan Documents or (e) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section 9.16 or (ii) becomes available to the Administrative Agent, any
Issuing Bank, any Lender or the Collateral
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84
Agent on a nonconfidential basis from a source other than the Borrower. For the
purposes of this Section, "Information" shall mean all financial statements,
certificates, reports, agreements and information (including all analyses,
compilations and studies prepared by the Administrative Agent, the Collateral
Agent, any Issuing Bank or any Lender based on any of the foregoing) that are
received from the Borrower and related to the Borrower, any shareholder of the
Borrower or any employee, customer or supplier of the Borrower, other than any
of the foregoing that were available to the Administrative Agent, the Collateral
Agent, any Issuing Bank or any Lender on a nonconfidential basis prior to its
disclosure thereto by the Borrower. The provisions of this Section 9.16 shall
remain operative and in full force and effect regardless of the expiration and
term of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
RYDER TRS, INC.,
by /s/ Wallace L. Rueckel
------------------------------
Name: Wallace L. Rueckel
Title: Senior Vice President
and Treasurer
THE CHASE MANHATTAN BANK, individually
and as Administrative Agent,
by /s/ Daniel Rouse
------------------------------
Name: Daniel Rouse
Title: Attorney-in-fact
CITICORP, U.S.A., INC., individually and as
Documentation Agent and as Collateral Agent,
by /s/ Robert A. Kosian
------------------------------
Name: Robert A. Kosian
Title: Attorney in Fact
<PAGE>
Exhibit D
---------
SEE EXHIBIT 4.4 GUARANTEE AGREEMENT
<PAGE>
Exhibit E
---------
SEE EXHIBIT 4.6 INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT
<PAGE>
Exhibit F
---------
SEE EXHIBIT 4.5 PLEDGE AGREEMENT
<PAGE>
Exhibit G
---------
SEE EXHIBIT 4.3 SECURITY AGREEMENT
<PAGE>
EXHIBIT 4.3
EXECUTION COPY
SECURITY AGREEMENT dated as of October 17, 1996, among RYDER
TRS, INC., a Delaware corporation (the "Borrower"), each
subsidiary of the Borrower listed on Schedule I hereto (each such
subsidiary, individually, a "Guarantor" and, collectively, the
"Guarantors"; the Borrower and the Guarantors are referred to
collectively herein as the "Grantors") and CITICORP, U.S.A.,
INC., a Delaware corporation ("Citicorp"), as documentation agent
and as collateral agent (the "Collateral Agent") for the Secured
Parties (as defined herein).
Reference is made to the Credit Agreement dated as of October 17, 1996
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the lenders from time to time party thereto
(the "Lenders"), the Lenders identified therein as issuing banks (the "Issuing
Banks"), The Chase Manhattan Bank, as administrative agent (the "Administrative
Agent") for the Lenders, and the Collateral Agent.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Banks have agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Guarantors has agreed to guarantee, among other
things, all the obligations of the Borrower under the Credit Agreement. The
obligations of the Lenders to make Loans and of the Issuing Banks to issue
Letters of Credit are conditioned upon, among other things, the execution and
delivery by the Grantors of an agreement in the form hereof to secure (a) the
due and punctual payment by the Borrower of (i) the principal of and premium, if
any, and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral, and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Borrower to the Secured Parties under the
Credit Agreement and the other Loan Documents, (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Borrower under or pursuant to the Credit Agreement and the other Loan Documents,
(c) the due and punctual payment and performance of all the covenants,
agreements, obligations and liabilities of each Loan Party under or pursuant to
this Agreement and the other Loan Documents and (d) the due and punctual payment
and performance of all obligations of the Borrower, monetary or otherwise, under
each Interest Rate Protection Agreement entered into with any counterparty that
was a Lender (or an Affiliate of a Lender) at the time such Interest Rate
Protection Agreement was entered into (all the monetary and other obligations
described in the preceding clauses (a) through (d) being collectively called the
"Obligations").
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Accordingly, the Grantors and the Collateral Agent, on behalf of
itself and each Secured Party (and each of their respective successors or
assigns), hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall have
the meanings set forth in the Credit Agreement.
SECTION 1.02. Definition of Certain Terms Used Herein. As used
herein, the following terms shall have the following meanings:
"Account Debtor" shall mean any person who is or who may become
obligated to any Grantor under, with respect to or on account of an Account.
"Accounts" shall mean any and all right, title and interest of any
Grantor to payment for goods, Equipment and services sold or leased (including
by or in connection with Qualifying Rentals), including any such right evidenced
by chattel paper, whether due or to become due, whether or not it has been
earned by performance, and whether now or hereafter acquired or arising in the
future, including accounts receivable from Affiliates of the Grantors.
"Accounts Receivable" shall mean all Accounts and all right, title and
interest in any returned goods or Equipment, together with all rights, titles,
securities and guarantees with respect thereto, including any rights to stoppage
in transit, replevin, reclamation and resales, and all related security
interests, liens and pledges, whether voluntary or involuntary, in each case
whether now existing or owned or hereafter arising or acquired.
"Agreements" shall mean all Transaction Agreements, leases, whether
entered into as lessor or lessee, Interest Rate Protection Agreements and other
agreements, documents and instruments, including agreements with Dealers, of any
Grantor.
"Authorized Employees" shall have the meaning given such term in
Section 6.04(b).
"Collateral" shall mean all (a) Accounts Receivable, (b) Documents,
(c) Equipment, (d) General Intangibles, (e) Inventory, (f) cash and cash
accounts (including the Concentration Account, the Collection Deposit Accounts
and the General Fund Account) and (g) Proceeds.
"Collection Deposit Account" shall mean a lockbox account of a Grantor
maintained for the benefit of the Secured Parties with the Collateral Agent or
with a Sub-Agent pursuant to a Lockbox and Depository Agreement.
"Concentration Account" shall mean the cash collateral account
established at the office of Citicorp located at 399 Park Avenue, New York, NY
10021, in the name of the Collateral Agent, Account No. 4071-1405.
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3
"Copyright License" shall mean any written agreement (including the
Copyright License Agreement (as defined in the Purchase Agreement)), now or
hereafter in effect, granting any right to any third party under any Copyright
now or hereafter owned by any Grantor or which such Grantor otherwise has the
right to license, or granting any right to such Grantor under any Copyright now
or hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including those listed on Schedule II.
"Credit Agreement" shall have the meaning given such term in the
preliminary statement of this Agreement.
"Designated Location" shall mean any location reasonably approved by
the Collateral Agent for the maintaining and processing of Title Documentation
in accordance with this Agreement.
"Documents" shall mean all instruments, files, records, ledger sheets
and documents covering or relating to any of the Collateral, including Title
Documentation.
"Equipment" shall mean all equipment, furniture and furnishings, and
all tangible personal property similar to any of the foregoing, including
Vehicles (whether intended for sale, rental or lease, whether in custody or
possession of any third person pursuant to a Qualifying Rental, other rental or
lease arrangement, or otherwise), tools, parts and supplies of every kind and
description, and all improvements, accessions or appurtenances thereto, that are
now or hereafter owned by any Grantor.
"General Fund Account" shall mean the general fund account established
at the office of Citicorp located at 399 Park Avenue, New York, NY 10021, in the
name of the Borrower, Account No. 4071-1413.
"General Intangibles" shall mean all choses in action and causes of
action and all other assignable intangible personal property of any Grantor of
every kind and nature (other than Accounts Receivable) now owned or hereafter
acquired by any Grantor, including corporate or other business records,
indemnification claims, contract rights (including rights under Agreements),
Intellectual Property, goodwill, registrations, franchises, tax refund claims
and any letter of credit, guarantee, claim, security interest or other security
held by or granted to any Grantor to secure payment by an Account Debtor of any
of the Accounts Receivable. Without limiting the foregoing, the term "General
Intangibles" shall include (a) all rights to receive and demand payments under
the Agreements, (b) all rights to receive and compel performance under the
Agreements and (c) all other rights, interests and claims now existing or
hereafter arising in connection with the Agreements.
"Intellectual Property" shall mean all intellectual and similar
property of any Grantor of every kind and nature now owned or hereafter acquired
by any Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions,
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4
improvements and accessions to, and books and records describing or used in
connection with, any of the foregoing.
"Inventory" shall mean all goods of any Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
any Grantor under contracts of service, or consumed in any Grantor's business,
including raw materials, intermediates, work in process, packaging materials,
finished goods, semi-finished inventory, scrap inventory, manufacturing supplies
and spare parts, and all such goods that have been returned to or repossessed by
or on behalf of any Grantor.
"Leasco" shall mean RCTR, Inc., a special purpose Delaware corporation
and a wholly owned subsidiary of the Borrower.
"License" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which any Grantor is a party,
including those listed on Schedule III (other than those license agreements in
existence on the date hereof and listed on Schedule III and those license
agreements entered into after the date hereof, which by their terms prohibit
assignment or a grant of a security interest by such Grantor as licensee
thereunder).
"Lockbox and Depository Agreement" shall mean a Lockbox and Depository
Agreement substantially in the form of Annex 1 hereto among the Borrower, the
Collateral Agent and a Sub-Agent.
"Lockbox System" shall have the meaning assigned to such term in
Section 5.01.
"Motor Vehicle Statute" shall mean the motor vehicle statutes or
similar laws, rules or regulations of any state or other jurisdiction.
"New Vehicles" shall mean all Vehicles other than Seller Vehicles.
"Obligations" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Patent License" shall mean any written agreement (including the
Patent License Agreement (as defined in the Purchase Agreement)), now or
hereafter in effect, granting to any third party any right to make, use or sell
any invention on which a Patent, now or hereafter owned by any Grantor or which
any Grantor otherwise has the right to license, is in existence, or granting to
any Grantor any right to make, use or sell any invention on which a Patent, now
or hereafter owned by any third party, is in existence, and all rights of any
Grantor under any such agreement.
"Patents" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all letters patent of the United States or any
other country, all registrations and recordings thereof, and all applications
for letters patent of the United States or any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country, including
those listed on Schedule IV, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
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5
"Perfection Certificate" shall mean a certificate substantially in the
form of Annex 2 hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Financial Officer and
the chief legal officer of the Borrower.
"Proceeds" shall mean any consideration received from the sale,
exchange, license, lease or other disposition of any asset or property that
constitutes Collateral, any value received as a consequence of the possession of
any Collateral and any payment received from any insurer or other person or
entity as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property which constitutes
Collateral, and shall include (a) all cash and negotiable instruments received
by or held on behalf of the Collateral Agent pursuant to the Lockbox System,
(b) any claim of any Grantor against any third party for (and the right to sue
and recover for and the rights to damages or profits due or accrued arising out
of or in connection with) (i) past, present or future infringement of any Patent
now or hereafter owned by any Grantor, or licensed under a Patent License, (ii)
past, present or future infringement or dilution of any Trademark now or
hereafter owned by any Grantor or licensed under a Trademark License or injury
to the goodwill associated with or symbolized by any Trademark now or hereafter
owned by any Grantor, (iii) past, present or future breach of any License and
(iv) past, present or future infringement of any Copyright now or hereafter
owned by any Grantor or licensed under a Copyright License and (c) any and all
other amounts from time to time paid or payable under or in connection with any
of the Collateral.
"Purchase Agreement" shall mean the Asset and Stock Purchase Agreement
dated as of September 19, 1996, by and between the Seller and the Borrower, as
the same may be amended, modified or supplemented from time to time in
accordance with the terms thereof and the Credit Agreement.
"Secured Parties" shall mean (a) the Lenders, (b) the Administrative
Agent, (c) the Collateral Agent, (d) the Issuing Banks, (e) each counterparty to
an Interest Rate Protection Agreement entered into with the Borrower if such
counterparty was a Lender (or an Affiliate of a Lender) at the time the Interest
Rate Protection Agreement was entered into, (f) the beneficiaries of each
indemnification obligation undertaken by any Grantor under any Loan Document and
(g) the successors and assigns of each of the foregoing.
"Security Interest" shall have the meaning assigned to such term in
Section 2.01.
"Seller" shall mean Ryder Truck Rental, Inc., a Florida corporation.
"Seller Vehicles" shall mean all Vehicles acquired from the Seller
pursuant to the Purchase Agreement.
"Sub-Agent" shall mean a financial institution which shall have
delivered to the Collateral Agent an executed Lockbox and Depository Agreement.
"Title Documentation" shall have the meaning given such term in
Section 6.04(a).
"Trademark License" shall mean any written agreement (including the
Trademark License Agreement (as defined in the Purchase Agreement)), now or
hereafter in effect, granting to any third party any right to use any Trademark
now or hereafter owned by any Grantor or which any Grantor otherwise has the
right to license, or granting to any Grantor any right to use any Trademark now
or hereafter owned by any third party, and all rights of any Grantor under any
such agreement.
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6
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, trade dress, logos, other source or business identifiers, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office,
any State of the United States or any similar offices in any other country or
any political subdivision thereof, and all extensions or renewals thereof,
including those listed on Schedule V, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that uniquely
reflect or embody such goodwill.
"Transaction Agreements" shall mean all of the following: the Purchase
Agreement, the Maintenance Agreement, the Administrative Services Agreement, the
MIS Support Agreement, the Ryder Dealer Agreement, the Used Truck Sales
Agreement, the Software License Agreement, the Shared Facility Licenses, the
Assumption Agreement and the Office Sublease Agreement (each such term as
defined in the Purchase Agreement) and the Lease and any other agreement,
instrument or other document entered into or delivered by, between or among the
Borrower, the Seller and any of their respective Affiliates in connection with
the Acquisition, as each such agreement, instrument or document may be amended,
modified or supplemented from time to time in accordance with the terms thereof
and the Credit Agreement. The term "Transaction Agreements" shall include the
Vehicle Title Nominee Agreement and any bill of sale or similar instrument
delivered by the Seller to Leasco with respect to Vehicles acquired by Leasco
from the Seller, if and only if Leasco shall become a Grantor hereunder after
the Step-Up Date as provided in Section 5.15(d) of the Credit Agreement.
"Vehicle" shall mean any truck or other vehicle owned by the Borrower
or any Subsidiary and registered and based in the United States of America, the
body (including the "box" or storage component) and equipment mounted thereon
and all accessions, attachments and accessories of any type or description
attached to such truck or vehicle.
"Vehicle Title Nominee Agreement" shall mean the Vehicle Title Nominee
Agreement dated as of the Closing Date between the Seller and Leasco, as the
same may be amended, modified or supplemented from time to time in accordance
with the terms thereof and the Credit Agreement.
SECTION 1.03. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in, all of such Grantor's right, title and interest
in, to and under the Collateral (the "Security Interest"). Without limiting the
foregoing, the Grantors agree to take, on behalf of the Collateral Agent, the
actions required by Section 6.03 with respect to Vehicles,
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7
and the Collateral Agent is hereby authorized to file one or more financing
statements, continuation statements, filings with the United States Patent and
Trademark Office or United States Copyright Office (or any successor office or
any similar office in any other country) or other documents (without the
signature of any Grantor, and naming any Grantor or the Grantors as debtors and
the Collateral Agent as secured party), in each for the purpose of perfecting,
confirming, continuing, enforcing or protecting the Security Interest granted by
each Grantor. It is acknowledged that Vehicles owned by Leasco do not constitute
part of the Collateral except, after the Step-Up Date, if required as provided
in Section 5.15(d) of the Credit Agreement.
SECTION 2.02. No Assumption of Liability. The Security Interest is
granted as security only and shall not subject the Collateral Agent or any other
Secured Party to, or in any way alter or modify, any obligation or liability of
any Grantor with respect to or arising out of the Collateral.
ARTICLE III
Representations and Warranties
The Grantors jointly and severally represent and warrant to the
Collateral Agent and the Secured Parties that:
SECTION 3.01. Title and Authority. Each Grantor has good and valid
rights in and title to the Collateral with respect to which it has purported to
grant a Security Interest hereunder and has full power and authority to grant to
the Collateral Agent the Security Interest in such Collateral pursuant hereto
and to execute, deliver and perform its obligations in accordance with the terms
of this Agreement, without the consent or approval of any other person other
than any consent or approval which has been obtained.
SECTION 3.02. Filings. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete. The filing of applications for certificates of title and
registration with respect to Vehicles pursuant to Section 6.03, together with
the fully executed Uniform Commercial Code financing statements (including
fixture filings, as applicable) or other appropriate filings, recordings or
registrations containing a description of the Collateral that have been
delivered to the Collateral Agent for filing in each governmental, municipal or
other office specified in Schedule 6 to the Perfection Certificate, are all the
filings, recordings and registrations (other than filings required to be made in
the United States Patent and Trademark Office and the United States Copyright
Office in order to perfect the Security Interest in Collateral consisting of
United States Patents, Trademarks and Copyrights) that are necessary to publish
notice of and protect the validity of and to establish a legal, valid and
perfected security interest in favor of the Collateral Agent (for the ratable
benefit of the Secured Parties) in respect of all Collateral in which the
Security Interest may be perfected by filing, recording or registration in the
United States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of renewals for certificates of registration and the filing of continuation
statements and as provided under subparagraphs (a) and (b) of Section 6.03.
(b) Each Grantor shall ensure that fully executed security agreements
in the form hereof and containing a description of all Collateral consisting of
Intellectual Property shall have been received and recorded, within two Business
Days after the execution of this Agreement, with respect to United States
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8
Patents and United States registered Trademarks (and Trademarks for which United
States registration applications are pending) and United Sates registered
Copyrights by the United States Patent and Trademark Office and the United
States Copyright Office, respectively, pursuant to 35 U.S.C. (S) 261, 15 U.S.C.
(S) 1060 or 17 U.S.C. (S) 205 and the regulations thereunder, as applicable, and
otherwise as may be required pursuant to the laws of any other necessary
jurisdiction, to protect the validity of and to establish a legal, valid and
perfected security interest in favor of the Collateral Agent (for the ratable
benefit of the Secured Parties) in respect of all Collateral consisting of
Patents, Trademarks and Copyrights in which a security interest may be perfected
by filing, recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, or in any other
necessary jurisdiction, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary (other than
such actions as are necessary to perfect the Security Interest with respect to
any Collateral consisting of Patents, Trademarks and Copyrights (or registration
or application for registration thereof) acquired or developed after the date
hereof).
SECTION 3.03. Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering an application for the certificate of title or registration,
financing statement or analogous document in the United States (or any political
subdivision thereof) and its territories and possessions pursuant to the Motor
Vehicle Statute, Uniform Commercial Code or other applicable law in such
jurisdictions and (c) a security interest that shall be perfected in all
Collateral in which a security interest may be perfected upon the receipt and
recording of this Agreement with the United States Patent and Trademark Office
and the United States Copyright Office, as applicable. The Security Interest is
and shall be prior to any other Lien on any of the Collateral, other than
Permitted Liens. None of the Grantors are subject to the Motor Carrier Act of
1980 (or any successor statute thereto) or the rules and regulations promulgated
thereunder by the Interstate Commerce Commission.
SECTION 3.04. Absence of Other Liens. The Collateral is owned by the
Grantors free and clear of any Lien, except for Permitted Liens. The Grantor has
not filed or consented to the filing of (a) any application for a certificate of
title or registration, financing statement or analogous document for or on
behalf of any other person under the Motor Vehicle Statute, Uniform Commercial
Code or any other applicable laws covering any Collateral, (b) any assignment in
which any Grantor assigns any Collateral or any security agreement or similar
instrument covering any Collateral with the United States Patent and Trademark
Office or the United States Copyright Office or (c) any assignment in which any
Grantor assigns any Collateral or any security agreement or similar instrument
covering any Collateral with any foreign governmental, municipal or other
office, which application, financing statement or analogous document is still in
effect, except, in each case, for Permitted Liens.
ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral; Records; Place
of Business. (a) Each Grantor agrees promptly to notify the Collateral Agent in
writing of any change (i) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it
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9
maintains books or records relating to Collateral owned by it or any office or
facility at which Collateral owned by it is located (including the establishment
of any such new office or facility), (iii) in its identity or corporate
structure or (iv) in its Federal Taxpayer Identification Number; provided,
however, that notice of the addition or elimination of any Dealer locations or
any other change in the location of Dealers needs to be provided only at such
time as the quarterly financial statements are delivered pursuant to Section
5.04(b) of the Credit Agreement; provided, further, that the foregoing shall not
be deemed to restrict the movement of Vehicles in the ordinary course of
business. Each Grantor agrees not to effect or permit any change referred to in
the preceding sentence (other than any change in the location of Dealers) unless
all filings have been made under the Uniform Commercial Code or otherwise that
are required in order for the Collateral Agent to continue at all times
following such change to have a valid, legal and perfected first priority
security interest in all the Collateral. Each Grantor agrees promptly to notify
the Collateral Agent if any material portion of the Collateral owned or held by
such Grantor is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which such Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Collateral, and, at such time or times as the Collateral Agent
may reasonably request, promptly to prepare and deliver to the Collateral Agent
a duly certified schedule or schedules in form and detail reasonably
satisfactory to the Collateral Agent showing the identity, amount and location
of any and all Collateral, other than Vehicles, as to which Section 6.06 is
applicable.
SECTION 4.02. Periodic Certification. Each year, at the time of
delivery of annual financial statements with respect to the preceding fiscal
year pursuant to Section 5.04 of the Credit Agreement, the Borrower shall
deliver to the Collateral Agent a certificate executed by a Financial Officer
and the chief legal officer of the Borrower (a) setting forth the information
required pursuant to Section 2 of the Perfection Certificate or confirming that
there has been no change in such information since the date of such certificate
or the date of the most recent certificate delivered pursuant to Section 4.02
and (b) certifying that all Motor Vehicle Statute filings, Uniform Commercial
Code financing statements or other appropriate filings, recordings or
registrations, including all renewals, refilings, rerecordings and
reregistrations, have been filed of record in each governmental, municipal or
other appropriate office in each jurisdiction identified pursuant to clause (a)
above to the extent necessary to protect and perfect the Security Interest for a
period of not less than 18 months after the date of such certificate (except as
noted therein with respect to any renewals of certificates of registration for
Vehicles or continuation statements to be filed within such period). Each
certificate delivered pursuant to this Section 4.02 shall identify in the format
of Schedule II, III, IV or V, as applicable, all Intellectual Property of any
Grantor in existence on the date thereof and not then listed on such Schedules
or previously so identified to the Collateral Agent.
SECTION 4.03. Protection of Security. Each Grantor shall, at its own
cost and expense, take any and all actions necessary to defend title to the
Collateral against all persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien
other than, to the extent permitted by the Credit Agreement, Permitted Liens.
SECTION 4.04. Further Assurances. Each Grantor agrees, at its own
expense, to execute, acknowledge, deliver and cause to be duly filed all such
further instruments and documents and take all such actions as the Collateral
Agent may from time to time request to better assure, preserve, protect and
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10
perfect the Security Interest and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the Security Interest
and the filing of any financing statements or other documents in connection
herewith or therewith. If any amount payable under or in connection with any of
the Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be immediately pledged and delivered
to the Collateral Agent, duly endorsed in a manner satisfactory to the
Collateral Agent.
Without limiting the generality of the foregoing, each Grantor hereby
authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to
supplement this Agreement by supplementing Schedule II, III, IV or V hereto or
adding additional schedules hereto to specifically identify any asset or item
that may constitute Copyrights, Licenses, Patents or Trademarks; provided,
however, that any Grantor shall have the right, exercisable within 15 days after
it has been notified by the Collateral Agent of the specific identification of
such Collateral, to advise the Collateral Agent in writing of any inaccuracy of
the representations and warranties made by such Grantor hereunder with respect
to such Collateral. Each Grantor agrees that it will use its best efforts to
take such action as shall be necessary in order that all representations and
warranties hereunder shall be true and correct with respect to such Collateral
within 45 days after the date it has been notified by the Collateral Agent of
the specific identification of such Collateral.
SECTION 4.05. Inspection and Verification. The Collateral Agent and
such persons as the Collateral Agent may reasonably designate shall have the
right, at the Grantors' own cost and expense, to inspect the Collateral, all
records related thereto (and to make extracts and copies from such records) and
the premises upon which any of the Collateral is located (including Dealer
locations), to discuss the Grantors' affairs with the officers of the Grantors
and their independent accountants and to verify under reasonable procedures, in
accordance with Section 5.11 of the Credit Agreement, the validity, amount,
quality, quantity, value, condition and status of, or any other matter relating
to, the Collateral, including, in the case of Accounts or Collateral in the
possession of any third person (including Dealers), by contacting Account
Debtors or the third person possessing such Collateral for the purpose of making
such a verification, provided that (a) so long as no Default or Event of Default
shall have occurred and be continuing, there shall be no more than one such
inspection and verification by any of the Collateral Agent or such other persons
in any fiscal quarter of the Borrower, (b) the business of the Borrower and the
Subsidiaries shall not be unreasonably disrupted by any such inspection and
verification and (c) the Collateral Agent shall use reasonable efforts to
coordinate any such inspection and verification with evaluations and appraisals
of the Borrowing Base conducted pursuant to Section 5.11(a) of the Credit
Agreement. The Collateral Agent shall have the absolute right to share any
information it gains from such inspection or verification with any Secured Party
(it being understood that any such information shall be deemed to be
"Information" subject to the provisions of Section 9.16 of the Credit
Agreement).
SECTION 4.06. Taxes; Encumbrances. At its option, the Collateral Agent
may discharge past due taxes, assessments, charges, fees, Liens, security
interests or other encumbrances at any time levied or placed on the Collateral
and not constituting Permitted Liens, and may pay for the maintenance and
preservation of the Collateral to the extent any Grantor fails to do so as
required by the Credit Agreement or this Agreement, and each Grantor jointly and
severally agrees to reimburse the Collateral Agent on demand for any payment
made or any expense incurred by the Collateral Agent pursuant to the foregoing
authorization; provided, however, that nothing in this Section 4.06 shall be
interpreted as excusing any Grantor from the performance of, or imposing any
obligation on the Collateral Agent or any Secured Party to cure or perform, any
covenants or other promises of any Grantor with respect to taxes, assessments,
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11
charges, fees, liens, security interests or other encumbrances and maintenance
as set forth herein or in the other Loan Documents.
SECTION 4.07. Assignment of Security Interest. If at any time any
Grantor shall take a security interest in any property of an Account Debtor or
any other person to secure payment and performance of an Account, such Grantor
shall promptly assign such security interest to the Collateral Agent. Such
assignment need not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and transferees
from the Account Debtor or other person granting the security interest.
SECTION 4.08. Continuing Obligations of the Grantors. Each Grantor
shall remain liable to observe and perform all the conditions and obligations to
be observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and each Grantor jointly and severally agrees to indemnify and hold
harmless the Collateral Agent and the Secured Parties from and against any and
all liability for such performance.
SECTION 4.09. Use and Disposition of Collateral. None of the Grantors
shall make or permit to be made an assignment, pledge or hypothecation of the
Collateral or shall grant any other Lien in respect of the Collateral, except
for Permitted Liens. None of the Grantors shall make or permit to be made any
transfer of the Collateral and each Grantor shall remain at all times in
possession of the Collateral owned by it, except that (a) Inventory may be sold
in the ordinary course of business, (b) Vehicles may be leased by Dealers
pursuant to Qualifying Rentals and other Equipment may be sold or leased by
Dealers in bona fide transactions, in each case in the ordinary course of
business, (c) Vehicles and other Equipment may be held in the possession of
other persons when being repaired by such persons in the ordinary course of such
Grantor's business and (d) unless and until the Collateral Agent shall notify
the Grantors that an Event of Default shall have occurred and be continuing and
that during the continuance thereof the Grantors shall not sell, convey, lease,
assign, transfer or otherwise dispose of any Collateral (which notice may be
given by telephone if promptly confirmed in writing), the Grantors may use and
dispose of the Collateral in any lawful manner not inconsistent with the
provisions of this Agreement, the Credit Agreement or any other Loan Document.
Without limiting the generality of the foregoing, each Grantor agrees that it
shall not permit any Inventory or Equipment to be in the possession or control
of any warehouseman, bailee, agent, processor or Dealer at any time unless such
warehouseman, bailee, agent, processor or Dealer shall have been notified of the
Security Interest and shall have agreed in writing to hold the Inventory or
Equipment subject to the Security Interest and the instructions of the
Collateral Agent and to waive and release any Lien held by it with respect to
such Inventory or Equipment, whether arising by operation of law or otherwise,
provided that (a) in the case of Dealers in existence on the date hereof, the
Grantors may provide such notice to, and obtain such agreement from, such
Dealers not later than 90 days after the date hereof and (b) persons repairing
dollies in the ordinary course of business need not be so notified or make such
agreement.
SECTION 4.10. Limitation on Modification of Accounts. None of the
Grantors will, without the Collateral Agent's prior written consent, grant any
extension of the time of payment of any of the Accounts Receivable, compromise,
compound or settle the same for less than the full amount thereof, release,
wholly or partly, any person liable for the payment thereof or allow any credit
or discount whatsoever thereon, other than extensions, credits, discounts,
compromises or settlements granted or made in the ordinary course of business
and consistent with its current practices and in accordance with such prudent
and standard practices used in industries that are the same as or similar to
those in which such Grantor is engaged.
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12
SECTION 4.11. Insurance. The Grantors, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage to
the Inventory and Equipment in accordance with Section 5.02 of the Credit
Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact)
for the purpose, during the continuance of an Event of Default, of making,
settling and adjusting claims in respect of Collateral under policies of
insurance, endorsing the name of such Grantor on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
any Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Agent may, without waiving or releasing any
obligation or liability of the Grantors hereunder or any Event of Default, in
its sole discretion, obtain and maintain such policies of insurance and pay such
premium and take any other actions with respect thereto as the Collateral Agent
deems advisable. All sums disbursed by the Collateral Agent in connection with
this Section 4.11, including reasonable attorneys' fees, court costs, expenses
and other charges relating thereto, shall be payable, upon demand, by the
Grantors to the Collateral Agent and shall be additional Obligations secured
hereby.
SECTION 4.12. Legend. Each Grantor shall legend, in form and manner
reasonably satisfactory to the Collateral Agent, its Accounts Receivable and its
books, records and documents evidencing or pertaining thereto with an
appropriate reference to the fact that such Accounts Receivable have been
assigned to the Collateral Agent for the benefit of the Secured Parties and that
the Collateral Agent has a security interest therein.
SECTION 4.13. Covenants Regarding Patent, Trademark and Copyright
Collateral. (a) Each Grantor agrees that it will not, nor will it permit any of
its licensees to, do any act, or omit to do any act, whereby any Patent which is
material to the conduct of such Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall continue to mark any products
covered by a Patent with the relevant patent number as necessary and sufficient
to establish and preserve its maximum rights under applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice
of Federal or foreign registration to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law and (iv) not
knowingly use or knowingly permit the use of such Trademark in violation of any
third party rights.
(c) Each Grantor (either itself or through licensees) will, for each
work covered by a material Copyright, continue to publish, reproduce, display,
adopt and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws.
(d) Each Grantor shall notify the Collateral Agent immediately if it
knows or has reason to know that any Patent, Trademark or Copyright material to
the conduct of its business may become abandoned, lost or dedicated to the
public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, United States Copyright Office or
any court or similar office of any country) regarding such
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13
Grantor's ownership of any Patent, Trademark or Copyright, its right to register
the same, or to keep and maintain the same.
(e) In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States or in any
other country or any political subdivision thereof, unless it promptly informs
the Collateral Agent, and, upon request of the Collateral Agent, executes and
delivers any and all agreements, instruments, documents and papers as the
Collateral Agent may request to evidence the Collateral Agent's security
interest in such Patent, Trademark or Copyright, and each Grantor hereby
appoints the Collateral Agent as its attorney-in-fact to execute and file such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable.
(f) Each Grantor will take all necessary steps that are consistent
with the practice in any proceeding before the United States Patent and
Trademark Office, United States Copyright Office or any office or agency in any
political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
relating to the Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registration of the Trademarks and Copyrights that is material to the conduct of
any Grantor's business, including timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance
fees, and, if consistent with good business judgment, to initiate opposition,
interference and cancellation proceedings against third parties.
(g) In the event that any Grantor has reason to believe that any
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral.
(h) Upon and during the continuance of an Event of Default, each
Grantor shall use its best efforts to obtain all requisite consents or approvals
by the licensor of each Copyright License, Patent License or Trademark License
to effect the assignment of all of such Grantor's right, title and interest
thereunder to the Collateral Agent or its designee.
ARTICLE V
Collections
SECTION 5.01. Lockbox System. (a) Within 60 days after the Closing
Date, the Grantors shall establish in the name of the Collateral Agent, and
subject to the control of the Collateral Agent pursuant to the Lockbox and
Depository Agreements, for the ratable benefit of the Collateral Agent and the
other Secured Parties, a system of lockboxes and related deposit accounts (the
"Lockbox System") with one or more financial institutions that are reasonably
satisfactory to the Collateral Agent into which the Proceeds
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14
of all Accounts Receivable, Inventory and Equipment shall be deposited and
forwarded to the Collateral Agent in accordance with the Lockbox and Depository
Agreements.
(b) All Proceeds of Accounts Receivable, Inventory and Equipment that
have been received on any Business Day through the Lockbox System will be
transferred into the Concentration Account on such Business Day to the extent
required by the applicable Lockbox and Depository Agreement. All Proceeds
stemming from the sale of a substantial portion of the Collateral that have been
received by a Grantor on any Business Day will be transferred into the
Concentration Account on such Business Day. All dividends, distributions or
other payments received by the Borrower from Leasco will be transferred into the
Concentration Account on the Business Day on which such dividends, distributions
or payments are so received by the Borrower. All Proceeds received on any
Business Day by the Collateral Agent pursuant to Section 5.02 will be
transferred into the Concentration Account on such Business Day.
(c) The Concentration Account is, and shall remain, under the sole
dominion and control of the Collateral Agent. Each Grantor acknowledges and
agrees that (i) such Grantor has no right of withdrawal from the Concentration
Account, (ii) the funds on deposit in the Concentration Account shall continue
to be collateral security for all of the Obligations and (iii) upon the
occurrence and during the continuance of an Event of Default, at the Collateral
Agent's election, the funds on deposit in the Concentration Account shall be
applied as provided in Section 7.02. So long as no Event of Default has occurred
and is continuing, the Collateral Agent shall promptly remit any funds on
deposit in the Concentration Account to the General Fund Account and the
Borrower shall have the right, at any time and from time to time, to withdraw
such amounts from the General Fund Account as it shall deem to be necessary or
desirable.
(d) Effective upon notice to the Grantors from the Collateral Agent
after the occurrence and during the continuance of an Event of Default (which
notice may be given by telephone if promptly confirmed in writing), the
Concentration Account will, without any further action on the part of any
Grantor, the Collateral Agent or any Sub-Agent, convert into a closed lockbox
account under the exclusive dominion and control of the Collateral Agent in
which funds are held subject to the rights of the Collateral Agent hereunder.
Each Grantor irrevocably authorizes the Collateral Agent to notify each Sub-
Agent (i) of the occurrence of an Event of Default and (ii) of the matters
referred to in this paragraph (d). Following the occurrence of an Event of
Default, the Collateral Agent may instruct each Sub-Agent to transfer
immediately all funds held in each deposit account to the Concentration Account.
SECTION 5.02. Collections. (a) Each Grantor agrees (i) to notify and
direct promptly each Account Debtor and every other person obligated to make
payments on Accounts Receivable or in respect of any Inventory or Equipment to
make all such payments directly to the Lockbox System established in accordance
with Section 5.01, (ii) to use all reasonable efforts to cause each Account
Debtor and every other person identified in clause (i) above to make all
payments with respect to Accounts Receivable, Inventory and Equipment directly
to such Lockbox System and (iii) promptly to deposit all payments received by it
on account of Accounts Receivable, Inventory and Equipment, whether in the form
of cash, checks, notes, drafts, bills of exchange, money orders or otherwise, in
the Lockbox System in precisely the form in which received (but with any
endorsements of such Grantor necessary for deposit or collection), and until
they are so deposited such payments shall be held in trust by such Grantor for
and as the property of the Collateral Agent.
(b) Without the prior written consent of the Collateral Agent, no
Grantor shall, in a manner adverse to the Lenders, change the general
instructions given to Account Debtors in respect of payment on Accounts to be
deposited in the Lockbox System. Until the Collateral Agent shall have advised
the
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15
Grantors to the contrary, each Grantor shall, and the Collateral Agent hereby
authorizes each Grantor to, enforce and collect all amounts owing on the
Accounts Receivable, Inventory and Equipment, for the benefit and on behalf of
the Collateral Agent and the other Secured Parties; provided, however, that such
privilege may at the option of the Collateral Agent be terminated upon the
occurrence and during the continuance of an Event of Default.
SECTION 5.03. Power of Attorney. Each Grantor irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers, employees or
agents designated by the Collateral Agent) as such Grantor's true and lawful
agent and attorney-in-fact, and in such capacity the Collateral Agent shall have
the right, with power of substitution for each Grantor and in each Grantor's
name or otherwise, for the use and benefit of the Collateral Agent and the
Secured Parties, upon the occurrence and during the continuance of an Event of
Default (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment relating
to the Collateral or any part thereof; (b) to demand, collect, receive payment
of, give receipt for and give discharges and releases of all or any of the
Collateral; (c) to sign the name of any Grantor on any invoice or bill of lading
relating to any of the Collateral; (d) to send verifications of Accounts
Receivable to any Account Debtor; (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral; (f) to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to all or
any of the Collateral; (g) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Collateral Agent; and (h) to
use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and
things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Collateral Agent were the absolute owner of the
Collateral for all purposes; provided, however, that nothing contained in this
Section 5.03 shall be construed as requiring or obligating the Collateral Agent
or any Secured Party to make any commitment or to make any inquiry as to the
nature or sufficiency of any payment received by the Collateral Agent or any
Secured Party, or to present or file any claim or notice, or to take any action
with respect to the Collateral or any part thereof or the moneys due or to
become due in respect thereof or any property covered thereby, and no action
taken or omitted to be taken by the Collateral Agent or any Secured Party with
respect to the Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of any Grantor or to any claim or action against
the Collateral Agent or any Secured Party. It is understood and agreed that the
appointment of the Collateral Agent as the agent and attorney-in-fact of the
Grantors for the purposes set forth above is coupled with an interest and is
irrevocable. The provisions of this Section shall in no event relieve any
Grantor of any of its obligations hereunder or under any other Loan Document
with respect to the Collateral or any part thereof or impose any obligation on
the Collateral Agent or any Secured Party to proceed in any particular manner
with respect to the Collateral or any part thereof, or in any way limit the
exercise by the Collateral Agent or any Secured Party of any other or further
right which it may have on the date of this Agreement or hereafter, whether
hereunder, under any other Loan Document, by law or otherwise.
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ARTICLE VI
Vehicles
SECTION 6.01. General. The following provisions of this Article VI and
the provisions of Article IV relating to Vehicles (including Section 4.11) shall
apply to all Vehicles legally or beneficially owned by the Borrower or any
Grantor, and the Borrower shall cause Leasco to comply with all such provisions
with respect to Vehicles so owned by Leasco (as if references to a "Grantor"
were references to "Leasco", it being acknowledged that Leasco is not a party to
this Agreement on the date hereof); provided, however, that the Collateral
Agent, on behalf of the Secured Parties, acknowledges that the Vehicles owned by
Leasco do not and will not constitute part of the Collateral, notwithstanding
the notation on any certificate of title therefor that Citicorp is the
lienholder of record with respect thereto and notwithstanding any certificate of
registration having been issued in the name of Citicorp, except after the Step-
Up Date if required as provided in Section 5.15(d) of the Credit Agreement. The
Collateral Agent, on behalf of the Secured Parties, acknowledges that, upon
consummation of the Securitization, the following provisions of this Article VI
and the provisions of Article IV relating to Vehicles shall no longer apply to
Vehicles owned by Leasco.
SECTION 6.02. Titling. (a) With respect to each Seller Vehicle then
owned by a Grantor, such Grantor shall, in the ordinary course of business (but
in no event later than, subject to Section 5.15(c) of the Credit Agreement, the
earlier of (i) one year after the Closing Date and (ii) the last day under the
Vehicle Title Nominee Agreement by which such Seller Vehicle must be so retitled
(such last day being, as of the Closing Date, six months after the Closing
Date)), file an application for, and obtain, a certificate of title and a
certificate of registration for such Seller Vehicle from each state or other
jurisdiction in which such Seller Vehicle is required to be titled or
registered, except to the extent such Seller Vehicle shall no longer be owned by
such Grantor.
(b) With respect to each New Vehicle, the applicable Grantor shall, as
soon as reasonably practicable, file an application for, and obtain, a
certificate of title and a certificate of registration for such New Vehicle from
each state or other jurisdiction in which such New Vehicle is required to be
titled or registered, provided that in no event shall such filing be made later
than 14 days following the later of (i) the time of delivery to such Grantor of
such New Vehicle and (ii) the payment by such Grantor of the purchase price for
such New Vehicle.
(c) The Grantors shall obtain all new certificates of title and
registration for the Vehicles as required by applicable law. Certificates of
title and registration for the Vehicles shall be obtained from the department or
registry of motor vehicles or other relevant body in each state or other
jurisdiction in which the Vehicles are required to be titled or registered. Each
Grantor shall take such action as shall be necessary from time to time to avoid
suspension, revocation or invalidation of any certificates of title, and to
renew and maintain all certificates of registration, for the Vehicles. No
Grantor shall operate any Vehicle, or permit any Vehicle to be operated, in such
a manner as could cause any certificate of title or registration for such
Vehicle to be suspended, revoked or invalidated or otherwise adversely affected.
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SECTION 6.03. First Lien of Collateral Agent. The certificate of title for
each Vehicle shall designate the applicable Grantor as the registered owner and
"Citicorp, U.S.A., Inc. or its successors and assigns, as collateral agent" as
the first lienholder. To the extent:
(a) such Vehicle is subject to a certificate of title issued by a state
or other jurisdiction in which the perfection of a security interest in
such Vehicle requires possession of such certificate of title by the
secured party, the applicable Grantor shall deliver to the Collateral Agent
such certificate of title promptly upon such Grantor's receipt thereof;
(b) such Vehicle is registered in a state or other jurisdiction in
which the perfection of a security interest in such Vehicle held as
Inventory requires the filing of a Uniform Commercial Code financing
statement or other filing, recording or registration covering such
Inventory, the Collateral Agent is hereby authorized to make such filings
as are described in the second sentence of Section 2.01 with respect to
such Vehicle; and
(c) such Vehicle is registered in a state or other jurisdiction in
which the perfection of a security interest in such Vehicle requires that
the certificate of registration for such Vehicle be issued in the name of
the secured party and/or requires possession of such certificate of
registration by the secured party, the applicable Grantor shall cause such
certificate of registration to be issued in the name of "Citicorp, U.S.A.,
Inc. or its successor and assigns, as collateral agent" and/or shall
deliver to the Collateral Agent such certificate of registration promptly
upon such Grantor's receipt thereof.
