<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------- ------------
Commission file number 1-13663
UNITED RENTALS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 06-1493538
- --------------------------- ------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Four Greenwich Office Park, Greenwich, Connecticut 06830
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 622-3131
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X Yes No
----- -----
As of May 11, 1998 there were 33,623,715 shares of the registrant's Common
stock, $.01 par value outstanding.
<PAGE>
UNITED RENTALS, INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
INDEX
PAGE
--------
PART I FINANCIAL INFORMATION
Item 1 Unaudited Consolidated Financial Statements
Consolidated Balance Sheets as of March 31, 1998
and December 31, 1997 (unaudited)................................. 3
Consolidated Statement of Operations for the Three
Months Ended March 31, 1998 (unaudited)........................... 4
Consolidated Statement of Stockholders' Equity for
the Three Months Ended March 31, 1998,
(unaudited)....................................................... 5
Consolidated Statement of Cash Flows for the Three
Months Ended March 31, 1998 (unaudited)........................... 6
Notes to Unaudited Consolidated Financial Statements.............. 8
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations............................... 12
PART II OTHER INFORMATION
Item 2 Changes in Securities and Use of Proceeds......................... 20
Item 6 Exhibits and Reports on Form 8-K.................................. 21
Signatures........................................................ 22
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UNITED RENTALS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 54,785,007 $ 68,607,528
Accounts receivable, net of
allowance for doubtful accounts
of $3,813,000 in 1998 and
$1,161,000 in 1997 31,443,000 7,494,636
Inventory 14,933,813 3,827,446
Prepaid expenses and other assets 10,006,519 2,966,822
Rental equipment, net 140,743,703 33,407,561
Property and equipment, net 11,900,686 2,272,683
Intangible assets, net of
accumulated amortization
of $1,235,000 in 1998 and
$241,000 in 1997 186,314,455 50,533,736
------------ ------------
$450,127,183 $169,110,412
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 28,149,318 $ 5,697,830
Debt 26,494,068 1,074,474
Deferred income taxes 544,820 198,249
Accrued expenses and other
liabilities 10,305,699 4,409,828
------------ ------------
Total liabilities 65,493,905 11,380,381
Commitments and contingencies
Stockholders' equity:
Preferred stock--$.01 par value,
5,000,000 shares authorized, no
shares issued and outstanding -- --
Common stock--$.01 par value,
75,000,000 shares authorized in
1998 and 1997,33,313,708 in 1998
and 23,899,119 in 1997 shares
issued and outstanding 333,137 238,991
Additional paid-in capital 381,629,839 157,457,418
Retained earnings 2,671,973 33,622
Accumulated translation adjustments (1,671) --
------------ ------------
Total stockholders' equity 384,633,278 157,730,031
------------ ------------
$450,127,183 $169,110,412
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
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UNITED RENTALS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
<TABLE>
<S> <C>
Revenues:
Equipment rentals $26,779,850
Sales of rental equipment 2,983,191
Sales of new equipment, merchandise and other
revenues 9,427,125
-----------
Total revenues 39,190,166
Cost of revenues:
Cost of equipment rentals, excluding depreciation 11,221,504
Depreciation of rental equipment 4,583,832
Cost of rental equipment sales 1,639,431
Cost of new equipment and merchandise sales
and other operating costs 7,591,891
-----------
Total cost of revenues 25,036,658
-----------
Gross profit 14,153,508
Selling, general and administrative expenses 7,806,931
Non-rental depreciation and amortization 1,086,424
-----------
Operating income 5,260,153
Interest expense 1,172,718
Other (income) expense (380,703)
-----------
Income before provision for income taxes 4,468,138
Provision for income taxes 1,829,787
-----------
Net income $ 2,638,351
===========
Basic earnings per share $0.10
===========
Diluted earnings per share $0.09
===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
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UNITED RENTALS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK
------------------------
NUMBER ADDITIONAL ACCUMULATED
OF PAID-IN RETAINED TRANSLATION
SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENTS
----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1997 23,899,119 $238,991 $157,457,418 $ 33,622 --
Issuance of
common stock 9,537,375 95,374 223,971,193
Translation
adjustments $ (1,671)
Conversion of
convertible note 14,814 148 199,852
Cancellation of
common stock (137,600) (1,376) 1,376
Net income 2,638,351
----------- ----------- ------------ ----------- ------------
Balance,
March 31, 1998 33,313,708 $ 333,137 $381,629,839 $2,671,973 $ (1,671)
=========== =========== ============ =========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
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UNITED RENTALS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,638,351
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and amortization 5,670,256
Gain on sale of rental equipment (1,343,760)
Deferred taxes 1,422,898
Changes in operating assets and
liabilities:
Accounts receivable (474,469)
Inventory (2,918,253)
Prepaid expenses and other assets (4,917,023)
Accounts payable 9,560,512
Accrued expenses and
other liabilities (2,064,894)
-------------
Net cash provided by operating
activities 7,573,618
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of rental equipment (12,860,888)
Purchases of property and equipment (5,315,132)
Proceeds from sales of rental
equipment 2,983,191
In-process acquisition costs (758,771)
Purchases of other companies (138,170,090)
-------------
Net cash used in investing
activities (154,121,690)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common
stock, net of issuance costs 206,456,306
Proceeds from debt 149,576,408
Repayments of debt (222,652,100)
Payment of debt financing costs (655,063)
-------------
Net cash provided by financing
activities 132,725,551
-------------
Net decrease in cash and
cash equivalents (13,822,521)
Cash and cash equivalents at
beginning of period 68,607,528
-------------
Cash and cash equivalents at
end of period $ 54,785,007
=============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
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UNITED RENTALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CON'T
THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
Supplemental disclosure of cash flow
information:
Cash paid during the period:
Interest $ 1,111,819
=============
Income taxes $ 106,500
=============
Supplemental disclosure of non cash
investing and financing activities:
During the period ended March 31, 1998
a convertible note in the principal
amount of $200,000 was converted into
14,814 shares of common stock.
The Company acquired the net assets
and assumed certain liabilities
other companies as follows:
Assets, net of cash acquired 279,808,752
Liabilities assumed (123,821,390)
Less:
Amounts paid in common stock and
warrants (17,817,272)
-------------
Net cash paid $ 138,170,090
=============
The accompanying notes are an integral part of these consolidated financial
statements.
7
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UNITED RENTALS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
1. BASIS OF PRESENTATION
The Consolidated Financial Statements of United Rentals, Inc. and its
subsidiaries (the "Company") included herein are unaudited and, in the opinion
of management, such financial statements reflect all adjustments, consisting
only of normal recurring adjustments, necessary to a fair statement of the
results of the interim period presented. Interim financial statements do not
require all disclosures normally presented in year-end financial statements,
and, accordingly, certain disclosures have been omitted. Results of operations
for the three month period ended March 31, 1998 are not necessarily indicative
of the results that may be expected for the year ending December 31, 1998. The
Consolidated Financial Statments included herein should be read in conjunction
with the Company's Consolidated Financial Statements and related Notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1997.
Impact of Recently Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board issued SFAS NO.
130, "Reporting Comprehensive Income," and SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information." SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its components
in a primary financial statement. The Company adopted SFAS No. 130 during the
period ended March 31, 1998. The adoption of SFAS No. 130 did not have a
material effect on the consolidated financial position, results of operations or
cash flows of the Company. SFAS No. 131 establishes a new method by which
companies will report operating segment information. This method is based on
the manner in which management organizes the segments within a company for
making operating decisions and assessing performance. The Company continues to
evaluate the provisions of SFAS No. 131 and, upon adoption, the Company may
report operating segments. The Company is required to adopt SFAS No. 131 by
December 31, 1998.
2. COMMON STOCK
On March 11, 1998, the Company completed a public offering of
8,625,000 shares of Common Stock (the "Offering"). The net proceeds to the
Company from the Offering were approximately $207.4 million (after deducting the
underwriting discount and estimated offering expenses). The Company used $132.7
million of
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the net proceeds from the Offering to repay all outstanding indebtedness under
the Company's credit facility and used the balance of such net proceeds for
acquisitions.
The purchase agreement relating to the acquisition of one company
acquired provides that the stock consideration paid by the Company in connection
with such acquisition is subject to adjustment based upon the trading prices of
the common stock during the 60-day period which commenced December 18, 1997. In
accordance with such provisions, the Company canceled 137,600 shares of common
stock issued by the Company in connection with such acquisition.
3. ACQUISITIONS
During the three months ended March 31, 1998, the Company completed
the acquisition of 19 equipment rental companies having an aggregate of 66
rental locations in 16 states and Ontario, Canada.
The aggregate consideration paid by the Company for the acquisitions
completed during the three months ended March 31, 1998 was $165.0 million and
consisted of approximately $147.2 million in cash, 912,375 shares of Common
Stock and warrants to purchase an aggregate of 30,000 shares of Common Stock.
In addition, the Company repaid or assumed outstanding indebtedness of the
companies acquired during the three months ended March 31, 1998 in the aggregate
amount of $98.5 million. The Company also agreed in connection with two of the
acquisitions to pay the former owners additional amounts based upon specified
future revenues (such amounts being limited to (i) Cdn$4.0 million with respect
to one acquisition and (ii) an amount based on the results of a single store
with respect to the other acquisition).
These acquisitions have been accounted for as purchases and,
accordingly, the results of their operations have been included in the Company's
results of operations from their respective acquisition dates. The purchase
prices have been allocated to the assets acquired and liabilities assumed based
on their respective fair values at their respective acquisition dates.
The Company has not completed its valuation on all of its purchases
and the purchase price allocations are subject to change when additional
information concerning asset and liability valuations are completed.
The following table summarizes, on an unaudited pro forma basis, the combined
results of operations of the Company for the three months ended March 31, 1998
as though each acquisition described above was made on January 1, 1998.
9
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THREE MONTHS ENDED
MARCH 31, 1998
------------------
Revenues $ 46,616,686
Net income 2,279,657
Basic earnings per share 0.09
Diluted earnings per share 0.07
The unaudited pro forma results are based upon certain assumptions and
estimates which are subject to change. These results are not necessarily
indicative of the actual results of operations that might have occurred, nor are
they necessarily indicative of expected results in the future.
4. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
Numerator:
Net income $ 2,638,351
==================
Denominator:
Denominator for basic earnings
per share--weighted-average shares 26,278,462
Effect of dilutive securities:
Employee stock options 434,402
Warrants 3,731,044
------------------
Dilutive potential common shares
Denominator for diluted earnings
per share--adjusted weighted-
average shares 30,443,908
==================
Basic earnings per share $ 0.10
==================
Diluted earnings per share $ 0.09
==================
10
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5. SUBSEQUENT EVENTS
Subsequent to March 31, 1998, the Company completed the acquisition of 14
equipment rental companies consisting of 35 rental sites. The aggregate
consideration paid by the Company for these acquisitions was $92.5 million and
consisted of approximately $85.9 million in cash, and 307,906 shares of Common
Stock. The Company also agreed in connection with one of the acquisitions to
pay the former owner additional amounts based upon specified future revenues not
to exceed $500,000. The Company funded a portion of the cash consideration for
these acquisitions with cash on hand and the balance with borrowings under the
Company's revolving credit facility.
11
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ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion reviews the Company's operations for three months
ended March 31, 1998 and should be read in conjunction with the unaudited
Consolidated Financial Statements and related Notes thereto of the Company
included herein and the Consolidated Financial Statements and related Notes
thereto included in the Company's 1997 Annual Report on Form 10-K.
The following discussion includes statements that are forward-looking in
nature. These statements are generally identified by the inclusion of phrases
such as "the Company expects," "the Company anticipates," "the Company
believes," "the Company estimates," and other phrases of similar meaning.
Whether such statements ultimately prove to be accurate depends upon a variety
of factors that may affect the business and operations of the Company. Certain
of these factors are discussed under the caption Item 1 - "Business-Factors that
May Influence Results and Accuracy of Forward-Looking Statements" included in
the Company's 1997 Annual Report of Form 10-K. The information in such Annual
Report under such caption is incorporated by reference herein.
General
- -------
The Company commenced equipment rental operations in October 1997 by
acquiring six established equipment rental companies and acquired 33 additional
companies in the first five months of 1998 (through May 14, 1998). Of such
acquisitions, 19 were completed in the first quarter of 1998. Each of the
acquisitions completed by the Company to date has been accounted for as a
purchase.
The Company primarily derives revenues from the following sources: (i)
equipment rental (including additional fees that may be charged for equipment
delivery, fuel, repair of rental equipment, and damage waivers), (ii) the sale
of rental equipment, (iii) the sale of new equipment, and (iv) the sale of
related merchandise and parts.
Cost of operations consists primarily of depreciation costs associated with
rental equipment, the cost of repairing and maintaining rental equipment, the
cost of rental and new equipment sold, personnel costs, occupancy costs,
supplies, and expenses related to information systems. The Company records
rental equipment expenditures at cost and depreciates equipment using the
straight-line method over the estimated useful life (which ranges from 2 to 10
years), after giving effect to an estimated salvage value of 0% to 10% of cost.
Selling, general and administrative expense includes
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advertising and marketing expenses, management salaries, and clerical and
administrative overhead.
Non-rental depreciation and amortization includes (i) depreciation expense
associated with equipment that is not offered for rent (such as vehicles,
computers and office equipment) and amortization expense associated with
leasehold improvements and (ii) the amortization of intangible assets. The
Company's intangible assets include goodwill, which represents the excess of the
purchase price of acquired companies over the estimated fair market value of the
assets acquired.
Consideration Paid For Acquisitions in First Quarter of 1998
- ------------------------------------------------------------
The aggregate consideration paid by the Company for the acquisitions
completed during the three months ended March 31, 1998 was $165.0 million and
consisted of approximately $147.2 million in cash, 912,375 shares of Common
Stock and warrants to purchase an aggregate of 30,000 shares of Common Stock.
In addition, the Company repaid or assumed outstanding indebtedness of the
companies acquired during the three months ended March 31, 1998 in the aggregate
amount of $98.5 million. The Company also agreed in connection with two of the
acquisitions to pay the former owners additional amounts based upon specified
future revenues (such amounts being limited to (i) Cdn$4.0 million with respect
to one acquisition and (ii) an amount based on the results of a single store
with respect to the other acquisition).
Results of Operations
- ---------------------
Three months ended March 31, 1998
Revenues. Total revenues were $39.2 million for the three months ended
March 31, 1998. Equipment rental revenues accounted for 68.3% of such revenues.
Gross Profits. For the three months ended March 31, 1998 the gross profit
margin was (i) 41.0% from equipment rentals, (ii) 45.0% from sales of rental
equipment and (iii) 19.5% from sales of new equipment, merchandise and other
revenues.
Selling, General and Administrative Expense. For the three months ended
March 31, 1998 selling, general and administrative expense was $7.8 million or
19.9% of total revenues.
Non-rental Depreciation and Amortization. For the three months ended March
31, 1998 non-rental depreciation and amortization was $1.1 million or 2.8% of
total revenues.
Interest Expense. For the three months ended March 31, 1998
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interest expense was $1.2 million. Interest expense principally related to
borrowings made under the Company's credit facility in order to fund a portion
of the purchase price of the acquisitions completed in 1998.
Income Taxes. The Company's effective income tax rate for the three months
ended March 31, 1998 was 41.0%.
Liquidity and Capital Resources
- -------------------------------
The Company completed an initial public offering ("IPO") of 8,050,000
shares of its Common Stock ("Common Stock") in December 1997 and completed a
second public offering of 8,625,000 shares of Common Stock (the "March
Offering") in March 1998. The estimated aggregate net proceeds to the Company
(after deducting the underwriting discounts and estimated offering expenses)
from such offerings were approximately $307.0 million ($ 99.6 million from the
IPO and $207.4 million from the March Offering). The Company used (i)
approximately $132.7 million of such net proceeds to repay indebtedness under
the Company's Credit Facility, (ii) approximately $90.3 million of such net
proceeds to fund the cash consideration paid for acquisitions completed in the
first quarter of 1998 and (iii) the balance of such net proceeds to fund a
portion of the cash consideration paid for acquisitions completed after the
first quarter of 1998. The increase in stockholders' equity at March 31, 1998
compared with December 31, 1997, primarily reflects the March Offering and the
issuance of an aggregate of 912,375 shares of Common Stock during the first
quarter of 1998 as part of the consideration for acquisitions.
The Company had cash-on-hand at the beginning of 1998 of approximately
$68.6 million, representing the net proceeds of the IPO not used to repay
indebtedness. During the first three months of 1998, the Company (i) generated
cash from operations of approximately $7.6 million, (ii) generated cash from the
sales of rental equipment of approximately $3.0 million and (iii) had net cash
from financing activities of approximately $132.7 million (principally
reflecting the March Offering). The Company used cash during the first three
months of 1998 for acquisitions (approximately 138.2 million), to purchase
rental equipment (approximately $12.9 million) and to purchase property and
equipment related to the Company's information technology system (approximately
$5.3 million). These acquisitions and purchases accounted for (a) the increase
in accounts receivable, inventory, rental equipment, property and equipment, and
intangible assets at March 31, 1998 compared with December 31, 1997, (b) the
increase in accounts payable, debt and accrued expenses and other liabilities at
March 31, 1998 compared with December 31, 1997 and (c) the decrease in cash at
March 31, 1998 compared with December 31, 1997.
14
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The increase in prepaid expenses and other assets at March 31, 1998
compared with December 31, 1997 primarily reflected (i) and increase in prepaid
expenses relating to the Company's operations, (ii) deferred tax assets recorded
in connection with acquisitions and (iii) certain direct costs relating to
potential or pending acquisitions that were capitalized.
The Company has a Credit Facility with a group of financial institutions,
which enables the Company to borrow up to $300 million on a revolving credit
basis and permits a Canadian subsidiary of the Company (the "Canadian
Subsidiary") to directly borrow up to $40 million under the Credit Facility
(provided that the aggregate borrowings of the Company and the Canadian
Subsidiary do not exceed $300 million). Up to $10 million of the Credit
Facility is available in the form of letters of credit. The Credit Facility
terminates on March 30, 2001, at which time all outstanding indebtedness is due.
The amount of indebtedness outstanding under the Credit Facility was $16.9
million at March 31, 1998 and $99.4 million at May 14, 1998.
Borrowings by the Company under the Credit Facility accrue interest, at the
Company's option, at either (a) the Base Rate (which is equal to the greater of
(i) the Federal Funds Rate plus 0.5% and (ii) Bank of America's reference rate)
plus a margin ranging from 0% to 0.25% per annum or (b) the Eurodollar Rate
(which for borrowings by the Company is equal to Bank of America's reserve
adjusted eurodollar rate) plus a margin ranging from 1.125% to 2.125% per annum.
Borrowings by the Canadian Subsidiary under the Credit Facility accrue interest,
at such subsidiary's option, at either (x) the Prime Rate (which is equal to
Bank of America Canada's prime rate) plus a margin ranging from 0% to 0.25% per
annum, (y) the BA Rate (which is equal to Bank of America Canada's BA Rate) plus
a margin ranging from 1.125% to 2.125% per annum or (z) the Eurodollar Rate
(which for borrowing by the Canadian Subsidiary is equal to Bank of America
Canada's reserve adjusted eurodollar rate) plus a margin ranging from 1.125% to
2.125% per annum. The Company is also required to pay the banks an annual
facility fee equal to 0.375% of the banks' $300 million aggregate lending
commitment under the Credit Facility.
The Credit Facility contains certain covenants that require the Company to,
among other things, satisfy certain financial tests relating to: (a)
maintenance of minimum net worth, (b) the ratio of debt to net worth, (c)
interest coverage ratio, (d) the ratio of funded debt to cash flow, and (e) the
ratio of senior debt to tangible assets. The Credit Facility also contains
certain covenants that restrict the Company's ability to, among
15
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other things, (i) incur additional indebtedness, (ii) permit liens to attach to
its assets, (iii) enter into operating leases requiring payments in excess of
specified amounts, (iv) declare or pay dividends or make other restricted
payments with respect to its equity securities (including the Common Stock) or
subordinated debt, (v) sell assets, (vi) make acquisitions unless certain
financial conditions are satisfied, (vii) invest more than a specified amount in
foreign subsidiaries or have more than a specified amount of its consolidated
assets owned by foreign subsidiaries, and (viii) engage in any line of business
other than the equipment rental industry. The Credit Facility provides that the
failure by any two of Messrs. Jacobs, Milne, Nolan and Miner to continue to hold
executive positions with the Company for a period of 30 consecutive days
constitutes an event of default under the Credit Facility unless replacement
officers satisfactory to the lenders are appointed. The Credit Facility is also
subject to other customary events of default. The obligations of United
Rentals, Inc. under the Credit Facility are secured by substantially all of its
assets, the stock of its United States subsidiaries and a portion of the stock
of a Canadian subsidiary. The obligations of the Canadian Subsidiary under the
Credit Facility are guaranteed by United Rentals, Inc. and secured by
substantially all of the assets of the Canadian Subsidiary and the stock for the
subsidiaries of the Canadian Subsidiary.
The Company's principal existing source of cash are (i) borrowings under
the Credit Facility and (ii) cash generated from operations. The Company
estimates that such sources will be sufficient to fund the cash required for the
Company's existing operations (not including new acquisitions or start-up
locations that are not currently under development, which may require additional
financing as discussed below) for at least the next 12 months.
The Company expects that over the next 12 months its principal needs for
cash relating to its operations will be to fund (i) operating activities and
working capital, (ii) the purchase of equipment on an ongoing basis to maintain
the quality and competitiveness of its existing rental equipment, (iii) the
purchase of equipment required to expand and modernize the rental equipment at
certain locations, and (iv) the purchase of equipment and other items required
to maintain sufficient inventory of the new equipment and related merchandise
and parts that the Company offers for sale.
The Company estimates that equipment expenditures for its existing
locations will be in the range of $65 million to $70 million over the next 12
months. In addition, the Company expects that it will be required to make
equipment expenditures in connection with new acquisitions. The Company cannot
quantify at this time the amount of such equipment expenditures.
16
<PAGE>
Principal elements of the Company's strategy include expansion through a
disciplined acquisition program and the opening of new rental locations. The
Company expects to pay for future acquisitions using cash, capital stock, notes
and/or assumption of indebtedness. The Company is seeking to acquire companies
of varying size,including the acquisition of smaller companies to complement
existing or anticipated locations and combinations with relatively large
companies that have an established presence in one or more regions. The Company
expects that cash required for future acquisitions and start-up locations will
be provided by a combination of borrowings under the Credit Facility, cash
generated from operations, and future debt or equity financings. There can be no
assurance that any such future debt or equity financings will be available or,
if available, will be on terms satisfactory to the Company.
The Company is in the process of developing three start-up locations. The
Company estimates that the aggregate costs associated with such start-up
locations will be in the range of $2.5 million to $3.5 million (including
expenditures of approximately $250,000 incurred to date). The Company believes
that cash generated from operations and borrowings under the Credit Facility
will be sufficient to fund these costs without additional debt or equity
financings.
The Company has commenced an offering of $250 million of Senior
Subordinated Notes. These securities have not been registered under the
Securities Act of 1933 (the "Act") and, accordingly, may not be offered or sold
in the United States absent registration or an applicable exemption from the
registration requirements of the Act. The Company expects to use the net
proceeds from this offering, if completed, to repay the outstanding indebtedness
under the Credit Facility and for future acquisitions, capital expenditures and
general corporate purposes. There can be no assurance, however, that the
Company will complete this offering in the near term, if at all, or that the
size of the offering will not change.
The Company has recently installed a new integrated information technology
system. The new system is currently operational at 83 of the Company's existing
locations, and the Company expects that the system will be operational at the
remaining existing locations by June 1998. The cost of installing such system
was approximately $7.4 million. The Company's software vendors have advised the
Company that the system is year 2000 compliant.
Fluctuations in Operating Results
- ---------------------------------
The Company expects that its revenues and operating results may fluctuate
from quarter to quarter due to a number of factors, including: seasonal rental
patterns of the Company's customers
17
<PAGE>
(with rental activity tending to be lower in the winter); changes in general
economic conditions in the Company's markets; the timing of acquisitions and the
opening of start-up locations and related costs; the effect of the integration
of acquired businesses and start-up locations; the timing of expenditures for
new equipment and the disposition of used equipment; and price changes in
response to competitive factors.
The Company is continually involved in the investigation and evaluation of
potential acquisitions. In accordance with generally accepted accounting
principles, the Company capitalizes certain direct out-of-pocket expenditures
(such as legal and accounting fees) relating to potential or pending
acquisitions. Indirect acquisition costs, such as executive salaries, general
corporate overhead, public affairs and other corporate services, are expensed as
incurred. The Company's policy is to charge against earnings any capitalized
expenditures relating to any potential or pending acquisition that the Company
determines will not be consummated. There can be no assurance that the Company
in future periods will not be required to incur a charge against earnings in
accordance with such policy, which charge, depending upon the magnitude thereof,
could adversely affect the Company's results of operations.
The Company will be required to incur significant start-up expenses in
connection with establishing each start-up location. Such expenses may include,
among others, pre-opening expenses related to setting up the facility, training
employees, installing information systems and marketing. The Company expects
that in general start-up locations will initially operate at a loss or at less
than normalized profit levels. Consequently, the opening of a start-up location
may negatively impact the Company's margins until the location achieves
normalized profitability.
There may be a lag between the time that the Company purchases new
equipment and begins to incur the related depreciation and interest expenses and
the time that the equipment begins to generate revenues at normalized rates. As
a result, the purchase of new equipment, particularly equipment purchased in
connection with expanding and diversifying the Company's rental equipment, may
periodically reduce margins.
General Economic Conditions And Inflation
- -----------------------------------------
The Company's operating results may be adversely affected by (i) changes in
general economic conditions, including national, regional and local changes in
construction and industrial activity, (ii) increases in interest rates that may
result in a higher cost of capital to the Company, or (iii) adverse weather
conditions that may decrease construction and other industrial activity.
Although the Company cannot accurately anticipate the
18
<PAGE>
effect of inflation on its operations, the Company believes that inflation has
not had, and is not likely in the foreseeable future to have, a material impact
on its results of operations.
Recently Issued Accounting Standards
- ------------------------------------
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," and SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 130 establishes standards
for reporting and display of comprehensive income and its components in a
primary financial statement. The Company adopted SFAS No. 130 during the period
ended March 31, 1998. The adoption of SFAS No. 130 did not have a material
effect on the consolidated financial position results of operations or cash
flows of the Company. SFAS No. 131 establishes a new method by which companies
will report operating segment information. This method is based on the manner in
which management organizes the segments within a company for making operating
decisions and assessing performance. The Company continues to evaluate the
provisions of SFAS No. 131 and, upon adoption, the Company may report operating
segments. The Company is required to adopt SFAS No. 131 by December 31, 1998.
19
<PAGE>
PART II OTHER INFORMATION
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
Sale of Unregistered Securities
Set forth below is certain information concerning sales by the Company of
unregistered securities during the first quarter of 1998. The issuances by the
Company of the securities sold in the transaction referenced below were not
registered under the Securities Act of 1933, pursuant to the exemption
contemplated by Section 4(2) thereof for transactions not involving a public
offering.
SHARES
MONTH ISSUED
- ----- ----------------------
January 804,875
March 122,314
----------------------
Total 927,189
======================
Of the shares indicated above, (i) 912,375 shares were issued as partial
consideration in connection with six acquisitions and (ii) 14,814 shares were
issued upon conversion of a convertible note.
Use of Proceeds From IPO
At December 31, 1997, the remaining net proceed from the Company' initial
public offering was $65.8 million. During the first quarter of 1998, the
Company used approximately $557,000 of such net proceeds to pay expenses of the
offering and used the balance for acquisitions. See Item 2 -- Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Consideration Paid for Acquisitions in First Quarter of 1998". None of the
payments described in this paragraph represented a direct or indirect payment
to (i) directors, officers or general partners of the Company or to their
associates, (ii) persons owning 10% or more of any class of equity securities of
the Company or (iii) affiliates of the Company.
20
<PAGE>
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
(1) Exhibit 10.1 - Second Amended and Restated Credit Agreement
dated as of March 30, 1998, between the Company, various
financial institutions, Bank of America Canada, as Canadian
agent, and Bank of America National Trust and Savings
Association, as U.S. agent.
(2) Exhibit 10.2 - Form of Amendment No. 1 to Private Placement
Purchase Agreement (1).
(3) Exhibit 27 - Financial Data Schedule
(4) Exhibit 99.1 - Information that appears in the Company's Report
on Form 10-K for the year ended December 31, 1997 under
Item 1 -"Business - Factors that May Influence Future Results
and Accuracy of Forward - Looking Statements."
__________________
(1) The Company entered into an agreement in this form with each of Mr. Milne,
Mr. Nolan and Mr. Miner. This agreement amends the agreement filed as
Exhibit 10(d) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1997.
(b) Reports on Form 8-K:
(1) Form 8-K and Form 8-K/A - Dated January 13, 1998, Items 5 and
7. The Form 8-K/A includes (a) financial statements for the
following acquired companies (i) Access Rentals, Inc. and
subsidiary and affiliate, (ii) BNR Group of Companies, and
(iii) Mission Valley Rentals, Inc.; and (b) pro forma
consolidated financial statements of the Company.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNITED RENTALS, INC.
Dated: May 14, 1998 By: Michael J. Nolan
------------ --------------------
Michael J. Nolan
Chief Financial Officer
(Principal Financial Officer)
Dated: May 14, 1998 By: Sandra E. Welwood
------------ --------------------
Sandra E. Welwood
Vice President,
Corporate Controller
(Chief Accounting Officer)
22
<PAGE>
EXHIBIT 10.1
EXECUTION COPY
================================================================================
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
dated as of March 30, 1998
among
UNITED RENTALS, INC.,
UNITED RENTALS OF CANADA, INC.,
VARIOUS FINANCIAL INSTITUTIONS,
BANKBOSTON, N.A.,
COMERICA BANK,
CREDIT LYONNAIS NEW YORK BRANCH,
DEUTSCHE BANK AG,
and
FLEET BANK, N.A.,
as Co-Agents,
BANK OF AMERICA CANADA,
as Canadian Agent,
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as U.S. Agent
Arranged by BANCAMERICA ROBERTSON STEPHENS
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1 DEFINITIONS, ETC..................................................... 1
1.1 Definitions............................................................ 1
1.2 Other Interpretive Provisions.......................................... 15
SECTION 2 COMMITMENTS OF THE BANKS; BORROWING, CONVERSION AND
LETTER OF CREDIT PROCEDURES; SWING LINE LOANS
2.1 Commitments............................................................ 16
2.1.1 U.S. Loan Commitment........................................... 16
2.1.2 Canadian Loan Commitment....................................... 16
2.1.3 Letter of Credit Commitment.................................... 16
2.1.4 Commitment Limits.............................................. 16
2.1.5 Valuation of Canadian Loans.................................... 16
2.2 U.S. Loan Procedures................................................... 17
2.2.1 Various Types of U.S. Loans.................................... 17
2.2.2 Borrowing Procedures for U.S. Loans............................ 17
2.2.3 Conversion and Continuation Procedures for U.S. Loans.......... 17
2.3 Canadian Loan Procedures............................................... 18
2.3.1 Various Types of Canadian Loans................................ 18
2.3.2 Borrowing Procedures for Canadian Loans........................ 19
2.3.3 Conversion and Continuation Procedures for Canadian Loans...... 19
2.3.4 Participations in Canadian Loans............................... 20
2.3.5 Canadian Participation Obligations Unconditional............... 21
2.3.6 Canadian Loan Report........................................... 22
2.4 Letter of Credit Procedures............................................ 22
2.4.1 L/C Applications............................................... 22
2.4.2 Participations in Letters of Credit............................ 23
2.4.3 Reimbursement Obligations...................................... 23
2.4.4 Limitation on the Issuing Bank's Obligations................... 23
2.4.5 Funding by U.S. Banks to the Issuing Bank...................... 23
2.4.6 Repayment of Participations.................................... 24
2.4.7 Participation Obligations Unconditional........................ 24
2.5 Swing Line Loans....................................................... 25
2.5.1 Swing Line Loans............................................... 25
2.5.2 Swing Line Loan Procedures..................................... 25
2.5.3 Refunding of, or Funding of Participations in, Swing Line Loans 25
2.5.4 Repayment of Participations.................................... 26
2.5.5 Participation Obligations Unconditional........................ 26
2.5.6 Swing Line Loan Reports........................................ 27
2.6 Pro Rata Treatment..................................................... 27
</TABLE>
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2.7 Commitments Several................................................... 27
2.8 Certain Conditions.................................................... 27
SECTION 3 NOTES EVIDENCING LOANS................................................ 27
3.1 Notes................................................................. 27
3.2 Recordkeeping......................................................... 27
SECTION 4 INTEREST.............................................................. 28
4.1 Interest Rates........................................................ 28
4.2 Interest Payment Dates................................................ 28
4.3 Setting and Notice of Certain Rates................................... 28
4.4 Computation of Interest............................................... 29
SECTION 5 FEES.................................................................. 29
5.1 Facility Fee.......................................................... 29
5.2 Letter of Credit Fees................................................. 30
5.3 Arrangement and Agents' Fees.......................................... 30
5.4 Closing Fees.......................................................... 30
SECTION 6 REDUCTION AND TERMINATION OF THE AGGREGATE COMMITMENT; PREPAYMENTS.... 30
6.1 Reduction or Termination of the Aggregate Commitment.................. 30
6.2 Prepayments........................................................... 31
6.2.1 Mandatory Prepayments........................................... 31
6.2.2 Voluntary Prepayments........................................... 31
6.2.3 All Prepayments................................................. 31
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES....................... 31
7.1 Making of Payments.................................................... 31
7.2 Application of Certain Payments....................................... 32
7.3 Due Date Extension.................................................... 33
7.4 Setoff................................................................ 33
7.5 Proration of Payments................................................. 33
7.6 Taxes................................................................. 33
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR FIXED RATE LOANS.............. 36
8.1 Increased Costs....................................................... 36
8.2 Basis for Determining Interest Rate Inadequate or Unfair.............. 37
8.3 Changes in Law Rendering Fixed Rate Loans Unlawful.................... 38
8.4 Funding Losses........................................................ 38
8.5 Right of Banks to Fund through Other Offices.......................... 38
8.6 Discretion of Banks as to Manner of Funding........................... 39
</TABLE>
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<TABLE>
<S> <C>
8.7 Mitigation of Circumstances; Replacement of Affected Bank............. 39
8.8 Conclusiveness of Statements; Survival of Provisions.................. 39
SECTION 9 WARRANTIES............................................................ 40
9.1 Organization, etc..................................................... 40
9.2 Authorization; No Conflict............................................ 40
9.3 Validity and Binding Nature........................................... 40
9.4 Information........................................................... 41
9.5 No Material Adverse Change............................................ 41
9.6 Litigation and Contingent Liabilities................................. 41
9.7 Ownership of Properties; Liens........................................ 41
9.8 Subsidiaries.......................................................... 42
9.9 Pension and Welfare Plans............................................. 42
9.10 Investment Company Act................................................ 42
9.11 Public Utility Holding Company Act.................................... 42
9.12 Regulation U.......................................................... 43
9.13 Taxes................................................................. 43
9.14 Solvency, etc......................................................... 43
9.15 Environmental Matters................................................. 43
9.16 Year 2000 Problem..................................................... 43
SECTION 10 COVENANTS............................................................ 43
10.1 Reports, Certificates and Other Information........................... 44
10.1.1 Audit Report.................................................. 44
10.1.2 Quarterly Reports............................................. 44
10.1.3 Monthly Reports............................................... 44
10.1.4 Compliance Certificates....................................... 44
10.1.5 Reports to SEC and to Shareholders............................ 45
10.1.6 Notice of Default, Litigation and ERISA Matters............... 45
10.1.7 Subsidiaries.................................................. 46
10.1.8 Management Reports............................................ 46
10.1.9 Projections................................................... 46
10.1.10 Other Information............................................. 46
10.2 Books, Records and Inspections........................................ 46
10.3 Insurance............................................................. 46
10.4 Compliance with Laws; Payment of Taxes and Liabilities................ 47
10.5 Maintenance of Existence, etc......................................... 47
10.6 Financial Covenants................................................... 47
10.6.1 Minimum Net Worth............................................. 47
10.6.2 Maximum Leverage.............................................. 47
10.6.3 Minimum Interest Coverage..................................... 48
10.6.4 Funded Debt to Cash Flow Ratio................................ 48
10.6.5 Senior Debt to Tangible Assets................................ 48
</TABLE>
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<TABLE>
<S> <C>
10.7 Limitations on Debt................................................. 48
10.8 Liens............................................................... 49
10.9 Operating Leases.................................................... 50
10.10 Restricted Payments................................................. 50
10.11 Mergers, Consolidations, Amalgamations, Sales....................... 50
10.12 Modification of Organizational Documents............................ 51
10.13 Use of Proceeds..................................................... 51
10.14 Further Assurances.................................................. 51
10.15 Transactions with Affiliates........................................ 52
10.16 Employee Benefit Plans.............................................. 52
10.17 Environmental Laws.................................................. 52
10.18 Unconditional Purchase Obligations.................................. 52
10.19 Inconsistent Agreements............................................. 52
10.20 Business Activities................................................. 53
10.21 Advances and Other Investments...................................... 53
10.22 Location of Assets.................................................. 54
SECTION 11 EFFECTIVENESS; CONDITIONS OF LENDING, ETC............................ 54
11.1 Effectiveness......................................................... 54
11.1.1 Notes........................................................ 54
11.1.2 Resolutions.................................................. 54
11.1.3 Consents, etc................................................ 54
11.1.4 Incumbency and Signature Certificates........................ 54
11.1.5 Guaranties................................................... 54
11.1.6 Security Agreements.......................................... 54
11.1.7 Pledge Agreements............................................ 55
11.1.8 Opinions of Counsel for the Borrowers. The.................. 55
11.1.9 Confirmation................................................. 55
11.1.10 Other........................................................ 55
11.2 Conditions to all Credit Extensions................................... 55
11.2.1 Compliance with Warranties, No Default, etc.................. 55
11.2.2 Confirmatory Certificate..................................... 56
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT................................... 56
12.1 Events of Default..................................................... 56
12.1.1 Non-Payment of the Loans, etc................................ 56
12.1.2 Non-Payment of Other Debt.................................... 56
12.1.3 Other Material Obligations................................... 57
12.1.4 Bankruptcy, Insolvency, etc.................................. 57
12.1.5 Non-Compliance with Provisions of This Agreement............. 57
12.1.6 Warranties................................................... 58
12.1.7 Pension Plans................................................ 58
12.1.8 Judgments.................................................... 58
</TABLE>
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<TABLE>
<S> <C>
12.1.9 Invalidity of Guaranties, etc............................... 58
12.1.10 Invalidity of Collateral Documents, etc..................... 58
12.1.11 Change in Control........................................... 58
12.2 Effect of Event of Default............................................ 59
SECTION 13 THE AGENTS........................................................... 59
13.1 Appointment and Authorization........................................ 59
13.2 Delegation of Duties................................................. 60
13.3 Liability of Agent................................................... 60
13.4 Reliance by Agents................................................... 61
13.5 Notice of Default.................................................... 61
13.6 Credit Decision...................................................... 61
13.7 Indemnification...................................................... 62
13.8 Agent in Individual Capacity......................................... 63
13.9 Successor Agent; Assignment of Agency................................ 63
13.10 Withholding Tax...................................................... 64
13.11 Collateral Matters................................................... 66
13.12 Co-Agents............................................................ 66
SECTION 14 GUARANTY BY THE COMPANY.............................................. 66
14.1 Guaranty............................................................. 66
14.2 Guaranty Unconditional............................................... 66
14.3 Discharge only upon Payment in Full; Reinstatement in Certain
Circumstances....................................................... 67
14.4 Waiver by the Company................................................ 67
14.5 Subrogation.......................................................... 67
14.6 Stay of Acceleration................................................. 68
SECTION 15 GENERAL.............................................................. 68
15.1 Waiver; Amendments................................................... 68
15.2 Confirmations........................................................ 68
15.3 Notices.............................................................. 69
15.4 Computations......................................................... 69
15.5 Regulation U......................................................... 69
15.6 Costs, Expenses and Taxes............................................ 69
15.7 Judgment............................................................. 70
15.8 Captions............................................................. 70
15.9 Assignments; Participations.......................................... 70
15.9.1 Assignments................................................. 70
15.9.2 Participations.............................................. 72
15.10 Governing Law....................................................... 72
15.11 Counterparts........................................................ 73
15.12 Successors and Assigns.............................................. 73
</TABLE>
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<TABLE>
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15.13 Indemnification by the Company.................................... 73
15.14 FORUM SELECTION AND CONSENT TO JURISDICTION....................... 73
15.15 Waiver of Jury Trial.............................................. 74
15.16 Authorization of Execution of Confirmation by U.S. Agent.......... 74
</TABLE>
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<PAGE>
SCHEDULE 1.1A U.S. Banks and Initial Percentages
SCHEDULE 1.1B Canadian Banks and Initial Percentages
SCHEDULE 1.1C Pricing Schedule
SCHEDULE 9.6(a) Litigation and Contingent Liabilities
SCHEDULE 9.6(b) Contingent Payments
SCHEDULE 9.7 Properties
SCHEDULE 9.8 Subsidiaries
SCHEDULE 9.15 Environmental Matters
SCHEDULE 10.7(c) Existing Equipment Debt
SCHEDULE 10.7(g) Other Existing Debt
SCHEDULE 10.8 Existing Liens
SCHEDULE 12.1.11 Key Executives
SCHEDULE 15.3 Addresses for Notices
EXHIBIT A-1 Form of Note (U.S.)