SECTION 6.04. Title Documentation. (a) Each Grantor shall maintain and
process in a safe, fireproof and secure manner at the Designated Location all
original title and registration documentation, and copies of all applications
for title, with respect to the Vehicles (collectively, the "Title
Documentation"). In no event shall any Grantor release or surrender any Title
Documentation other than in accordance with this Agreement or shall any Title
Documentation be maintained or processed at any location other than the
Designated Location. The Designated Location shall not be used for any other
purpose other than for maintaining and processing Title Documentation, and no
employee or agent of any Grantor or any other person shall have any access
thereto other than the Authorized Employees. The Designated Location shall be a
separate fireproof room that shall be locked whenever not in use by Authorized
Employees, provided that the Borrower shall have up to six months after the
Closing Date to fireproof the Designated Location. The Titling Documentation
shall be maintained in fireproof file cabinets that shall be locked whenever not
in use by Authorized Employees. The keys to the Designated Location and such
file cabinets shall be held only by the Authorized Employees, provided that a
copy of such keys shall be held by the Collateral Agent. Such file cabinets
shall be raised off of the floor so as not to incur water damage if the
sprinkler system shall be activated. Notwithstanding the foregoing, until the
later of (a) 45 days after the Closing Date and (b) such time as a Vehicle
covered by the Vehicle Title Nominee Agreement is retitled from the name of the
Seller, the Title Documentation for such Vehicle may be maintained and processed
by Authorized Employees (who may be employees of the Seller) in the same manner
and at the same location used immediately prior to the date hereof by the Seller
for such purposes, provided that (i) such Titling Documentation shall be
maintained in fireproof file cabinets that shall be locked when not in use by
Authorized Employees and (ii) the Collateral Agent shall be given a copy of the
keys to such file cabinets.
(b) Each of the employees of the Grantors (or, in the case of the last
sentence of the foregoing paragraph (a), of the Seller) who will at any time be
authorized to maintain and process, and to have any
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access to, the Title Documentation (the "Authorized Employees"), including for
purposes of taking any of the actions described in clauses (i) and (ii) of
Section 6.05(a), shall be in good standing with the Grantors (or the Seller),
and no Responsible Officer of any Grantor (or the Seller) shall have any reason
to question the veracity, integrity or abilities of any such Authorized
Employee. Each Authorized Employee shall be qualified to perform the
responsibilities delegated to such Authorized Employee. Schedule VI sets forth a
correct list of all the Authorized Employees as of the date hereof. The Borrower
shall promptly provide the Collateral Agent with revised copies of such Schedule
so that at all times such Schedule correctly identifies the then-Authorized
Employees. Not later than 45 days after the Closing Date, each Authorized
Employee shall have been, and at all times thereafter shall be, bonded for the
benefit of the Collateral Agent on behalf of the Secured Parties in an amount
equal to not less than $1,000,000 per Authorized Employee pursuant to a bond
issued by a reputable bonding company, such bond and bonding company being
reasonably satisfactory to the Collateral Agent.
(c) The Collateral Agent and such persons as the Collateral Agent may
reasonably designate shall have the right to inspect the Designated Location and
the Title Documentation (and to make extracts and copies of the Title
Documentation) and to discuss the Title Documentation and the maintaining and
processing of it with the Authorized Employees and the officers of the Grantors,
all at the Grantors' own cost and expense, provided that (i) so long as no
Default or Event of Default shall have occurred and be continuing, there shall
be no more than one such inspection by any of the Collateral Agent or such other
persons in any fiscal quarter of the Borrower, (ii) the business of the Borrower
and the Subsidiaries shall not be unreasonably disrupted by any such inspection
and (iii) the Collateral Agent shall use reasonable efforts to coordinate any
such inspection with evaluations and appraisals of the Borrowing Base conducted
pursuant to Section 5.11(a) of the Credit Agreement. The Collateral Agent shall
have the absolute right to share any information it gains from such inspection
with any Secured Party (it being understood that any such information shall be
deemed to be "Information" subject to the provisions of Section 9.16 of the
Credit Agreement).
(d) If the Securitization is not consummated by the Step-Up Date, then at
any time thereafter, upon the request of the Collateral Agent or the Required
Lenders made prior to consummation of the Securitization, the Grantors shall
(i) lease the Designated Location to the Collateral Agent on behalf of the
Secured Parties, (ii) cause the Authorized Employees to become employees of or
be seconded to the Collateral Agent on behalf of the Secured Parties, with the
salaries and other compensation and benefits due to the Authorized Employees
being paid by the Grantors on behalf of the Collateral Agent, and/or (iii) cause
its counsel (who shall be reasonably acceptable to the Collateral Agent) to
deliver a memorandum to the Collateral Agent describing the procedures to be
followed in each state or other jurisdiction to perfect a security interest in
the Vehicles.
SECTION 6.05. Power of Attorney. (a) The Collateral Agent hereby makes,
constitutes and appoints each Grantor (and each Authorized Employee) as the
Collateral Agent's true and lawful agent (and attorney-in-fact) for the purpose
of taking such actions as are necessary (i) to note the Collateral Agent as the
holder of a first lien on the certificates of title for the Vehicles (and,
pursuant to Section 6.03, to execute and file any related Uniform Commercial
Code financing statements or other documentation) and to cause the certificates
of registration for the Vehicles to be issued in the name of the Collateral
Agent (if required pursuant to subparagraph (c) of Section 6.03) and (ii) to
release the Collateral Agent's lien on any such certificate of title (and to
file termination statements or similar documents with respect to any such
related Uniform Commercial Code or other filings) in connection with a Vehicle
Sale permitted under the Credit Agreement and to permit any such related
certificate of registration to be reissued in the name of the acquiror under
such Vehicle Sale.
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(b) Upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent may at any time terminate the foregoing power of attorney
(including the related power granted under paragraph (c) below) by giving notice
to such effect to the Borrower; provided, however, that, with respect to Leasco,
such power of attorney may only be so terminated after the Step-Up Date and then
only if, pursuant to Section 5.15(d) of the Credit Agreement, Leasco shall have
become a party to this Agreement as a "Grantor".
(c) To further evidence the power of attorney referred to in paragraph (a)
above, the Collateral Agent agrees that, upon the request of any Grantor, it
will execute a separate power of attorney substantially in the form of Annex 4,
provided that with respect to Leasco, such power of attorney shall be executed
by Citicorp in its individual capacity and not as Collateral Agent, with
necessary conforming changes being made thereto, until such time after the Step-
Up Date as the Vehicles owned by Leasco shall constitute Collateral hereunder
(if required as provided in Section 5.15(d) of the Credit Agreement).
(d) So long as the power of attorney set forth in paragraph (a) above shall
not have been terminated, the Collateral Agent will deliver to the applicable
Grantor any certificate of title or registration it possesses pursuant to
Section 6.03 with respect to Vehicles subject to Vehicle Sales permitted under
the Credit Agreement.
SECTION 6.06. Reports. (a) Not later than 45 days after the end of each
fiscal quarter of the Borrower (or, if a Default or Event of Default shall have
occurred and be continuing, not later than 20 days after the end of each month),
the Borrower will provide the Collateral Agent with a complete list of all
Vehicles as of the last day of such quarter (or month), indicating which
Vehicles have been added or deleted since the list most recently delivered to
the Collateral Agent and, for each Vehicle, any state or other jurisdiction from
which a certificate of title or registration for such Vehicle has been issued
and is in effect and whether any such state or other jurisdiction requires any
of the actions described in subparagraph (a) or (b) of Section 6.03 to be taken.
(b) Not more than once every six months (as measured from the most recent
request, other than requests made pursuant to the following proviso), upon the
request of the Required Lenders or the Collateral Agent, the Borrower will cause
a title check of a representative or random sample of certificates of title and
registration (such sample to be compiled taking into account the multiple states
and other jurisdictions from which certificates of title and registration for
Vehicles have been issued) by a third person reasonably acceptable to the
Collateral Agent (or, at the Collateral Agent's election, by the Collateral
Agent) on a reasonable number (but in no event less than 2%) of the Vehicles,
including verification that the certificates of title note the Collateral Agent
as the first lienholder thereon and that the requirements set forth in
subparagraphs (a), (b) and (c) of Section 6.03 have been satisfied, and shall
prepare a report of exceptions with the results of such title check and cause
such report to be furnished to the Required Lenders or the Collateral Agent, as
applicable; provided, however, that if any such title check reveals that 5% of
such sample does not comply with all the requirements set forth in Section 6.03,
then, upon the request of the Required Lenders or the Collateral Agent, the
Borrower will cause additional title checks to be performed on a reasonable
number of other Vehicles and the Grantors shall take such actions as the
Required Lenders or the Collateral Agent may reasonably request to improve the
Grantors' procedures for maintaining and processing Title Documentation.
SECTION 6.07. Collateral Agent. (a) Each Grantor irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers, employees or
agents designated by the Collateral Agent) as such Grantor's true and lawful
agent (and attorney-in-fact) for the purpose, upon the occurrence and during the
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20
continuance of an Event of Default, of taking all actions with respect to the
Vehicles as are specified in Sections 6.02 and 6.03 and for making all
determinations and decisions with respect thereto. In the event that any Grantor
at any time or times shall fail to take any such action or any other action
required by this Article VI, the Collateral Agent may, without waiving or
releasing any obligation or liability of the Grantors hereafter or any Event of
Default, in its sole discretion, take such actions and any other actions with
respect thereto as the Collateral Agent deems advisable.
(b) Upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall have such remedies with respect to the Title
Documentation as are set forth in Section 7.01. No exercise by the Collateral
Agent of any such remedies shall release the Grantors of any of their
obligations under this Article VI, including Sections 6.02 and 6.03.
SECTION 6.07. Expenses. All actions required to be taken by the Borrower or
any other Grantor under this Article VI shall be taken at the Borrower's or such
Grantor's own cost and expense (other than as set forth in the proviso to
Section 6.04(c)).
SECTION 6.08. No Limitation. Nothing in this Article VI shall limit any
other obligation or liability of the Borrower or any other Grantor set forth
elsewhere in this Agreement or any other Loan Document.
ARTICLE VII
Remedies
SECTION 7.01. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees to deliver each item of
Collateral (including Title Documentation) to the Collateral Agent on demand,
and it is agreed that the Collateral Agent shall have the right (but not the
obligation) to take any of or all the following actions at the same or different
times: (a) with respect to any Collateral consisting of Intellectual Property,
on demand, to cause the Security Interest to become an assignment, transfer and
conveyance of any of or all such Collateral by the applicable Grantors to the
Collateral Agent, or to license or sublicense, whether general, special or
otherwise, and whether on an exclusive or non-exclusive basis, any such
Collateral throughout the world on such terms and conditions and in such manner
as the Collateral Agent shall determine (other than in violation of any then-
existing licensing arrangements to the extent that waivers cannot be obtained),
(b) with or without legal process and with or without prior notice or demand for
performance, in its own name or the name of the applicable Grantor, (i) to
demand, sue upon or otherwise enforce the Agreements with full power as though
the Collateral Agent were the party named in the Agreements, and amend, revise,
release or otherwise change the same as may seem proper to the Collateral Agent
in its sole discretion and exercise all other rights of the applicable Grantor
under the Agreements in such manner as the Collateral Agent may determine in its
sole discretion and (ii) to perform for the applicable Grantor under the
Agreements, and (c) with or without legal process and with or without prior
notice or demand for performance, to take possession of the Collateral and
without liability for trespass to enter any premises where the Collateral may be
located for the purpose of taking possession of or removing the Collateral
(including any Dealer location and including entering the Designated Location
and taking possession of or removing any amount of or all the Title
Documentation) and, generally, to exercise any and all rights afforded to a
secured party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any
<PAGE>
broker's board or on any securities exchange, for cash, upon credit or for
future delivery as the Collateral Agent shall deem appropriate. The Collateral
Agent shall be authorized at any such sale (if it deems it advisable to do so)
to restrict the prospective bidders or purchasers to persons who will represent
and agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely, free from any claim or right on the part of any Grantor, and
each Grantor hereby waives (to the extent permitted by law) all rights of
redemption, stay and appraisal which such Grantor now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted.
The Collateral Agent shall give the Grantors 10 days' written notice (which
each Grantor agrees is reasonable notice within the meaning of Section 9-504(3)
of the Uniform Commercial Code as in effect in the State of New York or its
equivalent in other jurisdictions) of the Collateral Agent's intention to make
any sale of Collateral. Such notice, in the case of a public sale, shall state
the time and place for such sale and, in the case of a sale at a broker's board
or on a securities exchange, shall state the board or exchange at which such
sale is to be made and the day on which the Collateral, or portion thereof, will
first be offered for sale at such board or exchange. Any such public sale shall
be held at such time or times within ordinary business hours and at such place
or places as the Collateral Agent may fix and state in the notice (if any) of
such sale. At any such sale, the Collateral, or portion thereof, to be sold may
be sold in one lot as an entirety or in separate parcels, as the Collateral
Agent may (in its sole and absolute discretion) determine. The Collateral Agent
shall not be obligated to make any sale of any Collateral if it shall determine
not to do so, regardless of the fact that notice of sale of such Collateral
shall have been given. The Collateral Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or, to the extent permitted by law, private) sale made
pursuant to this Section, any Secured Party may bid for or purchase, free (to
the extent permitted by law) from any right of redemption, stay, valuation or
appraisal on the part of any Grantor (all said rights being also hereby waived
and released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any claim then
due and payable to such Secured Party from any Grantor as a credit against the
purchase price, and such Secured Party may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability
to any Grantor therefor. For purposes hereof, a written agreement to purchase
the Collateral or any portion thereof shall be treated as a sale thereof; the
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and no Grantor shall be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Collateral
Agent shall have entered into such an agreement all Events of Default shall have
been remedied and the Obligations paid in full. As an alternative to exercising
the power of sale herein conferred upon it, the Collateral Agent may proceed by
a suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a court-
appointed receiver.
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22
SECTION 7.02. Application of Proceeds. Following an Event of Default, the
Collateral Agent shall apply the proceeds of any collection or sale of the
Collateral, as well as any Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by the
Collateral Agent or the Administrative Agent (in their respective
capacities as such hereunder or under any other Loan Document) in
connection with such collection or sale or otherwise in connection with
this Agreement or any of the Obligations, including all court costs and the
fees and expenses of their respective agents and legal counsel, the
repayment of all advances made by the Collateral Agent or the
Administrative Agent hereunder or under any other Loan Document on behalf
of any Grantor and any other costs or expenses incurred in connection with
the exercise of any right or remedy hereunder or under any other Loan
Document;
SECOND, to the payment in full of the Obligations (the amounts so
applied to be distributed among the Secured Parties pro rata in accordance
with the amounts of the Obligations owed to them on the date of any such
distribution); and
THIRD, to the Grantors, their successors or assigns, or as a court of
competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds or cash (or any income derived from investments
made pursuant to the following sentence) in accordance with this Agreement.
Pending the application of the proceeds of any collection or sale of Collateral
or of any Collateral consisting of cash, the Collateral Agent may, in its
absolute discretion, invest such proceeds or cash, provided that any after-tax
income derived from any such investment shall be applied as provided in this
Section 7.02. Upon any sale of the Collateral by the Collateral Agent
(including pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Collateral Agent or of the officer making the
sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 7.03. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the Collateral
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantors) to use, license or sub-license
any of the Collateral consisting of Intellectual Property now owned or hereafter
acquired by such Grantor, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Collateral Agent
shall be exercised, at the option of the Collateral Agent, upon the occurrence
and during the continuation of an Event of Default; provided that any license,
sub-license or other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Grantors notwithstanding any
subsequent cure of an Event of Default.
SECTION 7.04. Irrevocable Authorization. Each Grantor hereby irrevocably
authorizes and directs each person who shall be a party to or liable for the
performance of any of the Agreements, upon receipt of written notice from the
Collateral Agent to the effect that an Event of Default has occurred and
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23
is continuing, to attorn to the Collateral Agent as owner under such Agreement
and to pay, observe and otherwise perform the obligations under such Agreement
to or for the Collateral Agent or the Collateral Agent's designee as though the
Collateral Agent or such designee were the Grantor named in such Agreement, and
to continue to do so until otherwise notified by the Collateral Agent. The
Collateral Agent shall simultaneously provide the Borrower with a copy of any
such notification given by the Collateral Agent pursuant to this Section 7.04,
provided that the failure to do so shall not affect the Collateral Agent's
rights under this Agreement. On or prior to the date hereof, the Borrower shall
have delivered to the Collateral Agent the Consent and Agreement (in the form
attached hereto as Annex 5) executed by the Seller with respect to the
Transaction Agreements.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement. All communications and notices
hereunder to any Guarantor shall be given to it at its address or telecopy
number set forth on Schedule I.
SECTION 8.02. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.
SECTION 8.03. Survival of Agreement. All covenants, agreements,
representations and warranties made in writing by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Secured Parties and shall survive the making by the Lenders of the Loans, and
the execution and delivery to the Lenders of any notes evidencing such Loans,
regardless of any investigation made by the Lenders or on their behalf, and
shall continue in full force and effect until this Agreement shall terminate.
SECTION 8.04. Binding Effect; Several Agreement. This Agreement shall
become effective as to any Grantor when a counterpart hereof executed on behalf
of such Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Grantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the Credit Agreement. This Agreement
shall be construed as a separate agreement with respect to each Grantor and
<PAGE>
24
may be amended, modified, supplemented, waived or released with respect to any
Grantor without the approval of any other Grantor and without affecting the
obligations of any other Grantor hereunder.
SECTION 8.05. Successors and Assigns. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Grantor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 8.06. Collateral Agent's Fees and Expenses; Indemnification. (a) To
the extent provided in Section 5.07 or 5.11 of the Credit Agreement, each
Grantor jointly and severally agrees to pay upon demand to the Collateral Agent
the amount of any and all reasonable expenses, including the reasonable fees,
disbursements and other charges of its counsel and of any experts or agents,
which the Collateral Agent may incur in connection with (i) the administration
of this Agreement (including the customary fees and charges of the Collateral
Agent for any audits conducted by it or on its behalf with respect to the
Borrowing Base and the assets included therein, subject to Section 5.11 of the
Credit Agreement), (ii) the custody or preservation of, or the sale of,
collection from or other realization upon any of the Collateral, (iii) the
exercise, enforcement or protection of any of the rights of the Collateral Agent
hereunder or (iv) the failure of any Grantor to perform or observe any of the
provisions hereof.
(b) Without limitation of its indemnification obligations under the other
Loan Documents, each Grantor jointly and severally agrees to indemnify the
Collateral Agent and the other Indemnitees against, and hold each of them
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable fees, disbursements and other charges of counsel,
incurred by or asserted against any of them arising out of, in any way connected
with, or as a result of, the execution, delivery or performance of this
Agreement or any claim, litigation, investigation or proceeding relating hereto
or to the Collateral, whether or not any Indemnitee is a party thereto, provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted solely from the gross negligence or willful misconduct
of such Indemnitee.
(c) If for any reason the indemnification set forth in paragraph (b) above
is unavailable to any Indemnitee or insufficient to hold it harmless, then each
Grantor shall contribute to the amount paid or payable to such Indemnitee as a
result of such loss, claim, damage, liability or expense in such proportion as
is appropriate to reflect not only the relative benefits received by such
Grantor, on the one hand, and such Indemnitee, on the other hand, but also the
relative fault of such Grantor, on the one hand, and such Indemnitee, on the
other hand, as well as any relevant equitable considerations. It is hereby
agreed that the relative benefits to all Grantors, on the one hand, and all
Indemnities, on the other hand, shall be deemed to be in the same proportion as
(i) the total value received or proposed to be received by the Borrower and the
other Grantors in connection with the Commitments (whether or not any Loans are
made) bears to (ii) the Fees. The indemnity, reimbursement and contribution
obligations of each Grantor under paragraph (b) above and under this paragraph
(c) shall be in addition to any liability which such Grantor may otherwise have
to an Indemnitee and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of such Grantor and any
Indemnitee.
(d) Promptly after receipt by an Indemnitee of notice of the commencement
of any Proceedings, such Indemnitee will, if a claim in respect thereof is to be
made against any Grantor, notify the Borrower in writing of the commencement
thereof; provided that (i) the omission so to notify the Borrower will not
relieve it or any other Grantor from any liability which it or such Grantor may
have hereunder except to
<PAGE>
25
the extent it has been materially prejudiced by such failure and (ii) the
omission so to notify the Borrower will not relieve it or any other Grantor from
any liability which it or such Grantor may have to an Indemnitee otherwise than
on account of the indemnity agreement provided for hereunder. In case any such
Proceedings are brought against any Indemnitee and it notifies the Borrower of
the commencement thereof, the Borrower will be entitled to participate therein,
and, to the extent that it may elect by written notice delivered to such
Indemnitee, to assume the defense thereof, with counsel reasonably satisfactory
to such Indemnitee, provided that, if the defendants in any such Proceedings
include both such Indemnitee and the Borrower or any other Grantor and such
Indemnitee shall have concluded that there may be legal defenses available to it
which are different from or additional to those available to the Borrower or
such Grantor, such Indemnitee shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the defense of such
Proceedings on behalf of such Indemnitee. Upon receipt of notice from the
Borrower to such Indemnitee of its election so to assume the defense of such
Proceedings and approval by such Indemnitee of counsel, neither the Borrower nor
any other Grantor shall be liable to such Indemnitee for expenses incurred by
such Indemnitee in connection with the defense thereof (other than reasonable
costs of investigation) unless (i) such Indemnitee shall have employed separate
counsel in connection with the assertion of legal defenses in accordance with
the proviso to the next preceding sentence (it being understood, however, that
neither the Borrower nor any other Grantor shall be liable for the reasonable
expenses of more than one separate counsel (plus no more than one separate local
counsel in any jurisdiction), approved by the Agents, representing the
Indemnitees who are parties to such Proceedings), (ii) the Borrower shall not
have employed counsel reasonably satisfactory to such Indemnitee to represent
such Indemnitee within a reasonable time after notice of commencement of the
Proceedings, (iii) the Borrower shall have authorized in writing the employment
of counsel for such Indemnitee or (iv) the use of counsel chosen by the Borrower
to represent such Indemnitee would present such counsel with a conflict of
interest; and except that, if clause (i) or (iii) is applicable, such liability
shall be only in respect of the counsel referred to in such clause (i) or (iii).
(e) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 8.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Collateral Agent or any Lender. All amounts due under this Section 8.06
shall be payable on written demand therefor.
SECTION 8.07. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 8.08. Waivers; Amendment. (a) No failure or delay of the Collateral
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent hereunder and of
the Collateral Agent, the Issuing Banks, the Administrative Agent and the
Lenders under the other Loan Documents are cumulative and are not exclusive of
any rights or remedies that they would otherwise have. No waiver of any
provisions of this Agreement or any other Loan Document or consent to any
departure by any Grantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to
<PAGE>
26
or demand on any Grantor in any case shall entitle such Grantor or any other
Grantor to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Collateral Agent and the Grantor or Grantors with respect to which
such waiver, amendment or modification is to apply, with the prior written
consent of the Required Lenders (except as otherwise provided in the Credit
Agreement).
SECTION 8.09. Waiver Of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.09.
SECTION 8.10. Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired thereby
(it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 8.11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract (subject to Section 8.04), and
shall become effective as provided in Section 8.04. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
SECTION 8.12. Headings. Article and Section headings used herein are for
the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 8.13. Jurisdiction; Consent to Service of Process. (a) Each Grantor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any
<PAGE>
other manner provided by law. Nothing in this Agreement shall affect any right
that the Collateral Agent, the Administrative Agent, the Issuing Banks or any
Lender may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against any Grantor or its properties in
the courts of any jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 8.01. Nothing in this Agreement
will affected the right of any party to this Agreement to serve process in any
other manner permitted by law.
SECTION 8.14. Termination. This Agreement and the Security Interest shall
terminate when all the Obligations have been indefeasibly paid in full, the
Lenders have no further commitment to lend, the L/C Exposure has been reduced to
zero and the Issuing Banks have no further commitment to issue Letters of Credit
under the Credit Agreement, at which time the Collateral Agent shall execute and
deliver to the Grantors, at the Grantors' expense, all Uniform Commercial Code
termination statements and similar documents which the Grantors shall reasonably
request to evidence such termination. Any execution and delivery of termination
statements or documents pursuant to this Section 8.14 shall be without recourse
to or warranty by the Collateral Agent. A Guarantor shall automatically be
released from its obligations hereunder and the Security Interest in the
Collateral of such Guarantor shall be automatically released in the event that
all the capital stock of such Guarantor shall be sold, transferred or otherwise
disposed of to a person that is not an Affiliate of the Borrower in accordance
with the terms of the Credit Agreement; provided that, to the extent required by
the Credit Agreement, the Required Lenders (or, if such Collateral constitutes
all or any substantial part of the Collateral, each of the Lenders) shall have
consented to such sale, transfer or other disposition and the terms of such
consent did not provide otherwise. On and after consummation of the
Securitization, the Security Interest in any of the Collateral transferred by a
Grantor as part of the Securitization shall be automatically released and the
provisions of this Agreement (including, in the case of Vehicles, Article VI)
relating to such Collateral shall no longer be applicable, provided that the
proviso to Section 6.01(d) of the Credit Agreement shall have been satisfied.
SECTION 8.15. Additional Grantors. Pursuant to Sections 5.15(d) and 5.16,
respectively, of the Credit Agreement, (a) if the Securitization is not
consummated by the Step-Up Date, then at any time thereafter, upon the request
of the Agents or the Required Lenders made prior to the consummation of the
Securitization, the Borrower is required to cause Leasco to enter into this
Agreement as a Guarantor and (b) each Domestic Subsidiary (and, to the extent no
adverse tax consequences to the Borrower or any Subsidiary would result, each
Foreign Subsidiary) that was not in existence or not such a Subsidiary on the
date of the Credit Agreement is required to enter into this Agreement as a
Guarantor upon becoming such a Subsidiary. Upon execution and delivery by the
Collateral Agent and Leasco or any such other Subsidiary of an instrument in the
form of Annex 3 hereto, such Subsidiary shall become a Grantor hereunder with
the same force and effect as if originally named as a Grantor herein. The
execution and delivery of any such instrument shall not require the consent of
any Grantor hereunder. The rights and
<PAGE>
28
obligations of each Grantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Grantor as a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
RYDER TRS, INC.,
by /s/ Wallace L. Rueckel
-----------------------------------
Name: Wallace L. Rueckel
Title: Senior Vice President
& Treasurer
EACH OF THE GUARANTORS LISTED ON
SCHEDULE I HERETO,
by /s/ Wallace L. Rueckel
-----------------------------------
Name: Wallace L. Rueckel
Title: Authorized Officer
CITICORP, U.S.A., INC., as
Documentation Agent and as Collateral
Agent,
by /s/ Shapleigh B. Smith
-----------------------------------
Name: Shapleigh B. Smith
Title: Authorized Officer
<PAGE>
Schedule I to the
Security Agreement
GUARANTOR ADDRESS
Ryder Truck Rental-One Way, 8699 NW 36th Street
Inc. Miami, FL 33166
Ryder Move Management, Inc. 8669 NW 36th Street
Miami, FL 33166
Ryder Relocation Services, 8669 NW 36th Street
Inc. Miami, FL 33166
The Move Shop, Inc. 8669 NW 36th Street
Miami, FL 33166
<PAGE>
Annex 3 to the
Security Agreement
SUPPLEMENT NO. [ ] dated as of [ ], to the
Security Agreement dated as of October 17, 1996, among RYDER TRS, INC.,
a Delaware corporation (the "Borrower"), each subsidiary of the
Borrower listed on Schedule I thereto (each such subsidiary,
individually, a "Guarantor" and, collectively, the "Guarantors"; the
Borrower and the Guarantors are referred to collectively herein as the
"Grantors") and CITICORP, U.S.A., INC., a Delaware corporation, as
documentation agent and as collateral agent (the "Collateral Agent")
for the Secured Parties (as defined herein).
A. Reference is made to the Credit Agreement dated as of October 17, 1996
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the lenders from time to time party thereto
(the "Lenders"), the Lenders identified therein as issuing banks (the "Issuing
Banks"), The Chase Manhattan Bank, as administrative agent for the Lenders, and
the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Security Agreement and the
Credit Agreement.
C. The Grantors have entered into the Security Agreement in order to induce
the Lenders to make Loans and the Issuing Banks to issue Letters of Credit.
Pursuant to Sections 5.15(d) and 5.16, respectively, of the Credit Agreement,
(a) if the Securitization is not consummated by the Step-Up Date, then at any
time thereafter, upon the request of the Agents or the Required Lenders made
prior to the consummation of the Securitization, the Borrower is required to
cause Leasco to enter into the Security Agreement as a Guarantor and (b) each
Domestic Subsidiary (and, to the extent no adverse tax consequences to the
Borrower or any Subsidiary would result, each Foreign Subsidiary) that was not
in existence or not such a Subsidiary on the date of the Credit Agreement is
required to enter into Security Agreement as a Guarantor upon becoming such a
Subsidiary. Section 8.15 of Security Agreement provides that Leasco or any such
other Subsidiaries may become Grantors under the Security Agreement by execution
and delivery of an instrument in the form of this Supplement. The undersigned
Subsidiary (the "New Grantor") is executing this Supplement in accordance with
such requirements of the Credit Agreement to become a Grantor under the Security
Agreement in order to induce the Lenders to make additional Loans and the
Issuing Banks to issue additional Letters of Credit and as consideration for
Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Grantor agree as follows:
SECTION 1. In accordance with Section 8.15 of the Security Agreement, the
New Grantor by its signature below becomes a Grantor under the Security
Agreement with the same force and effect as if originally named therein as a
Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of
the Security Agreement applicable to it as a Grantor thereunder and
(b) represents and warrants that the representations and warranties made by it
as a Grantor thereunder are true and correct on and as of the date hereof
[insert if Leasco is the New Grantor: , except that Vehicles owned by the New
Grantor and covered by the Vehicle Title Nominee Agreement are titled in the
name of the Seller]. In furtherance of the foregoing, the New Grantor, as
security for the payment and performance in full of the Obligations (as defined
in the Security Agreement), does hereby create and grant to the Collateral
Agent, its successors and assigns, for the benefit of the Secured Parties, their
successors and assigns, a security interest in and lien on all of the New
Grantor's right, title and interest in and to the Collateral (as defined in the
Security Agreement) of the New Grantor. Each reference to a "Grantor" in the
Security Agreement shall be deemed to include the New Grantor. The Security
Agreement is hereby incorporated herein by reference.
<PAGE>
2
SECTION 2. The New Grantor represents and warrants to the Collateral Agent
and the other Secured Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Grantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Grantor hereby represents and warrants that (a) set
forth on Schedule I attached hereto is a true and correct schedule of the
location of any and all Collateral of the New Grantor and (b) set forth under
its signature hereto, is the true and correct location of the chief executive
office of the New Grantor.
SECTION 5. Except as expressly supplemented hereby, the Security Agreement
shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 8. All communications and notices hereunder shall be in writing and
given as provided in Section 8.01 of the Security Agreement. All communications
and notices hereunder to the New Grantor shall be given to it at the address set
forth under its signature below.
<PAGE>
3
SECTION 9. The New Grantor agrees to reimburse the Collateral Agent for its
reasonable out-of-pocket expenses in connection with this Supplement, including
the reasonable fees, other charges and disbursements of counsel for the
Collateral Agent.
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.
[Name Of New Grantor],
by
-----------------------------------
Name:
Title:
--------------------------
Address:
--------------------------
--------------------------
CITICORP, U.S.A., INC., as
Documentation Agent and as Collateral
Agent,
by
-----------------------------------
Name:
Title:
<PAGE>
Annex 4 to the
Security Agreement
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that Citicorp, U.S.A., Inc., as
documentation agent and as collateral agent (the "Collateral Agent"), pursuant
to the Security Agreement dated as of October 17, 1996 (the "Security
Agreement"), among Ryder TRS, Inc. (the "Borrower"), each subsidiary of the
Borrower listed on Schedule I thereto and the Collateral Agent, does hereby
make, constitute and appoint [insert name of Grantor] (and each of its
Authorized Employees) as the Collateral Agent's true and lawful agent (and
attorney-in-fact) for the purpose of taking such actions as are necessary (a) to
note the Collateral Agent as the holder of a first lien on the certificates of
title for the Vehicles (and, pursuant to Section 6.03 of the Security Agreement,
to execute and file any related Uniform Commercial Code financing statements or
other documentation) and to cause the certificates of registration for the
Vehicles to be issued in the name of the Collateral Agent (if required pursuant
to subparagraph (c) of Section 6.03 of the Security Agreement) and (b) to
release the Collateral Agent's lien on any such certificate of title (and to
file termination statements or similar documents with respect to any such
related Uniform Commercial Code or other filings) in connection with a Vehicle
Sale permitted under the Credit Agreement and to permit any such related
certificate of registration to be reissued in the name of the acquiror under
such Vehicle Sale. Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Security Agreement.
This Power of Attorney is for the limited purposes specified herein, shall
not be constituted as a general power of attorney and is granted by Citicorp,
U.S.A., Inc. not in its individual capacity but only as Collateral Agent. The
powers and authority granted hereunder shall, unless sooner revoked by the
Collateral Agent in accordance with Section 6.05(b) of the Security Agreement or
following the resignation or removal of the Collateral Agent under the Credit
Agreement, cease upon the termination of the Security Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Power of
Attorney as of this ___ day of _______, ____.
CITICORP, U.S.A., INC., as Documentation Agent
and as Collateral Agent,
by
-------------------------------------------
Name:
Title:
STATE OF NEW YORK )
:
COUNTY OF NEW YORK )
Subscribed and sworn before me, a notary public, in and for said county and
state this _____ day of __________, ____.
-------------------------------------------
Notary Public
My Commission Expires:
<PAGE>
Annex 5 to the
Security Agreement
CONSENT AND AGREEMENT
Ryder Truck Rental, Inc., a Florida corporation ("Ryder") hereby
acknowledges notice of, and consents to, the assignment of the Seller Agreements
(as defined below) pursuant to the Security Agreement dated as of October 17,
1996 (the "Security Agreement"), among Ryder TRS, Inc. a Delaware corporation
(the "Borrower"), the subsidiaries of the Borrower parties thereto and Citicorp,
U.S.A., Inc., as documentation agent and as collateral agent (the "Collateral
Agent") for the lenders parties to the Credit Agreement (as defined in the
Security Agreement), and each party hereto hereby agrees that:
(a) The Collateral Agent shall be entitled to exercise any and all
rights and remedies of the Borrower under the Seller Agreements and perform
for the Borrower under the Seller Agreements in accordance with the terms
of the Security Agreement, and Ryder shall comply in all respects with such
exercise. Notwithstanding anything to the contrary contained herein, such
rights and remedies of the Collateral Agent shall be subject to the
conditions, defenses, agreements or procedures, if any, that would be
applicable if such rights and remedies were exercised by the Borrower and
shall be no greater than the rights and remedies of the Borrower under the
Seller Agreements.
(b) The Collateral Agent shall be entitled to exercise any and all cure
rights of the Borrower under the Seller Agreements, and Ryder shall comply
in all respects with such exercise. Notwithstanding anything to the
contrary contained herein, such rights and remedies of the Collateral Agent
shall be subject to the conditions, defenses, agreements or procedures, if
any, that would be applicable if such rights and remedies were exercised by
the Borrower and shall be no greater than the rights and remedies of the
Borrower under the Seller Agreement.
(c) In the event that (i) a receiver, trustee, custodian, sequestrator,
conservator or similar official or the Borrower as debtor-in-possession (a
"Trustee") shall have been appointed for the Borrower or for a substantial
part of the property or assets of the Borrower in connection with the
occurrence of any of the events described in clause (g) or (h) of Article
VII of the Credit Agreement and (ii) the Trustee rejects any Seller
Agreement, then, upon the request of the Collateral Agent, Ryder will as
promptly as practicable enter into an agreement with the Collateral Agent
or its nominee substantially identical to the Seller Agreement so rejected;
provided, however, that as a condition precedent to entering into any such
new agreement, Ryder may require (A) reasonable modifications to the terms
of such Seller Agreement to the extent necessary to assure that Ryder will
suffer no damage or harm that it would not have suffered had the Borrower
and Ryder continued as the only parties under the Seller Agreements, (B) an
opinion of counsel reasonably acceptable to Ryder with respect to due
organization, due authorization, enforceability and non-contravention (in
each case as to the Collateral Agent or such nominee or such new agreement,
as applicable), such opinion to be in form and substance reasonably
acceptable to Ryder, and (C) the payment of Ryder's reasonable out-of-
pocket fees and expenses arising therefrom, including, without limitation,
those relating to the preparation, review and negotiation of such new
agreement.
The term "Seller Agreements" shall mean the Asset and Stock Purchase
Agreement dated as of September 19, 1996 (the "Purchase Agreement"), by and
between Ryder and the Borrower, the Maintenance Agreement, the Administrative
Services Agreement, the MIS Support Agreement, the Ryder Dealer Agreement, the
Used Truck Sales Agreement, the Trademark License Agreement, the Software
License Agreement, the Copyright License Agreement, the Patent License
Agreement, the Shared Facility Licenses, the Assumption Agreement and the Office
Sublease Agreement (each such term as defined in the Purchase Agreement) and any
<PAGE>
2
other agreement, instrument or document entered into or delivered between or
among the Borrower and the undersigned or any of its affiliates in connection
with the transactions effected pursuant to the Purchase Agreement, as each such
agreement, instrument or document may be amended, modified or supplemented from
time to time in accordance with the terms thereof.
This Consent and Agreement shall be binding upon Ryder and its successors
and assigns, and shall inure to the benefit of the Collateral Agent, the lenders
parties to the Credit Agreement and their respective successors and assigns.
THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
This Consent and Agreement may be executed in any number of counterparts,
and by one or more of the parties on separate counterparts, each of which when
so executed shall be deemed an original and such counterparts together shall
constitute and be one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly acknowledged, accepted and
executed this Consent and Agreement as of this 17th day of October, 1996.
RYDER TRUCK RENTAL, INC.,
by
----------------------------------
Name:
Title:
CITICORP, U.S.A., INC.,
as documentation agent and
as collateral agent,
by
----------------------------------
Name:
Title:
RYDER TRS, INC.,
by
----------------------------------
Name:
Title:
<PAGE>
EXHIBIT 4.4
EXECUTION COPY
GUARANTEE AGREEMENT dated as of October 17, 1996, among each
of the subsidiaries listed on Schedule I hereto (each such
subsidiary, individually, a "Guarantor" and, collectively, the
"Guarantors") of RYDER TRS, INC., a Delaware corporation (the
"Borrower"), and CITICORP, U.S.A., INC., a Delaware corporation,
as documentation agent and as collateral agent (the "Collateral
Agent") for the Secured Parties (as defined in the Credit
Agreement referred to below).
Reference is made to the Credit Agreement dated as of October 17, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the lenders from time to time party thereto
(the "Lenders"), the Lenders identified therein as issuing banks (the "Issuing
Banks"), The Chase Manhattan Bank, as administrative agent for the Lenders, and
the Collateral Agent. Capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Banks have agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Guarantors is a wholly owned Subsidiary of the
Borrower and acknowledges that it will derive substantial benefit from the
making of the Loans by the Lenders, and the issuance of the Letters of Credit by
the Issuing Banks. The obligations of the Lenders to make Loans and of the
Issuing Banks to issue Letters of Credit are conditioned on, among other things,
the execution and delivery by the Guarantors of a Guarantee Agreement in the
form hereof. As consideration therefor and in order to induce the Lenders to
make Loans and the Issuing Banks to issue Letters of Credit, the Guarantors are
willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Guarantor unconditionally guarantees, jointly
with the other Guarantors and severally, as a primary obligor and not merely as
a surety, (a) the due and punctual payment of (i) the principal of and premium,
if any, and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral, and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Loan Parties to the Secured Parties under
the Credit Agreement and the other Loan Documents, (b) the due and punctual
payment and performance of all covenants, agreements, obligations and
liabilities of the Loan Parties under or pursuant to the Credit Agreement and
the other Loan Documents and (c) the due and punctual payment and performance of
all obligations of the Borrower, monetary or otherwise, under each Interest Rate
Protection Agreement entered into with a counterparty that was a Lender (or an
Affiliate of a Lender) at the time such Interest Rate Protection Agreement was
entered into (all the monetary and other obligations referred to in the
preceding clauses (a) through (c) being collectively called the "Obligations").
Each Guarantor further agrees that the Obligations may be extended or renewed,
in whole or in part, without notice to or further assent from it,
<PAGE>
and that it remain bound upon its guarantee notwithstanding any extension or
renewal of any Obligation.
Anything contained in this Agreement to the contrary notwithstanding, the
obligations of each Guarantor hereunder shall be limited to a maximum aggregate
amount equal to the greatest amount that would not render such Guarantor's
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
provisions of applicable state law (collectively, the "Fraudulent Transfer
Laws"), in each case after giving effect to all other liabilities of such
Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (a) in respect of intercompany indebtedness to the Borrower or
Affiliates of the Borrower to the extent that such indebtedness would be
discharged in an amount equal to the amount paid by such Guarantor hereunder and
(b) under any Guarantee of senior unsecured indebtedness or Indebtedness
subordinated in right of payment to the Obligations which Guarantee contains a
limitation as to maximum amount similar to that set forth in this paragraph,
pursuant to which the liability of such Guarantor hereunder is included in the
liabilities taken into account in determining such maximum amount) and after
giving effect as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
contribution, reimbursement, indemnity or similar rights of such Guarantor
pursuant to (i) applicable law or (ii) any agreement providing for an equitable
allocation among such Guarantor and other Affiliates of the Borrower of
obligations arising under Guarantees by such parties (including the Indemnity,
Subrogation and Contribution Agreement).
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, each Guarantor waives presentment to, demand of payment from and
protest to the Borrower of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. To the
fullest extent permitted by applicable law, the obligations of each Guarantor
hereunder shall not be affected by (a) the failure of the Collateral Agent or
any other Secured Party to assert any claim or demand or to enforce or exercise
any right or remedy against the Borrower or any other Guarantor under the
provisions of the Credit Agreement, any other Loan Document or otherwise, (b)
any rescission, waiver, amendment or modification of, or any release from any of
the terms or provisions of this Agreement, any other Loan Document, any
Guarantee or any other agreement, including with respect to any other Guarantor
under this Agreement or (c) the failure to perfect any security interest in, or
the release of, any of the security held by or on behalf of the Collateral Agent
or any other Secured Party.
SECTION 3. Security. Each of the Guarantors authorizes the Collateral
Agent and each of the other Secured Parties, to (a) take and hold security for
the payment of this Guarantee and the Obligations and exchange, enforce, waive
and release any such security, (b) apply such security and direct the order or
manner of sale thereof as they in their sole discretion may determine and (c)
release or substitute any one or more endorsees, other guarantors of other
obligors.
SECTION 4. Guarantee of Payment. Each Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Collateral Agent or
any other Secured Party to any of the security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
the Collateral Agent or any other Secured Party in favor of the Borrower or any
other person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations of
each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other
<PAGE>
than the indefeasible payment in full in cash of the Obligations), including any
claim of waiver, release, surrender, alteration or compromise of any of the
Obligations, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the
Collateral Agent or any other Secured Party to assert any claim or demand or to
enforce any remedy under the Credit Agreement, any other Loan Document or any
other agreement, by any waiver or modification of any provision of any thereof,
by any default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or omission that may or might in any manner or
to any extent vary the risk of any Guarantor or that would otherwise operate as
a discharge of each Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of all the Obligations).
SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted
by applicable law, each of the Guarantors waives any defense based on or arising
out of any defense of the Borrower or the unenforceability of the Obligations or
any part thereof from any cause, or the cessation from any cause of the
liability of the Borrower, other than the final and indefeasible payment in full
in cash of the Obligations. The Collateral Agent and the other Secured Parties
may, at their election, foreclose on any security held by one or more of them by
one or more judicial or nonjudicial sales, accept an assignment of any such
security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with the Borrower or any other
guarantor or exercise any other right or remedy available to them against the
Borrower or any other guarantor, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Obligations have
been fully, finally and indefeasibly paid in cash. Pursuant to applicable law,
each of the Guarantors waives any defense arising out of any such election even
though such election operates, pursuant to applicable law, to impair or to
extinguish any right of reimbursement or subrogation or other right or remedy of
such Guarantor against the Borrower or any other Guarantor or guarantor, as the
case may be, or any security.
SECTION 7. Agreement to Pay; Subordination. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against any Guarantor by virtue
hereof, upon the failure of the Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral Agent
or such other Secured Party as designated thereby in cash the amount of such
unpaid Obligations. Upon payment by any Guarantor of any sums to the Collateral
Agent or any Secured Party as provided above, all rights of such Guarantor
against the Borrower arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subordinate and junior in right of payment to the prior indefeasible payment in
full in cash of all the Obligations. In addition, any indebtedness of the
Borrower now or hereafter held by any Guarantor is hereby subordinated in right
of payment to the prior payment in full of the Obligations. If any amount shall
erroneously be paid to any Guarantor on account of (i) such subrogation,
contribution, reimbursement, indemnity or similar right or (ii) any such
indebtedness of the Borrower, such amount shall be held in trust for the benefit
of the Secured Parties and shall forthwith be paid to the Collateral Agent to be
credited against the payment of the Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
SECTION 8. Information. Each of the Guarantors assumes all responsibility
for being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Obligations and the nature, scope and extent of the risks that
<PAGE>
such Guarantor assumes and incurs hereunder, and agrees that none of the
Collateral Agent or the other Secured Parties will have any duty to advise any
of the Guarantors of information known to it or any of them regarding such
circumstances or risks.
SECTION 9. Representations and Warranties. Each of the Guarantors
represents and warrants as to itself that all representations and warranties
relating to it contained in the Credit Agreement are true and correct.
SECTION 10. Termination. The Guarantees made hereunder (a) shall
terminate when all the Obligations have been indefeasibly paid in full and the
Lenders have no further commitment to lend under the Credit Agreement, the L/C
Exposure has been reduced to zero and the Issuing Banks have no further
obligation to issue Letters of Credit under the Credit Agreement and (b) shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by any Secured Party or any Guarantor upon the bankruptcy or
reorganization of the Borrower, any Guarantor or otherwise.
SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Guarantors that are contained in
this Agreement shall bind and inure to the benefit of each party hereto and
their respective successors and assigns. This Agreement shall become effective
as to any Guarantor when a counterpart hereof executed on behalf of such
Guarantor shall have been delivered to the Collateral Agent, and a counterpart
hereof shall have been executed on behalf of the Collateral Agent, and
thereafter shall be binding upon such Guarantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Guarantor, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Guarantor shall have the right
to assign its rights or obligations hereunder or any interest herein (and any
such attempted assignment shall be void). If all of the capital stock of a
Guarantor is sold, transferred or otherwise disposed of pursuant to a
transaction permitted by Section 6.05 of the Credit Agreement, such Guarantor
shall be released from its obligations under this Agreement without further
action. This Agreement shall be construed as a separate agreement with respect
to each Guarantor and may be amended, modified, supplemented, waived or released
with respect to any Guarantor without the approval of any other Guarantor and
without affecting the obligations of any other Guarantor hereunder.
SECTION 12. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by any
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Guarantor in any case shall entitle such Guarantor to
any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Guarantors with respect to which such waiver,
<PAGE>
amendment or modification relates and the Collateral Agent, with the prior
written consent of the Required Lenders (except as otherwise provided in the
Credit Agreement).
SECTION 13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 14. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to each Guarantor shall be given to it at
its address set forth in Schedule I.
SECTION 15. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made in writing by the Guarantors
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Collateral Agent and the other
Secured Parties and shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit by the Issuing Banks regardless of any
investigation made by the Secured Parties or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on
any Loan or any other fee or amount payable under this Agreement or any other
Loan Document is outstanding and unpaid or the L/C Exposure does not equal zero
and as long as the Commitments and the L/C Commitment have not been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 16. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 11. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 17. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 18. Jurisdiction; Consent to Service of Process. (a) Each
Guarantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
<PAGE>
Nothing in this Agreement shall affect any right that the Collateral Agent or
any other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Guarantor or
its properties in the courts of any jurisdiction.
(b) Each Guarantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 14. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 19. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
SECTION 20. Additional Guarantors. Pursuant to Sections 5.15(d) and 5.16,
respectively, of the Credit Agreement, (a) if the Securitization is not
consummated by the Step-Up Date, then at any time thereafter, upon the request
of the Agents or the Required Lenders made prior to the consummation of the
Securitization, the Borrower is required to cause Leasco to enter into this
Agreement as a Guarantor and (b) each Domestic Subsidiary (and, to the extent
that no adverse tax consequences to the Borrower or any Subsidiary would result,
Foreign Subsidiary) that was not in existence or not such a Subsidiary on the
date of the Credit Agreement is required to enter into this Agreement as a
Guarantor upon becoming such a Subsidiary. Upon execution and delivery after
the date hereof by the Collateral Agent and Leasco or any such other Subsidiary
of an instrument in the form of Annex 1, such Subsidiary shall become a
Guarantor hereunder with the same force and effect as if originally named as a
Guarantor herein. The execution and delivery of any instrument adding an
additional Guarantor as a party to this Agreement shall not require the consent
of any other Guarantor hereunder. The rights and obligations of each Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Guarantor as a party to this Agreement.
SECTION 21. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Secured Party is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other Indebtedness at any time owing by such Secured Party to
or for the credit or the account of any Guarantor against any or all the
obligations of such Guarantor now or hereafter existing under this Agreement and
the other Loan Documents held by such Secured Party, irrespective of whether
<PAGE>
7
or not such Secured Party shall have made any demand under this Agreement or any
other Loan Document and although such obligations may be unmatured. The rights
of each Secured Party under this Section 21 are in addition to other rights and
remedies (including other rights of setoff) which such Secured Party may have.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE I HERETO,
by
/s/ Wallace L. Rueckel
---------------------------------------
Name: Wallace L. Rueckel
Title: Authorized Officer
CITICORP, U.S.A., INC., as Documentation
Agent and as Collateral Agent,
by
/s/ Shapleigh B. Smith
--------------------------------------
Name: Shapleigh B. Smith
Title: Vice President
<PAGE>
Schedule I to the
Guarantee Agreement
GUARANTORS ADDRESS
Ryder Truck Rental-One Way, 8699 NW 36th Street
Inc. Miami, FL 33166
Ryder Move Management, Inc. 8669 NW 36th Street
Miami, FL 33136
Ryder Relocation Services, 8669 NW 36th Street
Inc. Miami, FL 33136
The Move Shop, Inc. 8669 NW 36th Street
Miami, FL 33136
<PAGE>
Annex 1 to the
Guarantee Agreement
SUPPLEMENT NO. [ ] dated as of [ ], to the
Guarantee Agreement dated as of October 17, 1996, among
each of the subsidiaries listed on Schedule I thereto
(each such subsidiary, individually, a "Guarantor" and,
collectively, the "Guarantors") of RYDER TRS, INC., a
Delaware corporation (the "Borrower"), and CITICORP,
U.S.A., INC., a Delaware corporation, as documentation
agent and as collateral agent (the "Collateral Agent") for
the Secured Parties (as defined in the Credit Agreement
referred to below).
A. Reference is made to the Credit Agreement dated as of October 17,
1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the lenders from time to time party
thereto (the "Lenders"), the Lenders identified therein as issuing banks (the
"Issuing Banks"), The Chase Manhattan Bank, as administrative agent for the
Lenders, and the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Guarantee Agreement and
the Credit Agreement.
C. The Guarantors have entered into the Guarantee Agreement in order
to induce the Lenders to make Loans and the Issuing Banks to issue Letters of
Credit. Pursuant to Sections 5.15(d) and 5.16, respectively, of the Credit
Agreement, (a) if the Securitization is not consummated by the Step-Up Date,
then at any time thereafter, upon the request of the Agents or the Required
Lenders made prior to the consummation of the Securitization, the Borrower is
required to cause Leasco to enter into the Guarantee Agreement as a Guarantor
and (b) each Domestic Subsidiary (and, to the extent that no adverse tax
consequences to the Borrower or any Subsidiary would result, Foreign Subsidiary)
that was not in existence or not such a Subsidiary on the date of the Credit
Agreement is required to enter into the Guarantee Agreement as a Guarantor upon
becoming such a Subsidiary. Section 20 of the Guarantee Agreement provides that
Leasco or any such other Subsidiaries may become Guarantors under the Guarantee
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary (the "New Guarantor") is executing this
Supplement in accordance with such requirements of the Credit Agreement to
become a Guarantor under the Guarantee Agreement in order to induce the Lenders
to make additional Loans and the Issuing Banks to issue additional Letters of
Credit and as consideration for Loans previously made and Letters of Credit
previously issued.
Accordingly, the Collateral Agent and the New Guarantor agree as
follows:
SECTION 1. In accordance with Section 20 of the Guarantee Agreement,
the New Guarantor by its signature below becomes a Guarantor under the Guarantee
Agreement with the same force and effect as if originally named therein as a
Guarantor and the New Guarantor hereby (a) agrees to all the terms and
provisions of the Guarantee Agreement applicable to it as a Guarantor thereunder
and (b) represents and warrants that the representations and warranties made by
it as a Guarantor thereunder are true and correct on and as of the date hereof.
Each reference to a "Guarantor" in the Guarantee Agreement shall be deemed to
include the New Guarantor. The Guarantee Agreement is hereby incorporated herein
by reference.
SECTION 2. The New Guarantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
<PAGE>
SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Guarantor and the Collateral
Agent. Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Guarantee
Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Guarantee Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision hereof in a particular jurisdiction shall not in and of itself affect
the validity of such provision in any other jurisdiction). The parties hereto
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7. All communications and notices hereunder shall be in
writing and given as provided in Section 14 of the Guarantee Agreement. All
communications and notices hereunder to the New Guarantor shall be given to it
at the address set forth under its signature below, with a copy to the Borrower.
<PAGE>
SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent
for its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, disbursements and other charges of counsel for
the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have
duly executed this Supplement to the Guarantee Agreement as of the day and year
first above written.
[Name Of New Guarantor],
by
--------------------------------------
Name:
Title:
Address:
------------------------------
------------------------------
------------------------------
CITICORP, U.S.A., INC., as Documentation
Agent and as Collateral Agent,
by
--------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 4.5
EXECUTION COPY
PLEDGE AGREEMENT dated as of October 17,
1996, among RYDER TRS, INC., a Delaware corporation
(the "Borrower"), each Subsidiary of the Borrower
listed on Schedule I hereto (each such Subsidiary,
individually, a "Subsidiary Pledgor" and,
collectively, the "Subsidiary Pledgors"; the Borrower
and the Subsidiary Pledgors are referred to
collectively herein as the "Pledgors") and CITICORP,
U.S.A., INC., a Delaware corporation, as
documentation agent and as collateral agent (the
"Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of October 17,
1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the lenders from time to time party
thereto (the "Lenders"), the Lenders identified therein as issuing banks (the
"Issuing Banks"), The Chase Manhattan Bank, as administrative agent for the
Lenders, and the Collateral Agent, and (b) the Guarantee Agreement dated as of
October 17, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Guarantee Agreement"), among the Guarantors and the Collateral Agent.
Capitalized terms used herein and not defined herein shall have meanings
assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower and the Issuing
Banks have agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Guarantors has agreed to guarantee, among other
things, all the obligations of the Borrower under the Credit Agreement. The
obligations of the Lenders to make Loans and of the Issuing Banks to issue
Letters of Credit are conditioned upon, among other things, the execution and
delivery by the Pledgors of a Pledge Agreement in the form hereof to secure (a)
the due and punctual payment by the Borrower of (i) the principal of and
premium, if any, and interest (including interest accruing during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding) on the Loans,
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (ii) each payment required to be made by the
Borrower under the Credit Agreement in respect of any Letter of Credit, when and
as due, including payments in respect of reimbursement of disbursements,
interest thereon and obligations to provide cash collateral, and (iii) all other
monetary obligations, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Borrower to the Secured Parties under the
Credit Agreement and the other Loan Documents, (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Borrower under or pursuant to the Credit Agreement and the other Loan Documents,
(c) the due and punctual payment and performance of all the covenants,
agreements, obligations and liabilities of each Guarantor under or pursuant to
the Guarantee Agreement and the other Loan Documents and (d) the due and
punctual payment and performance of all obligations of the Borrower under each
Interest Rate Protection Agreement entered into with any counterparty that was a
Lender (or an Affiliate of a Lender) at the time such Interest Rate Protection
Agreement was entered into (all the monetary and other obligations referred to
in the preceding clauses (a) through (d) being referred to collectively as the
"Obligations").
<PAGE>
2
Accordingly, the Pledgors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
SECTION 1. Pledge. As security for the payment and performance, as the
case may be, in full of the Obligations, each Pledgor hereby transfers, grants,
bargains, sells, conveys, hypothecates, pledges, sets over and delivers unto the
Collateral Agent, its successors and assigns, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest in all of such Pledgor's right, title and
interest in, to and under (a) the shares of capital stock owned by it and listed
on Schedule II hereto and any shares of capital stock of any Subsidiary obtained
in the future by such Pledgor and the certificates representing all such shares
(the "Pledged Stock"); provided that the Pledged Stock shall not include (i)
more than 65% of the issued and outstanding shares of stock of any Foreign
Subsidiary if, and to the extent that, the pledge of a greater percentage would
have adverse tax consequences for the Borrower or any Subsidiaries or (ii) to
the extent that applicable law requires that a Subsidiary of the Pledgor issue
directors' qualifying shares, such qualifying shares; (b)(i) the debt securities
listed opposite the name of such Pledgor on Schedule II hereto, (ii) any debt
securities in the future issued to the Pledgor and (iii) the promissory notes
and any other instruments evidencing such debt securities (the "Pledged Debt
Securities"); (c) all other property that may be delivered to and held by the
Collateral Agent pursuant to the terms hereof; (d) subject to Section 5, all
payments of principal or interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed, in
respect of, in exchange for or upon the conversion of the securities referred to
in clauses (a) and (b) above; (e) subject to Section 5, all rights and
privileges of such Pledgor with respect to the securities and other property
referred to in clauses (a), (b), (c) and (d) above; and (f) all proceeds of any
of the foregoing (the items referred to in clauses (a) through (f) above being
collectively referred to as the "Collateral"). Upon delivery to the Collateral
Agent, (a) any stock certificates, notes or other securities now or hereafter
included in the Collateral (the "Pledged Securities") shall be accompanied by
stock powers duly executed in blank or other instruments of transfer
satisfactory to the Collateral Agent and by such other instruments and documents
as the Collateral Agent may reasonably request and (b) all other property
comprising part of the Collateral shall be accompanied by proper instruments of
assignment duly executed by the applicable Pledgor and such other instruments or
documents as the Collateral Agent may reasonably request. Each delivery of
Pledged Securities shall be accompanied by a schedule describing the securities
theretofore and then being pledged hereunder, which schedule shall be attached
hereto as Schedule II and made a part hereof. Each schedule so delivered shall
supersede any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for the ratable benefit
of the Secured Parties, forever; subject, however, to the terms, covenants and
conditions hereinafter set forth.
SECTION 2. Delivery of the Collateral. (a) Each Pledgor agrees promptly
to deliver or cause to be delivered to the Collateral Agent any and all Pledged
Securities, and any and all certificates or other instruments or documents
representing the Collateral.
(b) Each Pledgor will cause any Indebtedness for borrowed money owed to
such Pledgor by any person to be evidenced by a duly executed promissory note
that is pledged and delivered to the Collateral Agent pursuant to the terms
thereof.
<PAGE>
3
SECTION 3. Representations, Warranties and Covenants. Each Pledgor
hereby represents, warrants and covenants, as to itself and the Collateral
pledged by it hereunder, to and with the Collateral Agent that:
(a) the Pledged Stock represents that percentage as set forth
on Schedule II of the issued and outstanding shares of each class of
the capital stock of the issuer with respect thereto;
(b) except for the security interest granted hereunder, the
Pledgor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on
Schedule II, (ii) holds the same free and clear of all Liens, (iii)
will make no assignment, pledge, hypothecation or transfer of, or
create or permit to exist any security interest in or other Lien on,
the Collateral, other than pursuant hereto, and (iv) subject to Section
5, will cause any and all Collateral, whether for value paid by the
Pledgor or otherwise, to be forthwith deposited with the Collateral
Agent and pledged or assigned hereunder;
(c) the Pledgor (i) has the power and authority to pledge the
Collateral in the manner hereby done or contemplated and (ii) will
defend its title or interest thereto or therein against any and all
Liens (other than the Lien created by this Agreement), however arising,
of all persons whomsoever;
(d) no consent of any other person (including stockholders or
creditors of any Pledgor) and no consent or approval of any
Governmental Authority or any securities exchange was or is necessary
to the validity of the pledge effected hereby;
(e) by virtue of the execution and delivery by the Pledgors of
this Agreement, when the Pledged Securities, certificates or other
documents representing or evidencing the Collateral are delivered to
the Collateral Agent in accordance with this Agreement, the Collateral
Agent will obtain a valid and perfected first lien upon and security
interest in such Pledged Securities as security for the payment and
performance of the Obligations;
(f) the pledge effected hereby is effective to vest in the
Collateral Agent, on behalf of the Secured Parties, the rights of the
Collateral Agent in the Collateral as set forth herein;
(g) all of the Pledged Stock has been duly authorized and
validly issued and is fully paid and nonassessable;
(h) all information set forth herein relating to the Pledged
Stock is accurate and complete in all material respects as of the date
hereof; and
(i) the pledge of the Pledged Stock pursuant to this Agreement
does not violate Regulation G, T, U or X of the Federal Reserve Board
or any successor thereto as of the date hereof.
SECTION 4. Registration in Nominee Name; Denominations. The Collateral
Agent, on behalf of the Secured Parties, shall have the right (in its sole and
absolute discretion) to hold the Pledged Securities in its own name as pledgee,
the name of its nominee (as pledgee or as sub-agent) or the name of the
Pledgors, endorsed or assigned in blank or in favor of the Collateral Agent.
Each Pledgor will promptly give to the Collateral Agent copies of any notices or
other communications received by it with
<PAGE>
4
respect to Pledged Securities registered in the name of such Pledgor. The
Collateral Agent shall at all times have the right to exchange the certificates
representing Pledged Securities for certificates of smaller or larger
denominations for any purpose consistent with this Agreement.
SECTION 5. Voting Rights; Dividends and Interest, etc. (a) Unless and
until an Event of Default shall have occurred and be continuing:
(i) Each Pledgor shall be entitled to exercise any and all
voting and/or other consensual rights and powers inuring to an owner of
Pledged Securities or any part thereof for any purpose consistent with
the terms of this Agreement, the Credit Agreement and the other Loan
Documents; provided, however, that such Pledgor will not be entitled to
exercise any such right if the result thereof could materially and
adversely affect the rights of a holder of the Pledged Securities or
the rights and remedies of any of the Secured Parties under this
Agreement or the Credit Agreement or any other Loan Document or the
ability of the Secured Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to each
Pledgor, or cause to be executed and delivered to each Pledgor, all
such proxies, powers of attorney and other instruments as such Pledgor
may reasonably request for the purpose of enabling such Pledgor to
exercise the voting and/or consensual rights and powers it is entitled
to exercise pursuant to subparagraph (i) above and to receive the cash
dividends it is entitled to receive pursuant to subparagraph (iii)
below.
(iii) Each Pledgor shall be entitled to receive and retain any
and all cash dividends, interest and principal paid on the Pledged
Securities to the extent and only to the extent that such cash
dividends, interest and principal are permitted by, and otherwise paid
in accordance with, the terms and conditions of the Credit Agreement,
the other Loan Documents and applicable laws. All noncash dividends,
interest and principal, and all dividends, interest and principal paid
or payable in cash or otherwise in connection with a partial or total
liquidation or dissolution, return of capital, capital surplus or
paid-in surplus, and all other distributions (other than distributions
referred to in the preceding sentence) made on or in respect of the
Pledged Securities, whether paid or payable in cash or otherwise,
whether resulting from a subdivision, combination or reclassification
of the outstanding capital stock of the issuer of any Pledged
Securities or received in exchange for Pledged Securities or any part
thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such
issuer may be a party or otherwise, shall be and become part of the
Collateral, and, if received by any Pledgor, shall not be commingled by
such Pledgor with any of its other funds or property but shall be held
separate and apart therefrom, shall be held in trust for the benefit of
the Collateral Agent and shall be forthwith delivered to the Collateral
Agent in the same form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event of
Default, all rights of any Pledgor to dividends, interest or principal that such
Pledgor is authorized to receive pursuant to paragraph (a)(iii) above shall
cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall have the sole and exclusive right and authority to receive
and retain such dividends, interest or principal. All dividends, interest or
principal received by any Pledgor contrary to the provisions of this Section 5
shall be held in trust for the benefit of the Collateral Agent, shall be
segregated from other property or funds of such Pledgor and shall be forthwith
delivered to the Collateral Agent upon demand in the same form as so received
(with any necessary endorsement). Any and all money and other property
<PAGE>
5
paid over to or received by the Collateral Agent pursuant to the provisions of
this paragraph (b) shall be retained by the Collateral Agent in an account to be
established by the Collateral Agent upon receipt of such money or other property
and shall be applied in accordance with the provisions of Section 7. After all
Events of Default have been cured or waived, the Collateral Agent shall, within
five Business Days after all such Events of Default have been cured or waived,
repay to each Pledgor all cash dividends, interest or principal (without
interest), that such Pledgor would otherwise be permitted to retain pursuant to
the terms of paragraph (a)(iii) above and which remain in such account.
(c) Upon the occurrence and during the continuance of an Event of
Default, all rights of any Pledgor to exercise the voting and consensual rights
and powers it is entitled to exercise pursuant to paragraph (a)(i) of this
Section 5, and the obligations of the Collateral Agent under paragraph (a)(ii)
of this Section 5, shall cease, and all such rights shall thereupon become
vested in the Collateral Agent, which shall have the sole and exclusive right
and authority to exercise such voting and consensual rights and powers, provided
that, unless otherwise directed by the Required Lenders, the Collateral Agent
shall have the right from time to time following and during the continuance of
an Event of Default to permit the Pledgors to exercise such rights. After all
Events of Default have been cured or waived, such Pledgor will have the right to
exercise the voting and consensual rights and powers that it would otherwise be
entitled to exercise pursuant to the terms of paragraph (a)(i) above.
SECTION 6. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, subject to applicable regulatory and legal
requirements, the Collateral Agent may sell the Collateral, or any part thereof,
at public or private sale or at any broker's board or on any securities
exchange, for cash, upon credit or for future delivery as the Collateral Agent
shall deem appropriate. The Collateral Agent shall be authorized at any such
sale (if it deems it advisable to do so) to restrict the prospective bidders or
purchasers to persons who will represent and agree that they are purchasing the
Collateral for their own account for investment and not with a view to the
distribution or sale thereof, and upon consummation of any such sale the
Collateral Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at
any such sale shall hold the property sold absolutely free from any claim or
right on the part of any Pledgor, and, to the extent permitted by applicable
law, the Pledgors hereby waive all rights of redemption, stay, valuation and
appraisal any Pledgor now has or may at any time in the future have under any
rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall give a Pledgor 10 days' prior written notice
(which each Pledgor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions) of the Collateral Agent's intention to
make any sale of such Pledgor's Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale at
a broker's board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Collateral Agent may fix and state in the
notice of such sale. At any such sale, the Collateral, or portion thereof, to be
sold may be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may (in its sole and absolute discretion) determine. The
Collateral Agent shall not be obligated to make any sale of any Collateral if it
shall determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In
<PAGE>
6
case any sale of all or any part of the Collateral is made on credit or for
future delivery, the Collateral so sold may be retained by the Collateral Agent
until the sale price is paid in full by the purchaser or purchasers thereof, but
the Collateral Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like notice. At any
public (or, to the extent permitted by applicable law, private) sale made
pursuant to this Section 6, any Secured Party may bid for or purchase, free from
any right of redemption, stay or appraisal on the part of any Pledgor (all said
rights being also hereby waived and released), the Collateral or any part
thereof offered for sale and may make payment on account thereof by using any
claim then due and payable to it from such Pledgor as a credit against the
purchase price, and it may, upon compliance with the terms of sale, hold, retain
and dispose of such property without further accountability to such Pledgor
therefor. For purposes hereof, (a) a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof, (b) the
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and (c) such Pledgor shall not be entitled to the return of the Collateral or
any portion thereof subject thereto, notwithstanding the fact that after the
Collateral Agent shall have entered into such an agreement all Events of Default
shall have been remedied and the Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the Collateral Agent may
proceed by a suit or suits at law or in equity to foreclose upon the Collateral
and to sell the Collateral or any portion thereof pursuant to a judgment or
decree of a court or courts having competent jurisdiction or pursuant to a
proceeding by a court-appointed receiver. Any sale pursuant to the provisions of
this Section 6 shall be deemed to conform to the commercially reasonable
standards as provided in Section 9-504(3) of the Uniform Commercial Code as in
effect in the State of New York or its equivalent in other jurisdictions.
SECTION 7. Application of Proceeds of Sale. The proceeds of any sale of
Collateral pursuant to Section 6, as well as any Collateral consisting of cash,
shall be applied by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses incurred by the
Collateral Agent or the Administrative Agent in connection with such
sale or otherwise in connection with this Agreement, any other Loan
Document or any of the Obligations, including all court costs and the
reasonable fees and expenses of their respective agents and legal
counsel, the repayment of all advances made by the Collateral Agent or
the Administrative Agent hereunder or under any other Loan Document on
behalf of any Pledgor and any other costs or expenses incurred in
connection with the exercise of any right or remedy hereunder or under
any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts so
applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
THIRD, to the Pledgors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds or cash (or any income derived from investments
made pursuant to the following sentence) in accordance with this Agreement.
Pending the application of the proceeds of any collection or sale of Collateral
or of any Collateral consisting of cash, the Collateral Agent may, in its
absolute discretion, invest such proceeds or cash, provided that any after-tax
income derived from any such investment shall be applied as provided in this
Section 7. Upon any sale of the Collateral by the Collateral Agent (including
<PAGE>
7
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the purchase money by the Collateral Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 8. Reimbursement of Collateral Agent. (a) Each Pledgor agrees
to pay upon demand to the Collateral Agent the amount of any and all reasonable
expenses, including the reasonable fees, other charges and disbursements of its
counsel and of any experts or agents, that the Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder or (iv) the failure by such Pledgor to perform or
observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Pledgor agrees to indemnify the Collateral Agent and
the Indemnitees (as defined in Section 9.05 of the Credit Agreement) against,
and hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees, other
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby or (ii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or wilful misconduct of such Indemnitee.
(c) If for any reason the indemnification set forth in paragraph (b)
above is unavailable to any Indemnitee or insufficient to hold it harmless, then
each Pledgor shall contribute to the amount paid or payable to such Indemnitee
as a result of such loss, claim, damage, liability or expense in such proportion
as is appropriate to reflect not only the relative benefits received by such
Pledgor, on the one hand, and such Indemnitee, on the other hand, but also the
relative fault of such Pledgor, on the one hand, and such Indemnitee, on the
other hand, as well as any relevant equitable considerations. It is hereby
agreed that the relative benefits to all Pledgors, on the one hand, and all
Indemnities, on the other hand, shall be deemed to be in the same proportion as
(i) the total value received or proposed to be received by the Borrower and the
other Pledgors in connection with the Commitments (whether or not any Loans are
made) bears to (ii) the Fees. The indemnity, reimbursement and contribution
obligations of each Pledgor under paragraph (b) above and under this paragraph
(c) shall be in addition to any liability which such Pledgor may otherwise have
to an Indemnitee and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of such Pledgor and any
Indemnitee.
(d) Promptly after receipt by an Indemnitee of notice of the
commencement of any Proceedings, such Indemnitee will, if a claim in respect
thereof is to be made against any Pledgor, notify the Borrower in writing of the
commencement thereof, provided that (i) the omission so to notify the Borrower
will not relieve it or any other Pledgor from any liability which it or such
Pledgor may have hereunder except to the extent it has been materially
prejudiced by such failure and (ii) the omission so to notify the Borrower will
not relieve it or any other Pledgor from any liability which it or such Pledgor
may have to an
<PAGE>
8
Indemnitee otherwise than on account of the indemnity agreement provided for
hereunder. In case any such Proceedings are brought against any Indemnitee and
it notifies the Borrower of the commencement thereof, the Borrower will be
entitled to participate therein, and, to the extent that it may elect by written
notice delivered to such Indemnitee, to assume the defense thereof, with counsel
reasonably satisfactory to such Indemnitee, provided that, if the defendants in
any such Proceedings include both such Indemnitee and the Borrower or any other
Pledgor and such Indemnitee shall have concluded that there may be legal
defenses available to it which are different from or additional to those
available to the Borrower or such Pledgor, such Indemnitee shall have the right
to select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such Proceedings on behalf of such Indemnitee.
Upon receipt of notice from the Borrower to such Indemnitee of its election so
to assume the defense of such Proceedings and approval by such Indemnitee of
counsel, neither the Borrower nor any other Pledgor shall be liable to such
Indemnitee for expenses incurred by such Indemnitee in connection with the
defense thereof (other than reasonable costs of investigation) unless (i) such
Indemnitee shall have employed separate counsel in connection with the assertion
of legal defenses in accordance with the proviso to the next preceding sentence
(it being understood, however, that neither the Borrower nor any other Pledgor
shall be liable for the reasonable expenses of more than one separate counsel
(plus no more than one separate local counsel in any jurisdiction), approved by
the Agents, representing the Indemnitees who are parties to such Proceedings),
(ii) the Borrower shall not have employed counsel reasonably satisfactory to
such Indemnitee to represent such Indemnitee within a reasonable time after
notice of commencement of the Proceedings, (iii) the Borrower shall have
authorized in writing the employment of counsel for such Indemnitee or (iv) the
use of counsel chosen by the Borrower to represent such Indemnitee would present
such counsel with a conflict of interest; and except that, if clause (i) or
(iii) is applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii).
(e) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 8 shall remain operative and in full force and effect regardless
of the termination of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document or any investigation made by or on behalf of the Collateral Agent or
any other Secured Party. All amounts due under this Section 8 shall be payable
on written demand therefor and shall bear interest at the rate specified in
Section 2.07 of the Credit Agreement.
SECTION 9. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor
hereby appoints the Collateral Agent the attorney-in-fact of such Pledgor for
the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument that the Collateral Agent may deem necessary
or advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest. Without limiting the generality of the foregoing,
the Collateral Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Collateral Agent's name or in the name of such Pledgor, to ask for, demand,
sue for, collect, receive and give acquittance for any and all moneys due or to
become due under and by virtue of any Collateral, to endorse checks, drafts,
orders and other instruments for the payment of money payable to the Pledgor
representing any interest or dividend or other distribution payable in respect
of the Collateral or any part thereof or on account thereof and to give full
discharge for the same, to settle, compromise, prosecute or defend any action,
claim or proceeding with respect thereto, and to sell, assign, endorse, pledge,
transfer and to make any agreement respecting, or otherwise deal with, the same;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Collateral Agent to make any commitment or to make any inquiry
as to the nature or sufficiency of any payment received
<PAGE>
9
by the Collateral Agent, or to present or file any claim or notice, or to take
any action with respect to the Collateral or any part thereof or the moneys due
or to become due in respect thereof or any property covered thereby. The
Collateral Agent and the other Secured Parties shall be accountable only for
amounts actually received as a result of the exercise of the powers granted to
them herein, and neither they nor their officers, directors, employees or agents
shall be responsible to any Pledgor for any act or failure to act hereunder,
except for their own gross negligence or wilful misconduct.
SECTION 10. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provisions of this Agreement or consent to any departure by any
Pledgor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Pledgor in any case shall entitle such Pledgor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Collateral Agent and the Pledgor or Pledgors with respect to which such
waiver, amendment or modification is to apply, subject to any consent required
in accordance with Section 9.08 of the Credit Agreement.
SECTION 11. Securities Act, etc. In view of the position of the
Pledgors in relation to the Pledged Securities, or because of other current or
future circumstances, a question may arise under the Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Securities, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Securities could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Securities under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. Each Pledgor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Securities, limit the purchasers to those who will agree, among other things, to
acquire such Pledged Securities for their own account, for investment, and not
with a view to the distribution or resale thereof. Each Pledgor acknowledges and
agrees that in light of such restrictions and limitations, the Collateral Agent,
in its sole and absolute discretion, (a) may proceed to make such a sale whether
or not a registration statement for the purpose of registering such Pledged
Securities or part thereof shall have been filed under the Federal Securities
Laws and (b) may approach and negotiate with a single potential purchaser to
effect such sale. Each Pledgor acknowledges and agrees that any such sale might
result in prices and other terms less favorable to the seller than if such sale
were a public sale without such restrictions. In the event of any such sale, the
Collateral Agent shall incur no responsibility or liability for selling all or
any part of the Pledged Securities at a price that the Collateral Agent, in its
sole and absolute discretion, may in good faith deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might have been realized if the sale were
<PAGE>
10
deferred until after registration as aforesaid or if more than a single
purchaser were approached. The provisions of this Section 11 will apply
notwithstanding the existence of a public or private market upon which the
quotations or sales prices may exceed substantially the price at which the
Collateral Agent sells.
SECTION 12. Registration, etc. Each Pledgor agrees that, upon the
occurrence and during the continuance of an Event of Default hereunder, if for
any reason the Collateral Agent desires to sell any of the Pledged Securities of
the Borrower at a public sale, it will, at any time and from time to time, upon
the written request of the Collateral Agent, use its best efforts to take or to
cause the issuer of such Pledged Securities to take such action and prepare,
distribute and/or file such documents, as are required or advisable in the
reasonable opinion of counsel for the Collateral Agent to permit the public sale
of such Pledged Securities. Each Pledgor further agrees to indemnify, defend and
hold harmless the Collateral Agent, each other Secured Party, any underwriter
and their respective officers, directors, affiliates and controlling persons
from and against all loss, liability, expenses, costs of counsel (including,
without limitation, reasonable fees and expenses to the Collateral Agent of
legal counsel), and claims (including the costs of investigation) that they may
incur insofar as such loss, liability, expense or claim arises out of or is
based upon any alleged untrue statement of a material fact contained in any
prospectus (or any amendment or supplement thereto) or in any notification or
offering circular, or arises out of or is based upon any alleged omission to
state a material fact required to be stated therein or necessary to make the
statements in any thereof not misleading, except insofar as the same may have
been caused by any untrue statement or omission based upon information furnished
in writing to such Pledgor or the issuer of such Pledged Securities by the
Collateral Agent or any other Secured Party expressly for use therein. Each
Pledgor further agrees, upon such written request referred to above, to use its
best efforts to qualify, file or register, or cause the issuer of such Pledged
Securities to qualify, file or register, any of the Pledged Securities under the
Blue Sky or other securities laws of such states as may be requested by the
Collateral Agent and keep effective, or cause to be kept effective, all such
qualifications, filings or registrations. Each Pledgor will bear all costs and
expenses of carrying out its obligations under this Section 12. Each Pledgor
acknowledges that there is no adequate remedy at law for failure by it to comply
with the provisions of this Section 12 and that such failure would not be
adequately compensable in damages, and therefore agrees that its agreements
contained in this Section 12 may be specifically enforced.
SECTION 13. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the grant of a security interest in the Collateral and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document, any agreement with respect to any of the
Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to any of the foregoing,
(c) any exchange, release or nonperfection of any other collateral, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any Pledgor in
respect of the Obligations or in respect of this Agreement (other than the
indefeasible payment in full of all the Obligations).
SECTION 14. Termination or Release. (a) This Agreement and the security
interests granted hereby shall terminate when all the Obligations have been
indefeasibly paid in full and the Lenders have no further commitment to lend
under the Credit Agreement, the L/C Exposure has been reduced to zero and the
Issuing Banks have no further obligation to issue Letters of Credit under the
Credit Agreement.
<PAGE>
11
(b) Upon any sale or other transfer by any Pledgor of any Collateral
that is permitted under the Credit Agreement to any person that is not a
Pledgor, or, upon the effectiveness of any written consent to the release of the
security interest granted hereby in any Collateral pursuant to Section 9.08(b)
of the Credit Agreement, the security interest in such Collateral shall be
automatically released.
(c) In connection with any termination or release pursuant to paragraph
(a) or (b), the Collateral Agent shall execute and deliver to any Pledgor, at
such Pledgor's expense, all documents that such Pledgor shall reasonably request
to evidence such termination or release. Any execution and delivery of documents
pursuant to this Section 14 shall be without recourse to or warranty by the
Collateral Agent.
SECTION 15. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Subsidiary Pledgor shall be given to
it at the address for notices set forth on Schedule I, with a copy to the
Borrower.
SECTION 16. Further Assurances. Each Pledgor agrees to do such further
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Collateral Agent may at any time
reasonably request in connection with the administration and enforcement of this
Agreement or with respect to the Collateral or any part thereof or in order
better to assure and confirm unto the Collateral Agent its rights and remedies
hereunder.
SECTION 17. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Pledgor that are contained in
this Agreement shall bind and inure to the benefit of its successors and
assigns. This Agreement shall become effective when a counterpart hereof
executed on behalf of any Pledgor shall have been delivered to the Collateral
Agent and a counterpart hereof shall have been executed on behalf of the
Collateral Agent, and thereafter shall be binding upon such Pledgor and the
Collateral Agent and their respective successors and assigns, and shall inure to
the benefit of such Pledgor, the Collateral Agent and the other Secured Parties,
and their respective successors and assigns, except that no Pledgor shall have
the right to assign its rights hereunder or any interest herein or in the
Collateral (and any such attempted assignment shall be void), except as
expressly contemplated by this Agreement or the other Loan Documents.
SECTION 18. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made in writing by each Pledgor
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Collateral Agent and the other
Secured Parties and shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit by the Issuing Banks, regardless of any
investigation made by the Secured Parties or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on
any Loan or any other fee or amount payable under this Agreement or any other
Loan Document is outstanding and unpaid or the L/C Exposure does not equal zero
and as long as the Commitments and the L/C Commitments have not been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that
<PAGE>
12
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 19. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 20. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute a single contract, and shall become
effective as provided in Section 17. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile transmission shall be as effective
as delivery of a manually executed counterpart of this Agreement.
SECTION 21. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement. Section headings used herein are for convenience of reference only,
are not part of this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting this Agreement.
SECTION 22. Jurisdiction; Consent to Service of Process. (a) Each
Pledgor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that, to the extent permitted by applicable law, all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Collateral Agent or
any other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Pledgor or
its properties in the courts of any jurisdiction.
(b) Each Pledgor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 15. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 23. Waiver Of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY
HERETO
<PAGE>
13
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 24. Additional Pledgors. Pursuant to Sections 5.15(d) and
5.16, respectively, of the Credit Agreement, (a) if the Securitization is not
consummated by the Step-Up Date, then at any time thereafter, upon the request
of the Agents or the Required Lenders made prior to the consummation of the
Securitization, the Borrower is required to cause Leasco to enter this Agreement
as a Subsidiary Pledgor and (b) each Domestic Subsidiary (and, to the extent
that no adverse tax consequences to the Borrower or any Subsidiary would result,
Foreign Subsidiary) that was not in existence or not such a Subsidiary on the
date of the Credit Agreement is required to enter in this Agreement as a
Subsidiary Pledgor upon becoming such a Subsidiary. Upon execution and delivery
by the Collateral Agent and Leasco or any such other Subsidiary of an instrument
in the form of Annex 1, such Subsidiary shall become a Subsidiary Pledgor
<PAGE>
14
hereunder with the same force and effect as if originally named as a Subsidiary
Pledgor herein. The execution and delivery of such instrument shall not require
the consent of any Pledgor hereunder. The rights and obligations of each Pledgor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Subsidiary Pledgor as a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
RYDER TRS, INC.,
by /s/ Wallace L. Rueckel
---------------------------------
Name: Wallace L. Rueckel
Title: Senior Vice President and Treasurer
THE SUBSIDIARY PLEDGORS LISTED ON
SCHEDULE I HERETO,
by /s/ Wallace L. Rueckel
---------------------------------
Name: Wallace L. Rueckel
Title: Authorized Officer
CITICORP, U.S.A., INC., as Documentation Agent and as
Collateral Agent,
by /s/ Shapleigh B. Smith
---------------------------------
Name: Shapleigh B. Smith
Title: Vice President
<PAGE>
EXHIBIT 4.6
EXECUTION COPY
INDEMNITY, SUBROGATION and CONTRIBUTION AGREEMENT dated as
of October 17, 1996, among RYDER TRS, INC., a Delaware
corporation (the "Borrower"), each Subsidiary of the Borrower
listed on Schedule I hereto (the "Guarantors") and CITICORP,
U.S.A., INC., a Delaware corporation, as documentation agent and
as collateral agent (the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of October 17, 1996
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the lenders from time to time party thereto
(the "Lenders"), the Lenders identified therein as issuing banks (the "Issuing
Banks"), The Chase Manhattan Bank, as administrative agent for the Lenders, and
the Collateral Agent, and (b) the Guarantee Agreement dated as of October 17,
1996 (the "Guarantee Agreement"), among the Guarantors identified therein and
the Collateral Agent. Capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Banks have agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Guarantors have guaranteed such Loans and the other
Obligations (as defined in the Guarantee Agreement) of the Borrower under the
Credit Agreement pursuant to the Guarantee Agreement; certain Guarantors have
granted Liens on and security interests in certain of their assets to secure
such guarantees. The obligations of the Lenders to make Loans and of the
Issuing Banks to issue Letters of Credit are conditioned on, among other things,
the execution and delivery by the Borrower and the Guarantors of an agreement in
the form hereof.