(Section 3.1)
EXHIBIT A-2 Form of Note (Canadian)
(Section 3.1)
EXHIBIT B Form of Compliance Certificate
(Section 10.1.4)
EXHIBIT C Copy of U.S. Guaranty
(Section 1)
EXHIBIT D Copy of U.S. Security Agreement
(Section 1)
EXHIBIT E Copy of Company Pledge Agreement
(Section 1)
EXHIBIT F Form of Subsidiary Pledge Agreement
(Section 11.1.7)
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EXHIBIT G Form of Subordination Language
(Section 1)
EXHIBIT H Form of Assignment Agreement
(Section 15.9)
EXHIBIT I Form of Canadian Guaranty
(Section 1)
EXHIBIT J Form of Canadian Security Agreement
(Section 1)
EXHIBIT K Form of Confirmation
(Section 11.1.9)
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<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
--------------------------------------------
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of March 30,
1998 (this "Agreement") is entered into among UNITED RENTALS, INC., a Delaware
---------
corporation (the "Company"), UNITED RENTALS OF CANADA, INC., an Ontario
-------
corporation ("UR Canada"), the financial institutions that are or may from time
---------
to time become parties hereto (together with their respective successors and
assigns, the "Banks"), BANK OF AMERICA CANADA (in its individual capacity,
-----
"BAC"), as Canadian Agent, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
---
ASSOCIATION (in its individual capacity, "BofA"), as U.S. Agent.
----
WHEREAS, the Company, various financial institutions and BofA, as agent,
have entered into an Amended and Restated Credit Agreement dated as of December
24, 1997 (the "Existing Agreement");
------------------
WHEREAS, the parties hereto have agreed to amend and restate the Existing
Agreement so as to, among other things, (a) increase the amount of the revolving
credit facility to U.S.$300,000,000, (b) add a Canadian subfacility to permit
borrowings by UR Canada, (c) amend certain covenants and various other
provisions of the Existing Agreement and (d) change the composition of the
lender group; and
WHEREAS, the parties hereto intend that this Agreement and the documents
executed in connection herewith not effect a novation of the obligations of the
Company under the Existing Agreement, but merely a restatement and, where
applicable, an amendment of the terms governing such obligations;
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the Existing Agreement is amended and restated in its entirety, and the parties
hereto agree as follows:
SECTION 1 DEFINITIONS, ETC.
1.1 Definitions. When used herein the following terms shall have the
-----------
following meanings (such definitions to be applicable to both the singular and
plural forms of such terms):
Affected Bank means any Bank that has given notice to a Borrower (which has
-------------
not been rescinded) of (i) any obligation of such Borrower to pay any amount
pursuant to Section 7.6 or 8.1 or (ii) the occurrence of any circumstances of
----------- ---
the nature described in Section 8.2 or 8.3.
----------- ---
Affiliate of any Person means (i) any other Person which, directly or
---------
indirectly, controls or is controlled by or is under common control with such
Person and (ii) any officer or director of such Person.
-1-
<PAGE>
Agent means each of the Canadian Agent and the U.S. Agent.
-----
Agent-Related Persons means either Agent and any successor thereto in such
---------------------
capacity hereunder, together with their respective Affiliates (including the
Arranger) and the officers, directors, employees, agents and attorneys-in-fact
of such Persons and Affiliates.
Aggregate Canadian Commitment means at any time an amount equal to the
-----------------------------
lesser of (a) the Aggregate Commitment and (b) a Dollar Equivalent amount of
U.S.$40,000,000.
Aggregate Commitment means at any time an amount equal to the aggregate
--------------------
amount of the Commitments of all U.S. Banks. The initial amount of the Aggregate
Commitment is U.S. $300,000,000.
Aggregate Outstandings means at any time the sum of (a) the aggregate
----------------------
Dollar Equivalent principal amount of all outstanding Loans and (b) the Stated
Amount of all Letters of Credit.
Agreement - see the Preamble.
--------- --------
Arranger means BancAmerica Robertson Stephens, a Delaware corporation.
--------
Assignment Agreement - see Section 15.9.1.
-------------------- --------------
BAC - see the Preamble.
--- --------
BA Rate means, with respect to any BA Rate Loan for any Interest Period,
-------
the rate of interest per annum as announced by BAC in Toronto, Ontario as its
"BA Rate" on the first day of such Interest Period for a period comparable to
such Interest Period.
BA Rate Loan means a Loan to UR Canada that bears interest based on the BA
------------
Rate.
Bank - see the Preamble. References to the "Banks" shall include the
---- --------
Issuing Bank and the Swing Line Bank; for purposes of clarification only, to the
extent that BofA (or any successor Issuing Bank or Swing Line Bank) may have any
rights or obligations in addition to those of the other Banks due to its status
as Issuing Bank or Swing Line Bank, its status as such will be specifically
referenced.
Bank Act Security means assignments of inventory and proceeds by UR Canada
-----------------
to and in favour of each Canadian Bank creating a first fixed charge on such
assets pursuant to Section 427 of the Bank Act (Canada), together with all
documents related or ancillary thereto.
Base Rate means at any time the greater of (a) the Federal Funds Rate plus
---------
0.5% and (b) the Reference Rate.
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<PAGE>
Base Rate Loan means any Loan to the Company which bears interest at or by
--------------
reference to the Base Rate.
BofA - see the Preamble.
---- --------
Borrower means each of the Company and UR Canada.
--------
Business Day means any day on which BofA is open for commercial banking
------------
business in Chicago, New York and San Francisco (and, in the case of payments
and disbursements in Canadian Dollars, on which BAC is open for commercial
banking business in Toronto) and, in the case of a Business Day which relates to
a Eurodollar Loan, on which dealings are carried on in the applicable offshore
U.S. Dollar or Canadian Dollar interbank market.
Canadian Agent means BAC in its capacity as agent for the Canadian Banks
--------------
hereunder and any successor thereto in such capacity.
Canadian Bank means each Bank listed on Schedule 1.1(B) and its permitted
------------- ---------------
successors and assigns. Each Canadian Bank shall be either (i) a U.S. Bank or
(ii) an Affiliate of a U.S. Bank which has been designated to be a Canadian Bank
hereunder by such U.S. Bank.
Canadian Cost of Funds Rate means, for any day, a rate per annum equal to
---------------------------
the cost of funds of the Canadian Agent as established by the Canadian Agent
based on its customary practice.
Canadian Dollar and Cdn.$ mean lawful money of Canada.
--------------- -----
Canadian Guaranty means a guaranty issued by a Subsidiary of UR Canada
-----------------
substantially in the form of Exhibit I hereto.
---------
Canadian Loan - see Section 2.1.2.
------------- -------------
Canadian Participation Funding Notice means a written notice from any Bank
-------------------------------------
(including any Canadian Bank) informing the U.S. Agent that an Event of Default
has occurred and is continuing and directing the U.S. Agent to notify all Banks
thereof and to notify all Non-Canadian Banks to fund their participations in the
Canadian Loans as provided in Section 2.3.4.
-------------
Canadian Percentage means, with respect to any Canadian Bank, the
-------------------
percentage specified opposite such Canadian Bank's name on Schedule 1.1(B),
---------------
reduced (or increased) by assignments pursuant to Section 15.9.1.
--------------
Canadian Security Agreement means a security agreement issued by UR Canada
---------------------------
or a Subsidiary thereof substantially in the form of Exhibit J hereto.
---------
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<PAGE>
Canadian Subsidiary means any Subsidiary of the Company which is organized
-------------------
under the federal or provincial laws of Canada and which carries on its business
primarily in Canada.
Capital Lease means, with respect to any Person, any lease of (or other
-------------
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person.
Cash Equivalent Investment means, at any time, (a) any evidence of Debt,
--------------------------
maturing not more than one year after such time, issued or guaranteed by the
United States Government or any agency thereof, (b) commercial paper, maturing
not more than one year from the date of issue, or corporate demand notes, in
each case (unless issued by a Bank or its holding company) rated at least A-l by
Standard & Poor's Ratings Group or P-l by Moody's Investors Service, Inc., (c)
any certificate of deposit (or time deposits represented by such certificates of
deposit) or bankers acceptance, maturing not more than one year after such time,
or overnight Federal Funds transactions that are issued or sold by any Bank or a
commercial banking institution that is a member of the Federal Reserve System
and has a combined capital and surplus and undivided profits of not less than
U.S.$500,000,000, (d) any repurchase agreement entered into with any Bank (or
other commercial banking institution of the stature referred to in clause (c))
----------
which (i) is secured by a fully perfected security interest in any obligation of
the type described in any of clauses (a) through (c) and (ii) has a market value
----------- ---
at the time such repurchase agreement is entered into of not less than 100% of
the repurchase obligation of such Bank (or other commercial banking institution)
thereunder and (e) investments in short-term asset management accounts offered
by any Bank for the purpose of investing in loans to any corporation (other than
the Company or an Affiliate of the Company), state or municipality, in each case
organized under the laws of any state of the United States or of the District of
Columbia.
Code means the Internal Revenue Code of 1986.
----
Collateral Documents means the Company Pledge Agreement, each Subsidiary
--------------------
Pledge Agreement, the U.S. Security Agreement, each Canadian Security Agreement,
the Bank Act Security and any other agreement pursuant to which the Company or
any Subsidiary grants collateral to either Agent or any Bank for the benefit of
the Banks.
Commitment means (a) as to any U.S. Bank, the obligation of such U.S. Bank
----------
to make U.S. Loans, and to issue or participate in Letters of Credit, hereunder;
and (b) as to any Canadian Bank, the obligation of such Canadian Bank to make
Canadian Loans hereunder. The amount of the Commitment of each Bank is set forth
on Schedule 1.1(A) and/or 1.1(B), as applicable.
--------------- ------
Company - see the Preamble.
------- --------
Company Pledge Agreement means the Company Pledge Agreement dated as of
------------------------
October 20, 1997 between the Company and the U.S. Agent, a copy of which is
attached hereto as Exhibit E.
---------
-4-
<PAGE>
Computation Date means the last Business Day of each calendar month, each
----------------
date on which UR Canada borrows, converts or continues any Canadian Loan
hereunder and each date on which the Dollar Equivalent principal amount of a
Canadian Loan of an Affected Bank is required to be determined under Section
-------
8.3.
- ---
Computation Period means each of the following periods: (i) the Fiscal
------------------
Quarter ending March 31, 1998; (ii) the period of two Fiscal Quarters ending
June 30, 1998; (iii) the period of three Fiscal Quarters ending September 30,
1998; and (iv) each period of four Fiscal Quarters ending on the last day of a
Fiscal Quarter on or after December 31, 1998.
Consolidated Net Income means, with respect to the Company and its
-----------------------
Subsidiaries for any period, the net income (or loss) of the Company and its
Subsidiaries for such period, excluding any extraordinary gains during such
---------
period.
Contingent Payment means any payment that has been (or is required to be)
------------------
made under any of the following circumstances:
(a) such payment is required to be made by the Company or any
Subsidiary in connection with the purchase of any asset or business, where
the obligation of the Company or the applicable Subsidiary to make such
payment (or the amount thereof) is contingent upon the financial or other
performance of such asset or business on an ongoing basis (e.g., based on
revenues or similar measures of performance);
(b) such payment is required to be made by the Company or any
Subsidiary in connection with the achievement of any particular business
goal (excluding employee compensation and bonuses in the ordinary course of
business);
(c) such payment is required to be made by the Company or any
Subsidiary under circumstances similar to those described in clause (a) or
----------
(b) or provides substantially the same economic incentive as would a
---
payment described in clause (a) or (b); or
---------- ---
(d) such payment is required to be made by the Company or any
Subsidiary in connection with the purchase of any real estate, where the
obligation to make such payment is contingent on any event or condition
(other than customary closing conditions for a purchase of real estate).
Controlled Group means all members of a controlled group of corporations
----------------
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Company, are treated
as a single employer under Section 414 of the Code or Section 4001 of ERISA.
Debt of any Person means, without duplication, (a) all indebtedness of such
----
Person for borrowed money, whether or not evidenced by bonds, debentures, notes
or similar instruments,
-5-
<PAGE>
(b) all obligations of such Person as lessee under Capital Leases which have
been or should be recorded as liabilities on a balance sheet of such Person, (c)
all obligations of such Person to pay the deferred purchase price of property or
services (including Contingent Payments and Holdbacks but excluding trade
accounts payable in the ordinary course of business), (d) all indebtedness
secured by a Lien on the property of such Person, whether or not such
indebtedness shall have been assumed by such Person (it being understood that if
such Person has not assumed or otherwise become personally liable for any such
indebtedness, the amount of the Debt of such Person in connection therewith
shall be limited to the lesser of the face amount of such indebtedness or the
fair market value of all property of such Person securing such indebtedness),
(e) all obligations, contingent or otherwise, with respect to the face amount of
all letters of credit (whether or not drawn) and banker's acceptances issued for
the account or upon the application of such Person (including the Letters of
Credit), (f) net liabilities of such Person under all Hedging Obligations and
(g) all Suretyship Liabilities of such Person.
Disposal - see the definition of "Release".
-------- -------
Dollar Equivalent means, at any time, (a) as to any amount denominated in
-----------------
U.S. Dollars, the amount thereof at such time, and (b) as to any amount
denominated in Canadian Dollars, the equivalent amount in U.S. Dollars as
determined by the U.S. Agent at such time on the basis of the Spot Rate for the
purchase of U.S. Dollars with Canadian Dollars on the most recent Computation
Date or such other date as is specified herein.
Effective Date - see Section 11.1.
-------------- ------------
Environmental Claims means all claims, however asserted, by any
--------------------
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.
Environmental Laws means all federal, state, provincial or local laws,
------------------
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any governmental authority,
in each case relating to environmental, health, safety and land use matters.
ERISA means the Employee Retirement Income Security Act of 1974.
-----
Eurodollar Loan means any Loan which bears interest at a rate determined by
---------------
reference to the Eurodollar Rate.
Eurodollar Office means, with respect to any Bank, the office or offices of
-----------------
such Bank which shall be making or maintaining the Eurodollar Loans of such Bank
hereunder or such other office or offices through which such Bank determines its
Eurodollar Rate. A Eurodollar Office of any Bank may be, at the option of such
Bank, either a domestic or foreign office.
-6-
<PAGE>
Eurodollar Rate means, with respect to any Eurodollar Loan for any Interest
---------------
Period, the rate of interest per annum (rounded upward, if necessary, to the
next 1/16th of 1%) determined by the applicable Agent as follows:
(a) In the case of Eurodollar Loans to the Company:
Eurodollar Rate = IBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
where,
Eurodollar Reserve Percentage, means for any day for any Interest
-----------------------------
Period, a percentage (expressed as a decimal, rounded upward, if
necessary, to an integral multiple of 1/100th of 1%) in effect on such
day under regulations issued from time to time by the FRB for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as "Eurocurrency
liabilities"); and
IBOR means the rate per annum at which deposits in U.S. Dollars
----
in immediately available funds are offered by the Eurodollar Office of
BofA two Business Days prior to the beginning of such Interest Period
to major banks in the interbank eurodollar market as at or about 10:00
a.m., Chicago time, for delivery on the first day of such Interest
Period, for the number of days comprised therein and in an amount
equal or comparable to the amount of the Eurodollar Loan of BofA for
such Interest Period.