Accordingly, the Borrower, each Guarantor and the Collateral Agent agree as
follows:
SECTION 1. Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law (but
subject to Section 3), the Borrower agrees that (a) in the event a payment shall
be made by any Guarantor under the Guarantee Agreement, the Borrower shall
indemnify such Guarantor for the full amount of such payment and such Guarantor
shall be subrogated to the rights of the person to whom such payment shall have
been made to the extent of such payment and (b) in the event any assets of any
Guarantor shall be sold pursuant to any Security Document to satisfy a claim of
any Secured Party, the Borrower shall indemnify such Guarantor in an amount
equal to the greater of the book value or the fair market value of the assets so
sold.
SECTION 2. Contribution and Subrogation. Each Guarantor (a "Contributing
Guarantor") agrees (subject to Section 3) that, in the event a payment shall be
made by any other Guarantor under the Guarantee Agreement or assets of any other
Guarantor shall be sold pursuant to any Security Document to satisfy a claim of
any Secured Party and such other Guarantor (the "Claiming Guarantor") shall not
have been fully indemnified by the Borrower as provided in Section 1, the
Contributing Guarantor shall indemnify the Claiming Guarantor in an amount equal
to the amount of such payment or the greater of the book value or the fair
market value of such assets, as the case may be, in each case multiplied by a
fraction of which the numerator shall be the Net Worth (as defined below) of the
Contributing Guarantor on the date hereof and the denominator shall be the
aggregate Net Worth of all the Guarantors on the date hereof (or, in the case of
any Guarantor becoming a party hereto pursuant to Section 12, the date of the
Supplement hereto executed and delivered by such Guarantor). The term "Net
Worth" shall mean, with
<PAGE>
respect to any person, the fair value of the assets of such person over the fair
value of the liabilities of such person (including contingent liabilities). Any
Contributing Guarantor making any payment to a Claiming Guarantor pursuant to
this Section 2 shall be subrogated to the rights of such Claiming Guarantor
under Section 1 to the extent of such payment.
Anything contained in this Agreement to the contrary notwithstanding, the
obligations of each Contributing Guarantor hereunder shall be limited to a
maximum aggregate amount equal to the greatest amount that would not render such
Contributing Guarantor's obligations hereunder subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of Title 11 of the United
States Code or any provisions of applicable state law (collectively, the
"Fraudulent Transfer Laws"), in each case after giving effect to all other
liabilities of such Contributing Guarantor, contingent or otherwise, that are
relevant under the Fraudulent Transfer Laws (specifically excluding, however,
any liabilities of such Contributing Guarantor (a) in respect of intercompany
indebtedness to the Borrower or Affiliates of the Borrower to the extent that
such indebtedness would be discharged in an amount equal to the amount paid by
such Contributing Guarantor hereunder and (b) under any Guarantee of senior
unsecured indebtedness or Indebtedness subordinated in right of payment to the
Obligations which Guarantee contains a limitation as to maximum amount similar
to that set forth in this paragraph, pursuant to which the liability of such
Contributing Guarantor hereunder is included in the liabilities taken into
account in determining such maximum amount) and after giving effect as assets to
the value (as determined under the applicable provisions of the Fraudulent
Transfer Laws) of any rights to subrogation, contribution, reimbursement,
indemnity or similar rights of such Contributing Guarantor pursuant to (i)
applicable law or (ii) any agreement providing for an equitable allocation among
such Contributing Guarantor and other Affiliates of the Borrower of obligations
arising under Guarantees by such parties (including this Agreement).
SECTION 3. Subordination. Notwithstanding any provision of this Agreement
to the contrary, all rights of the Guarantors under Sections 1 and 2 and all
other rights of indemnity, contribution or subrogation under applicable law or
otherwise shall be fully subordinated to the indefeasible payment in full in
cash of the Obligations. No failure on the part of the Borrower or any
Guarantor to make the payments required by Sections 1 and 2 (or any other
payments required under applicable law or otherwise) shall in any respect limit
the obligations and liabilities of any Guarantor with respect to its obligations
hereunder, and each Guarantor shall remain liable for the full amount of the
obligations of such Guarantor hereunder.
SECTION 4. Termination. This Agreement shall survive and be in full force
and effect so long as any Obligation is outstanding and has not been
indefeasibly paid in full in cash, and so long as the L/C Exposure has not been
reduced to zero or any of the Commitments under the Credit Agreement have not
been terminated, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by any Secured Party or any Guarantor
upon the bankruptcy or reorganization of the Borrower, any Guarantor or
otherwise.
SECTION 5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. No Waiver; Amendment. (a) No failure on the part of the
Collateral Agent or any Guarantor to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy by the
Collateral Agent or any Guarantor preclude any other or further exercise thereof
or the exercise of any
<PAGE>
other right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law. None of the Collateral Agent
and the Guarantors shall be deemed to have waived any rights hereunder unless
such waiver shall be in writing and signed by such parties.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Borrower, the Guarantors and the Collateral Agent, with the prior written
consent of the Required Lenders (except as otherwise provided in the Credit
Agreement).
SECTION 7. Notices. All communications and notices hereunder shall be in
writing and given as provided in the Guarantee Agreement and addressed as
specified therein.
SECTION 8. Binding Agreement; Assignments. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of the parties that are contained in this Agreement
shall bind and inure to the benefit of their respective successors and assigns.
Neither the Borrower nor any Guarantor may assign or transfer any of its rights
or obligations hereunder (and any such attempted assignment or transfer shall be
void) without the prior written consent of the Required Lenders. Notwithstanding
the foregoing, at the time any Guarantor is released from its obligations under
the Guarantee Agreement in accordance with such Guarantee Agreement and the
Credit Agreement, such Guarantor will cease to have any rights or obligations
under this Agreement.
SECTION 9. Survival of Agreement; Severability. (a) All covenants and
agreements made in writing by the Borrower and each Guarantor herein and in the
certificates or other instruments prepared or delivered in connection with this
Agreement or the other Loan Documents shall be considered to have been relied
upon by the Collateral Agent, the other Secured Parties and each Guarantor and
shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Banks, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loans or any
other fee or amount payable under the Credit Agreement or this Agreement or
under any of the other Loan Documents is outstanding and unpaid or the L/C
Exposure does not equal zero and as long as the Commitments have not been
terminated.
(b) In case any one or more of the provisions contained in this Agreement
should be held invalid, illegal or unenforceable in any respect, no party hereto
shall be required to comply with such provision for so long as such provision is
held to be invalid, illegal or unenforceable, but the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforce able provisions.
SECTION 10. Counterparts. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Agreement shall be effective with respect to any
Guarantor when a counterpart bearing the signature of such Guarantor shall have
been delivered to the Collateral Agent. Delivery of an executed signature page
to this Agreement by facsimile transmission shall be as effective as delivery of
a manually signed counterpart of this Agreement.
<PAGE>
SECTION 11. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 12. Additional Guarantors. Pursuant to Sections 5.15(d) and 5.16,
respectively, of the Credit Agreement, (a) if the Securitization is not
consummated by the Step-Up Date, then at any time thereafter, upon the request
of the Agents or the Required Lenders made prior to the consummation of the
Securitization, the Borrower is required to cause Leasco to enter into the
Guarantee Agreement and this Agreement as a Guarantor and (b) each Domestic
Subsidiary (and, to the extent that no adverse tax consequences to the Borrower
or any Subsidiary would result, Foreign Subsidiary) that was not in existence or
not such a Subsidiary on the date of the Credit Agreement is required to enter
into the Guarantee Agreement and this Agreement as a Guarantor upon becoming
such a Subsidiary. Upon execution and delivery, after the date hereof, by the
Collateral Agent and Leasco or any such other Subsidiary of an instrument in the
form of Annex 1 hereto, such Subsidiary shall become a Guarantor hereunder with
the same force and effect as if originally named as a Guarantor hereunder. The
execution and delivery of any instrument adding an additional Guarantor as a
party to this Agreement shall not require the consent of any Guarantor
hereunder. The rights and obligations of each Guarantor hereunder shall remain
in full force and effect notwithstanding the addition of any new Guarantor as a
party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first appearing above.
RYDER TRS, INC.,
by /s/ Wallace L. Rueckel
-------------------------------------------------
Name: Wallace L. Rueckel
Title: Senior Vice President
and Treasurer
EACH OF THE SUBSIDIARIES LISTED ON
SCHEDULE I HERETO, as a Guarantor,
by /s/ Wallace L. Rueckel
-------------------------------------------------
Name: Wallace L. Rueckel
Title: Authorized Officer
CITICORP, U.S.A., INC., as Documentation Agent and
as Collateral Agent,
by /s/ Shapleigh B. Smith
-------------------------------------------------
Name: Shapleigh B. Smith
Title: Vice President
<PAGE>
Schedule I to the
Indemnity, Subrogation
and Contribution Agreement
GUARANTOR ADDRESS
Ryder Truck Rental-One Way, 8669 NW 36th Street
Inc. Miami, FL 33166
Ryder Move Management, Inc. 8669 NW 36th Street
Miami, FL 33136
Ryder Relocation Services, 8669 NW 36th Street
Inc. Miami, FL 33136
The Move Shop, Inc. 8669 NW 36th Street
Miami, FL 33136
<PAGE>
Annex 1 to the
Indemnity, Subrogation and
Contribution Agreement
SUPPLEMENT NO. [ ] dated as of [ ], to the Indemnity,
Subrogation and Contribution Agreement dated as of October 17,
1996 (as the same may be amended, supplemented or otherwise
modified from time to time, the "Indemnity, Subrogation and
Contribution Agreement"), among RYDER TRS, INC., a Delaware
corporation (the "Borrower"), each Subsidiary of the Borrower
listed on Schedule I thereto (the "Guarantors") and CITICORP,
U.S.A., INC., a Delaware corporation, as documentation agent and
as collateral agent (the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement referred to below).
A. Reference is made to (a) the Credit Agreement dated as of October 17,
1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the lenders from time to time party
thereto (the "Lenders"), the Lenders identified therein as issuing banks (the
"Issuing Banks"), The Chase Manhattan Bank, as administrative agent for the
Lenders, and the Collateral Agent and (b) the Guarantee Agreement dated as of
October 17, 1996 (the "Guarantee Agreement"), among the Guarantors identified
therein and the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Indemnity, Subrogation and
Contribution Agreement and the Credit Agreement.
C. The Borrower and the Guarantors have entered into the Indemnity,
Subrogation and Contribution Agreement in order to induce the Lenders to make
Loans and the Issuing Banks to issue Letters of Credit. Pursuant to Sections
5.15(d) and 5.16, respectively, of the Credit Agreement, (a) if the
Securitization is not consummated by the Step-Up Date, then at any time
thereafter, upon the request of the Agents or the Required Lenders made prior to
the consummation of the Securitization, the Borrower is required to cause Leasco
to enter into the Guarantee Agreement and the Indemnity, Subrogation and
Contribution Agreement as a Guarantor and (b) each Domestic Subsidiary (and, to
the extent that no adverse tax consequences to the Borrower or any Subsidiary
would result, Foreign Subsidiary) that was not in existence or not such a
Subsidiary on the date of the Credit Agreement is required to enter into the
Guarantee Agreement and the Indemnity, Subrogation and Contribution Agreement as
a Guarantor upon becoming such a Subsidiary. Section 12 of the Indemnity,
Subrogation and Contribution Agreement provides that Leasco or any such other
Subsidiaries may become Guarantors under the Indemnity, Subrogation and
Contribution Agreement by execution and delivery of an instrument in the form of
this Supplement. The undersigned Subsidiary (the "New Guarantor") is executing
this Supplement in accordance with such requirements of the Credit Agreement to
become a Guarantor under the Indemnity, Subrogation and Contribution Agreement
in order to induce the Lenders to make additional Loans and the Issuing Banks to
issue additional Letters of Credit and as consideration for Loans previously
made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Guarantor agree as follows:
SECTION 1. In accordance with Section 12 of the Indemnity, Subrogation and
Contribution Agreement, the New Guarantor by its signature below becomes a
Guarantor under the Indemnity, Subrogation and Contribution Agreement with the
same force and effect as if originally named therein as a Guarantor and the New
Guarantor hereby agrees to all the terms and provisions of the Indemnity,
Subrogation and Con tribution Agreement applicable to it as a Guarantor
thereunder. Each reference to a
<PAGE>
"Guarantor" in the Indemnity, Subrogation and Contribution Agreement shall be
deemed to include the New Guarantor. The Indemnity, Subrogation and Contribution
Agreement is hereby incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Guarantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Indemnity,
Subrogation and Contribution Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Indemnity, Subrogation and Contribution Agreement shall not in
any way be affected or impaired. The parties hereto shall endeavor in good-
faith negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions the eco nomic effect of which comes as close as possible
to that of the invalid, illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 7 of the Indemnity, Subrogation and
Contribution Agreement. All communications and notices hereunder to the New
Guarantor shall be given to it at the address set forth under its signature.
<PAGE>
SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent for
its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have duly
executed this Supplement to the Indemnity, Subrogation and Contribution
Agreement as of the day and year first above written.
[Name Of New Guarantor],
by
----------------------------------------------
Name:
Title:
Address:
--------------------------------------
--------------------------------------
--------------------------------------
CITICORP, U.S.A., INC., as Documentation Agent
and as Collateral Agent,
by
----------------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 4.7
EXECUTION COPY
Ryder TRS, Inc.
$175,000,000
10% Senior Subordinated Notes due 2006
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
------------------------------------------
November 25, 1996
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
Ryder TRS, Inc., a Delaware corporation (the "Company"), proposes to issue
and sell to you (the "Initial Purchaser"), upon the terms set forth in a
purchase agreement dated November 20, 1996 (the "Purchase Agreement"),
$175,000,000 principal amount of its 10% Senior Subordinated Notes due 2006 (the
"Securities"). Capitalized terms used but not specifically defined herein are
defined in the Purchase Agreement. As an inducement to the Initial Purchaser to
enter into the Purchase Agreement and in satisfaction of a condition to your
obligations thereunder, the Company agrees with you, for the benefit of the
holders of the Securities (including the Initial Purchaser) (the "Holders"), as
follows:
1. Registered Exchange Offer. The Company shall prepare and, not later
-------------------------
than 45 days following the Closing Date, shall file with the Commission a
registration statement (the "Exchange Offer Registration Statement") on an
appropriate form under the Securities Act with respect to a proposed offer (the
"Registered Exchange Offer") to the Holders to issue and deliver to such
Holders, in exchange for the Securities, a like aggregate principal amount of
debt securities of the Company (the "Exchange Securities") identical in all
material respects to the Securities, except for the transfer restrictions
relating to the Securities, shall use its best efforts to cause the Exchange
Offer Registration Statement to become effective under the Securities Act within
135 days after the Closing Date and to keep the Exchange Offer Registration
Statement effective for
<PAGE>
2
not less than 30 days (or longer, if required by applicable law) after the date
on which notice of the Exchange Offer is mailed to the Holders (such period
being called the "Exchange Offer Registration Period"). The Exchange Securities
will be issued under the Indenture or an indenture (the "Exchange Securities
Indenture") between the Company and the Trustee or such other bank or trust
company reasonably satisfactory to you, as trustee (the "Exchange Securities
Trustee"), such indenture to be identical in all material respects with the
Indenture except for the transfer restrictions relating to the Securities (as
described above).
Upon the effectiveness of the Exchange Offer Registration Statement, the
Company shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Securities for Exchange Securities (assuming that such Holder is not an
affiliate of the Company within the meaning of the Securities Act (an
"Affiliate"), acquires the Exchange Securities in the ordinary course of such
Holder's business and has no arrangements with any person to participate in the
distribution of the Exchange Securities) to trade such Exchange Securities from
and after their receipt without any limitations or restrictions on transfer
under the Securities Act and without material restrictions on transfer under the
securities laws of the several states of the United States. The Company and the
Initial Purchaser acknowledge that the foregoing statement of the objective of
the Registered Exchange Offer is based upon current interpretations of the staff
of the Commission's Division of Corporation Finance, which interpretations are
subject to change without notice, and further acknowledge that, pursuant to
current interpretations of such staff of Section 5 of the Securities Act, (i)
each Holder that is a broker-dealer electing to exchange Securities, acquired
for its own account as a result of market making activities or other trading
activities, for Exchange Securities (an "Exchanging Dealer"), is required to
deliver a prospectus containing the information set forth in Annex A hereto on
the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the
"Purpose of the Exchange Offer" section, and in Annex C hereto in the "Plan of
Distribution" section of such prospectus in connection with a sale of any such
Exchange Securities received by such Exchanging Dealer pursuant to the
Registered Exchange Offer and (ii) if the Initial Purchaser elects to sell
Exchange Securities acquired in
<PAGE>
3
exchange for Securities constituting any portion of an unsold allotment, it is
required to deliver a prospectus, containing the information required by Item
507 or Item 508 of Regulation S-K under the Securities Act, or both, as
applicable, in connection with such a sale.
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30 days after
the date notice thereof is mailed to the Holders (or longer if required by
applicable law);
(c) utilize the services of a depositary for the Registered Exchange Offer
with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at any time prior to the
close of business, New York time, on the last business day on which the
Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all applicable laws.
As soon as practicable after the close of the Registered Exchange Offer,
the Company shall:
(a) accept for exchange all Securities tendered and not validly withdrawn
pursuant to the Registered Exchange Offer;
(b) deliver to the Trustee for cancellation all Securities so accepted for
exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as the case may
be, promptly to authenticate and deliver to each Holder of Securities,
Exchange Securities equal in principal amount to the Securities of such
Holder so accepted for exchange.
<PAGE>
4
Interest on each Exchange Security issued pursuant to the Registered
Exchange Offer will accrue from the last interest payment date to which interest
was paid on the Securities surrendered in exchange therefor or, if no interest
has been paid on the Securities, from the date of original issue of the
Securities.
The Company may require each holder of Securities participating in the
Registered Exchange Offer to represent to the Company that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Securities
received by such holder will be acquired in the ordinary course of business,
(ii) such holder will have no arrangements or understanding with any person to
participate in the distribution of the Securities or the Exchange Securities
within the meaning of the Securities Act and (iii) such holder is not an
Affiliate.
Notwithstanding any other provisions hereof, the Company will ensure that
(i) any Exchange Offer Registration Statement and any amendment thereto and any
prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
promulgated thereunder, (ii) any Exchange Offer Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Exchange Offer Registration Statement,
and any supplement to such prospectus, does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
2. Shelf Registration. If (a) prior to the consummation of the Registered
------------------
Exchange Offer, the Company reasonably determines in good faith that (i) the
Exchange Securities would not, upon receipt, be tradeable by Holders that are
not Affiliates without restriction under the Securities Act and without material
restriction under applicable state securities laws or (ii) after conferring with
counsel, the Commission is unlikely to permit the consummation of the Registered
Exchange Offer within 165 days after the date hereof, (b) for any other reason
the Registered Exchange Offer is not consummated within 165 days of the Closing
Date, (c) the Initial Purchaser so requests
<PAGE>
5
with respect to Securities (i) purchased by it pursuant to the Purchase
Agreement, (ii) not eligible to be exchanged for Exchange Securities in the
Registered Exchange Offer and (iii) held by it following consummation of the
Registered Exchange Offer or (d) any Holder (other than an Exchanging Dealer) is
not eligible to participate in the Registered Exchange Offer or, in the case of
any Holder that participates in the Registered Exchange Offer (other than an
Exchanging Dealer), does not receive freely tradeable Exchange Securities in
exchange for tendered Securities (and in either case so advises the Company
within ten business days following the later of the consummation of the
Registered Exchange Offer or the time at which such Holder becomes aware or is
notified by the Company of such circumstance) or if the Company so elects, in
each case the Company shall promptly (and in any event within three business
days) deliver to the Holders and the Trustee written notice thereof (the "Shelf
Notice") and the following provisions shall apply:
(a) The Company shall as promptly as practicable after delivery of the
Shelf Notice file with the Commission and thereafter shall use its best efforts
to cause to be declared effective a registration statement on an appropriate
form under the Securities Act relating to the offer and sale of the Transfer
Restricted Securities (as defined below) by the Holders from time to time in
accordance with the methods of distribution elected by such Holders and set
forth in such registration statement (hereafter, a "Shelf Registration
Statement" and, together with any Exchange Offer Registration Statement, a
"Registration Statement").
(b) The Company shall use its best efforts to keep the Shelf Registration
Statement continuously effective in order to permit the prospectus forming part
thereof to be usable by Holders for a period of three years from the date the
Shelf Registration Statement is declared effective by the Commission or such
shorter period that will terminate when all the Securities covered by the Shelf
Registration Statement (i) have been sold pursuant to the Registration Statement
or (ii) are distributed to the public pursuant to Rule 144 under the Securities
Act or are saleable pursuant to Rule 144(k) under the Securities Act (in any
such case, such period being called the "Shelf Registration Period"). The
Company shall be deemed not to have used its best efforts to keep the Shelf
Registration Statement effective during the requisite period if it voluntarily
takes any
<PAGE>
6
action that would result in Holders of Securities covered thereby not
being able to offer and sell such Securities during that period, unless such
action is required by applicable law.
(c) Notwithstanding any other provisions hereof, the Company will ensure
that (i) any Shelf Registration Statement and any amendment thereto and any
prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment thereto does
not, when it becomes effective, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (iii) any prospectus forming part
of any Shelf Registration Statement, and any supplement to such prospectus, does
not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
Following delivery of a Shelf Notice to the Holders in the circumstances
contemplated by clause (a) or (b) of the first paragraph of this Section 2, the
Company shall not have any further obligation to conduct the Registered Exchange
Offer.
3. Liquidated Damages. (a) The parties hereto agree that the Holders of
------------------
Securities will suffer damages if the Company fails to fulfill its obligations
under Section 1 or Section 2, as applicable, and that it would not be feasible
to ascertain the extent of such damages. Accordingly, if (i) the Exchange Offer
Registration Statement is not filed with the Commission on or prior to 45 days
after the Closing Date, (ii) the Exchange Offer Registration Statement is not
declared effective within 135 days after the Closing Date, (iii) the Exchange
Offer is not consummated on or prior to 165 days after the Closing Date, (iv)
the Shelf Registration Statement is not filed with the Commission within 45 days
after the Shelf Notice is required to be delivered or is not declared effective
within 135 days after such date or (v) the Shelf Registration Statement is filed
and declared effective within 135 days after the date the Shelf Notice is
required to be delivered but shall thereafter cease to be effective (at any time
that the Company is obligated to maintain the effectiveness thereof) without
being succeeded within 30 days by an additional or
<PAGE>
7
amended Registration Statement filed and declared effective (each such event
referred to in clauses (i) through (v), a "Registration Default"), the Company
will pay liquidated damages to each holder of Transfer Restricted Securities (as
defined below), during the period of such Registration Default, in an amount
equal to $0.192 per week per $1,000 principal amount of the Securities
constituting Transfer Restricted Securities held by such holder until the
applicable Registration Statement is filed or declared effective, the Exchange
Offer is consummated or the Shelf Registration Statement again becomes
effective, as the case may be. Following the cure of all Registration Defaults,
the accrual of liquidated damages will cease. "Transfer Restricted Securities"
means each Security until (i) the date on which such Security has been exchanged
for a freely transferrable Exchange Security in the Exchange Offer, (ii) the
date on which such Security has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or (iii)
the date on which such Security is distributed to the public pursuant to Rule
144 under the Securities Act or is salable pursuant to Rule 144(k) under the
Securities Act.
(b) The Company shall notify the Trustee and Paying Agent under the
Indenture immediately upon the happening of each and every Registration Default.
The Company shall pay the liquidated damages due on the Transfer Restricted
Securities by depositing with the Paying Agent (which may not be the Company for
these purposes), in trust, for the benefit of the Holders thereof, prior to
10:00 a.m. New York City time on the next interest payment date specified by the
Indenture and the Securities, sums sufficient to pay the liquidated damages then
due. The liquidated damages due shall be payable on each interest payment date
specified by the Indenture to the record holder entitled to receive the interest
payment to be made on such date. Each obligation to pay liquidated damages
shall be deemed to accrue from and including the applicable Registration
Default.
(c) The parties hereto agree that the liquidated damages provided for in
this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by holders of Transfer
Restricted Securities by reason of the failure of the applicable Registration
Statement to be filed, to be declared effective or to remain effective, or of
the
<PAGE>
8
Exchange Offer to be consummated, as the case may be, to the extent required by
this Agreement.
4. Registration Procedures. In connection with any Shelf Registration
-----------------------
Statement and, to the extent applicable, any Exchange Offer Registration
Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to you, prior to the filing thereof with
the Commission, a copy of the Registration Statement and each amendment thereof
and each supplement, if any, to the prospectus included therein and, in the
event that the Initial Purchaser (with respect to any portion of an unsold
allotment from the original offering) is participating in the Registered
Exchange Offer or the Shelf Registration, shall use its best efforts to reflect
in each such document, when so filed with the Commission, such comments as you
reasonably may propose; (ii) include the information set forth in Annex A hereto
on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and
the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan
of Distribution" section of the prospectus forming a part of the Exchange Offer
Registration Statement, and include the information set forth in Annex D hereto
in the Letter of Transmittal delivered pursuant to the Registered Exchange
Offer; and (iii) if requested by the Initial Purchaser, include the information
required by Item 507 or Item 508 of Regulation S-K under the Securities Act, or
both, as applicable, in the prospectus forming a part of the Exchange Offer
Registration Statement.
(b) The Company shall advise you and the Holders (if applicable), and, if
requested by you or any such Holder, confirm such advice in writing (which
advice pursuant to clauses (ii)-(v) hereof shall be accompanied by an
instruction to suspend the use of the prospectus until the requisite changes
have been made):
(i) when the Registration Statement and any amendment thereto has been
filed with the Commission and when the Registration Statement or any
posteffective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements to
the Registration Statement or the prospectus included therein or for
additional information;
<PAGE>
9
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; and
(v) of the happening of any event that requires the making of any changes
in the Registration Statement or the prospectus so that, as of such date,
the Registration Statement or prospectus, as the case may be, does not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
(c) The Company will make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of any Registration Statement at the
earliest possible time.
(d) The Company will furnish to each Holder of Securities included within
the coverage of any Shelf Registration Statement, without charge, at least one
copy of such Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Holder so
requests in writing, all exhibits (including those incorporated by reference).
(e) The Company will deliver to each Holder of Securities included within
the coverage of any Shelf Registration Statement, without charge, as many copies
of the prospectus (including each preliminary prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Company consents to the use of the prospectus or
any amendment or supplement thereto by each of the selling Holders of Securities
in connection with the offering and sale of the Securities covered by the
prospectus or any amendment or supplement thereto.
(f) The Company will furnish to each Exchanging Dealer or the Initial
Purchaser, as applicable, that so requests, without charge, at least one copy of
the Exchange
<PAGE>
10
Offer Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Exchanging Dealer or Initial
Purchaser, as applicable, so requests in writing, all exhibits (including those
incorporated by reference).
(g) The Company will, during the Exchange Offer Registration Period and/or
the Shelf Registration Period, as applicable, promptly deliver to each
Exchanging Dealer or the Initial Purchaser, as applicable, without charge, as
many copies of the prospectus included in such Exchange Offer Registration
Statement and any amendment or supplement thereto as such Exchanging Dealer or
the Initial Purchaser, as applicable, may reasonably request for delivery by (i)
such Exchanging Dealer in connection with a sale of Exchange Securities received
by it pursuant to the Registered Exchange Offer or (ii) the Initial Purchaser in
connection with a sale of Exchange Securities received by it in exchange for
Securities constituting any portion of an unsold allotment; and the Company
consents to the use of the prospectus or any amendment or supplement thereto by
any such Exchanging Dealer or the Initial Purchaser, as applicable, as
aforesaid.
(h) Prior to any public offering of Securities pursuant to any Registration
Statement, the Company will use its reasonable best efforts to register or
qualify or cooperate with the Holders of Securities included therein and their
respective counsel in connection with the registration or qualification of such
securities for offer and sale under the securities or blue sky laws of such
jurisdictions as any such Holder reasonably requests in writing and do any and
all other acts or things necessary or advisable to enable the offer and sale in
such jurisdictions of the Securities covered by such Shelf Registration
Statement; provided, however, that the Company will not be required to qualify
-----------------
generally to do business in any jurisdiction where it is not then so qualified
or as a dealer in securities or to take any action which would subject it to
general service of process or to taxation in any such jurisdiction where it is
not then so subject.
(i) The Company will cooperate with the Holders of Securities to
facilitate the timely preparation and delivery of certificates representing
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered
<PAGE>
11
in such names as Holders may request prior to sales of Securities pursuant to
such Registration Statement.
(j) Upon the occurrence of any event contemplated by paragraphs (b)(ii)
through (v) above during the period for which the Company is required to
maintain an effective Registration Statement, the Company will promptly prepare
a post-effective amendment to the Registration Statement or a supplement to the
related prospectus or file any other required document so that, as thereafter
delivered to purchasers of the Securities or purchasers of Exchange Securities
from an Exchanging Dealer or the Initial Purchaser, as applicable, as
contemplated in paragraph (g) above, as applicable, the prospectus will not
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(k) Not later than the effective date of the applicable Registration
Statement, the Company will provide a CUSIP number for the Securities or
Exchange Securities, as the case may be, and provide the applicable trustee with
printed certificates for the Securities or Exchange Securities, as the case may
be, in a form eligible for deposit with The Depository Trust Company.
(l) The Company will comply with all applicable rules and regulations of
the Commission and will make generally available to its security holders as soon
as practicable after the effective date of the applicable Registration Statement
an earnings statement satisfying the provisions of Section 11(a) of the
Securities Act.
(m) The Company will cause the Indenture or the Exchange Securities
Indenture, as the case may be, to be qualified under the Trust Indenture Act as
required by applicable law in a timely manner.
(n) The Company may require each Holder of Securities to be sold pursuant
to any Shelf Registration Statement to furnish to the Company such information
regarding the Holder and the distribution of such Securities as the Company may
from time to time reasonably require for inclusion in such Registration
Statement, and the Company may exclude from such registration the Securities of
any Holder that unreasonably fails to furnish such information within a
reasonable time after receiving such request.
<PAGE>
12
(o) The Company shall enter into such customary agreements (including if
requested an underwriting agreement in customary form) and take all such other
action, if any, as Holders of a majority in aggregate principal amount of
Securities being sold or the managing underwriters (if any) shall reasonably
request in order to facilitate the disposition of Securities pursuant to any
Shelf Registration Statement.
(p) In the case of a Shelf Registration Statement, the Company shall (i)
make reasonably available for inspection by a representative of, and Special
Counsel acting for, the Holders, and any underwriter participating in any
disposition pursuant to a Shelf Registration Statement, all relevant financial
and other records, pertinent corporate documents and properties of the Company
and (ii) cause the Company's officers, directors and employees to supply all
relevant information reasonably requested by such representative, counsel or any
such underwriter (an "Inspector") in connection with any such Registration
Statement, subject to executing a confidentiality undertaking in customary form
with respect to confidential and/or proprietary information of the Company.
(q) In the case of a Shelf Registration Statement, the Company, if
requested by Holders of a majority in aggregate principal amount of Securities
covered by such Registration Statement, their Special Counsel, or the managing
underwriters (if any) in connection with any Shelf Registration Statement, shall
use its best efforts to cause (w) its counsel to deliver an opinion relating to
the Registration Statement and the Securities or the Exchange Securities, as
applicable, in customary form, (x) its officers to execute and deliver all
customary documents and certificates requested by Holders of a majority in
aggregate principal amount of such Securities, their Special Counsel, or the
managing underwriters (if any) and (y) its independent public accountants to
provide a comfort letter in customary form, subject to receipt of appropriate
documentation as contemplated, and only if permitted by Statement of Auditing
Standards No. 72.
(r) The Company will use its best efforts to cause the Securities or the
Exchange Securities, as applicable, covered by a Registration Statement to
continue to be rated, during the period for which such Registration Statement is
required to be effective, by the rating
<PAGE>
13
agencies that initially rated the Securities, if so requested by Holders of a
majority in aggregate principal amount of Securities covered by such
Registration Statement or the Exchange Securities, as the case may be, or the
managing underwriters, if any.
(s) The Company will use its best efforts to cause the Securities or the
Exchange Securities, as applicable, relating to such Registration Statement to
be listed on each securities exchange, if any, on which debt securities issued
by the Company are then listed, if so requested by Holders of a majority in
aggregate principal amount of Securities covered by such Registration Statement
or the Exchange Securities, as the case may be, or the managing underwriters, if
any.
(t) In the case of a Shelf Registration Statement, each Holder of
Securities agrees by acquisition of such Securities that, upon receipt of any
notice of the Company pursuant to Section 4(b)(ii) through (v) hereof, such
Holder will discontinue disposition of such Securities covered by such
Registration Statement until such Holder's receipt of copies of the supplemental
or amended Prospectus contemplated by Section 4(j) hereof, or until advised in
writing (the "Advice") by the Company that the use of the applicable Prospectus
may be resumed. If the Company shall give any notice under Section 4(b)(ii)
through (v) during the period that the Company is required to maintain an
effective Registration Statement (the "Effectiveness Period"), such
Effectiveness Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each seller of Securities covered by such Registration Statement shall
have received (x) the copies of the supplemental or amended Prospectus
contemplated by Section 4(j) (if an amended or supplemental Prospectus is
required) or (y) the Advice (if no amended or supplemental Prospectus is
required).
5. Registration Expenses. The Company will bear all expenses incurred in
---------------------
connection with the performance of its obligations under Sections 1, 2, 3 and 4
hereof and will reimburse the Initial Purchaser and/or the Holders for the
reasonable fees and disbursements of one firm of attorneys (in addition to not
more than one local counsel for each jurisdiction) chosen by the Holders of a
majority in aggregate principal amount of the Securities (the "Special Counsel")
acting for the Initial Purchaser and/or Holders in
<PAGE>
14
connection therewith; provided,however, that in an underwritten offering, the
-------- -------
Company shall not be responsible for any fees or expenses of any underwriter,
including any underwriting discounts or commissions, or any legal fees or
expenses of counsel to any underwriter (except for reasonable fees and
disbursements of counsel in connection with state securities laws qualification
of any of the Securities being offered).
6. Indemnification. (a) In the event of a Shelf Registration
---------------
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Exchanging Dealer or the Initial Purchaser,
as applicable, as contemplated in Section 4(g) above, the Company shall
indemnify and hold harmless each Holder and each person, if any, who controls
such Holder within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any such Registration
Statement or any prospectus forming part thereof or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and
(ii) against any and all expense whatsoever, as incurred (including,
subject to Section 6(c) hereof, the fees and disbursements of counsel
chosen by the indemnified party), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental or regulatory agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission;
provided, however, that (i) this indemnity shall not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
indemnified party expressly for use in such Registration Statement and (ii) this
indemnity with respect to any untrue statement or alleged untrue statement or
<PAGE>
15
omission or alleged omission in any related preliminary prospectus shall not
enure to the benefit of any indemnified party from whom the person asserting any
such loss, claim damage or liability received Securities if such person did not
receive a copy of the final prospectus at or prior to the confirmation of the
sale of such Securities to such person in any case where such delivery is
required by the Securities Act and the untrue statement or omission of material
fact contained in the related preliminary prospectus was corrected in the final
prospectus unless such failure to deliver the final prospectus was a result of
noncompliance by the Company with Section 4(d), 4(e), 4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each Holder
agrees to indemnify and hold harmless the Company, its directors, officers,
agents and employees and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act and the directors, officers, agents and employees of such controlling
persons against any and all loss, liability, claim, damage and expense described
in the indemnity contained in Section 6(a) hereof, as incurred, arising out of
or based upon any untrue statements or omissions, or alleged untrue statements
or omissions, made in the Registration Statement (or any amendment or supplement
thereto) in reliance on and in conformity with written information furnished to
the Company by such Holder expressly for use in the Registration Statement (or
in such amendment or supplement); provided, however, that no such Holder shall
-------- -------
be liable for any indemnity claims hereunder in excess of the amount of net
proceeds received by such Holder from the sale of Securities pursuant to the
Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any claim or action
commenced against it in respect of which indemnity may be sought hereunder,
provided, that failure to so notify an indemnifying party shall not relieve such
- --------
indemnifying party from any obligation that it may have pursuant to this Section
except to the extent that it has been materially prejudiced (through the
forfeiture of substantive rights or defenses) by such failure and, provided
further that the failure to notify the indemnifying party shall not relieve it
from any liability that it may have to an indemnified party otherwise than on
account of this indemnity agreement. If any such claim or action shall
<PAGE>
16
be brought against an indemnified party, the indemnified party shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof (other than reasonable costs of investigation); provided, however, that
-------- -------
an indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnified party, (2)
the indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(3) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one separate
firm of attorneys (in addition to not more than one local counsel for each
jurisdiction) at any one time for all such indemnified party or parties. Each
indemnified party, as a condition of the indemnity agreements contained in
Sections 6(a) and 6(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled
<PAGE>
17
with its written consent or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(d) If a claim by an indemnified party for indemnification under this
Section 6 is found unenforceable in a final judgment by a court of competent
jurisdiction (not subject to further appeal or review) even though the express
provisions hereof provide for indemnification in such case, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified party in connection with the
actions, statements or omissions that resulted in such losses as well as any
other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a
result of any losses shall be deemed to include, subject to the limitations set
forth in Section 6(c) herein, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section, an indemnifying party that is a
holder of Transfer Restricted Securities or Exchange Securities shall not be
required to contribute any amount in excess of the amount by which the total
price at which the securities sold by such indemnifying party and distributed to
the public were offered to the public exceeds the amount of any damages that
such indemnifying party has otherwise been required to pay by reason of such
untrue or alleged untrue statement or
<PAGE>
18
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
any contribution from any person who was not guilty of such fraudulent
misrepresentation.
7. Rules 144 and 144A. The Company shall use its best efforts to
------------------
file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not required
to file such reports, it will, upon the request of any holder of Transfer
Restricted Securities, make publicly available other information so long as
necessary to permit sales of securities by such holder pursuant to Rules 144 and
144A. The Company covenants that it will take such further action as any holder
of Transfer Restricted Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell Transfer Restricted
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rules 144 and 144A (including, without limitation,
the requirements of Rule 144 A(d)(4)). Upon the request of any holder of
Transfer Restricted Securities, the Company shall deliver to such holder a
written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.
8. Underwritten Registrations. If any of the Transfer Restricted
--------------------------
Securities covered by any Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering will be selected by the holders of a majority
in aggregate principal amount of such Transfer Restricted Securities included in
such offering, subject to the consent of the Company (which shall not be
unreasonably withheld or delayed).
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
<PAGE>
19
9. Miscellaneous. (a) Amendments and Waivers. The provisions of
------------- ----------------------
this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of Holders of a majority in aggregate
principal amount of the Securities. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of the Holders of Securities whose Securities
are being sold pursuant to a Registration Statement and that does not directly
or indirectly affect the rights of other Holders may be given by Holders of a
majority in aggregate principal amount of the Securities being sold by such
Holders pursuant to such Registration Statement.
(b) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 9(b),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the Registrar under the Indenture, with a copy in
like manner to you;
(2) if to you, initially at the respective addresses set forth in the
Purchase Agreement; and
(3) if to the Company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one business day after
being delivered to a next-day air courier; five business days after being
deposited in the mail; when answered back, if faxed; and when receipt is
acknowledged by the recipient's telecopier machine, if telecopied.
(c) Successors And Assigns. This Agreement shall be binding upon the
----------------------
Company and its successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall
<PAGE>
20
be deemed to be an original and all of which taken together shall constitute one
and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
---------------------------------------------------------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS FOR SUCH PURPOSES. THE
COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF ANY HOLDER OF A TRANSFER RESTRICTED SECURITY TO SERVE
PROCESS IN ANY MANNER PERMITTED BY LAW OR THE RIGHT OF ANY PARTY TO COMMENCE
LEGAL PROCEEDINGS IN ANY OTHER JURISDICTION.
(g) Remedies. In the event of a breach by the Company, or by a
--------
holder of Transfer Restricted Securities, of any of their obligations under this
Agreement, each holder of Transfer Restricted Securities or the Company, as the
case may be, in addition to being entitled to exercise all rights granted by
law, including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company and each holder of Transfer
Restricted Securities agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agree that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
<PAGE>
21
(h) No Inconsistent Agreements. The Company has not, nor shall the
--------------------------
Company on or after the date of this Agreement, enter into any agreement that is
inconsistent with the rights granted to the holders of Transfer Restricted
Securities in this Agreement or otherwise conflicts with the provisions hereof.
Without limiting the generality of the foregoing, without the written consent of
the holders of a majority in aggregate principal amount of the then outstanding
Transfer Restricted Securities, the Company shall not grant to any person the
right to request the Company to register any debt securities of the Company
under the Securities Act unless the rights so granted are subject in all
respects to the prior rights of the holders of Transfer Restricted Securities
set forth herein, and are not otherwise in conflict or inconsistent with the
provisions of this Agreement.
(i) No Piggyback on Registrations. Neither the Company nor any of
-----------------------------
its respective securityholders (other than the holders of Transfer Restricted
Securities in such capacity) shall have the right to include any securities of
the Company in any Shelf Registration or Exchange Offer other than Transfer
Restricted Securities.
(j) Severability. The remedies provided herein are cumulative and
------------
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
<PAGE>
22
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
Ryder TRS, Inc.,
By: /s/ Dean Anderson
---------------------
Name: Dean Anderson
Title: Vice President and
Assistant Secretary
Accepted in New York, New York
CHASE SECURITIES INC.,
By: /s/ Robert Berk
-------------------------
Name: Robert E. Berk
Title: Vice President
<PAGE>
23
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Securities received in exchange for Existing Securities
where such Existing Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
<PAGE>
24
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Existing Securities, where such Existing Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Securities. See "Plan of
Distribution."