(b) In the case of Eurodollar Loans to UR Canada:
Eurodollar Rate = Canadian IBOR
---------------------------------------------
1.00 - Canadian Eurodollar Reserve Percentage
where,
Canadian Eurodollar Reserve Percentage means for any day for any
--------------------------------------
Interest Period, a percentage (expressed as a decimal, rounded upward,
if necessary, to an integral multiple of 1/100th of 1%) in effect on
such day under regulations issued from time to time by the Bank of
Canada or any other relevant governmental authority in Canada for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding; and
-7-
<PAGE>
Canadian IBOR means the rate per annum at which deposits in
-------------
Canadian Dollars in immediately available funds are offered by the
Eurodollar Office of BAC two Business Days prior to the first day of
such Interest Period to major banks in the interbank eurodollar market
as at or about 10:00 A.M., Chicago time, for delivery on the first day
of such Interest Period, for the number of days comprised therein and
in an amount equal or comparable to the amount of the Eurodollar Loan
of BAC for such Interest Period.
Event of Default means any of the events described in Section 12.1.
---------------- ------------
Existing Agreement - see the Recitals.
------------------ --------
Federal Funds Rate means, for any day, the rate set forth in the weekly
------------------
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor
publication, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the U.S. Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York
City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the U.S. Agent.
Financial Letter of Credit means any Letter of Credit determined by the
--------------------------
U.S. Agent to be a "financial guaranty-type Standby Letter of Credit" as defined
in footnote 13 to Appendix A to the Risk Based Capital Guidelines issued by the
Comptroller of the Currency (or in any successor regulation, guideline or ruling
by any applicable banking regulatory authority).
Fiscal Quarter means a fiscal quarter of a Fiscal Year.
--------------
Fiscal Year means the fiscal year of the Company and its Subsidiaries,
-----------
which period shall be the 12-month period ending on December 31 of each year.
References to a Fiscal Year with a number corresponding to any calendar year
(e.g., "Fiscal Year 1997") refer to the Fiscal Year ending on December 31 of
such calendar year.
Fixed Rate Loan means a Eurodollar Loan or a BA Rate Loan.
---------------
Fixed Rate Margin - see Schedule 1.1(C).
----------------- ---------------
Floating Rate Margin - see Schedule 1.1(C).
-------------------- ---------------
Foreign Subsidiary means each Subsidiary of the Company which is organized
------------------
under the laws of any jurisdiction other than, and which is conducting the
majority of its business outside of, the United States or any state thereof.
-8-
<PAGE>
FRB means the Board of Governors of the Federal Reserve System, and any
---
governmental authority succeeding to any of its principal functions.
Funded Debt means all Debt of the Company and its Subsidiaries, excluding
-----------
(i) contingent obligations in respect of undrawn letters of credit and
Suretyship Liabilities (except to the extent constituting contingent obligations
or Suretyship Liabilities in respect of Funded Debt of a Person other than the
Company or any Subsidiary), (ii) Hedging Obligations and (iii) Debt of the
Company to Subsidiaries and Debt of Subsidiaries to the Company or to other
Subsidiaries.
Funded Debt to Cash Flow Ratio means, as of the last day of any Fiscal
------------------------------
Quarter, the ratio of (i) Funded Debt as of the last day of such Fiscal Quarter
to (ii) Consolidated Net Income for the period of four Fiscal Quarters ending on
the last day of such Fiscal Quarter plus, to the extent deducted in determining
----
such Consolidated Net Income, Interest Expense, income tax expense, depreciation
and amortization for such period. For purposes of calculating the Funded Debt
to Cash Flow Ratio, clause (ii) of the preceding sentence shall be calculated on
-----------
a pro forma basis in accordance with Article 11 of Regulation S-X of the SEC.
--- -----
GAAP means generally accepted accounting principles set forth from time to
----
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
Group of Loans means Loans of the same type made by the U.S. Banks or the
--------------
Canadian Banks, as the case may be, to the same Borrower which have the same
Interest Period.
Guaranty means each Canadian Guaranty and the U.S. Guaranty.
--------
Hedging Obligations means, with respect to any Person, all liabilities of
-------------------
such Person under interest rate, currency and commodity swap agreements, cap
agreements and collar agreements, and all other agreements or arrangements
designed to protect such Person against fluctuations in interest rates, currency
exchange rates or commodity prices.
Holdback means an unsecured, non-interest-bearing obligation of the Company
--------
or any Subsidiary to pay a portion of the purchase price for any purchase or
other acquisition permitted hereunder which matures within nine months of the
date of such purchase or other acquisition.
Immaterial Law means any provision of any Environmental Law the violation
--------------
of which will not (a) violate any judgment, decree or order which is binding
upon the Company or any Subsidiary, (b) result in or threaten any injury to
public health or the environment or any material damage to the property of any
Person or (c) result in any liability or expense (other than any de minimis
-- -------
liability or expense) for the Company or any Subsidiary; provided that no
provision of
-9-
<PAGE>
any Environmental Law shall be an Immaterial Law if the U.S. Agent has notified
the Company that the Required Banks have determined in good faith that such
provision is material.
Interest Coverage Ratio means the ratio of (a) Consolidated Net Income
-----------------------
before deducting Interest Expense and income tax expense for any Computation
Period to (b) Interest Expense for such Computation Period.
Interest Expense means for any period the consolidated interest expense of
----------------
the Company and its Subsidiaries for such period (including all imputed interest
on Capital Leases and before giving effect to any capitalization of interest but
excluding amortization of deferred financing costs).
Interest Period means, (a) as to any Eurodollar Loan, the period commencing
---------------
on the date such Loan is borrowed or continued as, or converted into, a
Eurodollar Loan and ending on the date one, two, three or six months thereafter
as selected by the applicable Borrower pursuant to Section 2.2 or 2.3, as the
----------- ---
case may be; and (b) as to any BA Rate Loan, the period commencing on the date
on which such Loan is borrowed or continued as, or converted into, a BA Rate
Loan and ending on the date 30, 60 or 90 days thereafter, as selected by UR
Canada pursuant to Section 2.3; provided that:
----------- --------
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the
following Business Day unless, in the case of a Eurodollar Loan, the
result of such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall end
on the preceding Business Day;
(ii) any Interest Period for a Eurodollar Loan that begins on a
day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period shall end on the
last Business Day of the calendar month at the end of such Interest
Period; and
(iii) neither Borrower may select any Interest Period for any
Loan which would extend beyond the scheduled Termination Date.
Investment means, relative to any Person, (a) any loan or advance made by
----------
such Person to any other Person (excluding any commission, travel or similar
advances made to directors, officers and employees of the Company or any of its
Subsidiaries), (b) any Suretyship Liability of such Person, (c) any ownership or
similar interest held by such Person in any other Person and (d) deposits and
the like relating to prospective acquisitions of businesses (excluding deposits
placed in escrow pursuant to bona fide arrangements that provide for the return
of such deposits to the Company or the applicable Subsidiary in the event that
the related transaction is not consummated for any reason by a date certain).
-10-
<PAGE>
Issuing Bank means BofA in its capacity as issuer of one or more Letters of
------------
Credit hereunder, together with any replacement letter of credit issuer under
Section 13.9.
- ------------
L/C Application means, with respect to any request for the issuance of a
---------------
Letter of Credit, a letter of credit application in the form being used by the
Issuing Bank at the time of such request for the type of letter of credit
requested.
Letter of Credit - see Section 2.1.3.
---------------- -------------
Lien means, with respect to any Person, any interest granted by such Person
----
in any real or personal property, asset or other right owned or being purchased
or acquired by such Person which secures payment or performance of any
obligation and shall include any mortgage, lien, encumbrance, charge,
hypothecation or other security interest of any kind, whether arising by
contract, as a matter of law, by judicial process or otherwise.
Loan Documents means this Agreement, the Notes, each Guaranty, the L/C
--------------
Applications and the Collateral Documents.
Loan Party means each Borrower and each Subsidiary which is a party to any
----------
Loan Document.
Loans means U.S. Loans, Canadian Loans and Swing Line Loans.
-----
Margin Stock means any "margin stock" as defined in Regulation U of the
------------
FRB.
Material Adverse Effect means (a) a material adverse change in, or a
-----------------------
material adverse effect upon, the financial condition, operations, assets,
business, properties or prospects of the Company and its Subsidiaries taken as a
whole, or (b) a material adverse effect upon any substantial portion of the
collateral under the Collateral Documents or upon the legality, validity,
binding effect or enforceability against the Company or any Subsidiary of any
Loan Document.
Multiemployer Pension Plan means a multiemployer plan, as such term is
--------------------------
defined in Section 4001(a)(3) of ERISA, and to which the Company or any member
of the Controlled Group may have any liability.
Net Worth means the Company's consolidated stockholders' equity (including
---------
preferred stock accounts).
Non-Canadian Bank means a U.S. Bank which is not, and has not designated an
-----------------
Affiliate as, a Canadian Bank.
Non-Financial Letter of Credit means any Letter of Credit other than a
------------------------------
Financial Letter of Credit.
-11-
<PAGE>
Note - see Section 3.1.
---- -----------
Operating Lease means any lease of (or other agreement conveying the right
---------------
to use) any real or personal property by the Company or any Subsidiary, as
lessee, other than (i) any Capital Lease or (ii) any lease with a remaining term
of six months or less which is not renewable solely at the option of the lessee.
PBGC means the Pension Benefit Guaranty Corporation and any entity
----
succeeding to any or all of its functions under ERISA.
Pension Plan means a "pension plan", as such term is defined in Section
------------
3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer
Pension Plan), and to which the Company or any member of the Controlled Group
may have any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.
Percentage means, with respect to any U.S. Bank, the percentage specified
----------
opposite such U.S. Bank's name on Schedule 1.1(A), reduced (or increased) by
---------------
assignments pursuant to Section 15.9.1.
--------------
Person means any natural person, corporation, partnership, trust, limited
------
liability company, association, governmental authority or unit, or any other
entity, whether acting in an individual, fiduciary or other capacity.
Prime Rate means, for any day, the per annum rate of interest in effect for
----------
such day as publicly announced from time to time by BAC in Toronto, Ontario as
its "prime rate." (The "prime rate" is a rate set by BAC based upon various
factors including BAC's costs and desired return, general economic conditions
and other factors, and is used as a reference point for pricing some loans,
which may be priced at, above or below such announced rate.) Any change in the
prime rate announced by BAC shall take effect at the opening of business on the
day specified in the public announcement of such change.
Prime Rate Loan means a Canadian Loan that bears interest based on the
---------------
Prime Rate.
Reference Rate means, for any day, the rate of interest in effect for such
--------------
day as publicly announced from time to time by BofA in San Francisco,
California, as its "reference rate." (The "reference rate" is a rate set by
BofA based upon various factors, including BofA's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate.) Any change in the reference rate announced by BofA shall take effect at
the opening of business on the day specified in the public announcement of such
change.
-12-
<PAGE>
Required Banks means U.S. Banks having Percentages aggregating 66-2/3% or
--------------
more; provided that if and so long as any Bank fails to fund its participation
--------
in any Canadian Loan, Letter of Credit or Swing Line Loan when required by
Section 2.3.4, 2.4.5 or 2.5.3, as the case may be, such Bank's Percentage shall
- ------------- ----- -----
be deemed for purposes of this definition to be reduced by the percentage which
the defaulted amount constitutes of such Bank's Percentage, and the Percentage
of each Canadian Bank (to the extent of its Canadian Percentage of the defaulted
amount), the Issuing Bank or the Swing Line Bank, as applicable, shall be deemed
for purposes of this definition to be increased by such percentage.
SEC means the Securities and Exchange Commission.
---
Seller Subordinated Debt means unsecured indebtedness of the Company that:
------------------------
(a) is subordinated, substantially upon the terms set forth in
Exhibit G or other terms that are more favorable to the Agents and the
---------
Banks, in right of payment to the payment in full in cash of the Loans and
all other amounts owed under the Loan Documents (whether or not matured or
due and payable), including amounts required to provide cash collateral for
the Letters of Credit; and
(b) represents all or part of the purchase price payable by the
Company in connection with a transaction described in Section 10.11(c).
----------------
Senior Debt means all Funded Debt of the Company and its Subsidiaries other
-----------
than Subordinated Debt.
Spot Rate for a currency means the rate quoted by BofA as the spot rate for
---------
the purchase by BofA of such currency with another currency in accordance with
its customary procedures at approximately 10:00 a.m. (Chicago time) on the date
on which the foreign exchange computation is made.
Stated Amount means, with respect to any Letter of Credit at any date of
-------------
determination, the maximum aggregate amount available for drawing thereunder at
any time during the then ensuing term of such Letter of Credit under any and all
circumstances, plus the aggregate amount of all unreimbursed payments and
disbursements under such Letter of Credit.
Subordinated Debt means (i) Seller Subordinated Debt and (ii) any other
-----------------
unsecured indebtedness of the Company which (x) is owed to Persons other than
officers, employees, directors or Affiliates of the Company, (y) has no
amortization prior to December 31, 2001 and (z) has subordination terms and
covenants approved by the Required Banks, the approval of which shall not be
unreasonably withheld.
Subsidiary means, with respect to any Person, a corporation of which such
----------
Person and/or its other Subsidiaries own, directly or indirectly, such number of
outstanding shares as have more
-13-
<PAGE>
than 50% of the ordinary voting power for the election of directors. Unless the
context otherwise requires, each reference to Subsidiaries herein shall be a
reference to Subsidiaries of the Company.
Subsidiary Pledge Agreement means each pledge agreement substantially in
---------------------------
the form of Exhibit F (or such other form as is acceptable to the U.S. Agent)
---------
issued by any Subsidiary, whether pursuant to Section 11.1.7 or Section 10.14.
-------------- -------------
Suretyship Liability means, with respect to any Person, any liability of
--------------------
such Person with respect to any agreement, undertaking or arrangement by which
such Person guarantees, endorses or otherwise becomes or is contingently liable
upon (by direct or indirect agreement, contingent or otherwise, to provide funds
for payment, to supply funds to or otherwise to invest in a debtor, or otherwise
to assure a creditor against loss) any indebtedness, obligation or other
liability of any other Person (other than by endorsements of instruments in the
course of collection), or guarantees the payment of dividends or other
distributions upon the shares of any other Person. The amount of any Person's
obligation in respect of any Suretyship Liability shall (subject to any
limitation set forth therein) be deemed to be the principal amount of the debt,
obligation or other liability supported thereby.
Swing Line Bank means BofA in its capacity as swing line lender hereunder,
---------------
together with any replacement swing line lender arising under Section 13.9.
------------
Swing Line Loan - see Section 2.5.1.
--------------- -------------
Tangible Assets means at any time all assets of the Company and its
---------------
Subsidiaries excluding all Intangible Assets. For purposes of the foregoing,
---------
"Intangible Assets" means goodwill, patents, trade names, trademarks,
- ------------------
copyrights, franchises, experimental expense, organization expense and any other
assets that are properly classified as intangible assets in accordance with
GAAP.
Termination Date means the earlier to occur of (a) March 30, 2001, or such
----------------
later date to which the Termination Date may be extended at the request of the
Company and with the consent of each Bank or (b) such other date on which the
Commitments shall terminate pursuant to Section 6 or 12.
--------- --
Type of Loan or Borrowing refers to the interest rate basis for a loan or
-------------------------
borrowing. The "types" of U.S. Loans or borrowings are Base Rate Loans or
borrowings and Eurodollar Loans or borrowings. The "types" of Canadian Loans or
borrowings are Prime Rate Loans or borrowings, BA Rate Loans or borrowings and
Eurodollar Loans or borrowings.
Unmatured Event of Default means any event that, if it continues uncured,
--------------------------
will, with lapse of time or notice or both, constitute an Event of Default.
-14-
<PAGE>
UR Canada - see the Preamble.
--------- --------
U.S. Agent means BofA in its capacity as agent for the Banks hereunder and
----------
any successor thereto in such capacity.
U.S. Bank means each Bank listed on Schedule 1.1(A) and its permitted
--------- ---------------
successors and assigns.
U.S. Dollar and the sign "U.S.$" mean lawful money of the United States of
----------- -----
America.
U.S. Guaranty means the Guaranty dated as of October 20, 1997 executed by
-------------
various Subsidiaries of the Company, a copy of which is attached hereto as
Exhibit C.
- ---------
U.S. Loan - see Section 2.1.1.
--------- -------------
U.S. Security Agreement means the Security Agreement dated as of October 8,
-----------------------
1997 among the Company, various Subsidiaries of the Company and the U.S. Agent,
a copy of which is attached as Exhibit D.
---------
U.S. Subsidiaries means any Subsidiary other than a Canadian Subsidiary.
-----------------
Welfare Plan means a "welfare plan", as such term is defined in Section
------------
3(1) of ERISA.
1.2 Other Interpretive Provisions.
-----------------------------
(a) Section, Schedule and Exhibit references are to this
------- -------- -------
Agreement unless otherwise specified.
(b) (i) The term "including" is not limiting and means
"including without limitation."
(ii) In the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including"; the
words "to" and "until" each mean "to but excluding", and the word "through"
means "to and including."
(c) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such statute
or regulation.
-15-
<PAGE>
(d) This Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(e) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agents, the Company,
the Banks and the other parties thereto and are the products of all parties.
Accordingly, they shall not be construed against the Agents or the Banks merely
because of the Agents' or Banks' involvement in their preparation.
SECTION 2 COMMITMENTS OF THE BANKS; BORROWING, CONVERSION AND LETTER OF
CREDIT PROCEDURES; SWING LINE LOANS.
2.1 Commitments. On and subject to the terms and conditions of this
-----------
Agreement, each of the Banks, severally and for itself alone, agrees to make
loans to, and to issue or participate in the issuance of letters of credit for
the account of, the Borrowers as follows:
2.1.1 U.S. Loan Commitment. Each U.S. Bank agrees to make loans to the
--------------------
Company on a revolving basis (collectively the "U.S. Loans" and individually
----------
each a "U.S. Loan") from time to time before the Termination Date in such U.S.
---------
Bank's Percentage of such aggregate amounts as the Company may from time to time
request from all U.S. Banks.
2.1.2 Canadian Loan Commitment. (a) Each Canadian Bank agrees to make
------------------------
loans to UR Canada on a revolving basis (collectively the "Canadian Loans" and
--------------
individually each a "Canadian Loan") from time to time before the Termination
-------------
Date in such Canadian Bank's Canadian Percentage of such aggregate amounts as UR
Canada may from time to time request from all Canadian Banks and (b) each Non-
Canadian Bank agrees that it will purchase a participation in each such Loan if
required pursuant to Section 2.3.4.
-------------
2.1.3 Letter of Credit Commitment. (a) The Issuing Bank will issue
----------------------------
standby letters of credit, in each case containing such terms and conditions as
are permitted by this Agreement and are reasonably satisfactory to the Issuing
Bank (collectively the "Letters of Credit" and individually each a "Letter of
----------------- ---------
Credit"), at the request of and for the account of the Company (or jointly for
- ------
the account of the Company and any Subsidiary) from time to time before the
Termination Date and (b) as more fully set forth in Section 2.4, each U.S. Bank
-----------
agrees to purchase a participation in each such Letter of Credit.
2.1.4 Commitment Limits. Notwithstanding any other provision of this
-----------------
Agreement (a) the Aggregate Outstandings shall not at any time exceed the
Aggregate Commitment; (b) the aggregate Dollar Equivalent principal amount of
all outstanding Canadian Loans shall not at any time exceed the Aggregate
Canadian Commitment; and (c) the Stated Amount of all Letters of
-16-
<PAGE>
Credit shall not at any time exceed the lesser of the Aggregate Commitment and a
Dollar Equivalent amount of U.S. $10,000,000.
2.1.5 Valuation of Canadian Loans. The U.S. Agent will determine the
---------------------------
Dollar Equivalent principal amount of each Canadian Loan on each Computation
Date, and such determination shall be conclusive absent demonstrable error.
2.2 U.S. Loan Procedures.
--------------------
2.2.1 Various Types of U.S. Loans. Each U.S. Loan shall be in U.S.
---------------------------
Dollars and shall be either a Base Rate Loan or a Eurodollar Loan, as the
Company shall specify in the related notice of borrowing, conversion or
continuation pursuant to Section 2.2.2 or 2.2.3. Base Rate Loans and Eurodollar
------------- -----
Loans may be outstanding at the same time, provided that (i) not more than eight
--------
different Groups of Eurodollar Loans to the Company shall be outstanding at any
one time and (ii) the aggregate principal amount of each Group of Eurodollar
Loans to the Company shall at all times (including after giving effect to any
conversion or continuation) be at least U.S.$1,000,000 and an integral multiple
of U.S.$500,000.
2.2.2 Borrowing Procedures for U.S. Loans. The Company shall give
-----------------------------------
written or telephonic (followed immediately by written confirmation thereof)
notice to the U.S. Agent of each proposed borrowing of U.S. Loans not later than
(a) in the case of a Base Rate borrowing, 10:00 A.M., Chicago time, on the
proposed date of such borrowing, and (b) in the case of a Eurodollar borrowing,
9:00 A.M., Chicago time, two Business Days prior to the proposed date of such
borrowing. Each such notice shall be effective upon receipt by the U.S. Agent,
shall be irrevocable, and shall specify the date (which shall be a Business
Day), amount and type of borrowing and, in the case of a Eurodollar borrowing,
the initial Interest Period therefor. Promptly upon receipt of such notice, the
U.S. Agent shall advise each U.S. Bank thereof. Not later than 1:00 p.m.,
Chicago time, on the date of a proposed borrowing, each U.S. Bank shall provide
the U.S. Agent at the office specified by the U.S. Agent with immediately
available funds covering such U.S. Bank's Percentage of such borrowing and, so
long as the U.S. Agent has not received written notice that the conditions
precedent set forth in Section 11 with respect to such borrowing have not been
----------
satisfied (and does not have knowledge of any default in the payment of any
principal, interest or fees to be paid to the U.S. Agent for the account of the
U.S. Banks), the U.S. Agent shall pay over the requested amount to the Company
on the requested borrowing date. Each borrowing of Base Rate Loans shall be in
an aggregate amount of at least U.S.$1,000,000 and an integral multiple of
U.S.$500,000.
2.2.3 Conversion and Continuation Procedures for U.S. Loans. (a) Subject
-----------------------------------------------------
to Section 2.2.1, the Company may, upon irrevocable written notice to the U.S.
-------------
Agent in accordance with clause (b) below:
----------
-17-
<PAGE>
(i) elect, as of any Business Day, to convert any U.S. Loans (or
any part thereof in an aggregate amount not less than U.S.$1,000,000
or a higher integral multiple of U.S.$500,000) into U.S. Loans of the
other type; or
(ii) elect, as of the last day of the applicable Interest Period,
to continue any Eurodollar Loans to the Company having Interest
Periods expiring on such day (or any part thereof in an aggregate
amount not less than U.S.$1,000,000 or a higher integral multiple of
U.S.$500,000) for a new Interest Period.
(b) The Company shall give written or telephonic (followed
immediately by written confirmation thereof) notice to the U.S. Agent of
each proposed conversion or continuation not later than (i) in the case of
conversion into Base Rate Loans, 10:00 A.M., Chicago time, on the proposed
date of such conversion; and (ii) in the case of conversion into or
continuation of Eurodollar Loans, 9:00 A.M., Chicago time, at least two
Business Days prior to the proposed date of such conversion or
continuation, specifying in each case:
(1) the proposed date of conversion or continuation;
(2) the aggregate amount of U.S. Loans to be converted or
continued;
(3) the type of Loans resulting from the proposed conversion
or continuation; and
(4) in the case of conversion into, or continuation of,
Eurodollar Loans to the Company, the duration of the requested
Interest Period therefor.
(c) If upon the expiration of any Interest Period applicable to
Eurodollar Loans to the Company, the Company has failed to select timely a
new Interest Period to be applicable to such Eurodollar Loans, the Company
shall be deemed to have elected to convert such Eurodollar Loans into Base
Rate Loans effective on the last day of such Interest Period.
(d) The U.S. Agent will promptly notify each U.S. Bank of its receipt
of a notice of conversion or continuation pursuant to this Section 2.2.3
-------------
or, if no timely notice is provided by the Company, of the details of any
automatic conversion.
(e) Unless the Required Banks otherwise consent, during the existence
of an Event of Default or Unmatured Event of Default, the Company may not
elect to have a U.S. Loan converted into or continued as a Eurodollar Loan.
2.3 Canadian Loan Procedures
------------------------
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<PAGE>
2.3.1 Various Types of Canadian Loans. Each Canadian Loan shall be in
-------------------------------
Canadian Dollars and shall be either a Prime Rate Loan, a BA Rate Loan or a
Eurodollar Loan, as UR Canada shall specify in the related notice of borrowing,
conversion or continuation pursuant to Section 2.3.2 or 2.3.3. Prime Rate
------------- -----
Loans, BA Rate Loans and Eurodollar Loans may be outstanding at the same time,
provided that (i) not more than five different Groups of Eurodollar Loans to UR
- --------
Canada shall be outstanding at any one time, (ii) not more than five different
Groups of BA Rate Loans shall be outstanding at any one time, (iii) the
aggregate principal amount of each Group of Eurodollar Loans to UR Canada shall
at all times (including after giving effect to any conversion or continuation)
be at least Cdn.$1,000,000 and an integral multiple of Cdn.$500,000 and (iv) the
aggregate principal amount of each Group of BA Rate Loans shall at all times
(including after giving effect to any conversion or continuation) be at least
Cdn.$1,000,000 and an integral multiple of Cdn.$500,000.
2.3.2 Borrowing Procedures for Canadian Loans. UR Canada shall give
---------------------------------------
written or telephonic (followed immediately by written confirmation thereof)
notice to the Canadian Agent and the U.S. Agent of each proposed borrowing of
Canadian Loans not later than (a) in the case of a Prime Rate borrowing, 9:00
A.M., Chicago time, one Business Day prior to the proposed date of such
borrowing, (b) in the case of a BA Rate Borrowing, 9:00 A.M., Chicago time,
three Business Days prior to the proposed date of such borrowing, and (c) in the
case of a Eurodollar borrowing, 9:00 A.M., Chicago time, four Business Days
prior to the date of such borrowing. Each such notice shall be effective upon
receipt by the Canadian Agent and the U.S. Agent, shall be irrevocable, and
shall specify the date (which shall be a Business Day), amount and type of
borrowing and, in the case of a BA Rate borrowing or a Eurodollar borrowing, the
initial Interest Period therefor. Promptly upon receipt of such notice the
Canadian Agent shall advise each Canadian Bank thereof. Not later than 12:00
noon, Chicago time, on the date of a proposed borrowing of Canadian Loans, each
Canadian Bank shall provide the Canadian Agent at the office specified by the
Canadian Agent with immediately available funds covering such Canadian Bank's
Canadian Percentage of such borrowing and, so long as the Canadian Agent has not
received written notice that the conditions precedent set forth in Section 11
----------
with respect to such borrowing have not been satisfied (and does not have any
knowledge of any default in payment of any principal, interest or fees to be
paid to the Canadian Agent for the account of the Canadian Banks), the Canadian
Agent shall pay over the requested amount to UR Canada on the requested
borrowing date. Each borrowing of Prime Rate Loans shall be in an aggregate
amount of at least Cdn.$1,000,000 and an integral multiple of Cdn.$500,000.
2.3.3 Conversion and Continuation Procedures for Canadian Loans. (a)
---------------------------------------------------------
Subject to Section 2.3.1, UR Canada may, upon irrevocable written notice to the
-------------
Canadian Agent and the U.S. Agent in accordance with clause (b) below:
----------
(i) elect, as of any Business Day, to convert any Canadian Loans
(or any part thereof in an aggregate amount not less than
Cdn.$1,000,000 or a higher integral multiple of Cdn.$500,000) into
Canadian Loans of another type; or
-19-
<PAGE>
(ii) elect, as of the last day of the applicable Interest Period,
to continue any BA Rate Loans or Eurodollar Loans to UR Canada having
Interest Periods expiring on such day (or any part thereof in an
aggregate amount not less than Cdn.$1,000,000 or a higher integral
multiple of Cdn.$500,000) for a new Interest Period.
(b) UR Canada shall give written or telephonic (followed immediately
by written confirmation thereof) notice to the Canadian Agent and the U.S.
Agent of each proposed conversion or continuation not later than (i) in the
case of conversion into Prime Rate Loans, 9:00 A.M., Chicago time, one
Business Day prior to the proposed date of such conversion, (ii) in the
case of conversion into or continuation of BA Rate Loans, 9:00 A.M.,
Chicago time, three Business Days prior to the date of such conversion or
continuation, and (iii) in the case of conversion into or continuation of
Eurodollar Loans to UR Canada, four Business Days prior to the date of such
conversion or continuation, specifying in each case:
(1) the proposed date of conversion or continuation;
(2) the aggregate amount of Canadian Loans to be converted or
continued;
(3) the type of Loans resulting from the proposed conversion or
continuation; and
(4) in the case of conversion into, or continuation of, BA Rate
Loans or Eurodollar Loans to UR Canada, the duration of the requested
Interest Period therefor.
(c) If upon the expiration of any Interest Period applicable to BA
Rate Loans or Eurodollar Loans to UR Canada, UR Canada has failed to select
timely a new Interest Period to be applicable to such BA Rate Loans or such
Eurodollar Loans, UR Canada shall be deemed to have elected to convert such
BA Rate Loans or Eurodollar Loans into Prime Rate Loans effective on the
last day of such Interest Period.
(d) The Canadian Agent will promptly notify each Canadian Bank of its
receipt of a notice of conversion or continuation pursuant to this Section
-------
2.3.3. or, if no timely notice is provided by UR Canada, of the details of
------
any automatic conversion.
(e) Unless the Required Banks otherwise consent, during the existence
of an Event of Default or Unmatured Event of Default, UR Canada may not
elect to have a Canadian Loan converted into or continued as a BA Rate Loan
or a Eurodollar Loan.
-20-
<PAGE>
2.3.4 Participations in Canadian Loans. (a) Each Non-Canadian Bank
--------------------------------
agrees that it shall at all times have a participation in, and acknowledges that
it is irrevocably and unconditionally obligated, upon receipt of notice that the
U.S. Agent has received a Canadian Participation Funding Notice, to fund (or to
cause an Affiliate to fund) its participation in, each outstanding Canadian Loan
in an amount equal to its Percentage of the amount of such Canadian Loan.
(b) The U.S. Agent shall promptly notify the Canadian Agent and each
Non-Canadian Bank of its receipt of a Canadian Participation Funding
Notice. Promptly upon receipt of such Notice, each Non-Canadian Bank shall
(or shall cause an Affiliate to) make available to the Canadian Agent for
the account of the Canadian Banks an amount in Canadian Dollars and in
immediately available funds equal to its Percentage of all outstanding
Canadian Loans. If any Non-Canadian Bank so notified fails to make
available to the Canadian Agent for the account of the Canadian Banks the
full amount of such Non-Canadian Bank's participations in all Canadian
Loans by 12:00 noon, Chicago time, on the Business Day following its
receipt of such notice from the U.S. Agent (or two Business Days following
receipt of such notice if such notice is received after 12:00 noon, Chicago
time, on any Business Day), then interest shall accrue on such Non-Canadian
Bank's obligation to fund such participations, from the date such
obligation became due to the date such Non-Canadian Bank pays such
obligations in full, at a rate per annum equal to (i) for the first three
days after such obligation became due, the Canadian Cost of Funds Rate in
effect from time to time and (ii) thereafter, the Prime Rate from time to
time in effect. The Canadian Agent shall promptly distribute to each
Canadian Bank an amount equal to its applicable share of the amount
received from any Non-Canadian Bank to fund its participation in the
Canadian Loans of such Canadian Bank together with its applicable share of
any interest received from any Non-Canadian Bank pursuant to the previous
sentence, in the same funds as those received by the Canadian Agent.
(c) From and after the date on which the U.S. Agent has received a
Canadian Participation Funding Notice, all amounts received by the Canadian
Agent hereunder with respect to the Canadian Loans shall be distributed by
the Canadian Agent, in the same funds as those received by the Canadian
Agent, to all Canadian Banks and Non-Canadian Banks in accordance with
their respective Percentages (i.e., giving effect to the funding of
participations pursuant to this Section 2.3.4), except that the Percentage
-------------
of such funds of any Non-Canadian Bank that has not funded its
participations as provided herein shall be distributed ratably to the
Canadian Banks.
(d) If the Canadian Agent or any Canadian Bank is required at any
time to return to either Borrower, or to a trustee, receiver, liquidator or
custodian, or any official in any bankruptcy, insolvency or similar
proceeding, any portion of any payment made by such Borrower to the
Canadian Agent or such Canadian Bank in respect of any Canadian Loan or
interest thereon, each Non-Canadian Bank shall, on demand of the Canadian
Agent, forthwith remit to the Canadian Agent for the account of the
applicable Canadian Bank its
-21-
<PAGE>
Percentage of the amount so returned by the Canadian Agent or such Canadian
Bank plus interest thereon from the date such demand is made to the date
such amount is returned by such Non-Canadian Bank to the Canadian Agent, at
a rate per annum equal to the Canadian Cost of Funds Rate from time to time
in effect.
(e) The Non-Canadian Banks, the Canadian Banks and the Agents may
agree on any other reasonable method (such as making assignments of
Canadian Loans) for sharing the risks of Canadian Loans so long as such
method does not materially disadvantage the Borrowers or any Bank.
2.3.5 Canadian Participation Obligations Unconditional.
------------------------------------------------
(a) Each Non-Canadian Bank's obligation to purchase participation
interests in Canadian Loans pursuant to Section 2.3.4 shall be absolute and
-------------
unconditional and shall not be affected by any circumstance whatsoever,
including (a) any set-off, counterclaim, recoupment, defense or other right
which such Non-Canadian Bank may have against either Agent, any Canadian
Bank, either Borrower or any other Person for any reason whatsoever; (b)
the occurrence or continuance of an Event of Default or an Unmatured Event
of Default; (c) any adverse change in the condition (financial or
otherwise) of either Borrower or any other Person; (d) any breach of this
Agreement or any other Loan Document by either Borrower, any other Loan
Party or any other Bank; (e) any inability of UR Canada to satisfy the
conditions precedent to borrowing set forth in this Agreement on the date
upon which any participation interest in any Canadian Loan is to be
purchased; or (f) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
(b) Notwithstanding the provisions of clause (a) above, no Non-
----------
Canadian Bank shall be required to purchase a participation interest in a
Canadian Loan pursuant to Section 2.3.4 if, prior to the making by the
-------------
Canadian Banks of such Canadian Loan, the Canadian Banks received written
notice from either Agent or any Bank specifying that such Agent or such
Bank believed in good faith that one or more of the conditions precedent to
the making of such Canadian Loan were not satisfied and, in fact, such
conditions precedent were not satisfied at the time of the making of such
Canadian Loan.
2.3.6 Canadian Loan Reports. The U.S. Agent agrees that, if any Non-
---------------------
Canadian Bank so requests, it will deliver to such Non-Canadian Bank on a
monthly basis a report of all borrowings and repayments of Canadian Loans.
2.4 Letter of Credit Procedures.
---------------------------
2.4.1 L/C Applications. The Company shall give notice to the U.S. Agent
----------------
(which shall promptly inform the Issuing Bank) of the proposed issuance of each
Letter of Credit on a Business Day which is at least three Business Days (or
such lesser number of days as the U.S.
-22-
<PAGE>
Agent and the Issuing Bank shall agree in any particular instance) prior to the
proposed date of issuance of such Letter of Credit. Each such notice shall be
accompanied by an L/C Application, duly executed by the Company (together with
any Subsidiary for the account of which the related Letter of Credit is to be
issued) and in all respects satisfactory to the U.S. Agent and the Issuing Bank,
together with such other documentation as the U.S. Agent or the Issuing Bank may
request in support thereof, it being understood that each L/C Application shall
specify, among other things, the date on which the proposed Letter of Credit is
to be issued, the expiration date of such Letter of Credit (which shall not be
later than five Business Days prior to the scheduled Termination Date) and
whether such Letter of Credit is to be transferable in whole or in part. So long
as the Issuing Bank has not received written notice that the conditions
precedent set forth in Section 11 with respect to the issuance of such Letter of
----------
Credit have not been satisfied (and does not have knowledge of any default in
the payment of any principal, interest or fees to be paid to either Agent for
the account of the applicable Banks), the Issuing Bank shall issue such Letter
of Credit on the requested issuance date.
2.4.2 Participations in Letters of Credit. Concurrently with the
-----------------------------------
issuance of each Letter of Credit, the Issuing Bank shall be deemed to have sold
and transferred to each other U.S. Bank, and each other U.S. Bank shall be
deemed irrevocably and unconditionally to have purchased and received from the
Issuing Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such other U.S. Bank's Percentage, in such
Letter of Credit and the Company's reimbursement obligations with respect
thereto. For the purposes of this Agreement, the unparticipated portion of each
Letter of Credit shall be deemed to be the Issuing Bank's "participation"
therein. The Issuing Bank hereby agrees (a) to notify each U.S. Bank upon the
issuance of, or any increase in the amount of, any Letter of Credit; and (b)
upon request of any U.S. Bank, to deliver to such U.S. Bank a list of all
outstanding Letters of Credit, together with such information related thereto as
such U.S. Bank may reasonably request.
2.4.3 Reimbursement Obligations. The Company hereby unconditionally and
-------------------------
irrevocably agrees to reimburse the Issuing Bank for each payment or
disbursement made by the Issuing Bank under any Letter of Credit honoring any
demand for payment made by the beneficiary thereunder, in each case on the date
that such payment or disbursement is made. Any amount not reimbursed on the date
of such payment or disbursement shall bear interest from the date of such
payment or disbursement to the date that the Issuing Bank is reimbursed by the
Company therefor, payable on demand, at a rate per annum equal to the Base Rate
from time to time in effect plus the Floating Rate Margin from time to time in
----
effect plus 2%. The Issuing Bank shall notify the Company whenever any demand
----
for payment is made under any Letter of Credit by the beneficiary thereunder;
provided, however, that the failure of the Issuing Bank to so notify the Company
- -------- -------
shall not affect the rights of the Issuing Bank or the U.S. Banks in any manner
whatsoever.