<PAGE>
25
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Existing Securities where such Existing Securities were acquired as
a result of market-making activities or other trading activities. The Company
has agreed that, for a period of 90 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until ,
199 , all dealers effecting transactions in the Exchange Securities may be
required to deliver a prospectus.*/
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Securities. Any broker-dealer that resells Exchange Securities that
were received by it for its own account pursuant to the Exchange Offer and any
broker or dealer that participates in a distribution of such Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Securities and any commission or
concessions received by any such persons may be deemed to be
- ---------------------
*/ In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.
<PAGE>
26
underwriting compensation under the Securities Act. The Letter of Transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
<PAGE>
27
ANNEX D
____
/____/ CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:
--------------------------------------------
Address:
-----------------------------------------
-----------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE>
EXHIBIT 10.1
EXECUTION COPY
RYDER TRS, INC.
$175,000,000
10% SENIOR SUBORDINATED NOTES DUE 2006
PURCHASE AGREEMENT
------------------
November 20, 1996
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
Ryder TRS, Inc., a Delaware corporation, proposes to issue and sell
$175,000,000 principal amount of its 10% Senior Subordinated Notes due 2006 (the
"Notes"). The Notes are to be issued pursuant to an Indenture substantially in
the form of Exhibit A hereto to be dated as of November 25, 1996 (the
"Indenture"), between the Company and The Bank of New York, as trustee (the
"Trustee"). The Company hereby confirms the agreement with Chase Securities
Inc. (the "Initial Purchaser" or "CSI") with respect to the sale by the Company
of the Notes.
The Notes will be offered and sold to the Initial Purchaser without
being registered under the Securities Act of 1933, as amended (the "Securities
Act"), in reliance on an exemption therefrom. The Company has prepared a
preliminary offering memorandum dated November 7, 1996 (such preliminary
offering memorandum being hereinafter referred to as the "Preliminary Offering
Memorandum"), and an offering memorandum dated November 20, 1996 (such offering
memorandum, in the form first furnished to the Initial Purchaser for use in
connection with the offering of the Notes, being hereinafter referred to as the
"Offering Memorandum"), setting forth information regarding the Company and the
Notes. The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the Offering Memorandum in connection with
the offering and sale of the Notes.
Holders (including subsequent transferees) of the Notes will have the
registration rights set forth in the Exchange and Registration Rights Agreement
(the "Registration Rights Agreement"), to be dated the Closing
<PAGE>
2
Date, in substantially the form of Exhibit B hereto, for so long as any such
Notes constitute "Transfer Restricted Notes" (as defined in the Registration
Rights Agreement). Pursuant to the Registration Rights Agreement, the Company
will agree to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") registering an issue of a series of
senior subordinated notes (the "Exchange Notes") identical in all material
respects to the Notes (except that the Exchange Notes will not contain terms
with respect to transfer restrictions) to be offered in exchange for the Notes
(the "Exchange Offer") and (ii) under certain circumstances, a shelf
registration statement pursuant to Rule 415 under the Securities Act (the "Shelf
Registration Statement").
Capitalized terms used herein without definition have the respective
meanings specified therefor in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Company. The
----------------------------------------------------------
Company represents and warrants to and agrees with the Initial Purchaser as of
the date hereof and as of the Closing Date that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all the information that,
if requested by a prospective purchaser, would be required to be provided
pursuant to Rule 144A(d)(4) under the Securities Act. Each of the
Preliminary Offering Memorandum and the Offering Memorandum, as of its
respective date, did not, and at the Closing Date, the Offering Memorandum
and any amendment or supplement thereto will not, contain any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading. The preceding sentence does not apply to
information contained in or omitted from the Preliminary Offering
Memorandum or the Offering Memorandum (or any supplement or amendment
thereto) in reliance upon and in conformity with written information
relating to the Initial Purchaser furnished to the Company by or on behalf
of the Initial Purchaser specifically for use therein (the "Initial
Purchaser's Information"). The parties acknowledge and agree that the
Initial Purchaser's Information consists solely of the third, fourth, sixth
and seventh
<PAGE>
3
paragraphs under the caption "Plan of Distribution" in the Offering
Memorandum.
(b) Each of the Company and its subsidiary, RCTR, Inc. ("Leasco")
have been duly incorporated and are validly existing as corporations in
good standing under the laws of the State of Delaware. The Company and
Leasco are not in violation of their respective charters and by-laws. The
Company and Leasco are duly qualified to do business and are in good
standing as foreign corporations in each jurisdiction in which their
ownership or lease of property or the conduct of their businesses requires
such qualification, and have all power and authority necessary to own or
hold their respective properties and to conduct the businesses in which
they are engaged as described in the Offering Memorandum, except where the
failure to so qualify or have such power or authority would not have,
singularly or in the aggregate, a material adverse effect on the condition
(financial or otherwise), results of operations, business or prospects of
the Company or Leasco, taken as a whole (a "Material Adverse Effect").
(c) The Company has an authorized capitalization as set forth in the
Offering Memorandum, and all the issued shares of capital stock of the
Company and Leasco have been duly and validly authorized and issued and are
fully paid and non-assessable. The capital stock of the Company conforms
to the description thereof contained in the Offering Memorandum.
(d) This Agreement has been duly authorized and validly executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company. The Registration Rights Agreement has been duly
authorized by the Company, and, when duly executed and delivered in
accordance with its terms by each party thereto, will constitute a valid
and legally binding agreement of the Company. At the Closing Date the
Indenture will conform in all respects to the requirements of the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the
rules and regulations of the Commission applicable to an indenture which is
qualified thereunder; and the Indenture has been duly authorized by the
Company and, when duly executed and delivered in accordance with its terms
by each party thereto, will constitute a valid and legally binding
agreement of the Company. Each of
<PAGE>
4
this Agreement, the Registration Rights Agreement and the Indenture is or
will be, as the case may be, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws affecting
creditors' rights and remedies generally and to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law
or in equity) and except that indemnity and contribution provisions may be
unenforceable.
(e) On the Closing Date, the Notes will have been duly authorized by
the Company, and the Notes, the Indenture and the Registration Rights
Agreement will have been duly executed by the Company and will conform in
all material respects to the descriptions thereof contained in the Offering
Memorandum. When the Notes are issued, authenticated and delivered in
accordance with the Indenture and paid for in accordance with the terms of
this Agreement, the Notes will constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance
with their terms and entitled to the benefits of the Indenture, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws affecting creditors' rights and remedies
generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(f) The execution, delivery and performance of the Indenture, the
Notes, the Registration Rights Agreement and this Agreement by the Company,
the consummation of the transactions contemplated hereby and thereby, and
the fulfillment of the terms hereof or thereof, will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company
pursuant to, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company is a party or by which
the Company is bound or to which any of the property or assets of the
Company is subject (except as would not have a Material Adverse Effect),
nor will such actions result in any violation of the provisions of the
charter or by-laws of the Company or
<PAGE>
5
any statute or any judgment, order, decree, rule or regulation of any court
or arbitrator or governmental agency or body having jurisdiction over the
Company or any of its properties or assets; and no consent, approval,
authorization or order of, or filing or registration with, any such court
or arbitrator or governmental agency or body under any such statute,
judgment, order, decree, rule or regulation is required for the execution,
delivery and performance of the Indenture, the Notes, the Registration
Rights Agreement or this Agreement by the Company or the consummation of
the transactions contemplated hereby and thereby which shall not have been
obtained or made prior to the Closing Date (other than state securities
laws or blue sky laws or other than such consents, approvals,
authorizations or orders of, or filings or registrations with the
Commission or any state securities regulatory authorities as may be
required to be obtained or made pursuant to the Registration Rights
Agreement).
(g) KPMG Peat Marwick LLP and Coopers & Lybrand L.L.P. are
independent public accountants with respect to the Company as required by
the Securities Act and the rules and regulations thereunder for financial
statements included in a definitive prospectus forming part of a
registration statement on Form S-1 under the Securities Act. The
historical financial statements (including the related notes, if any)
included in the Preliminary Offering Memorandum and the Offering Memorandum
comply in all material respects (except for the exclusion of financial
statement schedules) with the requirements applicable to a Registration
Statement on Form S-1 and have been prepared, and fairly present, the
financial position of the Company at the respective dates indicated and the
results of its operations and its cash flows for the respective periods
indicated, in accordance with generally accepted accounting principles
consistently applied throughout such periods; and the financial information
and financial data set forth in the Offering Memorandum under the captions
"Summary -- Summary Historical and Pro Forma Financial Information" and
"Selected Historical and Pro Forma Financial Information" are derived from
the accounting records of the Company, and fairly present the data
purported to be shown. The pro forma financial statements contained in the
--- -----
Preliminary Offering Memorandum and the Offering Memorandum have
<PAGE>
6
been prepared on a basis consistent with such historical statements, except
for the pro forma adjustments specified therein, include all material
--- -----
adjustments to the historical financial data required by Rule 11-02 of
Regulation S-X to reflect the Transactions and the Offering, and give
effect to assumptions made on a reasonable basis and present fairly the
historical and proposed transactions contemplated by the Preliminary
Offering Memorandum, the Offering Memorandum and this Agreement. The other
historical financial and statistical information and data included in the
Preliminary Offering Memorandum and the Offering Memorandum are, in all
material respects, accurately presented.
(h) There are no pending actions or suits or judicial, arbitral,
rule-making or other administrative or other proceedings to which the
Company is a party or of which any property or assets of the Company is the
subject which, singularly or in the aggregate, are reasonably likely to
have a Material Adverse Effect; and , to the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(i) No action has been taken and no statute, rule or regulation or
order has been enacted, adopted or issued by any governmental agency or
body which prevents the issuance of the Notes or suspends the sale of the
Notes in any jurisdiction; no injunction, restraining order or order of any
nature by a federal or state court of competent jurisdiction has been
issued with respect to the Company which would prevent or suspend the
issuance or sale of the Notes, or the use of the Preliminary Offering
Memorandum or the Offering Memorandum in any jurisdiction; no action, suit
or proceeding is pending against or threatened against or affecting the
Company before any court or arbitrator or any governmental body, agency or
official, domestic or foreign, which could reasonably be expected to
interfere with or adversely affect the issuance of the Notes or the
validity thereof or the validity of the Indenture, the Notes, the
Registration Rights Agreement or this Agreement or any action taken or to
be taken pursuant hereto or thereto; and every request of any securities
authority or agency of any jurisdiction for additional information (to be
included
<PAGE>
7
in the Preliminary Offering Memorandum or the Offering Memorandum or
otherwise) has been complied with.
(j) The Company (i) is not in default, and no event has occurred
which, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which it is a party
or by which it is bound or to which any of its property or assets is
subject and (ii) is not in violation in any respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its property
or assets may be subject, except any violation or default under clauses (i)
or (ii) that would not have a Material Adverse Effect.
(k) Except as disclosed in the Offering Memorandum, the Company
possesses all material licenses, certificates, authorizations and permits
issued by, and has made all declarations and filings with, the appropriate
state, federal or foreign regulatory agencies or bodies which are necessary
or desirable for the ownership of its properties or the conduct of its
businesses as described in the Offering Memorandum, except where the
failure to possess or make the same would not have, singularly or in the
aggregate, a Material Adverse Effect, and the Company has not received
notification of any revocation or modification of any such license,
authorization or permit and has no reason to believe that any such license,
certificate, authorization or permit will not be renewed.
(l) All Tax Returns (as defined below) required to be filed by the
Company in any jurisdiction have been filed, other than those filings being
contested in good faith, and all material taxes, including withholding
taxes, penalties and interest, assessments, fees and other charges due or
claimed to be due from such entities have been paid, other than those being
contested in good faith and for which adequate reserves have been provided
or those currently payable without penalty or interest. All Tax Returns
filed by the Company prior to the date hereof were complete and accurate,
except such as could not reasonably be expected to result, singularly or in
the aggregate, in
<PAGE>
8
a Material Adverse Effect. No material claim for assessment or collection
of Taxes is presently being asserted against the Company. Furthermore, the
Company is not a party to any pending action, proceeding or investigation
by any governmental authority for the assessment or collection of Taxes,
nor does the Company have knowledge of any such threatened action,
proceeding or investigation, except such as could not reasonably be
expected to result, singularly or in the aggregate, in a Material Adverse
Effect. No waivers of statutes of limitation in respect of any Tax Returns
have been given by or requested of the Company, nor has the Company agreed
to any extension of time with respect to a Tax assessment or deficiency.
No claim by any authority in a jurisdiction where the Company does not
currently file a Tax Return is pending to the effect that the Company is or
may be subject to taxation by that jurisdiction, except any claim that,
singularly or in the aggregate, would not have a Material Adverse Effect.
No Liens are presently imposed upon or asserted against any of the
Company's assets as a result of or in connection with any failure, or
alleged failure, to pay any Tax, except any Lien that, singularly or in the
aggregate, would not have a Material Adverse Effect. As of the Closing
Date, the Company will not have any agreement, whether or not written,
providing for the payment of Tax liabilities or entitlements to refunds
with any other party. The Company has withheld and paid all Taxes required
to be withheld in connection with any amounts paid or owing to any
employee, creditor, independent contractor or other third party with
respect to the business of the Company. The unpaid Taxes of the Company do
not exceed the reserve for Tax liability (as opposed to any reserve for
deferred Taxes established to reflect timing differences between book and
tax income) set forth on the most recent balance sheet of the Company, as
adjusted for the passage of time through the date hereof in accordance with
past custom and practice in filing Tax Returns. For purposes of this
Agreement, the terms "Tax" and "Taxes" shall mean all federal, state, local
or foreign income, payroll, employee withholding, unemployment insurance,
social security, sales, use, service use, leasing use, excise, franchise,
gross receipts, value added, alternative or add-on minimum, estimated,
occupation, real and personal property, stamp, transfer, workers'
compensation, severance, windfall profits, environmental (including taxes
under
<PAGE>
9
Section 59A of the Internal Revenue Code of 1986, as amended (the "Code")),
or other tax of the same or of a similar nature, including any interest,
penalty, or addition thereto. The term "Tax Return" means any return,
declaration, report, form, claim for refund, or information return or
statement relating to Taxes or income subject to taxation, or any amendment
thereto, and including any schedule or attachment thereto.
(m) The Company is not (a) an "investment company" or a company
"controlled" by an investment company within the meaning of the Investment
Company Act of 1940, as amended (the "Investment Company Act"), and the
rules and regulations of the Commission thereunder or (b) a "holding
company" or a "subsidiary company" of a holding company, or an "affiliate"
thereof within the meaning of the Public Utility Holding Company Act of
1935, as amended.
(n) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(o) The Company maintains insurance (including self-insurance)
covering its properties, operations, personnel and businesses, in amounts
as is in accordance with customary industry practice to protect the Company
and its businesses, and which insures (or self-insures) against such losses
and risks, in accordance with customary industry practice to protect the
Company and its businesses. The Company has not received notice from any
insurer or agent of such insurer that capital improvements or other
expenditures will have to be made in order to continue such insurance,
except such as could not reasonably be expected, singularly or in the
aggregate, to have a Material Adverse Effect.
<PAGE>
10
(p) There are no securities of the Company registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or listed
on a national securities exchange or quoted in a United States automated
inter-dealer quotation system. The Company has been advised that the Notes
have been designated as PORTAL securities in accordance with the rules and
regulations of the National Association of Securities Dealers, Inc. (the
"NASD").
(q) The Company does not own any "margin securities" as that term is
defined in Regulations G and U of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), and none of the proceeds of
the sale of the Notes will be used, directly or indirectly, for the purpose
of purchasing or carrying any margin security, for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or
carry any margin security or for any other purpose which might cause any of
the Notes to be considered a "purpose credit" within the meanings of
Regulation G, T, U or X of the Federal Reserve Board.
(r) Other than this Agreement or as disclosed in the Offering
Memorandum under "Certain Transactions," the Company is not a party to any
contract, agreement or understanding with any person that would give rise
to a valid claim against the Company or the Initial Purchaser for a
brokerage commission, finder's fee or like payment in connection with the
Acquisition (as defined in the Indenture) or the offering of the Notes.
(s) The Company owns or possesses adequate rights to use all material
patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service mark registrations, copyrights, licenses
and know-how (including trade secrets and other unpatented or unpatentable
proprietary or confidential information, systems or procedures) necessary
for the conduct of its businesses and has no reason to believe that the
conduct of its businesses will conflict with any such rights of others that
might reasonably be expected to have a Material Adverse Effect, and has not
received any notice of any claim of conflict with any such rights of
others.
<PAGE>
11
(t) The Company has good and valid title to, or has valid rights to
lease or otherwise use, all items of real or personal property which are
material to the business of the Company, in each case free and clear of all
liens, encumbrances, claims and defects that may materially interfere with
the condition (financial or otherwise), results of operations or business
of the Company, other than Permitted Liens (as defined in the Indenture).
(u) No labor disturbance by the employees of the Company exists or,
to the knowledge of the Company, is contemplated.
(v) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
4975 of the Code) or "accumulated funding deficiency" (as defined in
Section 302 of ERISA) or any of the events set forth in Section 4043(b) of
ERISA (other than events with respect to which the 30-day notice
requirement under Section 4043 of ERISA has been waived) has occurred with
respect to any "employee benefit plan" (as defined in ERISA Section 3(3))
of the Company other than a "multiemployer plan" (as defined in ERISA
Section 3(37)) (an "Employee Benefit Plan") which might reasonably be
expected to have a Material Adverse Effect; each Employee Benefit Plan is
in compliance in all material respects with applicable law, including ERISA
and the Code; the Company has not incurred and does not expect to incur
liability under Title IV of ERISA with respect to the termination of, or
withdrawal from, any "pension plan" (as defined in ERISA Section 3(2)); and
each "pension plan" for which the Company would have any liability and that
is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing, to the knowledge of the
Company, has occurred, whether by action or by failure to act, which might
be expected to cause the loss of such qualification.
(w) Except as disclosed in the Offering Memorandum, there has been no
storage, generation, transportation, handling, treatment, disposal,
discharge, emission, or other release of any kind of toxic or other wastes
or other hazardous substances by, due to, or caused by the Company (or any
other entity
<PAGE>
12
for whose acts or omissions the Company is or may be liable) upon any of
the property now or, to the actual knowledge of the chief executive
officer, chief financial officer, treasurer or secretary of the Company,
previously owned or leased by the Company (i) in violation of any statute
or any ordinance, rule, regulation, order, judgment, decree or permit or
(ii) which would, under any statute or any ordinance, rule (including rule
of common law), regulation, order, judgment, decree or permit, give rise to
any liability, except in the case of both clauses (i) and (ii) for any
violation or liability which would not have, singularly or in the aggregate
with all such violations and liabilities, a Material Adverse Effect; there
has been no disposal, discharge, emission or other release of any kind onto
such property or into the environment surrounding such property of any
toxic or other wastes or other hazardous substances with respect to which
the Company has knowledge, except for any such disposal, discharge,
emission, or other release of any kind which would not have, singularly or
in the aggregate with all such discharges and other releases, a Material
Adverse Effect.
(x) None of the Company, any affiliate (as such term is defined in
Rule 501(b) under the Securities Act) of the Company or any person acting
on its or their behalf has engaged or will engage in any directed selling
efforts (as that term is defined in Regulation S under the Securities Act),
and all such persons have complied and will comply with the offering
restrictions requirement of Regulation S to the extent applicable.
(y) Neither the Company nor any affiliate (as such term is defined in
Rule 501(b) under the Securities Act) of the Company has, directly or
through any agent, sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any "security" (as defined in the
Securities Act), which is or will be integrated with the sale of the Notes
in a manner that would require the registration of the Notes under the
Securities Act.
(z) None of the Company or any affiliate (as such term is defined in
Rule 501(b) under the Securities Act) of the Company or any other person
acting on its or their behalf has engaged, in connection with the offering
of the Notes, in any form of general solic-
<PAGE>
13
itation or general advertising within the meaning of Rule 502(c) under the
Securities Act.
(aa) Assuming the accuracy of the Initial Purchaser's representations
in Section 2 hereof and its compliance with the agreements set forth
therein, it is not necessary, in connection with the issuance and sale of
the Notes and the offer, resale and delivery of the Notes in the manner
contemplated by this Agreement and the Offering Memorandum, to register the
Notes under the Securities Act or to qualify the Indenture under the Trust
Indenture Act.
(bb) The Company immediately after the Closing Date (after giving
effect to the issuance of the Notes and to the other transactions related
thereto as described in the Offering Memorandum) will be Solvent. As used
in this paragraph (bb), the term "Solvent" means, with respect to a
particular date, that on such date (A) the present fair market value (or
fair salable value) of the assets of such entity is not less than the total
amount required to pay the probable liabilities of such entity on its total
existing debts and liabilities (including contingent liabilities) as they
become absolute and matured, (B) such entity is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and
commitments as they mature and become due in the normal course of business,
(C) assuming the sale of the Notes as contemplated by this Agreement and as
described in the Offering Memorandum, such entity is not incurring debts or
liabilities beyond its ability to pay as such debts and liabilities mature,
and (D) such entity is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which its property would
constitute unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which such person is engaged. In
computing the amount of such contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount that, in
light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability.
(cc) The Notes satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
<PAGE>
14
(dd) The Company has not taken and will not take, directly or indirectly,
any action prohibited by Rule 10b-6 under the Exchange Act in connection
with the offering of the Notes.
(ee) Except as described in the Offering Memorandum and except for
warrants issued pursuant to the warrant agreement dated as of October 17,
1996, between the Company and ChaseMellon Shareholder Services L.L.C.,
there are no outstanding rights, warrants or options to acquire, or
instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, any shares of
capital stock of or other equity interest in the Company.
(ff) Since the date as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (A) there has been no
material adverse change or any development involving a prospective material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company, whether or
not arising in the ordinary course of business, (B) there have been no
transactions entered into by the Company, other than those in the ordinary
course of business, which are material with respect to the Company, and (C)
there has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.
2. Purchase by the Initial Purchaser. On the basis of the
----------------------------------
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
the Initial Purchaser and the Initial Purchaser agrees to purchase from the
Company $175,000,000 in principal amount of Notes at a purchase price equal to
97.00% of the principal amount thereof less the interest for one day on such
amount (calculated at the Federal Funds Effective Rate as published on the
Telerate Screen at 9:00 A.M., New York City time, on the Closing Date).
The Company shall not be obligated to deliver any of the Notes except
upon payment for all the Notes to be purchased as provided herein.
<PAGE>
15
The Initial Purchaser has advised the Company that it is its
intention, as promptly as it deems appropriate after the Company shall have
furnished the Initial Purchaser with copies of the Offering Memorandum, to
resell the Notes, at a purchase price initially equal to the price set forth on
the front cover of the Offering Memorandum, pursuant to the procedures and upon
the terms set forth in the Offering Memorandum, including those terms stating
that the Initial Purchaser may not solicit any offer to buy or offer to sell the
Notes by means of any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act. The Initial Purchaser represents, warrants and agrees with the Company
that it has solicited and will solicit offers for Notes only from, and will
offer Notesonly to, persons that it reasonably believes to be, in the case of
offers inside the United States, (i) QIBs or (ii) other institutional Accredited
Investors. The Initial Purchaser represents and warrants that (i) it is either
a QIB or an institutional Accredited Investor, in either case with such
knowledge and experience in financial and business matters as are necessary to
evaluate the merits and risks of an investment in the Notes, and is acquiring
its interest in the Notes not with a view to the distribution or resale thereof,
except resales in compliance with the registration requirements or exemption
provisions of the Securities Act, (ii) neither it, nor anyone acting on its
behalf, will offer the Notes so as to bring the issuance and sale of the Notes
within the provisions of Section 5 of the Securities Act, (iii) it will be re-
offering and reselling the Notes only to QIBs in reliance on the exemption from
the registration requirements of the Securities Act provided by Rule 144A and to
a limited number of persons that it reasonably believes to be Institutional
Accredited Investors that execute and deliver a letter containing certain
representations and agreements in the form attached as Annex A to the Offering
Memorandum, and (iv) it has used no form of general solicitation or general
advertising in connection with the offer and sale of the Notes. The Company
acknowledges and agrees that the Initial Purchaser may sell Notes to any
affiliate of the Initial Purchaser and that any such affiliate may sell Notes
purchased by it to the Initial Purchaser. The Initial Purchaser agrees that,
prior to or simultaneously with the confirmation of sale by the Initial
Purchaser to any purchaser of any of the Notes purchased by the Initial
Purchaser from the Company pursuant hereto, the Initial Purchaser shall furnish
to that purchaser a copy of
<PAGE>
16
the Offering Memorandum (and any amendment thereof or supplement thereto that
the Company shall have furnished to the Initial Purchaser prior to the date of
such confirmation of sale). In addition to the foregoing, the Initial Purchaser
agrees and understands that the Company and, for purposes of the opinions to be
delivered to the Initial Purchaser pursuant to Sections 5(c) and (d) hereof,
counsel to the Company and to the Initial Purchaser, respectively, may rely upon
the accuracy and truth of the foregoing representations and warranties and
compliance with the covenants in this Section 2 and the Initial Purchaser hereby
consents to such reliance.
3. Delivery of and Payment for the Notes. Delivery of and payment
--------------------------------------
for the Notes shall be made at the office of Willkie Farr & Gallagher ("WF&G"),
New York, New York, or at such other place as shall be agreed upon by the
Initial Purchaser and the Company, at 10:00 A.M., New York City time, on
November 25, 1996, or at such other date or time, not later than seven full
business days thereafter, as shall be agreed upon by the Initial Purchaser and
the Company (such date and time being referred to herein as the "Closing Date").
On the Closing Date, the Company shall deliver or cause to be delivered to the
Initial Purchaser certificates for the Notes against payment to or upon the
order of the Company of the purchase price by wire or book-entry transfer of
immediately available funds. Upon delivery, the Notes shall be in definitive
fully registered form, in such denominations and registered in such names, or
otherwise, as the Initial Purchaser shall have requested in writing not less
than two full business days prior to the Closing Date. The Company shall make
one or more certificates for the Notes available for inspection by the Initial
Purchaser in New York, New York, not later than one full business day prior to
the Closing Date.
4. Further Agreements of the Company. The Company agrees with the
----------------------------------
Initial Purchaser:
(a) until the completion of distribution of the Notes (as determined
by you) to persons that are not your affiliates (i) to advise the Initial
Purchaser promptly and, if requested, confirm such advice in writing, of
the happening of any event which makes any statement of a material fact
made in the Offering Memorandum untrue or which requires the making of any
additions to or changes in any material respect to the Offering Memorandum
(as amended or supplemented from
<PAGE>
17
time to time) in order to make the statements therein, in light of the
circumstances under which they were made, not misleading and not to effect
such amendment or supplementation to which the Initial Purchaser reasonably
objects; (ii) to advise the Initial Purchaser promptly of any order
preventing or suspending the use of the Preliminary Offering Memorandum or
the Offering Memorandum, of the suspension of the qualification of the
Notes for offering or sale in any jurisdiction and of the initiation or
threatening of any proceeding for any such purpose; and (iii) to use best
efforts to prevent the issuance of any such order preventing or suspending
the use of the Preliminary Offering Memorandum or the Offering Memorandum
or suspending any such qualification and, if any such suspension is issued,
to obtain the lifting thereof at the earliest possible time;
(b) to furnish promptly to the Initial Purchaser and counsel for the
Initial Purchaser, without charge, as many copies of the Preliminary
Offering Memorandum and the Offering Memorandum (and of any amendments or
supplements thereto) as may be reasonably requested; to furnish to the
Initial Purchaser on the date hereof two copies of the independent
accountants' report included in the Offering Memorandum signed by the
accountants rendering such report; and the Company hereby consents to the
use of the Preliminary Offering Memorandum and the Offering Memorandum, and
any amendments and supplements thereto, in connection with resales of the
Notes prior to the time referred to in Section 4(a);
(c) prior to the time referred to in Section 4(a), if the delivery of
the Offering Memorandum is required at any time in connection with the sale
of the Notes and if at such time any events shall have occurred as a result
of which the Offering Memorandum as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when the Offering
Memorandum is delivered, not misleading, or if for any other reason it
shall be necessary at such time to amend or supplement the Offering
Memorandum in order to comply with any law, to notify the Initial Purchaser
immediately thereof, and
<PAGE>
18
to promptly prepare and furnish to the Initial Purchaser an amended
Offering Memorandum or a supplement to the Offering Memorandum which will
correct such statement or omission or effect such compliance; the Initial
Purchaser's delivery of any such amendment or supplement shall not
constitute a waiver of any of the conditions set forth in Section 5 hereof;
(d) for a period of five years after the Closing Date, to furnish to
the Initial Purchaser all public reports and all reports, documents,
information and financial statements furnished by the Company to the
Commission pursuant to the Indenture or the Exchange Act or any rule or
regulation of the Commission thereunder;
(e) for so long as and at any time that it is not subject to Section
13 or 15(d) of the Exchange Act, upon request of any holder of the Notes,
to furnish to such holder, and to any prospective purchaser or purchasers
of the Notes designated by such holder, information satisfying the
requirements of subsection (d)(4) of Rule 144A under the Securities Act;
this covenant is intended to be for the benefit of the holders from time to
time of the Notes, and prospective purchasers of the Notes designated by
such holders;
(f) to use the proceeds from the sale of the Notesin the manner
described in the Offering Memorandum under the caption "Use of Proceeds";
(g) to use reasonable best efforts to assist the Initial Purchaser, at
its request, in arranging to cause the Notes to be designated as PORTAL
securities in accordance with the rules and regulations of the NASD;
(h) in connection with the offering of the Notes, to make its officers
and employees, and to use its best efforts to make its independent
accountants and legal counsel reasonably available to the Initial Purchaser
upon its reasonable request for the purpose of discussing matters, as
appropriate for such persons, set forth in the Offering Memorandum;
(i) to do and perform all things required to be done and performed
under this Agreement by it that are
<PAGE>
19
within its control prior to or after the Closing Date and to use its best
efforts to satisfy all conditions precedent on its part to the delivery of
the Notes;
(j) except following the effectiveness of the Exchange Offer or Shelf
Registration Statement, as the case may be, to not, and to use its best
efforts to ensure that no affiliate (as such term is defined in Rule 501(b)
under the Securities Act) of the Company will, and not authorize or
knowingly permit any person acting on its or their behalf to, solicit any
offer to buy or offer to sell the Notes by means of any form of general
solicitation or general advertising (as such terms are used in Regulation D
under the Securities Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act;
(k) to not, and to use its best efforts to ensure that no affiliate
(as such term is defined in Rule 501(b) under the Securities Act) of the
Company will, offer, sell or solicit offers to buy or otherwise negotiate
in respect of any "security" (as defined in the Securities Act) which could
be integrated with the sale of the Notes in a manner that would require the
registration of the Notes under the Securities Act;
(l) to not, so long as the Notes are outstanding, be or become an
open-end investment company, unit investment trust or face-amount
certificate company that is or is required to be registered under Section 8
of the Investment Company Act, and will not be or become a closed-end
investment company required to be registered, but not registered
thereunder;
(m) to cause each Note to bear the legend set forth in the form of
Note attached as Exhibit A to the Indenture until such legend shall no
longer be necessary or advisable because the Notes are no longer subject to
the restrictions on transfer described therein;
(n) promptly to take from time to time such action as the Initial
Purchaser may reasonably request to qualify the Notes for offering and sale
under the securities laws of such jurisdictions as the Initial Purchaser
may reasonably request and to comply with such laws so as to permit the
continuance of sales and
<PAGE>
20
dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Notes; provided, however, that in
-------- -------
connection therewith the Company shall not be required to qualify as a
foreign corporation or as a dealer in securities or to file a general
consent to service of process in any jurisdiction where it is not so
qualified or so subject or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject;
the Company will promptly advise the Initial Purchaser of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Notes for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose;
(o) to comply with the Registration Rights Agreement and all
agreements set forth in the representation letters of the Company to The
Depository Trust Company relating to the approval of the Notes for "book-
entry" transfer;
(p) for a period of 120 days from the date of the Offering Memorandum,
to not offer for sale, sell, contract to sell or otherwise dispose of,
directly or indirectly, or file a registration statement for, or announce
any offer, sale, contract for sale of or other disposition of any debt
securities issued or guaranteed by the Company (other than the Notes, the
Exchange Notes, securities issued in or in connection with the
Securitization or in any loan, credit or financing transaction with banks
or similar institutions) without the prior written consent of the Initial
Purchaser;
(q) in connection with the offering, until the completion of the
initial resale of the Notes by the Initial Purchaser, neither the Company
nor any of its affiliated purchasers (as defined in Rule 10b-6 under the
Exchange Act), either alone or with one or more other persons, will bid for
or purchase, for any account in which it or any of its affiliated
purchasers has a beneficial interest, any Notes, or attempt to induce any
person to purchase any Notes; and neither it nor any of its affiliated
purchasers will make bids or purchases for the purpose of creating actual,
or apparent, active trading in or of raising the price of the Notes;
<PAGE>
21
(r) during the period from the Closing Date until three years after
the Closing Date, without the prior written consent of the Initial
Purchaser, to not, and not permit any of its affiliates (as defined in Rule
144 under the Securities Act) to, resell any of the Notes that have been
reacquired by them, except for Notes purchased by the Company or any of its
affiliates and resold in a transaction registered under the Securities Act;
(s) prior to the Closing Date, not to issue any press release or other
communication or hold any press conference with respect to the Company, its
condition, financial or otherwise, or earnings, business affairs or
business prospects (except for routine oral marketing communications in the
ordinary course of business and consistent with the past practices of the
Company or of which the Initial Purchaser is notified), without the prior
written consent of the Initial Purchaser which may not be unreasonably
withheld, unless in the judgment of the Company and its counsel, and after
notification to the Initial Purchaser (and, if prior notification is
impossible, notification immediately subsequent to such release or
communication) such press release or communication is required by law;
(t) to not take any action prior to the execution and delivery of the
Indenture which, if taken after such execution and delivery, would have
violated any of the covenants contained in the Indenture;
(u) to not take any action prior to the Closing Date which in the
Company's reasonable judgment would require the Offering Memorandum to be
amended or supplemented pursuant to Section 4(c) hereof; and
(v) to make its reasonable best efforts, as determined in good faith
by the Board of Directors of the Company, to obtain the consents necessary
to convert the Notes from Senior Subordinated Indebtedness (as defined in
the Indenture) to Senior Indebtedness (as defined in the Indenture) as
contemplated by Section 10.18 of the Indenture.
5. Conditions of Initial Purchaser's Obligations. The obligations of
----------------------------------------------
the Initial Purchaser hereunder are subject to the accuracy, when made and on
the Closing Date,
<PAGE>
22
of the representations and warranties of the Company contained herein, to the
accuracy of the statements of officers of the Company made in any certificates
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchaser as promptly as practicable on the date
of this Agreement, the date following the date of this Agreement or at such
other date and time as to which the Initial Purchaser may agree; and no
stop order suspending the sale of the Notes in any jurisdiction shall have
been issued and no proceeding for that purpose shall have been commenced or
shall be pending or threatened.
(b) All corporate proceedings and other legal matters incident to the
authorization, form and validity of the Notes, the Indenture, the
Registration Rights Agreement, this Agreement and the Offering Memorandum,
and all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be satisfactory in all material respects to the
Initial Purchaser, and the Company shall have furnished to the Initial
Purchaser all documents and information that it or its counsel may
reasonably request to enable them to pass upon such matters.
(c) Willkie Farr & Gallagher shall have furnished to the Initial
Purchaser their written opinion, as counsel to the Company, addressed to
the Initial Purchaser and dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchaser, to the effect that:
(i) the Company and Leasco have been duly incorporated and are
validly existing as corporations in good standing under the laws of
the State of Delaware, are duly qualified to do business and are in
good standing as foreign corporations in each jurisdiction in which
their ownership or lease of property or the conduct of their
businesses requires such qualification (other than those jurisdictions
in which the failure to so qualify would not have a Material Adverse
Effect), and have all corporate power and
<PAGE>
23
authority necessary to own or hold their properties and to conduct the
businesses in which they are engaged;
(ii) the outstanding shares of common stock of the Company and
of Leasco have been duly and validly authorized and issued and are
fully paid and nonassessable;
(iii) the Company has full corporate power and authority to
execute and deliver the Indenture, the Notes, the Registration Rights
Agreement and this Agreement and to perform its obligations hereunder
and thereunder; and all corporate action required to be taken for the
due and proper authorization, execution and delivery of the Indenture,
the Notes, the Registration Rights Agreement and this Agreement and
the consummation of the transactions contemplated hereby and thereby
have been duly and validly taken;
(iv) each of this Agreement and the Registration Rights Agreement
has been duly authorized, executed and delivered by the Company;
(v) the Indenture has been duly authorized, executed and
delivered by the Company and the Notes have been duly authorized and
executed by the Company;
(vi) the Company's authorized capitalization is as set forth in
the Offering Memorandum; the capital stock of the Company conforms to
the description thereof contained in the Offering Memorandum;
(vii) the descriptions in the Offering Memorandum of statutes,
legal and governmental proceedings and contracts and other documents
are accurate in all material respects and fairly present in all
material respects the information that would be required to be shown
if the Offering Memorandum were a prospectus included in a
registration statement on Form S-1 under the Securities Act; the
statements in the Offering Memorandum under the caption "Certain
Federal Income Tax Considerations", to the extent that they constitute
matters of law or regulation or
<PAGE>
24
legal conclusions, have been reviewed by them and fairly summarize the
matters described therein in all material respects; and such counsel
does not have actual knowledge of any current or pending legal or
governmental actions, suits or proceedings which would be required to
be described in the Offering Memorandum if the Offering Memorandum
were a prospectus included in a registration statement on Form S-1
which are not described as required;
(viii) as of its date and on the Closing Date, the Offering
Memorandum (except for financial statements and the notes thereto and
other financial and statistical data included in the Offering
Memorandum, as to which no opinion need be expressed) complies as to
form in all material respects with that which would be required by the
Securities Act and the rules and regulations of the Commission
thereunder applicable to a definitive prospectus forming part of a
registration statement on Form S-1 under the Securities Act;
(ix) the Indenture conforms as to form in all material respects
with the requirements of the Trust Indenture Act and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder;
(x) no authorization, approval, consent or order of, or filing or
registration with, any governmental body or agency or any court that
has jurisdiction over the Company or any of its assets or properties
is required for the consummation by the Company of the transactions
contemplated by this Agreement, except such as may be required under
state securities or Blue Sky laws or regulations or as may be required
for the consummation by the Company of the transactions contemplated
by the Registration Rights Agreement;
(xi) the Company is not (A) an "investment company" within the
meaning of the Investment Company Act and the rules and regulations of
the Commission thereunder, without taking account of any exemption
under the Investment Company Act arising out of the number of holders
of the
<PAGE>
25
Company's securities, or a company "controlled" by an investment
company or (B) a "holding company" or a "subsidiary company" of a
holding company, or an "affiliate" thereof within the meaning of the
Public Utility Holding Company Act of 1935, as amended;
(xii) the Registration Rights Agreement constitutes a valid and
legally binding agreement of the Company, enforceable against the
Company in accordance with its terms (assuming the due execution and
delivery thereof by the other parties thereto) subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws now or hereafter in effect relating to or
affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except to the extent that
indemnification or contribution provisions may be unenforceable;
(xiii) the Indenture constitutes a valid and legally binding
agreement of the Company, enforceable against the Company in
accordance with its terms (assuming due execution and delivery by the
Trustee), subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws now
or hereafter in effect relating to or affecting creditors' rights and
remedies generally and to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity);
the Notes are in the form contemplated by the Indenture and, upon the
due authentication and delivery thereof by the Trustee pursuant to the
Indenture, will be duly and validly issued and outstanding and will
constitute valid and legally binding obligations of the Company
entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws now or hereafter in effect relating to or
affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity); and
<PAGE>
26
the Indenture, the Notes and the Registration Rights Agreement conform
in all material respects to the descriptions thereof contained in the
Offering Memorandum;
(xiv) the execution, delivery and performance by the Company of
the Indenture, the Notes, the Registration Rights Agreement and this
Agreement, the consummation of the transactions contemplated hereby
and thereby, do not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument identified to such counsel in a certificate of
the Company as being a material instrument to which the Company is a
party or by which the Company is bound or to which any of the property
or assets of the Company is subject, nor will such actions result in
any violation of the provisions of the charter or by-laws of the
Company or any statute, or any judgment, order, decree, rule or
regulation known to such counsel of any federal or state court or
governmental agency or body or arbitrator having jurisdiction over the
Company or any of its properties or assets; and no consent, approval,
authorization or order of, or filing or registration with, any such
court or arbitrator or governmental agency or body is required under
any such statute, judgment, order, decree, rule or regulation for the
execution, delivery and performance of the Indenture, the Notes or the
Registration Rights Agreement by the Company or the consummation of
the transactions contemplated hereby and thereby; provided, however,
-------- -------
that the foregoing may exclude state securities laws or Blue Sky laws
and any such consents, approvals, authorizations or orders of, or
filings or registrations with, the Commission and any state securities
regulatory authorities as may be required to be obtained or made
pursuant to the Registration Rights Agreement;
(xv) neither the consummation of the transactions contemplated by
this Agreement nor the sale,
<PAGE>
27
issuance, execution or delivery of the Notes will violate Regulation
G, T, U or X of the Federal Reserve Board;
(xvi) to such counsel's actual knowledge, there is no pending
action or suit or judicial, arbitral, rule-making or other
administrative or other proceeding to which the Company is a party or
of which any property or assets of the Company is the subject that,
singularly or in the aggregate, (A) challenges the validity of this
Agreement, the Registration Rights Agreement or the Indenture or any
action taken or to be taken pursuant hereto or thereto, or (B) if
determined adversely to the Company is reasonably likely to have a
Material Adverse Effect and to such counsel's actual knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others; and
(xvii) assuming the accuracy of the representations and
warranties and compliance with the agreements of the Company contained
in paragraphs (x), (y) and (z) of Section 1 of this Agreement, of the
Initial Purchaser contained in Section 2 of this Agreement, and of any
institutional Accredited Investor contained in the Transferee Letter
of Representation delivered by such investor as contemplated in the
Offering Memorandum, it is not necessary in connection with the offer,
sale and delivery of the Notes to the Initial Purchaser or in
connection with the initial resale of the Notes by the Initial
Purchaser, in each case in the manner contemplated in the Offering
Memorandum and this Agreement, to register the Notes under the
Securities Act or to qualify the Indenture under the Trust Indenture
Act in connection therewith.