2.4.4 Limitation on the Issuing Bank's Obligations. In determining
--------------------------------------------
whether to pay under any Letter of Credit, the Issuing Bank shall have no
obligation to the Company or any Bank other than to confirm that any documents
required to be delivered under such Letter of Credit appear to
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<PAGE>
have been delivered and appear to comply on their face with the requirements of
such Letter of Credit. Any action taken or omitted to be taken by the Issuing
Bank under or in connection with any Letter of Credit, if taken or omitted in
the absence of gross negligence and willful misconduct, shall not impose upon
the Issuing Bank any liability to the Company or any Bank and shall not reduce
or impair the Company's reimbursement obligations set forth in Section 2.4.3 or
-------------
the obligations of the U.S. Banks pursuant to Section 2.4.5.
-------------
2.4.5 Funding by U.S. Banks to the Issuing Bank. If the Issuing Bank
-----------------------------------------
makes any payment or disbursement under any Letter of Credit and the Company has
not reimbursed the Issuing Bank in full for such payment or disbursement by
11:00 A.M., Chicago time, on the date of such payment or disbursement, or if any
reimbursement received by the Issuing Bank from the Company is or must be
returned or rescinded upon or during any bankruptcy or reorganization of the
Company or otherwise, each other U.S. Bank shall be obligated to pay to the
Issuing Bank, in full or partial payment of the purchase price of its
participation in such Letter of Credit, its pro rata share (according to its
Percentage) of such payment or disbursement (but no such payment shall diminish
the obligations of the Company under Section 2.4.3), and the U.S. Agent shall
-------------
promptly notify each other U.S. Bank thereof. Each other U.S. Bank irrevocably
and unconditionally agrees to so pay to the U.S. Agent in immediately available
funds for the Issuing Bank's account the amount of such other U.S. Bank's
Percentage of such payment or disbursement. If and to the extent any U.S. Bank
shall not have made such amount available to the U.S. Agent by 2:00 P.M.,
Chicago time, on the Business Day on which such U.S. Bank receives notice from
the U.S. Agent of such payment or disbursement (it being understood that any
such notice received after 12:00 noon, Chicago time, on any Business Day shall
be deemed to have been received on the next following Business Day), such U.S.
Bank agrees to pay interest on such amount to the U.S. Agent for the Issuing
Bank's account forthwith on demand for each day from the date such amount was to
have been delivered to the U.S. Agent to the date such amount is paid, at a rate
per annum equal to (a) for the first three days after demand, the Federal Funds
Rate from time to time in effect and (b) thereafter, the Base Rate from time to
time in effect. Any U.S. Bank's failure to make available to the U.S. Agent its
Percentage of any such payment or disbursement shall not relieve any other U.S.
Bank of its obligation hereunder to make available to the U.S. Agent such other
U.S. Bank's Percentage of such payment, but no U.S. Bank shall be responsible
for the failure of any other U.S. Bank to make available to the U.S. Agent such
other U.S. Bank's Percentage of any such payment or disbursement.
2.4.6 Repayment of Participations. Upon (and only upon) receipt by the
---------------------------
U.S. Agent for the account of the Issuing Bank of immediately available funds
from or on behalf of the Company (a) in reimbursement of any payment made by the
Issuing Bank under a Letter of Credit with respect to which a U.S. Bank has paid
the U.S. Agent for the account of the Issuing Bank the amount of such U.S.
Bank's participation therein or (b) in payment of any interest thereon, the U.S.
Agent will pay to such U.S. Bank its pro rata share (according to its
Percentage) thereof (and the Issuing Bank shall receive the amount otherwise
payable to any U.S. Bank which did not so pay the U.S. Agent the amount of such
U.S. Bank's participation in the applicable Letter of Credit).
-24-
<PAGE>
2.4.7 Participation Obligations Unconditional. (a) Each U.S. Bank's
---------------------------------------
obligation to make available to the U.S. Agent for the account of the Issuing
Bank the amount of its participation interest in any payment or disbursement
under Letter of Credit shall be absolute and unconditional and shall not be
affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such U.S. Bank may have against the
Issuing Bank or any other Person, (ii) the occurrence or continuance of an Event
of Default or Unmatured Event of Default, (iii) any adverse change in the
condition (financial or otherwise) of the Company or any Subsidiary thereof,
(iv) any termination of the Commitments or (v) any other circumstance, happening
or event whatsoever.
(b) Notwithstanding the provisions of clause (a) above, no U.S. Bank
----------
shall be required to purchase a participation interest in any Letter of Credit
if (i) prior to the issuance of such Letter of Credit, the Issuing Bank received
written notice specifying that one or more of the conditions precedent to the
issuance of such Letter of Credit were not satisfied and, in fact, such
conditions precedent were not satisfied at the time of the issuance of such
Letter of Credit or (ii) at the time of the issuance of such Letter of Credit,
the Issuing Bank had knowledge of any default in the payment of any principal,
interest or fees to be paid to either Agent for the account of the applicable
Banks.
2.5 Swing Line Loans.
----------------
2.5.1 Swing Line Loans. Subject to the terms and conditions of this
----------------
Agreement (including the limitations set forth in Section 2.1.4), the Swing Line
-------------
Bank may from time to time, in its discretion, make loans to the Company
(collectively the "Swing Line Loans" and individually each a "Swing Line Loan")
---------------- ---------------
in accordance with this Section 2.5 in an aggregate amount not at any time
-----------
exceeding the lesser of (a) U.S.$10,000,000 and (b) the Aggregate Commitment.
Amounts borrowed under this Section 2.5 may be borrowed, repaid and (subject to
-----------
the agreement of the Swing Line Bank) reborrowed until the Termination Date.
2.5.2 Swing Line Loan Procedures. The Company shall give written or
--------------------------
telephonic notice to the U.S. Agent (which shall promptly inform the Swing Line
Bank) of each proposed Swing Line Loan not later than 12:00 noon, Chicago time,
on the proposed date of such Swing Line Loan. Each such notice shall be
effective upon receipt by the U.S. Agent and shall specify the date and amount
of such Swing Line Loan, which shall be not less than U.S.$100,000 or a higher
integral multiple thereof. So long as the Swing Line Bank has not received
written notice that the conditions precedent set forth in Section 11 with
----------
respect to the making of such Swing Line Loan have not been satisfied (and does
not have knowledge of any default in the payment of any principal, interest or
fees to be paid to either Agent for the account of the applicable Banks), the
Swing Line Bank may make the requested Swing Line Loan. If the Swing Line Bank
agrees to make the requested Swing Line Loan, the Swing Line Bank shall pay over
the requested amount to the Company on the requested borrowing date.
Concurrently with the making of any Swing Line Loan, the Swing Line Bank shall
be deemed to have sold and transferred, and each other U.S. Bank shall be deemed
to have purchased and received from the Swing Line Bank, an
-25-
<PAGE>
undivided interest and participation to the extent of such other U.S. Bank's
Percentage in such Swing Line Loan (but such participation shall remain unfunded
until required to be funded pursuant to Section 2.5.3).
-------------
2.5.3 Refunding of, or Funding of Participations in, Swing Line Loans.
---------------------------------------------------------------
The Swing Line Bank may at any time, in its sole discretion, on behalf of the
Company (which hereby irrevocably authorizes the Swing Line Bank to act on its
behalf) deliver a notice to the U.S. Agent requesting that each U.S. Bank
(including the Swing Line Bank in its individual capacity) make a U.S. Loan
(which shall be a Base Rate Loan) in such Bank's Percentage of the aggregate
amount of Swing Line Loans outstanding on such date for the purpose of repaying
all Swing Line Loans (and, upon receipt of the proceeds of such U.S. Loans, the
U.S. Agent shall apply such proceeds to repay Swing Line Loans); provided that
--------
if the conditions precedent to a borrowing of U.S. Loans are not then satisfied
or for any other reason the U.S. Banks may not then make U.S. Loans, then
instead of making U.S. Loans each U.S. Bank (other than the Swing Line Bank)
shall become immediately obligated to fund its participation in all outstanding
Swing Line Loans and shall pay to the U.S. Agent for the account of the Swing
Line Bank an amount equal to such U.S. Bank's Percentage of such Swing Line
Loans. If and to the extent any U.S. Bank shall not have made such amount
available to the U.S. Agent by 2:00 P.M., Chicago time, on the Business Day on
which such U.S. Bank receives notice from the U.S. Agent of its obligation to
fund its participation in Swing Line Loans (it being understood that any such
notice received after 12:00 noon, Chicago time, on any Business Day shall be
deemed to have been received on the next following Business Day), such U.S. Bank
agrees to pay interest on such amount to the U.S. Agent for the Swing Line
Bank's account forthwith on demand for each day from the date such amount was to
have been delivered to the U.S. Agent to the date such amount is paid, at a rate
per annum equal to (a) for the first three days after demand, the Federal Funds
Rate from time to time in effect and (b) thereafter, the Base Rate from time to
time in effect. Any U.S. Bank's failure to make available to the U.S. Agent its
Percentage of the amount of all outstanding Swing Line Loans shall not relieve
any other U.S. Bank of its obligation hereunder to make available to the U.S.
Agent such other U.S. Bank's Percentage of such amount, but no U.S. Bank shall
be responsible for the failure of any other U.S. Bank to make available to the
U.S. Agent such other U.S. Bank's Percentage of any such amount.
2.5.4 Repayment of Participations. Upon (and only upon) receipt by the
---------------------------
U.S. Agent for the account of the Swing Line Bank of immediately available funds
from or on behalf of the Company (a) in reimbursement of any Swing Line Loan
with respect to which a U.S. Bank has paid the U.S. Agent for the account of the
Swing Line Bank the amount of such U.S. Bank's participation therein or (b) in
payment of any interest on a Swing Line Loan, the U.S. Agent will pay to such
U.S. Bank its pro rata share (according to its Percentage) thereof (and the
Swing Line Bank shall receive the amount otherwise payable to any U.S. Bank
which did not so pay the U.S. Agent the amount of such U.S. Bank's participation
in such Swing Line Loan).
2.5.5 Participation Obligations Unconditional. (a) Each U.S. Bank's
---------------------------------------
obligation to make available to the U.S. Agent for the account of the Swing Line
Bank the amount of its
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<PAGE>
participation interest in all Swing Line Loans as provided in Section 2.5.3
-------------
shall be absolute and unconditional and shall not be affected by any
circumstance, including (i) any set-off, counterclaim, recoupment, defense or
other right which such U.S. Bank may have against the Swing Line Bank or any
other Person, (ii) the occurrence or continuance of an Event of Default or
Unmatured Event of Default, (iii) any adverse change in the condition (financial
or otherwise) of the Company or any Subsidiary thereof, (iv) any termination of
the Commitments or (v) any other circumstance, happening or event whatsoever.
(b) Notwithstanding the provisions of clause (a) above, no U.S. Bank
shall be required to purchase a participation interest in any Swing Line Loan if
(i) prior to the making by the Swing Line Bank of such Swing Line Loan, the
Swing Line Bank received written notice specifying that one or more of the
conditions precedent to the making of such Swing Line Loan were not satisfied
and, in fact, such conditions precedent were not satisfied at the time of the
making of such Swing Line Loan or (ii) at the time of the making of such Swing
Line Loan, the Swing Line Bank had knowledge of any default in the payment of
any principal, interest or fees to be paid to either Agent for the account of
the applicable Banks.
2.5.6 Swing Line Loan Reports. The U.S. Agent agrees that, if any U.S.
-----------------------
Bank so requests, it will deliver to such U.S. Bank on a monthly basis a report
of all borrowings and repayments of Swings Line Loans.
2.6 Pro Rata Treatment. Except as otherwise expressly provided herein,
------------------
all borrowings, conversions, continuations and repayments shall be effected so
that after giving effect thereto (a) each U.S. Bank will have a pro rata share
(according to its Percentage) of all types and Groups of U.S. Loans and (b) each
Canadian Bank will have a pro rata share (according to its Canadian Percentage)
of all types and Groups of Canadian Loans.
2.7 Commitments Several. The failure of any Bank to make a requested
-------------------
Loan on any date shall not relieve any other Bank of any obligation to make a
Loan on such date, but no Bank shall be responsible for the failure of any other
Bank to make any Loan to be made by such other Bank.
2.8 Certain Conditions. Notwithstanding any other provision of this
------------------
Agreement, no Bank shall have an obligation to make any Loan, or to permit the
continuation of or any conversion into any Fixed Rate Loan, and the Issuing Bank
shall have no obligation to issue any Letter of Credit, if an Event of Default
or Unmatured Event of Default exists.
SECTION 3 NOTES EVIDENCING LOANS.
3.1 Notes. The Loans of each Bank shall be evidenced by a promissory
-----
note (each a "Note") substantially in the form set forth in Exhibit A, with
---- ---------
appropriate insertions, payable to the order of such Bank on the Termination
Date in an amount equal to such Bank's Percentage of the Aggregate Commitment
(or, in the case of the Swing Line Bank, an amount equal to the
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<PAGE>
maximum amount of all U.S. Loans and Swing Line Loans which the Swing Line Bank
may at any time have outstanding hereunder) or such Bank's Canadian Percentage
of the Canadian Commitment (as the case may be) or, if less, in the aggregate
unpaid principal amount of such Bank's Loans.
3.2 Recordkeeping. Each Bank shall record in its records, or at its
-------------
option on the schedule attached to its Note, the date and amount of each Loan
made by such Bank, each repayment or conversion thereof and, in the case of each
Eurodollar Loan and, if applicable, BA Rate Loan, the dates on which each
Interest Period for such Loan shall begin and end. The aggregate unpaid
principal amount so recorded shall be rebuttable presumptive evidence of the
principal amount owing and unpaid on such Note. The failure to so record any
such amount or any error in so recording any such amount shall not, however,
limit or otherwise affect the obligations of the applicable Borrower hereunder
or under any Note to repay the principal amount of the Loans evidenced by such
Note together with all interest accruing thereon.
SECTION 4 INTEREST.
4.1 Interest Rates. Each Borrower promises to pay interest on the unpaid
--------------
principal amount of each Loan to such Borrower for the period commencing on the
date of such Loan until such Loan is paid in full, as follows:
(a) at all times while such Loan is a Base Rate Loan, at a rate per
annum equal to the sum of the Base Rate from time to time in effect plus
the Floating Rate Margin from time to time in effect;
(b) at all times while such Loan is a Prime Rate Loan, at a rate
per annum equal to the Prime Rate from time to time in effect plus the
Floating Rate Margin from time to time in effect;
(c) at all times while such Loan is a BA Rate Loan, at a rate per
annum equal to the BA Rate applicable to each Interest Period for such Loan
plus the Fixed Rate Margin from time to time in effect;
(d) at all times while such Loan is a Eurodollar Loan, at a rate
per annum equal to the sum of the Eurodollar Rate applicable to each
Interest Period for such Loan plus the Fixed Rate Margin from time to time
in effect; and
(e) at all times while such Loan is a Swing Line Loan, at a rate
per annum separately agreed to by the Company and the Swing Line Bank from
time to time (provided that if at any time the U.S. Banks are obligated to
fund participations in Swing Line Loans pursuant to Section 2.5.3, all of
-------------
such Swing Line Loans shall bear interest, from the date the obligation to
fund such participations first arises to the date such Swing
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<PAGE>
Line Loans are paid in full, at a rate per annum equal to the sum of the
Base Rate from time to time in effect plus the Floating Rate Margin from
time to time in effect);
provided, however, that at any time an Event of Default exists, the interest
- -------- -------
rate applicable to each Loan shall be increased by 2%.
4.2 Interest Payment Dates. Accrued interest on each Base Rate Loan,
----------------------
Prime Rate Loan and Swing Line Loan shall be payable in arrears on the last day
of each calendar month and at maturity. Accrued interest on each Fixed Rate
Loan shall be payable on the last day of each Interest Period relating to such
Loan (and, in the case of a Eurodollar Loan with a six-month Interest Period, on
the three-month anniversary of the first day of such Interest Period) and at
maturity. After maturity, accrued interest on all Loans shall be payable on
demand.
4.3 Setting and Notice of Certain Rates. The applicable Eurodollar Rate
-----------------------------------
or BA Rate for each Interest Period shall be determined by the applicable Agent,
and notice thereof shall be given by such Agent promptly to the applicable
Borrower and applicable Banks. Each determination of the applicable Eurodollar
Rate or BA Rate by the applicable Agent shall be conclusive and binding upon the
parties hereto, in the absence of demonstrable error. Each Agent shall, upon
written request of the applicable Borrower or any applicable Bank, deliver to
such Borrower or such Bank a statement showing the computations used by such
Agent in determining any applicable Eurodollar Rate or BA Rate hereunder.
4.4 Computation of Interest.
-----------------------
(a) All computations of interest on Base Rate Loans when the
Base Rate is determined by the Reference Rate and on Prime Rate Loans and BA
Rate Loans shall be made on the basis of a year of 365 or 366 days, as the case
may be, and actual days elapsed. All other computations of interest shall be
made on the basis of a 360-day year and actual days elapsed (which results in
more interest being paid than if computed on the basis of a 365-day year);
provided that the Company and the Swing Line Bank may from time to time agree on
- --------
a different basis of computation for Swing Line Loans (unless such Loans
constitute Base Rate Loans pursuant to the parenthetical clause in Section
-------
4.1(e)). Interest and fees shall accrue during each period during which interest
- -------
or fees are computed from the first day thereof to the last day thereof.
(b) For the purposes of the Interest Act (Canada), where any
rate of interest is stated herein to be calculated on the basis of a 360-day
year, the annual rate of interest to which such stated rate is equivalent is
such stated rate, multiplied by the number of days in the year (being 365 or
366, as the case may be), and divided by 360.
(c) Anything herein to the contrary notwithstanding, the
obligations of the Borrowers to any Bank hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder to the extent (but
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<PAGE>
only to the extent) that contracting for or receiving such payment by such Bank
would be contrary to the provisions of any law applicable to such Bank limiting
the highest rate of interest that may be lawfully contracted for, charged or
received by such Bank, and in such event the applicable Borrower shall pay such
Bank interest at the highest rate permitted by applicable law.
(d) The applicable interest rate for each Base Rate Loan shall
change simultaneously with each change in the Base Rate, and the applicable rate
of interest for each Prime Rate Loan shall change simultaneously with each
change in the Prime Rate.
SECTION 5 FEES.
5.1 Facility Fee. The Company agrees to pay to the U.S. Agent for the
------------
account of each U.S. Bank a facility fee, for the period from the Effective Date
to the Termination Date, at the rate per annum in effect from time to time
pursuant to Schedule 1.1(C) of each U.S. Bank's Percentage of the Aggregate
---------------
Commitment. Such facility fee shall be payable in arrears on the last day of
each calendar quarter and on the Termination Date for any period then ending for
which such facility fee shall not have theretofore been paid. The facility fee
shall be computed for the actual number of days elapsed on the basis of a year
of 360 days.
5.2 Letter of Credit Fees.
---------------------
(a) The Company agrees to pay to the U.S. Agent for the account of the
U.S. Banks pro rata according to their respective Percentages a letter of credit
fee for each Letter of Credit in an amount equal to the rate per annum in effect
from time to time pursuant to Schedule 1.1(C) of the undrawn amount of such
---------------
Letter of Credit (computed for the actual number of days elapsed on the basis of
a year of 360 days); provided that the rate applicable to each Letter of Credit
--------
shall be increased by 2% at any time that an Event of Default exists. Such
letter of credit fee shall be payable in arrears on the last day of each
calendar quarter and on the Termination Date (and, if any Letter of Credit
remains outstanding after the Termination Date, on demand) for the period from
the date of the issuance of each Letter of Credit to the date such payment is
due or, if earlier, the date on which such Letter of Credit expired or was
terminated.