Such counsel shall state that they have participated in conferences
with representatives of the Company, representatives of the independent
auditors of the Company and representatives of the Initial Purchaser at
which conferences the contents of the Offering Memorandum, any amendment
thereof and supplement thereto and related matters were discussed, and,
although such counsel have not investigated or verified independently, and
assume no responsibility
<PAGE>
28
for, the accuracy or completeness or fairness of the statements contained
in the Offering Memorandum, any amendment thereof or supplement thereto
(except as expressly provided above), nothing has come to the attention of
such counsel to cause such counsel to believe that the Offering Memorandum
or any amendment thereof or supplement thereto (other than the financial
statements, the notes thereto and other financial and statistical
information contained therein, as to which such counsel need express no
belief) contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters of
fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials which are
furnished to the Initial Purchaser; provided, however, that with respect to
the opinion as to the foreign qualification of the Company and Leasco
expressed in clause (i) above, such counsel may rely exclusively on good
standing certificates.
(d) The Initial Purchaser shall have received from Cravath, Swaine &
Moore, counsel for the Initial Purchaser, such opinion or opinions, dated
the Closing Date, with respect to such matters as the Initial Purchaser may
reasonably require, and the Company shall have furnished to such counsel
such documents as they reasonably request for enabling them to pass upon
such matters.
(e) The Company shall have furnished to the Initial Purchaser (x) a
letter of KPMG Peat Marwick LLP, dated the date hereof, with respect to the
Company's fiscal years ended December 31, 1992, December 31, 1993, December
31, 1994, December 31, 1995 and the nine month periods ended September 30,
1996 and 1995, and (y) a letter of Coopers & Lybrand L.L.P., with respect
to the unaudited pro forma financial statements included in the Offering
Memorandum, dated the date hereof, which shall be in form and substance
satisfactory to the Initial Purchaser, to the effect that:
<PAGE>
29
(i) they are each independent certified public accountants with
respect to the Company within the meaning of the applicable rules and
regulations thereunder and Rule 101 of the American Institute of
Certified Public Accountants' Code of Professional Conduct and its
interpretations and rulings;
(ii) with respect to the letter of KPMG Peat Marwick LLP only,
based upon a reading of the latest unaudited financial statements made
available by the Company, the procedures of the American Institute of
Certified Public Accountants for a review of interim financial
information as described in Statement of Auditing Standards No. 71,
reading of minutes and inquiries of certain officials of the Company
who have responsibility for financial and accounting matters and
certain other limited procedures requested by the Initial Purchaser
and described in detail in such letter, nothing has come to their
attention that causes them to believe that (A) any unaudited financial
statements included or incorporated in the Offering Memorandum do not
comply in form in all material respects with applicable accounting
requirements or (B) any material modifications should be made to the
unaudited financial statements included in the Offering Memorandum for
them to be in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
financial statements included in the Offering Memorandum;
(iii) with respect to the letter of KPMG Peat Marwick LLP only,
based upon the procedures detailed in such letter with respect to the
period subsequent to the date of the last available balance sheet,
including reading of minutes and inquiries of certain officials of the
Company who have responsibility for financial and accounting matters,
nothing has come to their attention that causes them to believe that
(1) at a specified date not more than five business days prior to the
date of the letter, there was any increase in long-term debt as
compared with the amounts shown in the September 30, 1996, unaudited
balance sheet included in the Offering Memorandum, except as
<PAGE>
30
disclosed in the Offering Memorandum, or (2) for the period from
September 30, 1996, to a specified date not more than five business
days prior to the date of the letter, there were any decreases, as
compared with the corresponding period in the preceding year, in truck
rental and related revenue, except in all instances for changes,
increases or decreases which are set forth in such letter, in which
case the letter shall be accompanied by an explanation by the Company
as to the significance thereof unless said explanation is not deemed
necessary by the Initial Purchaser;
(iv) they have each performed certain other specified procedures
as a result of which they respectively determined that certain
information of an accounting, financial or statistical nature (which
is limited to accounting, financial or statistical information derived
from the general accounting records of the Company) set forth in the
Offering Memorandum agrees with the accounting records of the Company,
excluding any questions of legal interpretation; and
(v) With respect to the letter of Coopers & Lybrand L.L.P. only,
on the basis of a reading of the unaudited pro forma financial
statements included in the Offering Memorandum (the "pro forma
financial statements"); carrying out certain specified procedures;
reading of minutes and inquiries of certain officials of the Company
who have responsibility for financial and accounting matters; and
proving the arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts in the pro forma financial
statements, nothing came to their attention which caused them to
believe that the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of such statements.
(f) The Company shall have furnished to the Initial Purchaser a
letter (the "bring-down letter") of KPMG Peat Marwick LLP, addressed to the
Initial Purchaser and dated the Closing Date confirming, as of the date of
the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
<PAGE>
31
information is given in the Offering Memorandum, as of a date not more than
two days prior to the date of the bring-down letter), the conclusions and
findings of such firm with respect to the financial information and other
matters covered by its letter delivered to the Initial Purchaser
concurrently with the execution of this Agreement and described in
paragraph (e).
(g) The Company shall have furnished to the Initial Purchaser a
certificate, dated the Closing Date, of its chief executive officer and its
chief operating officer stating that (A) such officers have carefully
examined the Offering Memorandum, (B) in their opinion, as of its date, the
Offering Memorandum did not include any untrue statement of a material fact
and did not omit to state a material fact necessary to make the statements
therein not misleading and since its date, no event has occurred which
should have been set forth in a supplement or amendment to the Offering
Memorandum so that the Offering Memorandum, as so supplemented or amended,
shall not be misleading in any material respect and (C) as of the Closing
Date, the representations and warranties of the Company in this Agreement
are true and correct, the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date, and subsequent to the date of the most
recent financial statements in the Offering Memorandum, there has been no
material adverse change in the financial position or results of operation
of the Company, or any material adverse change, or any development
including a prospective material adverse change, in or affecting the
condition (financial or otherwise), results of operations, business or
prospects of the Company, except as set forth in the Offering Memorandum.
(h) Subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall
not have been any change, or any development involving a prospective
change, in or affecting the condition (financial or otherwise), results of
operations, business or prospects of the Company, or any change specified
in the letters referred to in paragraph (e) or (f) of this Section, the
effect of which, in any such case described above,
<PAGE>
32
is, in the reasonable judgment of the Initial Purchaser, so material and
adverse as to make it impracticable or inadvisable to proceed with the
offering or delivery of the Notes on the terms and in the manner
contemplated in the Offering Memorandum (exclusive of any amendment or
supplement).
(i) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency which would, as of the Closing Date, prevent the issuance or sale of
the Notes; and no injunction, restraining order or order of any other
nature by a Federal or state court of competent jurisdiction shall have
been issued as of the Closing Date which would prevent the issuance or sale
of the Notes.
(j) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Notes by any
"nationally recognized statistical rating organization," as that term is
defined by the Commission for purposes of Rule 436(g)(2) of the rules and
regulations of the Commission under the Securities Act, and (ii) no such
organization shall have publicly announced that it has under surveillance
or review (other than an announcement with positive implications of a
possible upgrading), its rating of the Notes.
(k) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or limited, or
minimum prices shall have been established on either of such exchanges or
such market by the Commission, by such exchange or by any other regulatory
body or governmental authority having jurisdiction, or (ii) any moratorium
on commercial banking activities shall have been declared by Federal or New
York State authorities or (iii) an outbreak or escalation of hostilities or
a declaration by the United States of a national emergency or war or such a
material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the
reasonable judgment of the Initial Purchaser, impracticable or
<PAGE>
33
inadvisable to proceed with the offering or the delivery of the Notes on
the terms and in the manner contemplated in the Offering Memorandum.
(l) The Company and the Initial Purchaser shall have executed and
delivered the Registration Rights Agreement.
(m) The Notes shall have been approved by the NASD for trading in the
PORTAL market.
(n) The Indenture shall have been duly executed and delivered by the
Company and the Trustee and the Notes shall have been duly executed and
delivered by the Company and duly authenticated by the Trustee.
(o) If any event shall have occurred that requires the Company under
Section 4(c) hereof to prepare an amendment or supplement to the Offering
Memorandum, such amendment or supplement shall have been prepared and
copies thereof delivered to the Initial Purchaser.
(p) There shall not have occurred any invalidation of Rule 144A under
the Securities Act by any court or any withdrawal or proposed withdrawal of
any rule or regulation under the Securities Act or the Exchange Act by the
Commission or any amendment or proposed amendment thereof by the Commission
which in the reasonable judgment of the Initial Purchaser would materially
impair the ability of the Initial Purchaser to purchase, hold or effect
resales of the Notes as contemplated hereby.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to Cravath, Swaine & Moore.
6. Termination. The obligations of the Initial Purchaser hereunder
------------
may be terminated by the Initial Purchaser, in its absolute discretion, by
notice given to and received by the Company prior to delivery of and payment for
the Notes if, prior to that time, any of the events described in Section 5(h),
5(i), 5(j), 5(k) or 5(p) shall have occurred.
<PAGE>
34
7. Reimbursement of Initial Purchaser's Expenses. If for any reason
----------------------------------------------
permitted under this Agreement the purchase of the Notes by the Initial
Purchaser is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 11 and the
respective obligations of the Company and the Initial Purchaser pursuant to
Sections 8 and 9 shall remain in effect. In addition, if the purchase of the
Notes by the Initial Purchaser is not consummated because any condition to the
obligations of the Initial Purchaser set forth in Section 5 hereof is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by the Initial Purchaser, the Company will
reimburse the Initial Purchaser upon demand for all reasonable out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with this Agreement and the proposed
purchase and sale of the Notes.
8. Indemnification. (a) The Company shall indemnify and hold
----------------
harmless the Initial Purchaser, its affiliates, and their respective officers,
directors, employees, representatives and agents, and each person, if any, who
controls the Initial Purchaser within the meaning of the Securities Act or the
Exchange Act (collectively referred to for the purposes of this Section 8 and
Section 9 as an Initial Purchaser), to the fullest extent lawful, against any
loss, claim, damage, expense or liability, joint or several, or any action in
respect thereof, to which the Initial Purchaser may become subject, whether
commenced or threatened under the Securities Act, the Exchange Act, or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of or is
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in the Preliminary Offering Memorandum or the Offering Memorandum
or in any amendment or supplement thereto or any information provided by the
Company pursuant to Section 4(e) or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse the Initial Purchaser
for any legal or other expenses reasonably incurred by the Initial Purchaser in
connection with investigating or preparing to defend or defending against or
appearing as a third party witness in connection with any
<PAGE>
35
such loss, claim, damage, liability, expense or action as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
-------- -------
case to the extent that any such loss, claim, damage, liability or action arises
out of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission from any of such documents in reliance upon and in
conformity with the Initial Purchaser's Information; and provided further, that
----------------
with respect to any such untrue statement or omission made in the Preliminary
Offering Memorandum, the indemnity agreement contained in this Section 8 shall
not inure to the benefit of the Initial Purchaser from whom the person asserting
any such losses, claims, damages or liabilities purchased the Notes concerned if
both (A) a copy of the Offering Memorandum was not sent or given to such person
at or prior to the written confirmation of the sale of such Notes to such
person, and (B) the untrue statement or omission in the Preliminary Offering
Memorandum was corrected in the Offering Memorandum unless, in either case, such
failure to deliver the Offering Memorandum was a result of noncompliance by the
Company with Section 4(b).
(b) The Initial Purchaser shall indemnify and hold harmless the
Company, its affiliates, and their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for the purposes of this Section 8 and Section 9 as the Company), to
the same extent as the foregoing indemnity from the Company to the Initial
Purchaser, against any loss, claim, damage or liability, joint or several, or
any action in respect thereof, to which the Company may become subject, under
the Securities Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
expense, liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum or in any amendment
or supplement thereto or (ii) the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with any Initial Purchaser's
Information, and shall reimburse the Company for
<PAGE>
36
any legal or other expenses reasonably incurred by the Company in connection
with investigating or preparing to defend or defending against or appearing as
third party witness in connection with any such loss, claim, damage, liability,
expense or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 8(a) or 8(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
--------
however, that the failure to notify the indemnifying party shall not relieve it
- -------
from any liability which it may have under this Section 8 except to the extent
it has been materially prejudiced (through the forfeiture of substantive rights
or defenses) by such failure; and, provided further, that the failure to notify
----------------
the indemnifying party shall not relieve it from any liability which it may have
to an indemnified party otherwise than under this Section 8. If any such claim
or action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
-------- -------
indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (2)
the indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(3) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to
<PAGE>
37
direct the defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel to assume the defense of
such action within a reasonable time after receiving notice of the commencement
of the action, in each of which cases the reasonable fees, disbursements and
other charges of counsel will be at the expense of the indemnifying party or
parties. It is understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees, disbursements and other charges of more than
one separate firm of attorneys (in addition to no more than one local counsel in
any jurisdiction) at any one time for all such indemnified party or parties.
Each indemnified party, as a condition of the indemnity agreements contained in
Sections 8(a) and 8(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
The obligations of the Company and the Initial Purchaser in this
Section 8 and in Section 9 are in addition to any other liability that the
Company or the Initial Purchaser, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
9. Contribution. If the indemnification provided for in Section 8 is
-------------
unavailable or insufficient to hold harmless an indemnified party under Section
8(a) or (b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand and the Initial Purchaser on
the other from the offering of the Notes or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
<PAGE>
38
Initial Purchaser on the other with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Initial Purchaser on the other
with respect to such offering shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Notes purchased under this
Agreement (before deducting expenses) received by or on behalf of the Company
bear to the total discounts received by the Initial Purchaser with respect to
the Notes purchased under this Agreement, in each case as set forth in the table
on the cover page of the Offering Memorandum. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or to the Initial Purchaser's Information on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and the
Initial Purchaser agree that it would not be just and equitable if contributions
pursuant to this Section 9 were to be determined by pro rata allocation or by
any other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 9 shall be deemed to include, for
purposes of this Section 9, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9, the Initial
Purchaser shall not be required to contribute any amount in excess of the amount
by which the total price at which the Notes purchased from the Company by it
were offered to investors less the amount of any damages which the Initial
Purchaser has otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 10(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
10. Persons Entitled to Benefit of Agreement. This Agreement shall
-----------------------------------------
inure to the benefit of and be binding upon the Initial Purchaser, the Company
and their respective
<PAGE>
39
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchaser, the Company and their respective affiliates and successors
and the controlling persons and officers and directors referred to in Sections 8
and 9 and their heirs and legal representatives and other than holders of the
Notes any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
11. Expenses. The Company agrees to pay (a) the costs incident to
---------
the authorization, issuance, sale, preparation and delivery of the Notes and any
taxes payable in that connection; (b) the costs incident to the preparation,
printing and distribution of any Preliminary Offering Memorandum, the Offering
Memorandum and any amendments and supplements thereto; (c) the costs of
reproducing and distributing this Agreement, the Registration Rights Agreement
and the Indenture; (d) the preparation, issuance and delivery of the
certificates for the Notes to the Initial Purchaser; (e) the fees and expenses
of qualifying the Notes under the securities laws of the several jurisdictions
as provided in Section 4(n) and of preparing, printing and distributing Blue Sky
Memoranda (including related fees and expenses of CS&M); (f) any fees charged by
securities rating services for rating the Notes; (g) all fees and expenses of
the Trustee; (h) all costs incident to and fees and expenses of the inclusion of
the Notes on the PORTAL system and the approval of the Notes for book-entry
transfer by The Depository Trust Company; and (i) all other costs and expenses
incident to the performance of the obligations of the Company under this
Agreement; provided, however, that, except as otherwise provided in this Section
-------- -------
11 and in Section 7 the Initial Purchaser shall pay its own costs and expenses,
including the costs and expenses of its counsel, any transfer taxes on the Notes
that they may sell and the expenses of advertising any offering of the Notes
made by the Initial Purchaser.
12. Survival. The respective indemnities, rights of contribution,
---------
representations, warranties and agreements made by or on behalf of the Company
and the Initial Purchaser and any of their respective affiliates,
representatives, officers, directors or controlling persons contained in this
Agreement or in any certificate delivered pursuant to this Agreement, shall
survive the delivery of and payment for the Notes and shall remain in full force
and
<PAGE>
40
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any of them or any person controlling any
of them.
13. Notices, etc. All statements, requests, notices and agreements
-------------
hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered or sent by mail,
telex or facsimile transmission to Chase Securities Inc., 270 Park Avenue,
New York, New York 10017, Attention: Stephen Eichenberger;
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Offering Memorandum, Attention: Chief Financial Officer;
provided, however, that any notice to the Initial Purchaser pursuant to Section
- -------- -------
8(c) shall be delivered or sent by mail, telex or facsimile transmission to the
Initial Purchaser at its address set forth on the signature page hereof.
Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof.
14. Business Day. For purposes of this Agreement, "business day"
-------------
means any day on which the New York Stock Exchange, Inc. is open for trading.
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
--------------
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
16. Counterparts. This Agreement may be executed in any number of
-------------
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
17. Headings. The headings herein are inserted for convenience of
---------
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
<PAGE>
41
If the foregoing is in accordance with your understanding of the
agreement between the Company and the Initial Purchaser, kindly indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
Ryder TRS, Inc.,
By /s/ Dean Anderson
-----------------------------------
Name: Dean Anderson
Title: Vice President and Assistant
Secretary
Accepted:
CHASE SECURITIES INC.,
By /s/ Stephen J. Eichenberger
-----------------------------
Name: Stephen J. Eichenberger
Title: Managing Director
Address for Notices:
One Chase Plaza, 25th Floor
New York, New York 10081
Attention: Legal Department
<PAGE>
EXHIBIT 10.14
MANAGEMENT AND CONSULTING AGREEMENT
-----------------------------------
This Management and Consulting Agreement ("Agreement") is made this 17
day of October, 1996, and is between Ryder TRS, Inc., a Delaware corporation
("Ryder TRS"), and Questor Management Company, a Delaware corporation
("Questor").
A. Ryder TRS acquired certain stock and assets of Ryder Truck Rental,
Inc., a Florida corporation ("RTR"), which purchase transaction was consummated
on or about October 17, 1996 (the "Closing Date") to which transaction Questor
devoted substantial consulting services and financial resources.
B. Ryder TRS and Questor desire that Questor provide various consulting
and management services to Ryder TRS beginning on and after the Closing Date.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Ryder TRS and Questor
agree as follows:
1. Nature of Consulting
--------------------
Questor agrees to perform various consulting, management and advisory
services on behalf of Ryder TRS with respect to all matters relating to or
affecting Ryder TRS's business, at such reasonable times as Ryder TRS may
request. Questor agrees to perform the following specific services upon request:
(a) provide strategic planning services, (b) meet with Ryder TRS's officers
and/or managers regarding operations and productivity, (c) attend meetings with
Ryder TRS's customers and with potential customers of Ryder TRS, (d) review
financial aspects of Ryder TRS's business, including financial analysis,
projections and budgeting, and (e) provide such other services from time to time
as may be agreed to by Ryder TRS and Questor (the "Consulting Services").
2. Location of Consulting
----------------------
It is understood that Questor's services will be rendered largely at
Southfield, Michigan, but that Questor will, on reasonable request, render such
Consulting Services at such other places as mutually agreed upon by Ryder TRS
and Questor.
3. Management Fee
--------------
As compensation for the Consulting Services, Ryder TRS agrees to pay
Questor a management fee ("Management Fee") in an aggregate amount equal to
$70,833.33 for each calendar month (or,
<PAGE>
in the event of a partial month, in an aggregate amount for such month equal to
the product of (A) $70,833.33 times (B) the product of (I) the number of days in
such month during which this Agreement is in effect, divided by (II) 30). The
Management Fee shall be paid monthly in advance on or before the first day of
each month (with the first payment for the period beginning on the date hereof
and ending on November 30, 1996 due on or before November 1, 1996). During the
period in which the Loan Agreement is in effect, in the event (x) a Default or
Event of Default (each as defined in the Loan Agreement) shall have occurred and
be continuing or would result from the payment of the Management Fee, no more
than 50% of the Management Fee may be paid to Questor in any such period (but
such fee shall continue accrue) or (y) a Change of Control (as defined in the
Loan Agreement) shall have occurred, no Management Fee may be paid to Questor
(but such fee shall continue to accrue). Ryder TRS agrees to reimburse Questor
for its costs and expenses incurred while performing the Consulting Services
(including, but not limited to, travel, office equipment and hardware, fax and
telephone calls, delivery fees and supplies). In the event the Management Fee is
not paid with fifteen days after to the date such fee is due, any unpaid fees
shall bear interest at an annual rate equal to the lesser of (i) the prime or
stated rate from time to time of The Chase Manhattan Bank plus 4% per annum or
(ii) the maximum rate permitted by law.
4. Term
----
This Agreement shall continue for so long as Questor, any affiliate of
Questor or any affiliate of a Questor affiliate continues to hold any shares of
common stock of Ryder TRS.
5. Status of Questor
-----------------
This contract calls for the performance of the services of Questor as an
independent contractor, and Questor will not be considered an officer, employee,
or agent of Ryder TRS for any purpose.
6. Indemnification
---------------
Ryder TRS shall and hereby agrees to indemnify, defend and save and hold
harmless Questor and its affiliates, and their successors and assigns,
employees, representatives, officers, directors and agents (collectively,
"Representatives") from and against any and all liabilities or claims arising
out of or in connection with Questor's performance of its duties and obligations
hereunder other than those arising as a result of Questor's or its
Representatives' willful misconduct or gross negligence. The provisions of this
Section 6 shall survive the termination of this Agreement.
-2-
<PAGE>
7. Arbitration
-----------
Any dispute or claim involving this Agreement shall be settled by
arbitration in Detroit, Michigan under the rules of the American Arbitration
Association. Any dispute or claim shall be deemed waived unless arbitration is
demanded within 90 days of the occurrence giving rise to the dispute or claim.
The arbitrator shall have no authority to change any provision of this
Agreement; the arbitrator's sole authority shall be to interpret or apply the
provisions of this Agreement. The decision of the arbitrator shall be final and
binding and the exclusive remedy for any alleged breach of this Agreement.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction.
8. Miscellaneous
-------------
(a) Entire Agreement. This Agreement contains the parties entire
----------------
agreement regarding Questor's rendering the Consulting Services to Ryder TRS and
supersedes any prior oral or written understandings and agreements. The parties
can modify it only by a writing signed by both Ryder TRS and Questor.
(b) Assignment. This agreement is binding upon the successors and
----------
assigns of Ryder TRS and is not assignable by Questor without the prior written
consent of Ryder TRS.
(c) Governing Law. This Agreement shall be deemed a contract under and
-------------
shall be governed and construed in accordance with the laws of the State of
Michigan, without giving effect to principles of conflicts of law.
(d) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
(e) Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall as to that jurisdiction, be ineffective
to the extent such provision is invalid or unenforceable, without affecting in
any way the remaining provisions of this Agreement.
Definitions. As used herein, "Loan Agreement" shall mean the Loan
Agreement, dated as of the date hereof, among Ryder TRS, the lenders named
therein, The Chase Manhattan Bank, as Administrative Agent, and Citicorp,
U.S.A., Inc., as Collateral Agent.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first written above.
RYDER TRS, INC.
By: /s/ Robert Shields
-----------------------
Its: Senior Vice President
----------------------
QUESTOR MANAGEMENT
COMPANY
By: /s/ Robert Shields
-----------------------
Its: Managing Director
----------------------
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<PAGE>
EXHIBIT 10.16
MASTER MOTOR VEHICLE LEASE AGREEMENT
dated as of October 17, 1996
between
RCTR, INC.
as Lessor, and
RYDER TRS, INC.
as Lessee
AS SET FORTH IN SECTION 12 HEREOF, LESSOR HAS ASSIGNED TO THE COLLATERAL AGENT
(AS DEFINED HEREIN) CERTAIN OF ITS RIGHT, TITLE AND INTEREST IN AND TO THIS
LEASE. TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL PAPER (AS
SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY
APPLICABLE JURISDICTION) NO SECURITY INTEREST IN THIS LEASE MAY BE CREATED
THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL
EXECUTED COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING
THE RECEIPT THEREFOR EXECUTED BY THE COLLATERAL AGENT ON THE SIGNATURE PAGE
THEREOF.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1. CERTAIN DEFINITIONS............................. 1
Section 1.1. Certain Definitions...................... 1
Section 1.2. Accounting and Financial
Determinations.......................... 1
Section 1.3. Cross References; Headings............... 2
Section 1.4. Interpretation........................... 2
SECTION 2. GENERAL AGREEMENT............................... 2
Section 2.1. Operating Lease.......................... 2
Section 2.2. Leasing of Vehicles...................... 2
Section 2.3. Lessee to Act as Lessor's Agent 3
Section 2.4. Payment of Purchase Price by
Lessor; Certain Additional Payments
to the Servicer......................... 3
Section 2.5. Non-liability of Lessor.................. 3
SECTION 3. TERM............................................ 4
Section 3.1. Vehicle Lease Commencement Date 4
Section 3.2. Lease Commencement Date.................. 4
SECTION 4. CONDITIONS PRECEDENT............................ 4
SECTION 5. RENT AND CHARGES................................ 4
Section 5.1. Payment of Rent.......................... 4
Section 5.2. Payment of Casualty Payments............. 4
Section 5.3. Late Payment............................. 5
SECTION 6. CASUALTY OBLIGATION............................. 5
SECTION 7. VEHICLE USE..................................... 5
SECTION 8. REGISTRATION; LICENSE; TRAFFIC SUMMONSES;
PENALTIES AND FINES............................ 6
SECTION 9. MAINTENANCE AND REPAIRS......................... 6
SECTION 10. VEHICLE WARRANTIES.............................. 6
SECTION 11. DISPOSITION..................................... 7
SECTION 12. RIGHTS OF LESSEE PLEDGED TO COLLATERAL AGENT.... 7
SECTION 13. GENERAL INDEMNITY............................... 7
Section 13.1. Indemnity of the Lessor................. 7
Section 13.2. Indemnity of the Lessee................. 8
Section 13.3. Reimbursement Obligation by
the Lessee............................. 8
Section 13.4. Notice to Lessee of Claims.............. 9
Section 13.5. Defense of Claims....................... 9
SECTION 14. SUCCESSORS AND ASSIGNS; ASSIGNMENT............. 9
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
SECTION 15. DEFAULT AND REMEDIES THEREFOR.................. 10
Section 15.1. Events of Default....................... 10
Section 15.2. Effect of Lease Event of
Default................................ 11
Section 15.3. Rights of Lessor Upon Lease
Event of Default....................... 11
Section 15.4. Measure of Damages...................... 12
SECTION 16. CERTIFICATION OF TRADE OR BUSINESS
USE........................................... 13
SECTION 17. SURVIVAL....................................... 13
SECTION 18. MODIFICATION AND SEVERABILITY.................. 13
SECTION 19. CERTAIN REPRESENTATIONS AND
WARRANTIES.................................... 13
Section 19.1. Organization; Ownership; Power;
Qualification.......................... 14
Section 19.2. Authorization; Enforceability........... 14
Section 19.3. Compliance.............................. 14
Section 19.4. Litigation.............................. 15
Section 19.5. Investment Company Act.................. 15
Section 19.6. Regulations G, T, U and X............... 15
Section 19.7. Governmental Authorizations............. 15
Section 19.8. Absence of Default...................... 15
Section 19.9. Compliance with Requirements of Law..... 15
Section 19.10. Accuracy of Information................. 16
Section 19.11. Solvency................................ 16
Section 19.12. Supplemental Documents True and
Correct................................ 16
SECTION 20. CERTAIN AFFIRMATIVE COVENANTS.................. 16
Section 20.1. Corporate Existence; Foreign
Qualification.......................... 16
Section 20.2. Books, Records and Inspections 16
Section 20.3. Accounting Methods; Financial
Records................................ 17
Section 20.4. Insurance............................... 17
Section 20.5. Reporting Requirements.................. 17
Section 20.6. Taxes and Liabilities................... 18
Section 20.7. Compliance with Requirements
of Law................................. 18
Section 20.8. Maintenance of the Vehicles............. 18
Section 20.9. Change of Location or Name.............. 18
SECTION 21. CERTAIN NEGATIVE COVENANTS..................... 18
Section 21.1. Mergers, Consolidations................. 18
Section 21.2. Liens................................... 19
Section 21.3. Use of Vehicles......................... 19
SECTION 22. FORUM SELECTION AND CONSENT TO JURISDICTION.... 19
SECTION 23. GOVERNING LAW.................................. 19
SECTION 24. JURY TRIAL..................................... 20
SECTION 25. NOTICES........................................ 20
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
SECTION 26. HEADINGS....................................... 20
SECTION 27. EXECUTION IN COUNTERPARTS...................... 20
SECTION 28. EFFECTIVENESS.................................. 21
SECTION 29. SEVERABILITY................................... 21
</TABLE>
ATTACHMENT A Vehicle Acquisition Schedule
ATTACHMENT B Form of Certification of Trade or Business
Use
ATTACHMENT C Lease Schedule
SCHEDULE I DEFINITIONS LIST
LEASE ANNEX
-iii-
<PAGE>
MASTER MOTOR VEHICLE LEASE AGREEMENT
This Master Motor Vehicle Lease Agreement (the "Base Lease" and, as
----------
supplemented by the Lease Annex, this "Agreement" or "Lease"), dated as of
--------- -----
October 17, 1996, by and between RCTR, Inc., a Delaware corporation ("RCTR" or
----
the "Lessor"), and Ryder TRS, Inc., f/k/a RCTR Holdings, Inc., a Delaware
------
corporation ("Ryder" or the "Lessee").
----- ------
W I T N E S S E T H:
-------------------
WHEREAS, the Lessor has acquired certain Initial Vehicles (such capitalized
term, together with all other capitalized terms used herein, shall have the
meanings assigned thereto in Section 1) in connection with the acquisition (the
---------
"Acquisition") of substantially all of the assets of the Consumer Truck Rental
division of Ryder Truck Rental, Inc., a Florida corporation (the "Seller")
pursuant to the Asset and Stock Purchase Agreement dated as of September 19,
1996, by and between the Seller and the Lessee; and
WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee desires
to lease from the Lessor, Vehicles including Initial Vehicles for use in the
Lessee's truck rental operations;
NOW, THEREFORE, in consideration of the foregoing premises, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
-------------------
Section 1.1 Certain Definitions. As used in this Agreement and
--------------------
unless the context requires a different meaning, capitalized terms not otherwise
defined herein or in the Lease Annex hereto shall have the meanings assigned to
such terms in the Definitions List, attached as Schedule I, as such Schedule I
---------- ----------
may be amended, supplemented or modified from time to time in accordance
herewith (the "Definitions List").
----------------
Section 1.2 Accounting and Financial Determinations. Where the
----------------------------------------
character or amount of any asset or liability or item of income or expense is
required to be determined, or any accounting computation is required to be made,
for the purpose of this Agreement, such determination or calculation shall be
made, to the extent applicable and except as otherwise specified in this
Agreement, in accordance with GAAP. When used herein, the term "financial
statement" shall include the notes and schedules thereto.
<PAGE>
Section 1.3 Cross References; Headings. The words "hereof",
---------------------------
"herein" and "hereunder" and words of a similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. Annex, Section, Schedule and Exhibit references
contained in this Agreement are references to Annexes, Sections, Schedules and
Exhibits in or to this Agreement unless otherwise specified. Any reference in
any Section or definition to any clause is, unless otherwise specified, to such
clause of such Section or definition. The various headings in this Agreement
are inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement or any provision hereof.
Section 1.4 Interpretation. In this Agreement, unless the context
---------------
otherwise requires:
(a) the singular includes the plural and vice versa;
---- -----
(b) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement, and reference to any Person in a particular
capacity only refers to such Person in such capacity;
(c) reference to any gender includes the other gender;
(d) reference to any Requirement of Law means such Requirement of Law
as amended, modified, codified or reenacted, in whole or in part, and in
effect from time to time;
(e) "including" (and, with correlative meaning, "include") means
including without limiting the generality of any description preceding such
term;
(f) "or" is not exclusive; and
(g) with respect to the determination of any period of time, "from"
means "from and including" and "to" means "to but excluding".
SECTION 2. GENERAL AGREEMENTS.
-------------------
Section 2.1 Operating Lease. As specified in the Lease Annex, each
---------------
of the Lessee and the Lessor intends that (i) this Agreement be an operating
lease with respect to the Vehicles, and (ii) each Vehicle leased pursuant to
this Agreement shall be leased hereunder as if such Vehicle were the only
Vehicle leased pursuant to this Agreement.
Section 2.2 Leasing of Vehicles. From time to time, subject to the
--------------------
terms and conditions hereof, the Lessor agrees to lease to the Lessee and the
Lessee agrees to lease from the Lessor the Initial Vehicles and each additional
Subsequently
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<PAGE>
Acquired Vehicle identified in vehicle order summaries (each, a "Vehicle
-------
Order"). The Lessee shall deliver to the Lessor each Vehicle Order, together
- -----
with a schedule containing the information with respect to the Subsequently
Acquired Vehicles included within such Vehicle Order as is set forth in
Attachment A hereto, or in such form as is otherwise requested by the Lessor
- ------------
(each, a "Vehicle Acquisition Schedule"). A lease schedule for all the Vehicles
----------------------------
is attached hereto as Attachment C. In addition, the Lessee shall provide such
------------
other information regarding such Subsequently Acquired Vehicles as the Lessor
may reasonably require from time to time.
Section 2.3 Lessee to Act as Lessor's Agent. The Lessor agrees that
--------------------------------
the Lessee may act as the Lessor's agent in filing claims on behalf of the
Lessor for damage in transit, and other Manufacturer delivery claims related to
the Subsequently Acquired Vehicles leased hereunder; provided, however, that the
-------- -------
Lessor may hold the Lessee liable for losses due to the Lessee's actions in
performing as the Lessor's agent hereunder. In addition, the Lessor agrees that
the Lessee shall make arrangements for delivery of Vehicles to a location
selected by the Lessee at the Lessee's expense to the extent that any such
expense has not been included in the Capitalized Cost of such Vehicle. Unless
otherwise instructed by the Lessor, the Lessee, acting as agent for the Lessor,
shall be responsible for pursuing any rights of the Lessor with respect to the
return of any Subsequently Acquired Vehicle to the Manufacturer thereof pursuant
to the preceding sentence.
Section 2.4 Payment of Purchase Price by Lessor. Upon receipt of the
------------------------------------
Manufacturer's invoice and certificate of origin in respect of any Subsequently
Acquired Vehicle, the Lessor or its agent shall pay or cause to be paid to the
dealer or the related Manufacturer in accordance with such Manufacturer's
payment terms, as applicable, the Capitalized Cost of such Vehicle as
established by the invoice of the dealer or the Manufacturer.
Section 2.5 Non-liability of Lessor. The Lessor shall not be liable
------------------------
to the Lessee for any failure or delay in obtaining Vehicles or making delivery
thereof. AS BETWEEN THE LESSOR AND THE LESSEE, THE LESSOR HAS NOT MADE AND DOES
NOT HEREBY MAKE ANY REPRESENTATION, WARRANTY OR COVENANT, EXPRESS OR IMPLIED,
WITH RESPECT TO MERCHANTABILITY, CONDITION, QUALITY, CAPABILITY, WORKMANSHIP,
DURABILITY OR SUITABILITY OF THE VEHICLE IN ANY RESPECT OR IN CONNECTION WITH OR
FOR THE PURPOSES OR USES OF THE LESSEE, OR ANY WARRANTY THAT THE LEASED VEHICLES
WILL SATISFY THE REQUIREMENTS OF ANY LAW OR ANY CONTRACT SPECIFICATION, OR ANY
OTHER REPRESENTATION, WARRANTY OR COVENANT OF ANY KIND OR CHARACTER, EXPRESS OR
IMPLIED, WITH RESPECT THERETO. THE LESSEE SPECIFICALLY WAIVES ALL RIGHTS TO
MAKE CLAIMS AGAINST THE LESSOR AND ANY LEASED VEHICLE FOR BREACH OF ANY WARRANTY
OF ANY KIND WHATSOEVER AND, AS TO THE LESSOR, THE LESSEE LEASES THE LEASED
VEHICLES "AS IS." The Lessor shall not
-3-
<PAGE>
be liable for any failure or delay in delivering any Vehicle ordered for lease
pursuant to this Agreement, or for any failure to perform any provision hereof,
resulting from fire or other casualty, natural disaster, riot, strike or other
labor difficulty, governmental regulation or restriction, or any cause beyond
the Lessor's direct control. IN NO EVENT SHALL THE LESSOR BE LIABLE FOR ANY
INCONVENIENCES, LOSS OF PROFITS OR ANY OTHER CONSEQUENTIAL, INCIDENTAL OR
SPECIAL DAMAGES, WHATSOEVER OR HOWSOEVER CAUSED, WHETHER RESULTING FROM ANY
DEFECT IN OR ANY THEFT, DAMAGE, LOSS OR FAILURE OF ANY VEHICLE, OR OTHERWISE,
AND THERE SHALL BE NO ABATEMENT OF RENT BECAUSE OF THE SAME.
SECTION 3. TERM.
-----
Section 3.1 Vehicle Lease Commencement Date. The "Vehicle Lease
------------------------------- -------------
Commencement Date" shall mean, (i) for each Initial Vehicle, the date of this
- -----------------
Agreement, and (ii) for each Subsequently Acquired Vehicle, the date referenced
in the Vehicle Acquisition Schedule with respect to such Vehicle, which in no
event shall be later than the date that funds are expended by the Lessor to
acquire such Vehicle. A vehicle shall be deemed hereunder to be a Vehicle
leased under the Lease on each day during the period (the "Vehicle Term") from
------------
and including the Vehicle Lease Commencement Date to but excluding the Vehicle
Lease Expiration Date.
Section 3.2 Lease Commencement Date. The "Lease Commencement Date"
----------------------- -----------------------
shall mean the closing date for the Acquisition. The "Lease Expiration Date"
---------------------
shall mean the Vehicle Lease Expiration Date for the last Vehicle subject to
lease by the Lessee hereunder. The "Term" of this Agreement shall mean the
----
period commencing on the Lease Commencement Date and ending on the Lease
Expiration Date.
SECTION 4. CONDITIONS PRECEDENT. The agreement of the Lessor to make
---------------------
available any Vehicle for lease to the Lessee is subject to (i) the satisfaction
of the conditions to effectiveness specified in Section 28 and (ii) as of the
----------
Vehicle Lease Commencement Date for such Vehicle, no Potential Lease Event of
Default or Lease Event of Default having occurred and be continuing on such date
or would result from the making of such lease.
SECTION 5. RENT AND CHARGES. The Lessee will pay Rent and certain other
----------------
charges on a monthly basis as set forth in this Section 5:
---------
Section 5.1. Payment of Rent. On each Payment Date, the Lessee shall
----------------
pay to the Lessor the aggregate of all Rent payable on such Payment Date with
respect to the Vehicles, as provided in the related Lease Annex.
Section 5.2. Payment of Casualty Payments. On each Payment Date, the
----------------------------
Lessee shall pay to the Lessor all Casualty
-4-
<PAGE>
Payments that have accrued with respect to the Vehicles as provided in
Section 6.
- ---------
Section 5.3. Late Payment. In the event the Lessee fails to remit
------------
payment of any amount due under the Lease on or before the Payment Date, the
amount not paid will be considered delinquent and will bear interest at a rate
equal to 10% per annum, in each case from the date of such nonpayment until paid
in full.
SECTION 6. CASUALTY OBLIGATION. If a Vehicle becomes a Casualty, then the
-------------------
Lessee shall (a) promptly notify the Lessor of such occurrence, and (b) on the
Payment Date next succeeding the last day of the Related Month in which the
Lessee obtained actual knowledge that such Vehicle has become a Casualty, pay to
the Lessor an amount (a "Casualty Payment") equal to the Fair Market Value of
----------------
such Vehicle, calculated as of the first day of the Related Month in which the
Lessee obtained actual knowledge that such Vehicle became a Casualty (net of
Monthly Base Rent paid in respect of such Vehicle during such Related Month).
Upon payment by the Lessee to the Lessor in accordance herewith of the Casualty
Payment for any Vehicle that has become a Casualty, (i) the Lessor, upon request
of the Lessee, shall cause title to such Vehicle to be transferred to the Lessee
to facilitate liquidation of such Vehicle by the Lessee and (ii) the Lessee
shall be entitled to any physical damage insurance proceeds applicable to such
Vehicle (if at such time the Lessee carries such insurance coverage).
SECTION 7. VEHICLE USE. The Lessee shall use Vehicles leased hereunder
-----------
solely for the Lessee's truck rental operations. The Lessee shall promptly and
duly execute, deliver, file and record all such documents, statements, filings
and registrations, and take such further actions as the Lessor shall from time
to time reasonably request in order to establish and maintain the Lessor's title
to and interest in the Vehicles and the related Certificates of Title as against
the Lessee or any third party in any applicable jurisdiction. The Lessee may,
at the Lessee's sole expense, change the place of principal location of any
Vehicles. Within 60 days after any such change of location, the Lessee shall
take all actions necessary to meet all material legal requirements applicable
to such Vehicles. Following a Lease Event of Default, and upon the Lessor's
request, the Lessee shall advise the Lessor in writing where all Vehicles leased
hereunder as of such date are principally located. The Lessee shall not
knowingly use any Vehicles, or knowingly permit the same to be used, for any
unlawful purpose. The Lessor or any authorized representative of the Lessor may
during reasonable business hours from time to time, upon reasonable prior
notice, without disruption of the Lessee's business and subject to applicable
law, inspect Vehicles and registration certificates, Certificates of Title and
related documents covering Vehicles wherever the same be located.
-5-
<PAGE>
SECTION 8. REGISTRATION; LICENSE; TRAFFIC SUMMONSES; PENALTIES AND FINES.
------------------------------------------------------------
The Lessor, at its expense, shall be responsible for proper registration,
licensing and titling of Vehicles. The Lessee shall pay or cause to be paid all
traffic summonses, penalties, judgments and fines incurred with respect to any
Vehicle during the Vehicle Term for such Vehicle or imposed during the Vehicle
Term for such Vehicle by any Governmental Authority or Court with respect to
Vehicles in connection with the Lessee's operation of Vehicles, and any such
amounts paid by the Lessor on the Lessee's behalf, in its discretion upon at
least 15 days' prior notice to the Lessee, will be reimbursed within thirty (30)
days of the Lessor notifying the Lessee of such payment; provided, however, that
-------- -------
the Lessor shall not pay on the Lessee's behalf any traffic summons, or any
penalty, judgment or fine for so long as such amount is being contested by the
Lessee in good faith and by appropriate proceedings with respect to which
adequate reserves have been established, and are being maintained, in accordance
with GAAP and provided that the Lessee has agreed in writing to indemnify and
hold the Lessor harmless from and against all loss, liability and expense
arising out of such unpaid amounts (and, in any case, for so long as forfeiture
of any Vehicles will not result from the failure to pay any such amounts).