(b) In addition, with respect to each Letter of Credit, the Company
agrees to pay to the Issuing Bank, for its own account, (i) such fees and
expenses as the Issuing Bank customarily requires in connection with the
issuance, negotiation, processing and/or administration of letters of credit in
similar situations and (ii) a letter of credit fee in the amount separately
agreed to by the Company and the Issuing Bank.
5.3 Arrangement and Agents' Fees. The Company agrees to pay to the
----------------------------
Arranger, the U.S. Agent and the Canadian Agent such arrangement and agent's
fees as are mutually agreed to from time to time by the Company, the Arranger
and the Agents.
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<PAGE>
5.4 Closing Fees. On the Effective Date, the Company shall pay to the
------------
U.S. Agent for the account of each U.S. Bank a closing fee in an amount equal to
0.25% of the excess (if any) of such U.S. Bank's Percentage of the Aggregate
Commitment over such U.S. Bank's "Percentage" of the "Commitment Amount" under
the Existing Agreement.
SECTION 6 REDUCTION AND TERMINATION OF THE AGGREGATE COMMITMENT;
PREPAYMENTS.
6.1 Reduction or Termination of the Aggregate Commitment. The Company
----------------------------------------------------
may from time to time on at least five Business Days' prior written notice
received by the U.S. Agent (which shall promptly advise each Bank thereof)
permanently reduce the amount of the Aggregate Commitment to an amount not less
than the sum of the aggregate unpaid Dollar Equivalent principal amount of all
Loans and the aggregate Stated Amount of all Letters of Credit. Any such
reduction shall be in an amount not less than U.S.$5,000,000 or a higher
integral multiple of U.S.$1,000,000. The Company may at any time on like notice
terminate the Commitments upon payment in full by the Borrowers of all Loans and
all other obligations of the Borrowers hereunder and cash collateralization in
full, pursuant to documentation in form and substance reasonably satisfactory to
the U.S. Banks, of all obligations (contingent or otherwise) arising with
respect to the Letters of Credit. All reductions of the amount of the Aggregate
Commitment shall reduce the Commitments pro rata among the U.S. Banks according
to their respective Percentages.
6.2 Prepayments
-----------
6.2.1 Mandatory Prepayments. If on any Computation Date: (a)
---------------------
the Aggregate Outstandings exceed the Aggregate Commitment, then the Company
shall, or shall cause UR Canada to, immediately make a prepayment of Loans in an
amount sufficient to eliminate such excess; and (b) the aggregate Dollar
Equivalent principal amount of all Canadian Loans outstanding exceeds the
Aggregate Canadian Commitment, then UR Canada shall immediately make a
----
prepayment of the Canadian Loans in an amount sufficient to eliminate such
excess. All prepayments pursuant to this Section 6.2.1 shall comply with the
-------------
provisions of Section 6.2.3.
-------------
6.2.2 Voluntary Prepayments. Subject to Section 6.2.3, either
--------------------- -------------
Borrower may from time to time prepay the Loans to such Borrower, in whole or in
part, without penalty.
6.2.3 All Prepayments. Each Borrower shall give the U.S. Agent
---------------
and the Canadian Agent (which shall promptly advise each applicable Bank) notice
of any prepayment of Loans not later than 10:00 A.M. (or, in the case of
prepayment of Swing Line Loans, 12:00 noon), Chicago time, on the day of such
prepayment, specifying the Loans to be prepaid and the date and amount of
prepayment. Each partial prepayment of U.S. Loans shall be in a principal amount
of at least U.S.$1,000,000 and an integral multiple of U.S.$500,000. Each
partial prepayment of Canadian Loans shall be in a principal amount of at least
Cdn.$1,000,000 and an
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<PAGE>
integral multiple of Cdn.$500,000. Any prepayment of a Fixed Rate Loan on a day
other than the last day of an Interest Period therefor shall be subject to
Section 8.4.
- -----------
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. (a) All payments of principal of or interest on
------------------
the Notes, and of all facility fees and Letter of Credit fees, shall be made by
the applicable Borrower to the applicable Agent in immediately available funds
at the office specified by such Agent not later than 11:00 A.M., Chicago time,
in the case of payments to the Canadian Agent and noon, Chicago time, in the
case of payments to the U.S. Agent, on the date due; and funds received after
that hour shall be deemed to have been received by the applicable Agent on the
next following Business Day. Each Borrower hereby authorizes and instructs each
Agent to charge any demand deposit account of such Borrower maintained with BofA
or BAC for the amount of any such payment on the due date therefor, and (subject
to there being a sufficient balance in such account for such purpose) each Agent
agrees to do so, provided that an Agent's failure to so charge any such account
--------
shall in no way affect the obligation of such Borrower to make any such payment.
Each Agent shall promptly remit to each applicable Bank or other holder of a
Note its share of all such payments received in collected funds by such Agent
for the account of such Bank or holder.
(b) All payments under Section 8.1 shall be made by the
-----------
applicable Borrower directly to the Bank entitled thereto.
(c) Unless the applicable Agent receives notice from the
applicable Borrower prior to the date on which any payment is due to the
applicable Banks that such Borrower will not make such payment in full as and
when required, such Agent may assume that such Borrower has made such payment in
full to such Agent on such date in immediately available funds and such Agent
may (but shall not be so required), in reliance upon such assumption, distribute
to each applicable Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent such Borrower has not made such payment in full
to such Agent, each applicable Bank shall repay to such Agent on demand the
amount distributed to such Bank, together with interest thereon at the Federal
Funds Rate (in the case of amounts in U.S. Dollars) or the Canadian Cost of
Funds Rate (in the case of amounts in Canadian Dollars) for each day from the
date such amount is distributed to such Bank until the date repaid.
(d) Unless the applicable Agent receives notice from a Bank at
least one Business Day prior to the date of any borrowing of Loans, that such
Bank will not make available as and when required hereunder to such Agent for
the account of the applicable Borrower the amount of such Bank's Percentage or
Canadian Percentage, as the case may be, of such borrowing, such Agent may
assume that each Bank has made such amount available to such Agent in
immediately available funds on the borrowing date and such Agent may (but shall
not be required), in reliance upon such assumption, make available to the
applicable
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<PAGE>
Borrower on such date a corresponding amount. If and to the extent any Bank
shall not have made its full amount available to the applicable Agent in
immediately available funds and such Agent in such circumstances has made
available to the applicable Borrower such amount, such Bank shall on the
Business Day following such date of borrowing make such amount available to the
applicable Agent, together with interest at the Federal Funds Rate (in the case
of amounts in U.S. Dollars) or the Canadian Cost of Funds Rate (in the case of
amounts in Canadian Dollars) for each day during such period. A notice of an
Agent submitted to any Bank with respect to amounts owing under this subsection
----------
(d) shall be conclusive, absent manifest error. If such amount is so made
- ---
available, such payment to the applicable Agent shall constitute such Bank's
Loan on the date of borrowing for all purposes of this Agreement. If such
amount is not made available to the applicable Agent on the Business Day
following the date of borrowing, the applicable Agent will notify the applicable
Borrower of such failure to fund and, upon demand by such Agent, such Borrower
shall pay such amount to such Agent for such Agent's account, together with
interest thereon for each day elapsed since the date of such borrowing, at a
rate per annum equal to the interest rate applicable at the time to the
applicable Loan.
7.2 Application of Certain Payments. Each payment of principal shall be
-------------------------------
applied to such Loans as the applicable Borrower shall direct by notice to be
received by the applicable Agent on or before the date of such payment or, in
the absence of such notice, as such Agent shall determine in its discretion.
Concurrently with each remittance to any Bank of its share of any payment, the
applicable Agent shall advise such Bank as to the application of such payment.
7.3 Due Date Extension. If any payment of principal or interest with
------------------
respect to any of the Loans, or of non-use fees or Letter of Credit fees, falls
due on a day which is not a Business Day, then such due date shall be extended
to the immediately following Business Day (unless, in the case of a Eurodollar
Loan, such immediately following Business Day is the first Business Day of a
calendar month, in which case such date shall be the immediately preceding
Business Day) and, in the case of principal, additional interest shall accrue
and be payable for the period of any such extension.
7.4 Setoff. Each Borrower agrees that each Agent, each Bank and each
------
other holder of a Note have all rights of set-off and bankers' lien provided by
applicable law, and in addition thereto, each Borrower agrees that at any time
(a) any payment or other amount owing by such Borrower under this Agreement is
then due to either Agent, any Bank or any such holder or (b) any Unmatured Event
of Default under Section 12.1.4 with respect to the Company or any Event of
--------------
Default exists, each Agent, each Bank and each such holder may apply to the
payment of such payment or other amount (or, in the case of clause (b), to any
----------
obligations of such Borrower hereunder, whether or not then due) any and all
balances, credits, deposits, accounts or moneys of such Borrower then or
thereafter with such Agent, such Bank or such holder.
7.5 Proration of Payments. If any Bank shall obtain any payment or other
---------------------
recovery (whether voluntary, involuntary, by application of offset or otherwise,
but excluding any payment
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<PAGE>
pursuant to Section 8.7 or 15.9 or any payment to the Swing Line Bank in respect
----------- ----
of any Swing Line Loan) on account of principal of or interest on any Note (or
on account of its participation in any Letter of Credit, Canadian Loan or Swing
Line Loan) in excess of its pro rata share of payments and other recoveries
obtained by all U.S. Banks or Canadian Banks, as applicable, on account of
principal of and interest on the applicable Notes (or such participations) then
held by them, such Bank shall purchase from the other applicable Banks such
participation in the applicable Notes (or sub-participation in Letters of
Credit, Canadian Loans or Swing Line Loans) held by them as shall be necessary
to cause such purchasing Bank to share the excess payment or other recovery
ratably with each of them; provided, however, that if all or any portion of the
-------- -------
excess payment or other recovery is thereafter recovered from such purchasing
Bank, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery (but without interest).
7.6 Taxes. (a) All payments of principal of, and interest on, the Loans
-----
and all other amounts payable hereunder shall be made free and clear of and
without deduction for any present or future income, excise, stamp or franchise
taxes and other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, but excluding franchise taxes and
taxes imposed on or measured by any Bank's net income or receipts (all non-
excluded items being called "Taxes"). If any withholding or deduction from any
-----
payment to be made by a Borrower hereunder (including any additional amount or
amounts to be paid under this Section 7.6) is required in respect of any Taxes
-----------
pursuant to any applicable law, rule or regulation, then such Borrower will:
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the U.S. Agent (and, in the case of UR
Canada, the Canadian Agent) an official receipt or other documentation
satisfactory to the U.S. Agent (and, in the case of UR Canada, the Canadian
Agent) evidencing such payment to such authority; and
(c) pay to the U.S. Agent (or, in the case of UR Canada, the
Canadian Agent) for the account of the Banks such additional amount or
amounts as is necessary to ensure that the net amount actually received by
each Bank will equal the full amount such Bank would have received had no
such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against either Agent or any Bank
with respect to any payment received by such Agent or such Bank hereunder, such
Agent or such Bank may pay such Taxes and the applicable Borrower will promptly
pay such additional amounts (including any penalty, interest and expense) as is
necessary in order that the net amount received by such Person after the payment
of such Taxes (including any Taxes on such additional amount) shall equal the
amount such Person would have received had such Taxes not been asserted.
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<PAGE>
(b) If either Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the applicable Agent, for the account of
the applicable Banks, the required receipts or other required documentary
evidence, such Borrower shall indemnify such Banks for any incremental Taxes,
interest or penalties that may become payable by any such Bank as a result of
any such failure. For purposes of this Section 7.6, a distribution hereunder by
-----------
either Agent or any Bank to or for the account of any Bank shall be deemed a
payment by the applicable Borrower.
(c) Upon the request from time to time of the Company or the U.S. Agent,
each U.S. Bank that is organized under the laws of a jurisdiction other than the
United States of America or any State thereof shall execute and deliver to the
Company and the U.S. Agent one or more (as the Company or the U.S. Agent may
reasonably request) United States Internal Revenue Service Forms 4224 or Forms
1001 or such other forms or documents, appropriately completed, as may be
applicable to establish the extent, if any, to which a payment by the Company to
such U.S. Bank is exempt from withholding or deduction of Taxes.
(d) Each Canadian Bank agrees that it shall, no later than the Effective
Date (or, in the case of a Canadian Bank which becomes a party hereto after the
Effective Date, the date upon which such Canadian Bank becomes a party hereto)
deliver to the Canadian Agent and to UR Canada through the Canadian Agent an
instrument in writing certifying one of the following:
(A) that such Canadian Bank is not a non-resident of Canada for
the purposes of Part XIII of the Income Tax Act (Canada) and that it
is the sole beneficial owner of payments of principal of and interest
on its Canadian Loans;
(B) its jurisdiction of incorporation and residence for tax
purposes, that it is the sole beneficial owner of payments of
principal of and interest on its Canadian Loans, and the rate of
withholding tax applicable to any payment of interest to it pursuant
to any applicable tax conventions between Canada, on the one hand,
and its jurisdiction of residence for tax purposes, on the other
hand; or
(C) its jurisdiction of incorporation and residence for tax
purposes, the names of the beneficial owners of payments of principal
of and interest on its Canadian Loans, the residence for tax purposes
of each of such beneficial owners, and the rate of withholding tax
applicable to any payment of interest in respect of each beneficial
owner pursuant to any applicable tax convention between Canada, on
the one hand, and the jurisdiction of residence for tax purposes of
each beneficial owner, on the other hand;
and undertaking to advise the Canadian Agent and UR Canada of any changes in
respect of (A), (B) or (C), as the case may be (provided that no Canadian Bank
shall be required to notify the Canadian Agent or UR Canada of any change
resulting solely from delivery to the U.S.
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<PAGE>
Agent of a Canadian Participation Funding Notice). In addition, each Canadian
Bank (and, after delivery to the U.S. Agent of a Canadian Participation Funding
Notice, each Non-Canadian Bank) shall, promptly upon the Canadian Agent's or UR
Canada's reasonable request to that effect, deliver to the Canadian Agent or UR
Canada (as the case may be) such other instruments in writing, forms or similar
documentation as may be required from time to time by any applicable law,
treaty, rule or regulation or the official interpretation of any such law,
treaty, rule, or regulation by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) in order to establish such Canadian Bank's tax status for withholding
purposes. If the Canadian Agent receives a request from Revenue Canada or any
other taxing authority to provide additional information concerning the
withholding tax status of any Canadian Bank (or, after delivery to the U.S.
Agent of a Canadian Participation Funding Notice, a Non-Canadian Bank), such
Bank shall (upon notice of such request from the Canadian Agent) use reasonable
efforts to obtain and deliver such information to such taxing authority and the
Canadian Agent. Notwithstanding the foregoing, no Canadian Bank shall be
required to deliver any form pursuant to this clause (d) if such Canadian Bank
----------
is not legally permitted to deliver such form as a result of a change in any
law, or treaty, rule, or regulation or the official interpretation thereof after
the date such Canadian Bank becomes a party to this Agreement.
(e) The obligations of the Borrowers under this Section 7.6 (i) are
-----------
subject to the limitations set out in Section 15.9.1 and (ii) shall survive
--------------
repayment of the Loans, cancellation of the Notes, cancellation or expiration of
the Letters of Credit and any termination of the Agreement.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR FIXED RATE LOANS.
8.1 Increased Costs.
---------------
(a) If, after the date hereof, the adoption of or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or any Eurodollar Office of such Bank) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency
(A) shall subject any Bank (or any Eurodollar Office of such Bank)
to any tax, duty or other charge with respect to its Fixed Rate Loans (or
its participation therein), its Note or its obligation to make or
participate in Fixed Rate Loans, or shall change the basis of taxation of
payments to any Bank of the principal of or interest on its Fixed Rate
Loans (or its participation therein) or any other amounts due under this
Agreement in respect of its Fixed Rate Loans (or its participation therein)
or its obligation to make or participate in Fixed Rate Loans (except for
changes in the rate of tax on the overall net
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<PAGE>
income of such Bank or its Eurodollar Office imposed by the jurisdiction in
which such Bank's principal executive office or Eurodollar Office is
located); or
(B) shall impose, modify or deem applicable any reserve (including
any reserve imposed by the FRB, but excluding any reserve included in the
determination of interest rates pursuant to Section 4), special deposit or
---------
similar requirement against assets of, deposits with or for the account of,
or credit extended by any Bank (or any Eurodollar Office of such Bank); or
(C) shall impose on any Bank (or its Eurodollar Office) any other
condition affecting its Fixed Rate Loans (or its participation therein),
its Note or its obligation to make or participate in Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost to (or, in the
case of Regulation D of the FRB, to impose a cost on) such Bank (or any
Eurodollar Office of such Bank) of making, maintaining or participating in any
Fixed Rate Loan, or to reduce the amount of any sum received or receivable by
such Bank (or its Eurodollar Office) under this Agreement or under its Note with
respect thereto, then within 10 days after demand by such Bank (which demand
shall be accompanied by a statement setting forth the basis for such demand, a
copy of which shall be furnished to the U.S. Agent), the applicable Borrower
shall pay directly to such Bank such additional amount as will compensate such
Bank for such increased cost or such reduction.
(b) If any Bank shall reasonably determine that the adoption or phase-in
of or any change in any applicable law, rule or regulation regarding capital
adequacy, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank or any
Person controlling such Bank with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Bank's or such controlling Person's capital as a consequence of
such Bank's obligations hereunder (including such Bank's obligation to make or
participate in Loans or to issue or participate in Letters of Credit) or under
any Letter of Credit to a level below that which such Bank or such controlling
Person could have achieved but for such adoption, change or compliance (taking
into consideration such Bank's or such controlling Person's policies with
respect to capital adequacy) by an amount deemed by such Bank or such
controlling Person to be material, then from time to time, within 10 days after
demand by such Bank (which demand shall be accompanied by a statement setting
forth the basis for such demand, a copy of which shall be furnished to the U.S.
Agent), the applicable Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank or such controlling Person for such
reduction.
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If with
--------------------------------------------------------
respect to any Interest Period:
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(a) deposits in the relevant currency (in the applicable amounts)
are not being offered to BofA or BAC, as applicable, in the relevant
interbank Eurodollar market for such Interest Period, or the applicable
Agent otherwise reasonably determines (which determination shall be binding
and conclusive on the Borrowers) that by reason of circumstances affecting
the relevant interbank Eurodollar market adequate and reasonable means do
not exist for ascertaining the applicable Eurodollar Rate in the relevant
currency; or
(b) U.S. Banks having an aggregate Percentage of 30% or more advise
the U.S. Agent, or Canadian Banks having an aggregate Canadian Percentage
of 30% or more advise the Canadian Agent, that the Eurodollar Rate or the
BA Rate, as determined by the applicable Agent, will not adequately and
fairly reflect the cost to such Banks of maintaining or funding their
Eurodollar Loans or BA Rate Loans, as applicable, for such Interest Period
(taking into account any amount to which such Banks may be entitled under
Section 8.1) or that the making or funding of Eurodollar Loans in the
-----------
relevant currency or BA Rate Loans has become impracticable as a result of
an event occurring after the date of this Agreement which in the opinion of
such Banks materially affects such Loans;
then the applicable Agent shall promptly notify the applicable Borrower and the
- ----
applicable Banks thereof and, so long as such circumstances shall continue, (i)
no Bank shall be under any obligation to make or convert into Eurodollar Loans
in the relevant currency or BA Rate Loans, as the case may be, and (ii) on the
last day of the current Interest Period for each Eurodollar Loan in such
currency or BA Rate Loan, as the case may be, such Loan shall, unless then
repaid in full, automatically convert to a Base Rate Loan or a Prime Rate Loan,
as appropriate.