SECTION 9. MAINTENANCE AND REPAIRS. The Lessee shall perform or cause to
-----------------------
be performed all maintenance and repairs, shall keep each Vehicle in good
working order and condition, and shall maintain each Vehicle as required in
order to keep the Manufacturer's warranty in force. The Lessee will be
responsible for all warranty work. The Lessee shall comply with any
Manufacturer's recall of any Vehicle. The Lessee shall pay, or cause to be paid,
all usual and routine expenses incurred in the use and operation of Vehicles
including, but not limited to, fuel, lubricants, and coolants. The Lessor shall
reimburse the Lessee for all sums reasonably expended by the Lessee in
compliance with its obligations under this Section 9. Any improvements or
---------
additions to a Vehicle shall become and remain the property of the Lessor,
except that any addition or improvement to such a Vehicle made by the Lessee
shall remain the property of the Lessee if it can be disconnected or removed
from the Vehicle without impairing the functioning of or resale value thereof,
other than any function or value provided by such addition or improvement.
SECTION 10. VEHICLE WARRANTIES. If a Vehicle is covered by a
------------------
Manufacturer's warranty, the Lessee, during the Vehicle Term, shall have the
right to make any claims under such warranty which the Lessor could make and to
receive related proceeds directly. As provided in Section 2.5, the Lessor makes
-----------
no warranty or representation whatsoever, express or implied, with respect to
any Vehicle.
-6-
<PAGE>
SECTION 11. DISPOSITION.
------------
Prior to the end of the Vehicle Term, the Lessee will, at its sole
expense, deliver each Vehicle to the Lessor or dispose of it in accordance with
the written instructions of the Lessor. Any rebates or credits applicable to
the unexpired term of any license plates for a Vehicle shall inure to the
benefit of the Lessor.
SECTION 12. RIGHTS OF LESSEE PLEDGED TO COLLATERAL AGENT. Notwithstanding
--------------------------------------------
anything to the contrary contained in this Agreement (a) the Lessor acknowledges
that pursuant to a Security Agreement dated as of October 17, 1996 (the
"Security Agreement") by and among the Lessee, certain of its subsidiaries and
- -------------------
Citicorp, U.S.A. Inc., a Delaware corporation, as documentation agent and as
collateral agent (the "Collateral Agent") for the Secured Parties (as such term
----------------
is defined in the Security Agreement), the Lessee has granted a security
interest to the Collateral Agent for the benefit of the Secured Parties, in all
of its right, title and interest in, to and under this Lease and (b) the Lessee
acknowledges that, in connection with the Securitization (as such term is
defined in the Security Agreement), (i) the Lessor may grant a security interest
to the Collateral Agent for the Securitization in, to and under the Lease and/or
the Vehicles and (ii) on and after the Step-Up Date (as defined in the Security
Agreement), the Lessor may, if required pursuant to Section 5.15(d) of the
Credit Agreement to which the Security Agreement relates, grant a security
interest to the Collateral Agent of its right, title and interest in, to and
under the Lease and in and to the Vehicles.
SECTION 13. GENERAL INDEMNITY.
-----------------
Section 13.1. Indemnity of the Lessor. The Lessee agrees to
-----------------------
indemnify and hold harmless the Lessor and the directors, officers, agents,
employees and representatives (collectively, the "Lessor Indemnified Persons")
--------------------------
against any and all claims, demands and liabilities of whatsoever nature, and
all costs and expenses, relating to or in any way arising out of:
Section 13.1.1. any acts by the Lessee relating to the ordering,
delivery, acquisition, rejection, installation, possession, custody by the
Lessee of registration documents, use, nonuse, misuse, operation, deficiency,
defect, transportation, repair, control or disposition of any Vehicle leased
hereunder or to be leased hereunder; the foregoing shall include, without
limitation, any liability (or any alleged liability) of the Lessor to any third
party arising out of any of the foregoing, including, without limitation, all
legal fees, costs and disbursements arising out of such liability (or alleged
liability);
Section 13.1.2. all (i) federal, state, county, municipal,
foreign or other fees and taxes of whatever nature
-7-
<PAGE>
other than income taxes relating to use of the Vehicles levied or payable during
the term of the Lease, including but not limited to license, qualification,
registration, franchise, use, gross receipts, ad valorem, business, property
(real or personal), excise, motor vehicle, and occupation fees and taxes with
respect to any Vehicle or the lease, rental, use, operation, or disposition of
any Vehicle by any Person or measured in any way by the value thereof or by the
business of, investment by, or ownership by the Lessor or the Lessee with
respect thereto, and (ii) documentary, stamp, filing, recording, mortgage or
other taxes, if any, which may be payable by the Lessor or the Lessee in
connection with this Agreement or the other Related Documents and any penalties
or interest with respect thereto;
Section 13.1.3. any violation by the Lessee of this Agreement or
of any Related Documents to which the Lessee is a party or by which it is bound
or any laws, rules, regulations, orders, writs, injunctions, decrees, consents,
approvals, exemptions, authorizations, licenses and withholdings of objection of
any governmental or public body or authority and all other requirements having
the force of law applicable at any time to any Vehicle or any action or
transaction by the Lessee with respect thereto or pursuant to this Agreement;
and
Section 13.1.4. the administration, enforcement, waiver or
amendment of this Agreement and any other Related Documents.
Notwithstanding the foregoing, the Lessee shall have no duty to
indemnify any Lessor Indemnified Person for any claims, demands, liabilities,
costs, or expenses to the extent such claim, demand, liability, cost or expense
arises out of or is due to such Person's gross negligence or willful misconduct.
Section 13.2. Indemnity of the Lessee. The Lessor agrees to
-----------------------
indemnify and hold harmless the Lessee and its directors, officers, agents,
employees and representatives (collectively, the "Lessee Indemnified Persons"
--------------------------
and, together with the Lessor Indemnified Persons, the "Indemnified Persons")
-------------------
against any and all claims, demands and liabilities of whatsoever nature, and
all costs and expenses, relating to or in any way arising out of the
enforcement of this Agreement and any other Related Documents.
Notwithstanding the foregoing, the Lessor shall have no duty to indemnify
any Lessee Indemnified Person for any claims, demands, liabilities, costs, or
expenses to the extent such claim, demand, liability, cost or expense arises out
of or is due to such Person's gross negligence or willful misconduct.
Section 13.3. Reimbursement Obligation by the Indemnifying Person.
---------------------------------------------------
The Lessee or the Lessor, as the case may be (each an "Indemnifying Person")
-------------------
shall forthwith upon demand reimburse the Indemnified Person for any sum or sums
expended by
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<PAGE>
such Indemnified Person for which it is indemnified under Section 13.1 or 13.2,
as the case may be, or shall pay such amounts directly upon request from such
Indemnified Person; provided, however, that, if so requested by the Indemnifying
-------- -------
Person, the Indemnified Person shall submit to the Indemnifying Person a
statement documenting any such demand for reimbursement or prepayment. To the
extent that the Indemnifying Person in fact indemnifies the Indemnified Person
under the indemnity provisions of this Agreement, the Indemnifying Person shall
be subrogated to the rights of the Indemnified Person in the affected
transaction and shall have a right to determine the settlementof claims therein.
The obligations of any party contained in this Section 13 shall survive the
----------
expiration or earlier termination of this Agreement or any lease of any Vehicle
hereunder; provided, however, that the factual or legal circumstances giving
-------- -------
rise to the Indemnified Person's exposure to liability occur during the period
that the Lease is in effect as to the Vehicle for which such exposure to
liability arose.
Section 13.4. Notice to Lessee of Claims. The Indemnified Person
--------------------------
shall notify the Indemnifying Person in writing (a "Notice of Claim") of the
---------------
pendency of any such claim, action or facts referred to in this Section 13 for
----------
which indemnity may be required.
Section 13.5. Defense of Claims. Defense of any claim referred to in
-----------------
this Section 13 for which indemnity may be required shall, at the option and
----------
request of the Indemnifying Person, be conducted by the Indemnifying Person.
Following receipt of any Notice of Claim, the Indemnifying Person will inform
the Indemnified Person of its election to defend such claim. Such Indemnified
Person may participate in any such defense at its own expense, provided such
participation, in the Indemnifying Person's reasonable opinion, does not
interfere with the Indemnifying Person's defense. The Indemnifying Person
agrees that no Indemnified Person will be liable to the Indemnifying Person for
any claim caused directly or indirectly by the inadequacy of any Vehicle for any
purpose or any deficiency or defect therein or the use or maintenance thereof or
any repairs, servicing or adjustments thereto or any delay in providing or
failure to provide such or any interruption or loss of service or use thereof or
any loss of business, all of which shall be the risk and responsibility of the
Lessee, except to the extent that any of the foregoing is caused by the gross
negligence or willful misconduct of such Indemnified Person. The rights and
indemnities of each Indemnified Person hereunder are expressly made for the
benefit of, and will be enforceable by, each Indemnified Person notwithstanding
the fact that such Indemnified Person is not or is no longer a party to (or
entitled to receive the benefits of) this Agreement.
SECTION 14. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement shall be
----------------------------------
binding upon the Lessor, the Lessee and their respective successors and assigns,
and shall inure to the benefit
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of the Lessee and the Lessor; provided, however, that the Lessee shall not have
-------- -------
the right to assign its rights or delegate its duties under this Agreement
without the Lessor's prior written consent; and provided, further, the Lessee
-------- -------
may rent such Vehicles in the ordinary course of its business. Any purported
assignment in violation of this Section 14 shall be void and of no force or
----------
effect.
SECTION 15. DEFAULT AND REMEDIES THEREFOR.
------------------------------
Section 15.1. Events of Default. Any one or more of the following
-----------------
will constitute an event of default (a "Lease Event of Default") as that term is
----------------------
used herein:
Section 15.1.1. the occurrence of (i) a default in the payment
of any Monthly Base Rent or Casualty Payment, and the continuance thereof for
fifteen (15) Business Days, or (ii) a default in the payment of any amount
payable under this Agreement (other than amounts described in clause (i) above)
----------
and the continuance thereof for ten (10) Business Days;
Section 15.1.2. any unauthorized assignment or transfer of this
Agreement by the Lessee occurs;
Section 15.1.3. the Lessee fails to comply with or perform any
covenant, condition, agreement or provision of this Agreement (which failure
does not constitute a Lease Event of Default under any of the other provisions
of this Section 15) and the continuance of such failure for 60 days after the
----------
earlier of (i) the date the Lessor delivers written notice thereof to the Lessee
and (ii) the date the Lessee obtains actual knowledge thereof and such failure
(to the extent such provision does not incorporate a materiality limitation in
its terms) materially adversely affects the interests of the Lessor;
Section 15.14. any representation or warranty made by the Lessee
in this Agreement or any Related Document is incorrect in any respect as of the
date such warranty or representation is made and continues to be incorrect for a
period of 60 days after the earlier of (i) the date on which written notice
thereof shall have been given to the Lessee by the Lessor and (ii) the date on
which the Lessee obtains actual knowledge thereof, and which failure to be
correct (to the extent such representation and warranty does not incorporate a
materiality limitation in its terms) materially adversely affects the interests
of the Lessor, or any schedule, certificate, financial statement, report,
notice, or other writing furnished by the Lessee to the Lessor is false or
misleading in any respect on the date as of which the facts therein set forth
are stated or certified, and continues to be incorrect in any respect for a
period of 60 days after the earlier of (a) the date on which written notice
thereof shall have been given to the Lessee by the Lessor and (b) the date on
which the Lessee obtains actual
-10-
<PAGE>
knowledge thereof, and which failure to be correct materially adversely affects
the interests of the Lessor;
Section 15.1.5. an Event of Bankruptcy occurs with respect to
the Lessee;
Section 15.1.6. all or any portion of any Related Document shall at
any time and for any reason not be in full force and effect or any event shall
occur and be continuing, and such failure or event materially adversely affects
the interests of the Lessor; or
Section 15.1.7. the Pension Benefit Guaranty Corporation or the
Internal Revenue Service shall have filed notice of one or more liens against
the Lessee (unless such lien does not purport to cover any amount payable under
this Agreement), and such notice shall have remained in effect for more than
thirty (30) days unless, prior to the expiration of such period, the Lessee
shall have removed such lien or shall have provided the Lessor with a bond in an
amount at least equal to the amount of such liens.
Section 15.2. Effect of Lease Event of Default. (a) If any Lease
--------------------------------
Event of Default shall occur and be continuing, the rights of the Lessee to
place Vehicle Orders pursuant to this Agreement (but not otherwise) shall
immediately terminate; (b) if a Lease Event of Default described in Section
-------
15.1.1(i), 15.1.2 or 15.1.5, shall occur, the Lessor may declare all Rent for
- --------- ------ ------
the Lease Term to be due and payable, whereupon such Rent shall, subject to
Section 15.4, become immediately due and payable and upon written demand by the
- ------------
Lessor, the Lessee shall return or deliver the Vehicles pursuant to the Lessor's
instructions; and (c) if any other Lease Event of Default shall occur and be
continuing for more than 90 days, the Lessor may declare the Rent for the Lease
Term to be due and payable, whereupon such Rent shall, subject to Section 15.4,
------------
become immediately due and payable and upon written demand by the Lessor, the
Lessee shall return or deliver the Vehicles pursuant to the Lessor's
instructions.
Section 15.3. Rights of Lessor Upon Lease Event of Default. If a
--------------------------------------------
Lease Event of Default shall occur, then the Lessor at its option may:
(i) proceed by appropriate court action or actions, either at
law or in equity, to enforce performance by the Lessee of the applicable
covenants and terms of this Agreement or to recover damages for the breach
hereof calculated in accordance with Section 15.4; or
------------
(ii) by notice in writing to the Lessee, terminate this
Agreement in its entirety and/or the right of possession hereunder of the
Lessee as to the Vehicles, whereupon all rights and interests of the Lessee
to the
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<PAGE>
Vehicles (except as otherwise provided herein) will cease and terminate
(but the Lessee will remain liable hereunder as herein provided, calculated
in accordance with Section 15.4); and thereupon the Lessor or its agents
------------
may peaceably enter upon the premises of the Lessee or other premises where
such Vehicles may be located and take possession of them and thenceforth
hold, possess and enjoy the same free from any right of the Lessee, or its
successors or assigns, to employ such Vehicles for any purpose whatsoever
consistent with the mitigation of losses and damages, and the Lessor will,
nevertheless, have a right to recover from the Lessee any and all amounts
which under the terms of Section 15.2 (as limited by Section 15.4) of this
------------ ------------
Agreement may be then due. Each and every power and remedy hereby
specifically given to the Lessor will be in addition to every other power
and remedy hereby specifically given or now or hereafter existing at law,
in equity or in bankruptcy and each and every power and remedy may be
exercised from time to time and simultaneously and as often and in such
order as may be deemed expedient by the Lessor; provided, however, that the
-------- -------
measure of damages recoverable against the Lessee will in any case be
calculated in accordance with Section 15.4. All such powers and remedies
------------
will be cumulative, and the exercise of one will not be deemed a waiver of
the right to exercise any other or others. No delay or omission of the
Lessor in the exercise of any such power or remedy and no renewal or
extension of any payments due hereunder will impair any such power or
remedy or will be construed to be a waiver of any default or any
acquiescence therein. Any extension of time for payment hereunder or other
indulgence duly granted to the Lessee will not otherwise alter or affect
the Lessor's rights or the obligations hereunder of the Lessee. The
Lessor's acceptance of any payment after it will have become due hereunder
will not be deemed to alter or affect the Lessor's rights hereunder with
respect to any subsequent payments or defaults therein; or
(iii) Upon a default in the performance (after giving effect to
any grace periods provided herein) by the Lessee of its obligations under
Section 21.2 hereof with respect to certain Vehicles, the Lessor shall have
------------
the right to take actions reasonably necessary to correct such default with
respect to the subject Vehicles.
Section 15.4. Measure of Damages. If a Lease Event of Default shall
-------------------
occur and the Lessor exercises the remedies granted to the Lessor under this
Section 15 the amount that the Lessor shall be permitted to recover from the
- ----------
Lessee shall be equal to:
(i) the payment due pursuant to Section 15.2; plus
------------ ----
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<PAGE>
(ii) any damages and expenses which the Lessor shall have
sustained by reason of the Lease Event of Default, together with reasonable
sums for such attorneys' fees and such expenses as will be expended or
incurred in the seizure, storage, rental or sale of the Vehicles or in the
enforcement of any right or privilege hereunder or in any consultation or
action in such connection; plus
----
(iii) all other amounts due and payable under this Agreement;
plus
----
(iv) interest from time to time on amounts due and unpaid under
this Agreement computed at a rate equal to 10% per annum, computed from the
date of the Lease Event of Default or the date payments were originally due
the Lessor under this Agreement or from the date of each expenditure by the
Lessor which is recoverable from the Lessee pursuant to this Section 15, as
----------
applicable, to and including the date payments are made by the Lessee;
minus
-----
(v) an amount equal to all sums realized by the Lessor from
the liquidation or releasing of the Vehicles leased hereunder.
SECTION 16. CERTIFICATION OF TRADE OR BUSINESS USE. Pursuant to Section
--------------------------------------
7701 of the Code and as set forth in Attachment B hereto, the Lessee will
------------
warrant and certify that (1) the Lessee intends to use the Vehicles in a trade
or business of the Lessee, and (2) the Lessee has been advised that it will not
be treated as the owner of the Vehicles for federal income tax purposes.
SECTION 17. SURVIVAL. In the event that, during the term of this
---------
Agreement, the Lessor or the Lessee becomes liable for the payment or
reimbursement of any obligations, claims or taxes pursuant to any provision
hereof, such liability will continue, notwithstanding the expiration or
termination of this Agreement, until all such amounts are paid or reimbursed by
the Lessor or the Lessee, respectively.
SECTION 18. MODIFICATION AND SEVERABILITY. No delay on the part of the
-----------------------------
Lessor in the exercise of any right, power or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by any of them of any right,
power or remedy preclude other or further exercise thereof, or the exercise of
any other right, power or remedy. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement shall in any event be
effective unless the same shall be in writing and signed and delivered by the
Lessor and the Lessee.
SECTION 19. CERTAIN REPRESENTATIONS AND WARRANTIES. Each party hereto
--------------------------------------
represents and warrants to the other party that as of the date hereof:
-13-
<PAGE>
Section 19.1. Organization; Ownership; Power; Qualification. Such
---------------------------------------------
party (i) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, (ii) has the corporate
power and authority to own its properties and to carry on its business as now
being and hereafter proposed to be conducted, and (iii) is duly qualified, in
good standing and authorized to do business in each jurisdiction in which the
character of its properties or the nature of its businesses requires such
qualification or authorization, except where the failure to so qualify is not
reasonably likely to have a Material Adverse Effect.
Section 19.2. Authorization; Enforceability. Such party has the
-----------------------------
corporate power and has taken all necessary corporate action to authorize it to
execute, deliver and perform this Agreement and each of the other Related
Documents to which it is a party in accordance with their respective terms, and
to consummate the transactions contemplated hereby and thereby. This Agreement
has been duly executed and delivered by such party and each of the other Related
Documents to which it is a party is a legal, valid and binding obligation of
such party, as applicable, enforceable in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization and similar laws affecting creditors generally and by the
availability of equitable remedies.
The execution, delivery and performance by such party of this Agreement
does not contravene, or constitute a default under, any provision of applicable
law or regulation or of the certificate of incorporation of such party or of any
rule, contract, agreement, judgment, injunction, order, decree or other
instrument binding upon it or any of its Assets; except to the extent that any
such contravention or default would not have a Material Adverse Effect.
Section 19.3. Compliance. The execution, delivery and performance,
----------
in accordance with their respective terms, by each party of this Agreement and
each of the other Related Documents to which it is a party, and the consummation
of the transactions contemplated hereby and thereby, do not and will not (i)
require any consent, approval, authorization or registration not already
obtained or effected, except where the failure to obtain any such consent,
approval or authorization or to register is not reasonably likely to have a
Material Adverse Effect, (ii) violate any applicable law with respect to which
violation is reasonably likely to have a Material Adverse Effect or (iii)
conflict with, result in a breach of, or constitute a default under the
certificate of incorporation or by-laws of such party, or under any indenture,
agreement, or other instrument to which it is a party or by which its properties
may be bound, which conflict, breach or default is reasonably likely to have a
Material Adverse Effect.
-14-
<PAGE>
Section 19.4. Litigation. Except for claims as to which the insurer
----------
has admitted coverage in writing and which are fully covered by insurance, no
claims, litigation (including, without limitation, derivative actions),
arbitration, governmental investigation or proceeding or inquiry is pending or,
to the best of such party's knowledge, threatened against it, which is
reasonably likely to have a Material Adverse Effect.
Section 19.5. Investment Company Act. Such party is not an
----------------------
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act, and it is not subject to any
other statute which would have a material adverse effect on its ability to
perform its obligations under this Agreement or the other Related Documents, and
the entering into or performance by it of this Agreement does not violate any
provision of such Act and does not require any consent, approval or
authorization of, or registration with, the Securities and Exchange Commission
or any other governmental or public body or authority.
Section 19.6. Regulations G, T, U and X. Such party is not engaged
-------------------------
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System). Neither such party nor any Person acting on its behalf has
taken or will take action to cause the execution, delivery or performance of
this Agreement to violate Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System.
Section 19.7. Governmental Authorizations. Such party has all
---------------------------
licenses, franchises, permits and other governmental authorizations necessary
for all businesses presently carried on by each (including owning and leasing
the real and personal property owned and leased by it), except where failure to
obtain such licenses, franchises, permits and other governmental authorizations
is not reasonably likely to have a Material Adverse Effect.
Section 19.8. Absence of Default. No event has occurred or failed to
------------------
occur which has not been remedied or waived, the occurrence or non-occurrence of
which constitutes a Lease Event of Default or a Potential Lease Event of Default
and no party hereto is subject to any judgment, decree or final order pursuant
to which the Lessor or the Lessee any of their properties, respectively, may be
bound or affected that is reasonably likely to have a Material Adverse Effect.
Section 19.9. Compliance with Requirements of Law. Such party is in
-----------------------------------
compliance with, and has obtained all qualifications required under, all
applicable Requirements of Law, the failure to comply with which is reasonably
likely to have a Material Adverse Effect.
-15-
<PAGE>
Section 19.10. Accuracy of Information. All certificates, reports,
-----------------------
statements, documents and other information furnished to the Lessor by or on
behalf of the Lessee, and to the Lessee by or on behalf of the Lessor, pursuant
to any provision of any Related Document, or in connection with or pursuant to
any amendment or modification of, or waiver under, any Related Document, shall,
at the time the same are so furnished, be complete and correct to the extent
necessary to give to the other party true and accurate knowledge of the subject
matter thereof in all material respects, and the furnishing of the same to the
other party shall constitute a representation and warranty by the party
providing the same made on the date the same are furnished to the Lessor or
Lessee, as the case may be, to the effect specified herein.
Section 19.11. Solvency. As of the date hereof, neither the Lessor
--------
nor the Lessee is insolvent (as such term is defined in the Bankruptcy Code),
both parties have adequate capital or assets to carry on their respective
business, and both parties intend to and believe that they will be able to pay
their respective debts as such debts become due.
Section 19.12. Certain Documents True and Correct. All information
----------------------------------
contained in any Vehicle Acquisition Schedule which has been submitted, or which
may hereafter be submitted by the Lessee to the Lessor is, or will be, true,
correct and complete in all material respects.
SECTION 20. CERTAIN AFFIRMATIVE COVENANTS. The Lessee covenants and
-----------------------------
agrees that, until the expiration or termination of this Agreement, and
thereafter until its obligations under this Agreement and the Related Documents
are satisfied in full, unless at any time the Lessor shall otherwise expressly
consent in writing, it will:
Section 20.1. Corporate Existence; Foreign Qualification. Do and
------------------------------------------
cause to be done at all times all things necessary to (i) maintain and preserve
its corporate existence and corporate power and authority to own its properties
and to carry on its business, and (ii) be duly qualified to do business and in
good standing as a foreign corporation in each jurisdiction where the nature of
its business makes such qualification necessary and the failure to so qualify is
reasonably likely to have a Material Adverse Effect.
Section 20.2. Books, Records and Inspections. (i) Maintain complete
------------------------------
and accurate books and records with respect to Vehicles leased under this
Agreement; (ii) at any time and from time to time during regular business hours,
upon reasonable prior notice from the Lessor and subject to the normal security
and confidentiality procedures of the Lessee, provide reasonable access to such
documentation and permit the Lessor (or such other person who may be designated
from time to time by the Lessor), or its agents or representatives to examine
and make copies of such
-16-
<PAGE>
books, records and documents in the possession or under the control of the
Lessee relating to the Vehicles leased under this Agreement as the Lessor or
such person may reasonably request; and (iii) permit the Lessor to visit the
office (which office shall be in the continental United States and, if it is not
the office where such materials normally are kept, shall be accessible without
unreasonable effort or expense) and properties of the Lessee for the purpose of
examining such materials, and to discuss matters relating to the Vehicles leased
under this Agreement or the Lessee's performance under this Agreement with the
Lessee's independent public accountants or with any of the officers or employees
of the Lessee having knowledge of such matters.
Section 20.3. Accounting Methods; Financial Records. Maintain, and
-------------------------------------
cause its material Subsidiaries to maintain, a system of accounting established
and administered in accordance with GAAP, keep, and cause its material
Subsidiaries to keep, adequate records and books of account in which complete
entries will be made in accordance with such accounting principles and
reflecting all transactions required to be reflected by such accounting
principles and keep, and cause its material Subsidiaries to keep, accurate and
complete records of their respective properties and assets.
Section 20.4. Insurance. (a) Maintain or cause to be maintained,
---------
with financially sound and reputable insurers, (i) personal injury and damage
insurance (including self-insurance) with respect to the Vehicles and (ii)
insurance with respect to its properties and business (including self-insurance)
against loss or damage of the kinds customarily insured against by corporations
of established reputation engaged in the same or similar businesses and
similarly situated, of such types and in such amounts as are customarily carried
under similar circumstances by such other corporations and the Lessee shall,
from time to time, deliver to the Lessor, as the Lessor shall request, copies of
certificates describing all insurance then in effect; provided, however, that
-------- -------
the Lessee may continue its current practices of self-insurance.
(b) Within 30 days of the date hereof, the Lessee will require that each
insurance policy referred to in the foregoing clause (a) provide for at least
----------
thirty (30) days' prior written notice to the Lessor of any termination of or
proposed cancellation or nonrenewal of such policy and that each insurance
policy name the Lessor as an additional insured or additional loss payee, as
appropriate, pursuant to certificates in form and substance reasonably
satisfactory to the Lessor.
Section 20.5. Reporting Requirements. Furnish, or cause to be
----------------------
furnished to the Lessor, such information, documents, or reports respecting the
Vehicles as the Lessor may from time to time reasonably request in order to
protect its interests under
-17-
<PAGE>
or as contemplated by this Agreement or any other Related Document.
Section 20.6. Taxes and Liabilities. Pay when due all taxes,
---------------------
assessments and other material (determined on a consolidated basis) liabilities
of the Lessee except as contested in good faith and by appropriate proceedings
with respect to which adequate reserves have been established, and are being
maintained, in accordance with GAAP if and so long as forfeiture of any Vehicles
will not result from the failure to pay any such taxes, assessments or other
material liabilities during the period of any such contest.
Section 20.7. Compliance with Requirements of Law. Maintain in
-----------------------------------
effect all qualifications required under applicable Requirements of Law and will
comply with all other applicable Requirements of Law, the failure to maintain or
comply with which is reasonably likely to have a Material Adverse Effect.
Section 20.8. Maintenance of the Vehicles. The Lessee will maintain
---------------------------
and cause to be maintained in good operating condition all of the Vehicles in
accordance with its ordinary business practices and in accordance with such
prudent and standard practices used in industries that are the same as or
similar to those in which the Lessee is engaged.
Section 20.9. Change of Location or Name. During the Term, the
--------------------------
Lessee will not change (a) the location of its principal place of business,
chief executive office or its consolidated records concerning its business and
financial affairs, or (b) its legal name or the name under or by which it
conducts its business, in each case without first giving the Lessor at least 30
days' advance written notice thereof; provided, however, that notwithstanding
-------- -------
the foregoing, the Lessee shall not change the location of its principal place
of business, chief executive office or its consolidated records concerning its
business and financial affairs to any place outside the United States of
America.
SECTION 21. CERTAIN NEGATIVE COVENANTS. Until the expiration or
--------------------------
termination of this Agreement and thereafter until the obligations of the Lessee
are paid in full, the Lessee agrees that, unless at any time the Lessor shall
otherwise expressly consent in writing, it will not:
Section 21.1. Mergers, Consolidations. Be a party to any merger or
-----------------------
consolidation, other than (i) a merger or consolidation of any Affiliate of the
Lessee into or with the Lessee (provided that the Lessee is the surviving
corporation) or (ii) a merger or consolidation of the Lessee into or with
another entity if the corporation formed by such consolidation or into or with
which the Lessee is merged shall be a corporation organized and existing under
the laws of the United States of America or any State or the District of
Columbia, and, if the Lessee is not
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<PAGE>
the surviving entity, shall expressly assume, by an agreement supplemental
hereto, executed and delivered to the Lessor, the performance of every covenant
and obligation of the Lessee hereunder and under all other Related Documents.
Section 21.2. Liens. Create or permit to exist any Lien with respect
-----
to any Vehicle, whether now or hereafter acquired, except Permitted Liens.
Section 21.3. Use of Vehicles. Use or contractually permit any
---------------
Vehicles to be used in any manner for any illegal purposes or that could subject
any Vehicles to confiscation.
SECTION 22. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
-------------------------------------------
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF THE LESSOR OR THE LESSEE SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY VEHICLE OR OTHER PROPERTY MAY BE
BROUGHT, AT THE LESSOR'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
VEHICLE OR OTHER PROPERTY MAY BE FOUND. THE LESSOR AND THE LESSEE HEREBY
EXPRESSLY AND IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ALL
FEDERAL AND STATE COURTS OF THE STATE OF NEW YORK FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREE TO BE BOUND BY ANY FINAL
JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE LESSOR AND
THE LESSEE FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW
YORK. THE LESSOR AND THE LESSEE HEREBY EXPRESSLY AND IRREVOCABLY WAIVE, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY HAVE OR HEREAFTER
MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE LESSOR AND THE LESSEE HAVE OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO THEMSELVES OR THEIR
PROPERTY, EACH PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT.
SECTION 23. GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER
-------------
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES. Whenever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision
-19-
<PAGE>
or the remaining provisions of this Agreement. All obligations and all rights of
the Lessor and the Lessee expressed herein shall be in addition to and not in
limitation of those provided by applicable law or in any other written
instrument or agreement.
SECTION 24. JURY TRIAL. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY
----------
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT TO WHICH IT IS A
PARTY, OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION THEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED
TRANSACTION, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE
A COURT AND NOT BEFORE A JURY.
SECTION 25. NOTICES. All notices, amendments, waivers, consents and other
-------
communications provided to any party hereto under this Agreement shall be in
writing and addressed, delivered or transmitted to such party at its address or
facsimile number set forth below or at such other address or facsimile number as
may be designated by such party in a notice to the other parties. Any notice,
if mailed and properly addressed with postage prepaid or if properly addressed
and sent by pre-paid courier service, shall be deemed given when received; any
notice, if transmitted by facsimile, shall be deemed given when transmitted upon
receipt of electronic confirmation of transmission.
Ryder TRS, Inc.
8669 N.W. 36th Street
Miami, Florida 33166
Attention: President
Telephone: (305) 500-8000
Facsimile: (305) 470-7946
RCTR, Inc.
8669 N.W. 36th Street
Miami, Florida 33166
Attention: President
Telephone: (305) 500-8900
Facsimile: (305) 470-7951
SECTION 26. HEADINGS. Section headings used in this Agreement are for
--------
convenience of reference only and shall not affect the construction of this
Agreement.
SECTION 27. EXECUTION IN COUNTERPARTS. This Agreement 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, taken together, shall
constitute one and the same Agreement.
-20-
<PAGE>
SECTION 28. EFFECTIVENESS. This Agreement shall become effective on the
-------------
Lease Commencement Date, subject to the prior or concurrent delivery of each of
the following documents (in form and substance satisfactory to the Lessor and
the Lessee):
(a) Certificate of Incorporation. The certificate of incorporation of
----------------------------
each of the Lessee and the Lessor, duly certified by the Secretary of State of
the jurisdiction of its incorporation, together with a copy of its by-laws, duly
certified by the Secretary or an Assistant Secretary of the Lessee or the
Lessor, as the case may be;
(b) Resolutions. Copies of resolutions of the Board of Directors of
-----------
each of the Lessee and the Lessor authorizing or ratifying the execution,
delivery and performance of those documents and matters required of it with
respect to this Agreement;
(c) Consents, etc. Copies of all documents evidencing any necessary
-------------
corporate action, consents and governmental approvals (if any) with respect to
this Agreement;
(d) Good Standing Certificates. Certificates of good standing for
--------------------------
each of the Lessee and the Lessor in the jurisdiction of its organization and
the jurisdiction of its principal place of business;
(e) Lease Schedule. A true and correct copy of Attachment C;
--------------
(f) The representations and warranties contained in Section 19 shall
----------
be true and correct in all respects (except to the extent any such
representation and warranty does not incorporate a materiality limitation in its
terms and the failure of such representation and warranty to be true and correct
in all respects does not materially adversely affect the interest of the
Lessor); and
(g) Other. Such other documents as the Lessor or the Lessee may
-----
reasonably request.
SECTION 29. SEVERABILITY. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
-21-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement or caused it
to be executed by their respective officers thereunto duly authorized as of the
day and year first above written.
LESSEE:
------
By: /s/ Wallace L. Rueckel
------------------------------
Name: Wallace L. Rueckel
Title: Senior Vice President
LESSOR:
------
By: /s/ Wallace L. Rueckel
-------------------------------
Name: Wallace L. Rueckel
Title: Senior Vice President
-22-
<PAGE>
ATTACHMENT A
------------
Vehicle Acquisition Schedule
----------------------------
1 Vehicle Group Number (Vehicle Model)
2 Model Year
3 Vehicle Identification Number (last eight digits) (VIN)
4 Vehicle Lease Commencement Date
5 Maximum Vehicle Lease Term
6 Capitalized Cost
7 Monthly Base Rent
8 Garaging State
<PAGE>
ATTACHMENT B
FORM OF CERTIFICATION OF TRADE OR BUSINESS USE
----------------------------------------------
The undersigned, __________ of Ryder TRS, Inc., a Delaware corporation,
hereby warrants and certifies, that (1) the Lessee intends to use the Vehicles
in a trade or business of the Lessee, and (2) the Lessee has been advised that
it will not be treated as the owner of the Vehicles for federal income tax
purposes.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
executed this 17th day of October, 1996.
RYDER TRS, INC.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE>
SCHEDULE I
DEFINITIONS LIST
"Acquisition" is defined in the recitals to the Lease.
-----------
"Affiliate" means, with respect to any specified Person, another Person
---------
that directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with the Person specified. For
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise; and "controlled" and "controlling"
have meanings correlative to the foregoing. For purposes of the Lease, the
Lessee shall not be considered to be an Affiliate of the Lessor.
"Appraisal Procedure" means that the parties shall consult for the purpose
-------------------
of determining such amount or value by mutual agreement. In the absence of such
agreement, either party may notify the other requesting determination of such
amount or value by appraisal and in such event the parties shall consult for the
purpose of appointing a mutually acceptable qualified independent appraiser
(whose cost shall be paid by the Lessee.) If the parties are unable to agree on
an appraiser within 20 days after the giving of such notice, such amount or
value shall be determined by a panel of three independent appraisers, one of
whom shall be selected (and paid for) by the Lessee and another of whom shall be
selected (and paid for) by the Lessor and the third of whom (whose cost shall be
borne equally by the Lessor and the Lessee) shall be selected by agreement of
the first two appraisers (or, if such two appraisers are unable to agree upon a
third appraiser within 10 days, by the United States District Judge for the
Southern District of New York then senior in service); provided, however, that
-------- -------
if either such party shall fail to select an independent appraiser within 10
days after the expiration of such 20-day period, such determination shall be
made solely by the appraiser selected by one of the parties and his cost shall
be borne by the Lessee if the Lessee shall have failed to select an appraiser
and by the Lessor if the Lessor shall have failed to select an appraiser. The
appraiser(s) appointed pursuant to the foregoing procedure shall be instructed
to determine such amount or value within 60 days after the appointment of the
last of such appraisers and such determination shall be final, binding and
conclusive upon the parties. If three appraisers shall be appointed, the
determination of the appraiser which differs most from the other two appraisers
shall be excluded, the remaining two determinations shall be averaged and such
average shall constitute the determination of the appraisers. Each appraiser
shall be experienced and shall be independent of the Lessee, the Lessor and the
manufacturers of any of the Vehicles.
<PAGE>
"Asset Purchase Agreement" means the Asset Purchase Agreement, dated as of
------------------------
September 19, 1996, by and between the Seller and the Lessee as amended from
time to time.
"Assets" means any interest of any kind in any assets or property of any
------
kind (including, without limitation, any security interest in Vehicles),
tangible or intangible, real, personal or mixed, now owned or hereafter acquired
by the Lessee.
"Bankruptcy Code" means The Bankruptcy Reform Act of 1978, as amended from
---------------
time to time, and as codified as 11 U.S.C. Section 101 et seq.
-- ---
"Base Lease" means the Master Motor Vehicle Lease Agreement, dated as of
----------
October 17, 1996, between the Lessor and the Lessee, as the same may be amended,
modified or supplemented from time to time in accordance with its terms,
exclusive of the Lease Annex.
"Board of Directors" means the Board of Directors of the Lessee or any
------------------
authorized committee of the Board of Directors.
"Business Day" means any day other than a Saturday, Sunday or other day on
------------
which banks are authorized by law to close in New York City, New York or
Minneapolis, Minnesota.
"Capitalized Cost" means, with respect to each Vehicle, the price paid for
----------------
such Vehicle by the Lessor to the dealer or Manufacturer selling such Vehicle,
including dealer profit and delivery charges but excluding taxes and any
registration or titling fees.
"Casualty" means, with respect to any Vehicle, that (i) such Vehicle is
--------
lost, converted or stolen for a period of at least 90 days or (ii) such Vehicle
is destroyed, seized or otherwise rendered permanently unfit or unavailable for
use.
"Casualty Payment" is defined in Section 6 of the Lease.
---------------- ---------
"Certificate of Title" means, with respect to each Vehicle, the certificate
--------------------
of title applicable to such Vehicle duly issued in accordance with the
certificate of title act or statute of the jurisdiction applicable to such
Vehicle.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
----
otherwise modified from time to time, and any successor statute of similar
import, in each case as in effect from time to time. References to sections of
the Code also refer to any successor sections.
"Collateral Agent" is defined in Section 12 of the Lease.
----------------
"Controlled Group" means, with respect to any Person, such Person, whether
----------------
or not incorporated, and any corporation, trade or business that is, along with
such Person, a member of a
-2-
<PAGE>
controlled group of corporations or a controlled group of trades or businesses
as described in Sections 414(b) and (c), respectively, of the Code.
"Court" means any court, tribunal, arbitrator or other adjudicative
-----
authority in any proceeding.
"Definitions List" means this Definitions List, as amended or modified from
----------------
time to time in accordance with the terms of the Lease.
"Disposition Date" means if such Vehicle (i) was returned to the Lessor,
----------------
the date that such Vehicle was accepted for return by the Lessor, (ii) was
disposed of by the Lessee in accordance with any instructions of the Lessor, the
date on which such Vehicle was delivered to the location designated by the
Lessor in accordance with the Lessor's instructions, or (iii) was sold to any
Person, the date on which the proceeds of such sale are received by the Lessor.
"Disposition Proceeds" means the net proceeds from the sale or disposition
--------------------
of a Vehicle to any Person.
"Dollar" and the symbol "$" mean the lawful currency of the United States.
------ -
"Event of Bankruptcy" shall be deemed to have occurred with respect to a
-------------------
Person if:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up, or
composition or readjustment of debts of such Person, the appointment of a
trustee, receiver, custodian, liquidator, assignee, sequestrator or the
like for such Person or all or any substantial part of its assets, or any
similar action with respect to such Person under any law relating to
bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, and such case or proceeding shall continue
undismissed, or unstayed and in effect, for a period of 60 consecutive
days; or an order for relief in respect of such Person shall be entered in
an involuntary case under the federal bankruptcy laws or other similar laws
now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in effect,
or shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) for such Person or
-3-
<PAGE>
for any substantial part of its property, or shall make any general
assignment for the benefit of creditors; or
(c) the board of directors of such Person (if such Person is a
corporation or similar entity) shall vote to implement any of the actions
set forth in clause (b) above.
"Fair Market Value" means the fair market sales value of the Vehicles that
-----------------
would be obtained in an arm's-length transaction between an informed and willing
buyer (other than a buyer currently in possession) and an informed and willing
seller, in each case under no compulsion to sell or buy, as determined in
accordance with the Appraisal Procedure assuming in the determination of such
fair market sales value, that the Vehicles are in the condition and repair
required to be maintained by the terms of the Lease, and unencumbered by this
Lease. In the determination of such fair market sales value, all alternative
uses in the hands of such buyer including, without limitation, further leasing
of the Vehicles, shall be taken into account.
"GAAP" means the generally accepted accounting principles promulgated or
----
adopted by the Financial Accounting Standards Board and its predecessors and
successors from time to time.
"Governmental Authority" means any Federal, state, local or foreign court
----------------------
or governmental department, commission, board, bureau, agency, authority,
instrumentality or regulatory body.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in
------ ------ ------ ---------
any Related Document refer to such Related Document as a whole and not to any
particular Section, paragraph or provision of such Related Document.
"including" means including without limiting the generality of any
---------
description preceding such term, and, for purposes of each Related Document, the
parties thereto agree that the rule of ejusdem generis shall not be applicable
------- -------
to limit a general statement, which is followed by or referable to an
enumeration of specific matters, to matters similar to the matters specifically
mentioned.
"Indemnified Persons" is defined in Sections 13.2 of the Lease.
------------------- -------------
"Indemnifying Person" is defined in Section 13.3 of the Lease.
------------------- ------------
"Investment Company Act" means the Investment Company Act of 1940, as
----------------------
amended.
"Initial Vehicles" means all trucks acquired by the Lessor from the Seller
----------------
pursuant to the Acquisition.
-4-
<PAGE>
"Lease" means the Base Lease, together with all Lease Annexes, as the same
-----
may be amended, modified or supplemented from time to time in accordance with
its terms.
"Lease Annex" means the Annex to the Base Lease, as the same may be
-----------
amended, supplemented or modified from time to time in accordance with its
terms.
"Lease Commencement Date" is defined in Section 3.2 of the Lease.
----------------------- -----------
"Lease Event of Default" is defined in Section 15.1 of the Lease.
---------------------- ------------
"Lease Expiration Date" is defined in Section 3.2 of the Lease.
--------------------- -----------
"Lessee" means Ryder TRS, Inc., in its capacity as lessee under the Lease,
------
or any successor by merger to Ryder TRS, Inc. in accordance with Section 21.1 of
------------
the Lease, or any other permitted successor or assignee of Ryder TRS, Inc., in
its capacity as Lessee, pursuant to Section 14 of the Lease.
----------
"Lessee Indemnified Persons" is defined in Section 13.2.
-------------------------- ------------
"Lessor" means RCTR, Inc. in its capacity as the lessor under the Lease.
------
"Lessor Indemnified Persons" is defined in Section 13.1.
-------------------------- ------------
"Lien" means, when used with respect to any Person, any interest in any
----
real or personal property, asset or other right held, owned or being purchased
or acquired by such Person which secures payment or performance of any
obligation, and shall include any mortgage, lien, pledge, encumbrance, charge,
retained security title of a conditional vendor or lessor, or other security
interest of any kind, whether arising under a security agreement, mortgage,
lease, deed of trust, chattel mortgage, assignment, pledge, retention or
security title, financing or similar statement, or notice or arising as a matter
of law, judicial process or otherwise.
"Manufacturer" means a manufacturer of trucks.
------------
"Material Adverse Effect" means, with respect to any occurrence, event or
-----------------------
condition:
(i) a materially adverse effect on the financial condition, business,
assets or operations of the Lessor or the Lessee and their respective
Subsidiaries taken as a whole;
(ii) a materially adverse effect on the ability of the Lessor or the
Lessee to perform its material obligations
-5-
<PAGE>
under any of the Related Documents to which each is a party; and
(iii) a materially adverse effect on the enforceability of the Lease.
"Maximum Vehicle Lease Term" is defined in paragraph 5 of the Lease Annex.
-------------------------- -----------
"Monthly Base Rent" with respect to the Vehicles is defined in the Lease
-----------------
Annex.
"Operating Lease" means the Base Lease as supplemented by the Lease Annex.
---------------
"Payment Date" means the 20th day of each month, or if such date is not a
------------
Business Day, the next succeeding Business Day; provided, however, that the
-------- -------
first Payment Date is November 20, 1996.
"Permitted Liens" means (i) Liens for current taxes not delinquent or for
---------------
taxes being contested in good faith and by appropriate proceedings, and with
respect to which adequate reserves have been established, and are being
maintained, in accordance with GAAP, (ii) mechanics', materialmen's, landlords',
warehousemen's and carrier's Liens, and other Liens imposed by law, securing
obligations arising in the ordinary course of business that are not more than
thirty days past due or are being contested in good faith and by appropriate
proceedings and with respect to which adequate reserves have been established,
and are being maintained, in accordance with GAAP, and (iii) Liens in favor of
the Lessor.
"Person" means any natural person, corporation, business trust, joint
------
venture, association, company, partnership, joint stock company, corporation,
trust, unincorporated organization or Governmental Authority.
"Potential Lease Event of Default" means an event which with the giving of
--------------------------------
notice or lease of time or both would constitute a Lease Event of Default.
"Related Documents" means, collectively, the Lease and the Asset Purchase
-----------------
Agreement.
"Related Month" means, with respect to any Payment Date or other date, the
-------------
most recently ended calendar month; provided, however, that the initial Related
-------- -------
Month shall be the period from and including the closing date of the Acquisition
to and including the last day of the calendar month in which such closing
occurs.
"Rent" is defined in paragraph 9 of the Lease Annex.
---- -----------
-6-
<PAGE>
"Requirements of Law" means with respect to any Person or any of its
-------------------
property, the certificate of incorporation or articles of association and by-
laws, certificate of limited partnership, limited partnership agreement or other
organizational or governing documents of such Person, and any law, ordinance,
treaty, rule or regulation, requirement or determination of any arbitrator or
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject, whether Federal, state or local (including, without limitation, usury
laws, the Federal Truth in Lending Act and retail installment sales acts).
"Security Agreement" is defined in Section 12 of the Lease.
------------------ ----------
"Subsequently Acquired Vehicles" means all trucks acquired by the Lessor
------------------------------
after the closing date of the Acquisition pursuant to a Vehicle Order delivered
to the Lessor by the Lessee.
"Term" is defined in Section 3.2 of the Lease.
---- -----------
"United States" or "U.S." means the United States of America, its fifty
------------- ----
States and the District of Columbia.
"Vehicles" means, collectively, the Initial Vehicles and the Subsequently
--------
Acquired Vehicles.
"Vehicle Acquisition Schedule" is defined in Section 2.2 of the Lease.
---------------------------- -----------
"Vehicle Lease Commencement Date" is defined in Section 3.1 of the Lease.
------------------------------- -----------
"Vehicle Lease Expiration Date", with respect to each Vehicle, means the
-----------------------------
earliest of (i) the Disposition Date for such Vehicle, (ii) if such Vehicle
becomes a Casualty, the date funds in the amount of the Net Book Value thereof
are received by the Lessor from the Lessee in accordance with the Lease, and
(iii) the last day of the Maximum Vehicle Lease Term.
"Vehicle Order" is defined in Section 2.2 of the Lease.
------------- -----------
"Vehicle Term" is defined in Section 3.1 of the Lease.
------------ -----------
"Vehicle Title Nominee Agreement" means the Vehicle Title Nominee
-------------------------------
Agreement, dated as of October 17, 1996, between Ryder Truck Rental, Inc. and
the Lessor.
"written" or "in writing" means any form of written communication,
------- ----------
including, without limitation, by means of telex, telecopier device, telegraph
or cable.
-7-
<PAGE>
LEASE ANNEX
to the
MASTER MOTOR VEHICLE LEASE AGREEMENT
Dated as of October 17, 1996
between
RCTR, Inc.
as Lessor,
and
Ryder TRS, Inc.
as Lessee
<PAGE>
1. Scope of Annex. This Annex shall apply only to the acquisition and
--------------
leasing of the Vehicles by the Lessor pursuant to the Base Lease, as
supplemented by this Lease Annex (collectively, the "Operating Lease").
---------------
2. General Agreement. Lessor and Lessee intend that for all purposes
-----------------
(including, but not limited to, financial accounting, regulatory accounting,
federal income tax purposes and all applicable state and local income,
franchise, sales, use and excise tax purposes and for purposes of any foreign
corporation, business registration or doing business statutes), (A) the Lease
with regard to the Vehicles will be treated as an "operating lease" pursuant to
Statement of Financial Accounting Standards No. 13, as amended, as well as for
all tax purposes, (B) the Lessor will be treated as the owner and lessor of the
Vehicles, (C) Lessee will be treated as the lessee of the Vehicles, and (D)
Lessor will be entitled to all tax benefits ordinarily available to an owner of
property similar to the Vehicles for such tax purposes.
3. Operating Lease Commitment. Upon the execution and delivery of this
--------------------------
Operating Lease, the Lessor shall, subject to the terms and conditions of the
Base Lease, purchase from time to time on or after the Lease Commencement Date
and prior to the Lease Expiration Date, all Subsequently Acquired Vehicles
identified in Vehicle Orders placed by the Lessee for a purchase price equal to
the Capitalized Cost thereof.
4. Lease Procedures. In connection with the acquisition of any
----------------
Subsequently Acquired Vehicles to be leased on or after the Lease Commencement
Date, the Lessee shall deliver to the Lessor a Vehicle Order (including a
Vehicle Acquisition Schedule) with respect to all Subsequently Acquired Vehicles
to be leased by the Lessor on the related Vehicle Lease Commencement Date.
5. Maximum Vehicle Lease Term. The maximum Vehicle lease term of the
--------------------------
Operating Lease as it relates to each Vehicle leased hereunder (the "Maximum
-------
Vehicle Lease Term") shall be from the Vehicle Lease Commencement Date to the
- ------------------
date that is two-thirds of the remaining economic life of such Vehicle as
calculated from the Vehicle Lease Commencement Date and as set forth on the
Vehicle Acquisition Schedule. On the occurrence of such date for a Vehicle not
previously disposed of, the Lessee shall, (a) on behalf of the Lessor, promptly
dispose of such Vehicle in accordance with the terms hereof and in accordance
with any instructions of the Lessor for such disposition, (b) in each case,
provide that Disposition Proceeds be paid directly to the Lessor and (c) pay to
the Lessor, in accordance with this Operating Lease, any other amounts unpaid
and owing from the Lessee under the Lease in respect of such Vehicle.
6. Conditions of Return. Except in the case of Casualty the Lessee
--------------------
agrees to return each Vehicle on the applicable
<PAGE>
Vehicle Lease Expiration Date in good operating condition, normal wear and tear
excepted.
7. Lessor's Right to Cause Vehicles to be Sold. Notwithstanding anything
-------------------------------------------
to the contrary contained in the Base Lease, the Lessor shall have the right, at
any time within twenty one days prior to the Vehicle Lease Expiration Date for
each Vehicle, to require that the Lessee exercise commercially reasonable
efforts to arrange for the sale of such Vehicle to a third party for a price at
least equal to the Fair Market Value thereof, in which event the Lessee shall so
arrange for such a sale. If a sale of the Vehicle is arranged by the Lessee
prior to the Vehicle Lease Expiration Date, then the Lessee shall deliver the
Vehicle to the purchaser thereof and the Lessee shall cause to be delivered to
the Lessor the funds paid for such Vehicle by the purchaser. If the Lessee is
unable to arrange for a sale of the Vehicle in accordance with Lessor's
instructions, then the Lessee shall cease attempting to arrange for such a sale
and shall return such Vehicle to the Lessor or otherwise dispose of the Vehicle
in accordance with Lessor's instructions. Except as otherwise expressly agreed
upon by the Lessor, in no event shall any Vehicle be sold pursuant to this
paragraph 8 unless the funds to be paid to the Lessor arising out of such sale
- -----------
are at least equal to the Fair Market Value of such Vehicle.
8. Calculation of Rent. Rent shall be due and payable on a monthly basis
-------------------
as set forth in this paragraph 9:
-----------
"Monthly Base Rent", with respect to each Payment Date and each
-----------------
Vehicle leased under the Lease shall be determined (as set forth in
Attachment C, as amended from time to time) by calculating the monthly
payment (consistent with standard financial practice) utilizing the
following variables: (a) if such Vehicle is an Initial Vehicle, Fair
Market Value thereof and if such Vehicle is a Subsequently Acquired
Vehicle, the Capitalized Cost thereof, (b) the number of months equal to
two-thirds of the remaining economic life of such Vehicle, and (d) a
monthly interest rate of .5%.
9. Payment of Rent and Other Payments.
(a) Monthly Base Rent. On each Payment Date, the Lessee shall pay to
-----------------
the Lessor the Monthly Base Rents that have accrued during the Related
Month with respect to all Vehicles that were leased under the Operating
Lease on any day during the Related Month;
(b) Casualty Payments. On each Payment Date, the Lessee shall pay to
-----------------
the Lessor all Casualty Payments as provided in Section 5.2 of the Base
-----------
Lease; and
(c) Certain Other Payments. The Lessee shall direct all Disposition
----------------------
Proceeds payable in respect of Vehicles to be paid directly to the Lessor.
The Lessee agrees that in
-2-
<PAGE>
the event it shall receive directly any such payment, including cash,
securities, obligations or other property, the Lessee shall accept the
same as the Lessor's agent and shall hold the same in trust on behalf of
and for the benefit of the Lessor.
10. Net Lease. THE OPERATING LEASE SHALL BE A NET LEASE, AND THE LESSEE'S
---------
OBLIGATION TO PAY ALL RENT AND OTHER SUMS HEREUNDER SHALL BE ABSOLUTE AND
UNCONDITIONAL, AND SHALL NOT BE SUBJECT TO ANY ABATEMENT OR REDUCTION FOR ANY
REASON WHATSOEVER. The obligations and liabilities of the Lessee hereunder
shall in no way be released, discharged or otherwise affected (except as may be
expressly provided herein for any reason). The Operating Lease shall be
noncancelable by the Lessee and, except as expressly provided herein, the
Lessee, to the extent permitted by law, waives all rights now or hereafter
conferred by statute or otherwise to quit, terminate or surrender the Operating
Lease, or to any diminution or reduction of Rent payable by the Lessee
hereunder. All payments by the Lessee made hereunder shall be final (except to
the extent of adjustments provided for herein), absent manifest error and,
except as otherwise provided herein, the Lessee shall not seek to recover any
such payment or any part thereof for any reason whatsoever, absent manifest
error. If for any reason whatsoever the Operating Lease shall be terminated in
whole or in part by operation of law or otherwise except as expressly provided
herein, the Lessee shall nonetheless pay an amount equal to each Rent payment at
the time and in the manner that such payment would have become due and payable
under the terms of the Operating Lease as if it had not been terminated in whole
or in part. All covenants and agreements of the Lessee herein shall be
performed at its cost, expense and risk unless expressly otherwise stated.
11. Liens. Except for Permitted Liens, the Lessee shall keep all Vehicles
-----
leased by it free of all Liens arising during the Vehicle Term. Upon the
Vehicle Lease Expiration Date for each Vehicle leased hereunder, the Lessor may,
in its discretion, remove any such Lien and any sum of money that may be paid by
the Lessor in release or discharge thereof, including attorneys' fees and costs,
will be paid by the Lessee upon demand by the Lessor. The Lessor may grant
security interests in the Vehicles without consent of the Lessee.
12. Non-Disturbance. So long as the Lessee satisfies its obligations
---------------
hereunder, its quiet enjoyment, possession and use of the Vehicles will not be
disturbed during the Term subject, however, to paragraph 8 of this Annex and
-----------
except that the Lessor retains the right, but not the duty, to inspect the
Vehicles without disturbing the ordinary conduct of the Lessee's business. Upon
the request of the Lessor, from time to time, the Lessee will make reasonable
efforts to confirm to the Lessor the location, mileage and condition of each
Vehicle and to make available for the Lessor's inspection within a reasonable
time period, not to exceed forty-five (45) days, the Vehicles at the
-3-
<PAGE>
location where the Vehicles are normally domiciled. Further, the Lessee will,
during normal business hours and with a notice of three (3) Business Days, make
its records pertaining to the Vehicles available to the Lessor for inspection at
the location where the Lessee's records are normally domiciled.
13. Certain Risks of Loss Borne by Lessee. During the Maximum Lease
-------------------------------------
Term, as between the Lessor and the Lessee, the Lessee assumes and bears the
risk of loss, damage, theft, taking, destruction, attachment, seizure,
confiscation or requisition and all other risks and liabilities with respect to
such Vehicle, including personal injury or death and property damage, arising
with respect to any Vehicle due to the manufacture, purchase, acceptance,
rejection, delivery, leasing, subleasing, possession, use, inspection,
operation, condition, maintenance, repair or storage of such Vehicle, howsoever
arising.
14. Title. This is an agreement to lease only, and title to the Vehicles
-----
will at all times remain in the Lessor's name. The Lessee will not have any
rights or interest in such Vehicles whatsoever other than the rights of
possession and use as provided by this Operating Lease.
* * *
-4-
<PAGE>
EXHIBIT 10.17
VEHICLE TITLE NOMINEE AGREEMENT
-------------------------------
THIS VEHICLE TITLE NOMINEE AGREEMENT (this "Agreement") is made as of
---------
this 17th day of October, 1996, by and between Ryder Truck Rental, Inc., a
Florida corporation ("Seller"), and RCTR, Inc., a Delaware corporation ("Buyer")
------ -----
and a wholly-owned subsidiary of Ryder TRS, Inc. (f/k/a RCTR Holdings, Inc.), a
Delaware corporation ("Ryder TRS"). Except as otherwise specified, capitalized
---------
terms used but not defined herein have the respective meanings set forth in the
Purchase Agreement (as defined herein).
WHEREAS, the execution and delivery of this Agreement is a condition
to each of Seller's and Ryder TRS's obligation to conclude the transactions
contemplated by the Asset and Stock Purchase Agreement, dated as of September
19, 1996, by and between Seller and Ryder TRS (the "Purchase Agreement");
------------------
WHEREAS, at the Closing and pursuant to the terms of the Purchase
Agreement, (a) Ryder TRS will assume certain liabilities of Seller, (b) Ryder
TRS will acquire certain of the operating assets of Seller's Consumer Truck
Rental Division, other than the Trucks and the car carriers owned by Seller at
the Closing and included in the Assets sold (the "Vehicles"), and (c) Buyer will
--------
acquire the Vehicles;
WHEREAS, due to the administrative impossibility and the prohibitive
costs associated with the transfer of the voluminous number of titles to the
Vehicles, title to the Vehicles will not be transferred to Buyer at the Closing,
but instead, from and after the Closing, Seller will act as Buyer's nominee
title holder of the Vehicles pursuant to the terms hereof; and
WHEREAS, Seller and Buyer desire to confirm their respective interests
in and obligations with respect to the Vehicles and to provide for certain other
matters relating to the use and disposition of the Vehicles;
NOW THEREFORE, in consideration of the mutual promises herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer, intending to be
legally bound, hereby agree as follows:
<PAGE>
1. Term. This Agreement will commence on the Closing and will remain in
----
full force and effect until such date and time as none of the Vehicles are
titled in the name of Seller; provided that the terms and provisions of Section
6 shall survive indefinitely.
2. Appointment of Seller as Nominee Title Holder; Power of Attorney.
----------------------------------------------------------------
(a) Buyer hereby appoints Seller as nominee title holder of the Vehicles
and Seller hereby agrees to serve as Buyer's designated agent in such
capacity as described herein.
(b) Seller hereby grants Buyer a power of attorney substantially in the
form of Exhibit A attached hereto to (i) transfer the title to any Vehicle
---------
from the name of Seller to the name of Buyer or the name of a third party,
(ii) reflect on the certificate of title of any Vehicle the interest of any
lienholder and (iii) execute such other documents and instruments as may be
necessary to effect any such transfer or reflect any such interest.
3. Interests in the Vehicles. Notwithstanding the fact that title to the
-------------------------
Vehicles will remain in the name of Seller on and after the Closing, Seller and
Buyer hereby acknowledge that, on and after the Closing:
(a) except as set forth in subsection (b) below, Buyer is entitled to
and shall have all incidents, benefits and risks of ownership of the
Vehicles, including, without limitation, the sole right to operate, rent,
sell and otherwise transfer and dispose of the Vehicles; and
(b) Seller has no direct or indirect ownership or other interest in the
Vehicles, except such rights and obligations with respect to the Vehicles
as are required by Buyer's appointment of Seller as nominee title holder of
the Vehicles as set forth herein.
4. Transfer of Vehicle Titles.
--------------------------
(a) General. Seller and Buyer agree that Buyer may (i) transfer title
-------
to any Vehicle from the name of Seller to the name of Buyer or a third
party (but in no event, once transferred, re-register title from Buyer to
Seller) or (ii) reflect on the certificate of title of any Vehicle the
interest in such Vehicle of any lienholder.
(b) Transfer as Required by Seller.
------------------------------
(i) On or After the Six-Month Anniversary of the Closing. Buyer will
----------------------------------------------------
take all necessary action to insure that no Vehicles remain titled in the
name of Seller on or after
-2-
<PAGE>
the six-month anniversary of the Closing. In connection therewith, on the
six-month anniversary of the Closing, Buyer will submit to Seller an
officer's certificate of Buyer (A) stipulating that no Vehicles remain
titled in the name of Seller or (B) in the event any Vehicles remain titled
in the name of Seller, a schedule of all such Vehicles by vehicle
identification number and, upon Seller's request, all title documents with
respect to such Vehicles. Buyer hereby agrees that the power of attorney
granted to Buyer pursuant to Section 2(b) shall expire upon the six-month
anniversary hereof and that after such time Seller shall have the exclusive
power and authority to transfer title to any Vehicle that remains titled in
the name of Seller to the name of Buyer (whether or not such Vehicle is
scheduled in the officer's certificate referred to in the preceding
sentence).
(ii) Prior to the Six-Month Anniversary of the Closing. Prior to the
-------------------------------------------------
six-month anniversary of the Closing (but during the term of this
Agreement), Seller may require Buyer to transfer title of any or all of the
Vehicle(s) from the name of Seller to the name of Buyer by delivering
written notice of such request to Buyer. Within 15 business days of receipt
of such written notice, Buyer agrees to use its reasonable best efforts to
transfer title of any such Vehicle(s) from the name of Seller to the name
of Buyer. If Buyer fails to transfer title of any such Vehicle(s) from the
name of Seller to the name of Buyer within such 15 business days, (i) Buyer
will immediately deliver to Seller all title documents with respect to such
Vehicle(s), and (ii) Seller shall have the power and authority to transfer
title to any such Vehicle(s) that remains titled in the name of Seller to
the name of Buyer. Upon and after such title transfer, Seller shall
immediately deliver to Buyer all title documents with respect to such
Vehicle(s).
5. Insurance. During the term of this Agreement, Buyer will maintain the
---------
types of insurance, in the coverage limits, listed in the insurance policy
schedule set forth below (each, an "Insurance Policy"):
INSURANCE POLICY SCHEDULE
-------------------------
Type of Insurance Policy Coverage Limits
- ------------------------ ---------------
Standard Automobile Liability Twenty-Five Million and no/100
Insurance Policy (the "Auto- Dollars ($25,000,000,000.00)
mobile Liability Insurance Per Occurrence with an excess
Policy") layer of at least Fifty Million
and no/100 Dollars
($50,000,000.00) aggregate
Commercial General Liability Seventy-Five Million and no/100
-3-
<PAGE>
Insurance Policy with Broad Dollars ($75,000,000.00)
Form Contractual Liability
Insurance Coverage (the "CGL
Insurance Policy")
Workers Compensation Statutory
Employer's Liability Five Million and/100 Dollars
($5,000,000.00)
In the event that any Insurance Policy provides coverage on a "claims made" form
rather than on an occurrence form, Buyer shall cause the coverage provided by
each such policy to be kept in place for a period of one (1) year after the
effective date of termination or expiration of this Agreement.
Buyer may self insure up to One Million Dollars ($1,000,000) as a
deductible.
Insurance Policy Requirements.
-----------------------------
1. Each Liability Insurance Policy shall:
(1) be written by an insurance company reasonably acceptable to
Seller (it being understood that an insurance company rated
A- or better by A.M. Best & Company is acceptable);
(2) name Buyer as insureds, and be amended to name Seller, its
employees, officers, directors, contractors, agents and
affiliates (each an "Additional Insured") as additional
insureds as their interests may appear;
(3) provide that if such insurance is canceled, or any material
change is made in the coverage which affects the interest of
any Additional Insured, such cancellation or change shall
not be effective as to the Additional Insured for thirty
(30) days after receipt by the Additional Insured of written
notice from such insurers of such cancellation or change;
(4) be primary and without right of contribution from any other
insurance which is carried by, or otherwise available to,
any Additional Insured;
(5) provide that in respect of the interests of any Additional
Insured in such policies, the insurance shall not be
invalidated by any
-4-
<PAGE>
action or inaction of Buyer or any other Person and shall
insure each Additional Insured regardless of any breach or
violation of any warranty, declaration or condition
contained in such policies by Buyer or any other Person;
(6) shall expressly provide that all of the provisions thereof,
except the limits of liability, shall operate in the same
manner as if there were a separate policy covering each
Additional Insured; and
(7) in accordance with the terms and conditions of the
contractual liability coverage provided by such Insurance
Policy, insure the obligations of Buyer to indemnify the
Additional Insureds hereunder.
The first Twenty-Five Million Dollars ($25,000,000) of automobile liability
insurance and general liability insurance shall be on an occurrence form. The
first Twenty-Five Million Dollars of automobile liability insurance shall not be
subject to any annual aggregate limit of liability.
Each liability Insurance Policy and any all-risks Insurance Policy of
Buyer which covers Vehicles shall waive any rights of subrogation against the
Additional Insureds, except to the extent of Seller's obligations to indemnify
Buyer pursuant to Section 6(b) below.
Proof of Insurance. Upon execution of this Agreement, from time to
------------------
time at Seller's request, and any time a new policy is to go into effect, Buyer
shall provide Seller with insurance certificates and other evidence, reasonably
satisfactory to Seller, that the benefits and coverage required by this Section
are in full force and effect. The certificate shall describe the perils covered
by each policy of insurance then in force, identify the insurer or insurers with
which such policies of insurance are carried and maintained, specify the amounts
of insurance coverage provided against each such peril, and describe the
provisions contained in such policies of insurance so as to evidence compliance
with the requirements of this Section. Seller shall have no duty to examine
such insurance certificates or the Insurance Policies to verify compliance.
Buyer shall provide a copy of its insurance policies to Seller promptly
following a request therefor, if available. Failure to keep such Insurance
Policies in effect while any Vehicle is in Seller's name will cause immediate
and irreparable harm for which monetary damages would be inadequate.
Accordingly, in the event of such a breach, Seller will be entitled to equitable
relief, including specific performance, which remedy shall not be exclusive, but
shall be in addition to, all other remedies available at law or in equity.
-5-
<PAGE>
6. Indemnification.
---------------
(a) Buyer hereby agrees to indemnify and hold harmless Seller, its
employees, officers, directors, contractors, agents and affiliates (the
"Seller Indemnified Parties") from and against any actual or alleged claim,
damage, loss, liability, expense and tax (including, without limitation,
reasonable costs of investigation and attorney's fees and expenses)
(collectively, "Losses") (other than any matter for which Seller
------
indemnifies or holds Buyer or Ryder TRS harmless hereunder or the Purchase
Agreement) in any way arising out of or related to the Vehicles from and
after the Closing, whether due to Seller's holding legal title to any
Vehicle, Seller's appointment as nominee title holder of the Vehicles or
Seller's performance under this Agreement, including, without limitation,
Losses arising out of or related to (i) Seller's grant of power of attorney
to Buyer pursuant to Section 2(b), (ii) claims for personal injury
(including death) or property damage involving any Vehicle from and after
the Closing, including, without limitation, any claims in excess of or not
otherwise covered by any Insurance Policy, and any vicarious liability,
ownership liability or similar such liability for such claims, (iii) any
personal property taxes payable with respect to the Vehicles subsequent to
the Closing and (iv) Seller's transfer of title to the name of Buyer on or
after the six-month anniversary of the Closing. Buyer will, at Seller's
option, defend the Seller Indemnified Parties from any Losses under this
Section 6(a) with counsel reasonably acceptable to the Seller.
b. Seller hereby agrees to indemnify and hold harmless Buyer, its
employees, officers, directors, contractors, agents and affiliates (the
"Buyer Indemnified Parties") from and against any Losses (other than any
matter for which Buyer or Ryder TRS indemnifies or holds Seller harmless
hereunder or the Purchase Agreement) arising out of or relating to any
claim by a creditor of, or purchaser of a Vehicle (other than Buyer or
Ryder TRS) from, Seller with respect to a Vehicle or any proceeds thereof
as a result of (i) Seller's retention of legal title to any Vehicle on or
after the Closing, (ii) Seller's appointment as nominee title holder of the
Vehicles or (iii) Seller's breach under this Agreement, whether direct or
indirect, and whether any such Losses are incurred by Buyer or the
Collateral Agent; provided, however, that such indemnity shall not extend
to any Losses arising out of or relating to any claim made on a Vehicle by
a purchaser purchasing such Vehicle from or at the direction of Buyer,
Ryder TRS or the Collateral Agent. "Collateral Agent" means Citicorp,
----------------
U.S.A., Inc. and its successors and assigns, as collateral agent. Seller
will, at Buyer's option, defend the Buyer Indemnified Parties from
-6-
<PAGE>
any Losses under this Section 6(b) with counsel reasonably acceptable to
the Buyer.
7. Acknowledgments by Seller. Seller hereby acknowledges and
-------------------------
consents to the following:
(a) Buyer may, with notice to Seller, assign, pledge and grant to the
Collateral Agent a first priority, perfected security interest in all of
Buyer's right, title and interest in and to, among other things, (i) the
Vehicles, (ii) any repurchase program associated with any Vehicle, (iii)
the title documents for the Vehicles and (iv) this Agreement; and
(b) upon such assignment, the Collateral Agent as assignee of Buyer's
rights hereunder shall be entitled to enforce the indemnity set forth in
Section 5(b) above against Seller and Seller agrees to pay any amounts due
with respect to such indemnity directly to the Collateral Agent.
8. Remittance of Proceeds; Payment of License Fees. In the event
-----------------------------------------------
that Seller receives any (a) payments in respect of Vehicles traded or sold to
manufacturers or auction dealers after the Closing representing repurchase
prices from such vehicle manufacturers or auction dealers under repurchase
programs, (b) proceeds from the sale of Vehicles (other than pursuant to a
repurchase program or a sale accomplished under the Used Truck Sale Agreement),
(c) insurance proceeds in respect of Vehicles payable with respect to insurable
events occurring after Closing, other than any proceeds received pursuant to an
Insurance Policy or (d) any other payment or proceeds in respect of Vehicles, in
each case, other than any payments received pursuant to Section 6(a) or pursuant
to an agreement between Seller and an affiliate of Buyer or which constitutes
Excluded Assets, it shall, promptly upon receipt, but in no event later than
seven days from receipt, forward such proceeds to a bank account designated by
Buyer. Buyer will, promptly after execution of this Agreement, set up a bank
account(s) for remittance of proceeds and with sufficient funds in it at all
times to pay for any licensing fees or other amounts for which Buyer is
responsible. Buyer will make the necessary arrangements so that Seller may draw
on such bank account(s) to cover such amounts.
9. Further Assurances. Each of Seller and Buyer will, from time to
------------------
time, execute and deliver such further instruments and render such further
assistance as the other party may reasonably request in order to carry out the
transactions contemplated herein; provided, however, that such instruments will
be prepared by Buyer.
10. No Third Party Beneficiaries. This Agreement will not confer any
----------------------------
rights or remedies upon any Person other than Seller, Buyer, the Seller
Indemnified Parties, the Buyer
-7-
<PAGE>
Indemnified Parties, the Collateral Agent and their respective successors and
permitted assigns.
11. Entire Agreement. This Agreement and the other agreements
----------------
specifically referenced herein constitute the entire agreement between Seller
and Buyer with respect to the subject matter hereof (with the exception of other
agreements entered into pursuant to or in connection with the Purchase
Agreement) and supersede any prior understandings, agreements, or
representations by or among Seller and Buyer, written or oral.
12. Succession and Assignment. This Agreement will be binding upon
-------------------------
and inure to the benefit of Seller, Buyer and their respective successors and
permitted assigns. Neither Seller nor Buyer may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other; provided, however, that (a) Seller may without the prior
-------- -------
written approval of Buyer (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates and (ii) designate one or more of its
Affiliates to perform its obligations hereunder and (b) Buyer may without the
prior written approval of Seller assign any rights and interests hereunder as
provided in Section 7 (in either of which cases Buyer nonetheless will remain
liable and responsible for the performance of all of its obligations hereunder).
13. Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
14. Headings. The section headings contained in this Agreement are
--------
inserted for convenience only and will not affect in any way the meaning or
interpretation of this Agreement.
15. Notices. All notices, requests, demands, claims and other
-------
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder will be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to Seller:
------------
Ryder Truck Rental, Inc.
3600 N.W. 82nd Avenue
Miami, Florida 33166
Attention: President
Telecopy:
With Copies to:
--------------
Ryder System, Inc.
-8-
<PAGE>
3600 N.W. 82nd Avenue
Miami, Florida 33166
Attention: General Counsel
If to Buyer:
-----------
RCTR, Inc.
8669 N.W. 36th Street
Miami, Florida 33166
Attention: President
Telecopy: (305) 470-7951
With Copies to:
--------------
Willkie Farr & Gallagher
153 East 53rd Street
New York, NY 10022
Attention: Thomas M. Cerabino, Esq.
Telecopy: (212) 821-8111
Any party hereto may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication will be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party hereto may change the
address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other party notice in the manner
herein set forth.
16. Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE
OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
17. Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement will be valid unless the same will be in writing and signed by each of
Seller and Buyer. No waiver by either Seller or Buyer of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, will be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent such occurrence.
18. Severability. Any term or provision of this Agreement that is
------------
invalid or unenforceable in any situation in any jurisdiction will not affect
the validity or enforceability
-9-
<PAGE>
of the remaining terms and provisions hereof or the validity or enforceability
of the offending term or provision in any other situation or in any other
jurisdiction.
19. Construction.
------------
(a) General. The language used in this Agreement will be deemed to be
-------
the language chosen by Seller and Buyer to express their mutual intent, and
no rule of strict construction will be applied against either Seller or
Buyer.
(b) Title; Titling. As used in this Agreement, the term "title"
--------------
refers to a certificate of title or other similar form of vehicle title and
is intended by Seller and Buyer to include the terms "vehicle registration"
and "vehicle license plate," unless specified otherwise. Similarly, unless
specified otherwise, "titling" will be deemed to include the acts of
registering a vehicle, including the registering of the license plates of a
vehicle.
* * * * *
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Vehicle
Title Nominee Agreement as of the date first above written.
RYDER TRUCK RENTAL, INC.
By: /s/ Dwight D. Denny
-----------------------------------
Name: Dwight D. Denny
Title: Executive Vice President of
Development
RCTR, INC.
By: /s/ Dean Anderson
-----------------------------------
Name: Dean Anderson
Title: Vice President and
Assistant Secretary
<PAGE>
EXHIBIT A
---------
POWER OF ATTORNEY
-----------------
THIS POWER OF ATTORNEY is made as of this [ ] day of October, 1996
from Ryder Truck Rental, Inc., a Florida corporation ("Seller") to RCTR, Inc., a
------
Delaware corporation ("Buyer"). Except as otherwise specified, capitalized
-----
terms used but not defined herein have the respective meanings set forth in the
Agreement (as defined herein).
WHEREAS, pursuant to the Vehicle Title Nominee Agreement made as of
the date hereof, by and between Seller and Buyer (the "Agreement"), Seller has
---------
agreed to grant to Buyer a power of attorney;
NOW THEREFORE, in consideration of the mutual promises contained in
the Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer intending to be
legally bound, hereby agree as follows:
1. Term. This Power of Attorney will commence on the Closing and
----
will remain in full force and effect until the six-month anniversary of the
Closing or such date and time as none of the Vehicles are titled in the name of
Seller, whichever occurs first.
2. Power of Attorney.
-----------------
(a) Seller hereby irrevocably constitutes and appoints Buyer its
agent and attorney-in-fact to do or cause to be done any of the following
things:
(i) transfer the legal title to any Vehicle from the name of
Seller to the name of Buyer or to the name of a third party determined
by Buyer;
(ii) reflect on the certificate of title of any Vehicle the
interest of any lienholder;
(iii) file all reports required to be filed with respect to the
Vehicles with local governmental authorities (other than taxing
authorities); and
(iv) otherwise take all actions and do all things necessary or
proper, required, contemplated or deemed advisable or desirable by
Buyer in its discretion to effect the foregoing, including the
execution and delivery of such other documents and instruments as may
be necessary to effect any such transfer or reflect any such interest.
<PAGE>
(b) All persons dealing with Buyer, as attorney-in-fact, may rely and
act upon any writing believed in good faith to be signed by Buyer.
(c) Buyer is hereby empowered to determine, in its discretion, the
time or times when, the purposes for which, and the manner in which, any power
herein conferred upon Buyer shall be exercised.
(d) Buyer shall not receive any compensation for any services rendered
hereunder.
RYDER TRUCK RENTAL, INC.
By:
-------------------------------------
Name:
Title:
-2-
<PAGE>
EXHIBIT 12
STATEMENT REGARDING COMPUTATION OF EARNINGS TO FIXED CHARGES
FORM S-4
RYDER TRS, INC.
as filed with the Securities and Exchange Commission on January 24, 1997
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------------------------
PRO
FORMA
1992 1993 1994 1995 1995
------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
EARNINGS:
Earnings(loss) before income taxes ($14,584) $4,474 $21,109 $6,586 ($23,156)
Plus fixed charges:
Interest expense(A) 20,590 20,049 24,256 29,663 44,927
Portion of rent expense representing interest(B) 2,021 2,135 2,133 1,700 1,700
------------------------------------------------
Total fixed charges 22,611 22,184 26,389 31,363 46,627
------------------------------------------------
Total earnings $8,027 $26,658 $47,498 $37,949 $23,471
================================================
FIXED CHARGES $22,611 $22,184 $26,389 $31,363 $46,627
================================================
RATIO OF EARNINGS TO FIXED CHARGES (C) 1.2 1.8 1.2 (C)
================================================
<CAPTION>
January 1-
Nine October 16,
months --------------------
ended PRO
September 30, FORMA
1995 1996 1996
----------------- --------------------
(Dollars in Thousands)
<S> <C> <C>
EARNINGS:
Earnings(loss) before income taxes $3,381 $10,126 ($16,613)
Plus fixed charges:
Interest expense(A) 22,558 20,291 35,568
Portion of rent expense representing interest(B) 1,399 833 833
----------------- --------------------
Total fixed charges 23,957 21,124 36,401
----------------- --------------------
Total earnings $27,338 $31,250 $19,788
================= ====================
FIXED CHARGES $23,957 $21,124 $36,401
================= ====================
RATIO OF EARNINGS TO FIXED CHARGES 1.1 1.5 (C)
================= ====================
</TABLE>
(1) Includes amortization of deferred financing costs.
(2) The portion of rent expense that represents interest expense is one-third.
(3) Earnings were insufficient to cover fixed charges by $14,584, $23,156 and
$16,613 in the years ended December 31, 1992 and 1995 (pro forma) and the
period January 1-October 16, 1996 (pro forma), respectively.
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
Subsidiary State of Incorporation
- ---------- ----------------------
RCTR, Inc. Delaware
Ryder Truck Rental-One Way, Inc. Delaware
Ryder Move Management, Inc. Oregon
Ryder Relocation Services, Inc. Florida
The Move Shop, Inc. Florida
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4
of our report dated January 6, 1997, on our audit of the balance sheet of Ryder
TRS, Inc. We also consent to the reference to our firm under the caption
"Experts."
Coopers & Lybrand L.L.P.
Miami, Florida
January 24, 1997
<PAGE>
EXHIBIT 23.2
The Board of Directors and Shareholders
Ryder TRS, Inc.:
We consent to the inclusion of our reports dated December 20, 1996 and September
23, 1996, on the combined financial statements of Ryder Consumer Truck Rental (a
division of Ryder Truck Rental, Inc., a wholly-owned subsidiary of Ryder System,
Inc.) as of October 16, 1996, December 31, 1995 and 1994 and for the period
January 1, 1996 through October 16, 1996, and for each of the years in the two-
year period ended December 31, 1995, included in Ryder TRS, Inc.'s registration
statement on Form S-4 dated January 24, 1997, relating to the offering of up to
$175 million in aggregate principal amount of its outstanding 10% Senior
Subordinated Notes due 2006 and to the reference to our firm under the heading
"Experts" in the prospectus.
KPMG PEAT MARWICK LLP
Miami, Florida
January 24, 1997
<PAGE>
EXHIBIT 25.1
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO RULE 901(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [_]
-----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
-----------------------
RYDER TRS, INC.
(Exact name of obligor as specified in its charter)
Delaware 38-331-3542
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
8669 NW 36th Street
Miami, Florida 33166
(Address of principal executive offices) (Zip code)
-----------------------
10% Senior Subordinated Notes due 2006
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such affilia-
tion.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-
29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee
of all facts on which to base a responsive answer to Item 2, the answer to said
Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an amendment
to this Form T-1.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 2nd day of January, 1997.
THE BANK OF NEW YORK
By: /s/ BYRON MERINO
-------------------------
Name: BYRON MERINO
Title: ASSISTANT TREASURER
-4-
<PAGE>
EXHIBIT 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries.
a member of the Federal Reserves System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ............. $ 4,404,522
Interest-bearing balances ...................................... 732,833
Securities:
Held-to-maturity securities .................................... 789,964
Available-for-sale securities .................................. 2,005,509
Federal funds sold in domestic offices of the bank:
Federal funds sold ............................................. 3,364,838
Loans and lease financing receivables:
Loans and leases, net of unearned income ........ 28,728,602
LESS: Allowance for loan and lease losses ......... 584,525
LESS: Allocated transfer risk reserve ............. 429
Loans and leases, net of unearned income, allowance, and reserve. 28,143,648
Assets held in trading accounts .................................. 1,004,242
Premises and fixed assets (including capitalized leases) ......... 605,668
Other real estate owned .......................................... 41,238
Investments in unconsolidated subsidiaries and associated
companies ...................................................... 205,031
Customers' liability to this bank on acceptances outstanding ..... 949,154
Intangible assets ................................................ 490,524
Other assets ..................................................... 1,305,839
-----------
Total assets ..................................................... $44,043,010
===========
LIABILITIES
Deposits:
In domestic offices ............................................ $20,441,318
Noninterest-bearing ............................. 8,158,472
Interest-bearing ................................ 12,282,846
In foreign offices. Edge and Agreement subsidiaries, and IBFs .. 11,710,903
Noninterest-bearing ............................. 46,182
Interest-bearing ................................ 11,664,721
Federal funds purchased in domestic offices of the bank
Federal funds purchased ........................................ 1,565,288
Demand notes issued to the US Treasury ........................... 293,186
Trading liabilities .............................................. 826,856
Other borrowed money
With original maturity of one year or less ..................... 2,103,443
With original maturity of more than one year ................... 20,766
Bank's liability on acceptances executed and outstanding ......... 951,116
Subordinated notes and debentures ................................ 1,020,400
Other liabilities ................................................ 1,522,884
-----------
Total liabilities ................................................ 40,456,160
-----------
EQUITY CAPITAL
Common stock...................................................... 942,284
Surplus........................................................... 525,666
Undivided profits and capital reserves............................ 2,129,376
Net unrealized holding gains (losses) on available-for-sale
securities...................................................... ( 2,073)
Cumulative foreign currency translation adjustments............... ( 8,403)
-----------
Total equity capital.............................................. 3,586,850
-----------
Total liabilities and equity capital.............................. $44,043,010
===========
</TABLE>
I. Robert E. Keilman, Senior Vice President and Comptroller of the above-named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We the undersigned directors attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System is true and
correct.
J Carter Bacot
Thomas A Renyi Directors
Alan R Griffith
- --------------------------------------------------------------------------------