8.3 Changes in Law Rendering Fixed Rate Loans Unlawful. If any change in
--------------------------------------------------
(including the adoption of any new) applicable laws or regulations, or any
change in the interpretation of applicable laws or regulations by any
governmental or other regulatory body charged with the administration thereof,
should make it (or in the good faith judgment of any Bank cause a substantial
question as to whether it is) unlawful for any Bank to make, maintain or fund
any Fixed Rate Loan, then such Bank shall promptly notify the Borrowers and the
Agents and, so long as such circumstances shall continue, (a) such Bank shall
have no obligation to make or convert into the applicable type of Fixed Rate
Loans (but shall make Base Rate Loans or Prime Rate Loans, as appropriate,
concurrently with the making of or conversion into the applicable type of Fixed
Rate Loans by the Banks which are not so affected, in each case in an amount
equal to such Bank's pro rata share of all of the applicable type of Loans which
would be made or converted into at such time in the absence of such
circumstances) and (b) on the last day of the current Interest Period for each
applicable Fixed Rate Loan of such Bank (or, in any event, on such earlier date
as may be required by the relevant law, regulation or interpretation), such
Fixed Rate Loan shall, unless then repaid in full, automatically convert to a
Base Rate Loan or a Prime Rate Loan, as appropriate. Each Base Rate Loan or
Prime Rate Loan made by a Bank which, but for the circumstances described in the
foregoing sentence, would be a Fixed Rate Loan (an
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<PAGE>
"Affected Loan") shall remain outstanding for the same period as the Group of
Fixed Rate Loans of which such Affected Loan would be a part absent such
circumstances.
8.4 Funding Losses. Each Borrower hereby agrees that upon demand by any
--------------
Bank (which demand shall be accompanied by a statement setting forth the basis
for the amount being claimed, a copy of which shall be furnished to the U.S.
Agent), such Borrower will indemnify such Bank against any net loss or expense
which such Bank may sustain or incur (including any net loss or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired
by such Bank to fund or maintain any Fixed Rate Loan), as reasonably determined
by such Bank, as a result of (a) any payment, prepayment or conversion of any
Fixed Rate Loan of such Bank on a date other than the last day of an Interest
Period for such Loan (including any conversion pursuant to Section 8.3) or (b)
-----------
any failure of such Borrower to borrow, convert into, continue or prepay any
Fixed Rate Loan on a date specified therefor in a notice of borrowing,
conversion, continuation or prepayment pursuant to this Agreement. For this
purpose, all notices to either Agent pursuant to this Agreement shall be deemed
to be irrevocable.
8.5 Right of Banks to Fund through Other Offices. Each Bank may, if it
--------------------------------------------
so elects, fulfill its commitment as to any Eurodollar Loan by causing a foreign
branch or affiliate of such Bank to make such Loan, provided that in such event
--------
for the purposes of this Agreement such Loan shall be deemed to have been made
by such Bank and the obligation of the applicable Borrower to repay such Loan
shall nevertheless be to such Bank and shall be deemed held by it, to the extent
of such Loan, for the account of such branch or affiliate.
8.6 Discretion of Banks as to Manner of Funding. Notwithstanding any
-------------------------------------------
provision of this Agreement to the contrary, each Bank shall be entitled to fund
and maintain its funding of all or any part of its Loans in any manner it sees
fit, it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if such Bank had actually funded and
maintained each Eurodollar Loan during each Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the IBOR or the Canadian
IBOR (each as defined in the definition of Eurodollar Rate), as applicable, for
such Interest Period.
8.7 Mitigation of Circumstances; Replacement of Affected Bank.
---------------------------------------------------------
(a) Each Bank shall promptly notify the applicable Borrower and the U.S.
Agent (and if such notice relates to Canadian Loans, the Canadian Agent) of any
event of which it has knowledge which will result in, and will use reasonable
commercial efforts available to it (and not, in such Bank's good faith judgment,
otherwise disadvantageous to such Bank) to mitigate or avoid, (i) any obligation
of a Borrower to pay any amount pursuant to Section 7.6 or 8.1 or (ii) the
----------- ---
occurrence of any circumstances of the nature described in Section 8.2 or 8.3,
----------- ---
and, if any Bank has given notice of any such event described in clause (i) or
----------
(ii) above and thereafter such event ceases to exist, such Bank shall promptly
- ----
so notify the applicable Borrower and the U.S. Agent (and if such notice relates
to the Canadian Loans, the Canadian Agent). Without limiting
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<PAGE>
the foregoing, each Bank will designate a different funding office if such
designation will avoid (or reduce the cost to the applicable Borrower of) any
event described in clause (i) or (ii) of the preceding sentence and such
---------- ----
designation will not, in such Bank's sole judgment, be otherwise disadvantageous
to such Bank.
(b) At any time any Bank is an Affected Bank, the Company may replace
such Affected Bank (and any Affiliate of such Bank which is a party hereto) as a
party to this Agreement with one or more other bank(s) or financial
institution(s) reasonably satisfactory to the U.S. Agent (and upon notice from
the Company such Affected Bank shall assign pursuant to an Assignment Agreement,
and without recourse or warranty, its Commitment, its Loans, its Note, its
participation in Letters of Credit, and all of its other rights and obligations
hereunder to such replacement bank(s) or other financial institution(s) for a
purchase price equal to the sum of the principal amount of the Loans so
assigned, all accrued and unpaid interest thereon, its ratable share of all
accrued and unpaid facility fees and Letter of Credit fees, any amounts payable
under Section 8.4 as a result of such Bank receiving payment of any Fixed Rate
-----------
Loan prior to the end of an Interest Period therefor and all other obligations
owed to such Affected Bank hereunder); provided, however, that no Affected Bank
-------- -------
shall be required to make any assignment pursuant to this clause (b) unless the
----------
Company also replaces any Affiliate of such Bank which is a party hereto
pursuant to the provisions of this clause (b).
----------
8.8 Conclusiveness of Statements; Survival of Provisions. Determinations
----------------------------------------------------
and statements of any Bank pursuant to Section 8.1, 8.2, 8.3 or 8.4 shall be
----------- --- --- ---
conclusive absent demonstrable error. Banks may use reasonable averaging and
attribution methods in determining compensation under Sections 8.1 and 8.4, and
------------ ---
the provisions of such Sections shall survive repayment of the Loans,
cancellation of the Notes, cancellation or expiration of the Letters of Credit
and any termination of this Agreement.
SECTION 9 WARRANTIES.
To induce the Issuing Bank to issue Letters of Credit and to induce the
Agents and the Banks to enter into this Agreement and to induce the Banks to
make and participate in Loans and purchase participations in Letters of Credit
hereunder, the Company warrants to the Agents and the Banks (and, with respect
to Sections 9.1 through 9.4, UR Canada warrants with respect to itself) that:
------------ ---
9.1 Organization, etc. The Company is a corporation duly organized,
------------------
validly existing and in good standing under the laws of the State of Delaware;
UR Canada is a corporation duly organized, validly existing and in good standing
under the laws of the Province of Ontario and is a wholly-owned Subsidiary of
the Company; each Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation;
and each of the Company and each Subsidiary is duly qualified to do business in
each jurisdiction where the nature of its business makes such qualification
necessary (except in those instances in which the failure to be qualified or in
good standing does not have a Material Adverse Effect)
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<PAGE>
and has full power and authority to own its property and conduct its business as
presently conducted by it.
9.2 Authorization; No Conflict. The execution and delivery by each
--------------------------
Borrower of this Agreement and each other Loan Document to which it is a party,
the borrowings and obtaining of letters of credit hereunder, the execution and
delivery by each other Loan Party of each Loan Document to which it is a party
and the performance by each Borrower and each other Loan Party of its
obligations under each Loan Document to which it is a party are within the
corporate powers of each Borrower and each other Loan Party, have been duly
authorized by all necessary corporate action (including any necessary
shareholder action) on the part of each Borrower and each other Loan Party, have
received all necessary governmental approval (if any shall be required), and do
not and will not (a) violate any provision of law or any order, decree or
judgment of any court or other government agency which is binding on either
Borrower or any other Loan Party, (b) contravene or conflict with, or result in
a breach of, any provision of the Certificate or Articles of Incorporation, By-
Laws or other organizational documents of either Borrower or any other Loan
Party or of any agreement, indenture, instrument or other document which is
binding on either Borrower, any other Loan Party or any other Subsidiary or (c)
result in, or require, the creation or imposition of any Lien on any property of
either Borrower, any other Loan Party or any other Subsidiary (other than Liens
arising under the Loan Documents).
9.3 Validity and Binding Nature. Each of this Agreement and each other
---------------------------
Loan Document to which the Company is a party is the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms; each of this Agreement and each other Loan Document to which UR
Canada is a party is the legal, valid and binding obligation of UR Canada,
enforceable against UR Canada in accordance with its terms; and each Loan
Document to which any Loan Party is a party is, or upon the execution and
delivery thereof by such Loan Party will be, the legal, valid and binding
obligation of such Loan Party, enforceable against such Loan Party in accordance
with its terms.
9.4 Information. All information heretofore or contemporaneously
-----------
herewith furnished in writing by either Borrower or any Subsidiary to any Bank
for purposes of or in connection with this Agreement and the transactions
contemplated hereby is, and all written information hereafter furnished by or on
behalf of either Borrower or any Subsidiary to any Bank pursuant hereto or in
connection herewith will be, true and accurate in every material respect on the
date as of which such information is dated or certified, and none of such
information is or will be incomplete by omitting to state any material fact
necessary to make such information not misleading in light of the circumstances
under which made (it being recognized by the Agents and the Banks that any
projections and forecasts provided by either Borrower are based on good faith
estimates and assumptions believed by such Borrower to be reasonable as of the
date of the applicable projections or assumptions and that actual results during
the period or periods covered by any such projections and forecasts may differ
from projected or forecasted results).
9.5 No Material Adverse Change.
--------------------------
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<PAGE>
(a) The audited consolidated financial statements of the Company and its
Subsidiaries at December 31, 1997, copies of each of which have been delivered
to each Bank, have been prepared in accordance with generally accepted
accounting principles and present fairly the consolidated financial condition of
the Company and its Subsidiaries taken as a whole as at such date and the
results of their operations for the period then ended.
(b) Since December 31, 1997, there has been no material adverse change in
the financial condition, operations, assets, business, properties or prospects
of the Company and its Subsidiaries taken as a whole.
9.6 Litigation and Contingent Liabilities.
-------------------------------------
(a) No litigation (including derivative actions), arbitration proceeding,
labor controversy or governmental investigation or proceeding is pending or, to
the Company's knowledge, threatened against the Company or any Subsidiary which
might reasonably be expected to have a Material Adverse Effect, except as set
forth in Schedule 9.6(a). Other than any liability incident to such litigation
---------------
or proceedings, neither the Company nor any Subsidiary has any material
contingent liabilities not listed in such Schedule 9.6(a) or 9.6(b).
--------------- ------
(b) Schedule 9.6(b) sets out descriptions of all arrangements existing on
---------------
the Effective Date pursuant to which the Company or any Subsidiary may be
required to pay any Contingent Payment.
9.7 Ownership of Properties; Liens. Except as set forth on Schedule 9.7,
------------------------------ ------------
each of the Company and each Subsidiary owns good and marketable title to all of
its properties and assets, real and personal, tangible and intangible, of any
nature whatsoever (including patents, trademarks, trade names, service marks and
copyrights), free and clear of all Liens, charges and material claims (including
material infringement claims with respect to patents, trademarks, copyrights and
the like) except as permitted pursuant to Section 10.8.
------------
9.8 Subsidiaries. The Company has no Subsidiaries except those listed in
------------
Schedule 9.8.
- ------------
9.9 Pension and Welfare Plans.
-------------------------
(a) During the twelve-consecutive-month period prior to the date of the
execution and delivery of this Agreement or the making of any Loan hereunder,
(i) no steps have been taken to terminate any Pension Plan and (ii) no
contribution failure has occurred with respect to any Pension Plan sufficient to
give rise to a lien under Section 302(f) of ERISA. No condition exists or event
or transaction has occurred with respect to any Pension Plan which could result
in the incurrence by the Company of any material liability, fine or penalty. The
Company has no contingent liability with respect to any post-retirement benefit
under a Welfare Plan, other than liability for continuation coverage described
in Part 6 of Subtitle B of Title I of ERISA.
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<PAGE>
(b) All contributions (if any) have been made to any Multiemployer
Pension Plan that are required to be made by the Company or any other member of
the Controlled Group under the terms of such Multiemployer Pension Plan or of
any collective bargaining agreement or by applicable law; neither the Company
nor any member of the Controlled Group has withdrawn or partially withdrawn from
any Multiemployer Pension Plan, incurred any withdrawal liability with respect
to any Multiemployer Pension Plan, received notice of any claim or demand for
withdrawal liability or partial withdrawal liability from any Multiemployer
Pension Plan, and no condition has occurred which, if continued, might result in
a withdrawal or partial withdrawal from any Multiemployer Pension Plan; and
neither the Company nor any member of the Controlled Group has received any
notice that any Multiemployer Pension Plan is in reorganization, that increased
contributions may be required to avoid a reduction in plan benefits or the
imposition of any excise tax, that any Multiemployer Pension Plan is or has been
funded at a rate less than that required under Section 412 of the Code, that any
Multiemployer Pension Plan is or may be terminated, or that any Multiemployer
Pension Plan is or may become insolvent.
(c) All contributions required under applicable law have been made in
respect of all pension plans of UR Canada and each of its Subsidiaries and each
such pension plan is fully funded on an ongoing and termination basis.
9.10 Investment Company Act. Neither the Company nor any Subsidiary is an
----------------------
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940.
9.11 Public Utility Holding Company Act. Neither the Company nor any
----------------------------------
Subsidiary is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935.
9.12 Regulation U. The Company 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.
9.13 Taxes. Each of the Company and each Subsidiary has filed all tax
-----
returns and reports required by law to have been filed by it and has paid all
taxes and governmental charges thereby shown to be owing, except any such taxes
or charges which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books.
9.14 Solvency, etc. On the Effective Date (or, in the case of any Person
--------------
which becomes a Loan Party after the Effective Date, on the date such Person
becomes a Loan Party), and immediately prior to and after giving effect to the
issuance of each Letter of Credit and each borrowing hereunder and the use of
the proceeds thereof, (a) each of the Company's and each other Loan Party's
assets will exceed its liabilities and (b) each of the Company and each other
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Loan Party will be solvent, will be able to pay its debts as they mature, will
own property with fair saleable value greater than the amount required to pay
its debts and will have capital sufficient to carry on its business as then
constituted.
9.15 Environmental Matters. The Company conducts in the ordinary course of
---------------------
business a review of the effect of existing Environmental Laws and existing
Environmental Claims on its business, operations and properties, and as a result
thereof the Company has reasonably concluded that, except as specifically
disclosed in Schedule 9.15, such Environmental Laws and Environmental Claims
-------------
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
9.16 Year 2000 Problem. The Company and its Subsidiaries have reviewed
-----------------
the areas within their business and operations which could be adversely affected
by, and have developed or are developing a program to address on a timely basis,
the "Year 2000 Problem" (that is, the risk that computer applications used by
the Company and its Subsidiaries may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999). Based on such review and program, the Company reasonably
believes that the "Year 2000 Problem" will not have a Material Adverse Effect.
SECTION 10 COVENANTS.
Until the expiration or termination of the Commitments and thereafter until
all obligations of the Borrowers hereunder and under the other Loan Documents
are paid in full and all Letters of Credit have been terminated, the Company
agrees that, unless at any time the Required Banks shall otherwise expressly
consent in writing, it will:
10.1 Reports, Certificates and Other Information. Furnish to the U.S.
-------------------------------------------
Agent, the Canadian Agent and each Bank:
10.1.1 Audit Report. Promptly when available and in any event within 90
------------
days after the close of each Fiscal Year: (a) a copy of the annual audit report
of the Company and its Subsidiaries for such Fiscal Year, including therein
consolidated balance sheets of the Company and its Subsidiaries as of the end of
such Fiscal Year and consolidated statements of earnings and cash flow of the
Company and its Subsidiaries for such Fiscal Year certified without
qualification by Ernst & Young or other independent auditors of recognized
standing selected by the Company and reasonably acceptable to the Required
Banks, together with a written statement from such accountants to the effect
that in making the examination necessary for the signing of such annual audit
report by such accountants, they have not become aware of any Event of Default
or Unmatured Event of Default that has occurred and is continuing or, if they
have become aware of any such event, describing it in reasonable detail; (b)
consolidating balance sheets of the Company and its Subsidiaries as of the end
of such Fiscal Year and consolidating statements of earnings for the Company and
its Subsidiaries for such Fiscal Year, certified by the Chief Financial Officer
or the Vice President, Finance of the Company; and (c) commencing
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with the Fiscal Year ending December 31, 1998, a copy of an annual agreed-upon
procedures report on the equipment fleet of the Company and its Subsidiaries for
such Fiscal Year as performed by the Company's independent auditors.
10.1.2 Quarterly Reports. Promptly when available and in any event
-----------------
within 45 days after the end of each Fiscal Quarter (except the last Fiscal
Quarter) of each Fiscal Year, consolidated and consolidating balance sheets of
the Company and its Subsidiaries as of the end of such Fiscal Quarter, together
with consolidated and consolidating statements of earnings and consolidated
statements of cash flow for such Fiscal Quarter and for the period beginning
with the first day of such Fiscal Year and ending on the last day of such Fiscal
Quarter, certified by the Chief Financial Officer or the Vice President, Finance
of the Company.
10.1.3 Monthly Reports. Promptly when available and in any event within
---------------
30 days after the end of each of the first two months of each Fiscal Quarter,
consolidated balance sheets of the Company and its Subsidiaries as of the end of
such month, together with consolidated statements of earnings for such month and
for the period beginning with the first day of the Fiscal Year and ending on the
last day of such month, certified by the Chief Financial Officer or the Vice
President, Finance of the Company.
10.1.4 Compliance Certificates. Contemporaneously with the furnishing of
-----------------------
a copy of each annual audit report pursuant to Section 10.1.1 and of each set of
--------------
quarterly statements pursuant to Section 10.1.2, (a) a duly completed compliance
--------------
certificate in the form of Exhibit B, with appropriate insertions, dated the
---------
date of such annual report or such quarterly statements and signed by the Chief
Financial Officer or the Vice President, Finance of the Company, containing a
computation of each of the financial ratios and restrictions set forth in
Section 10.6 and to the effect that such officer has not become aware of any
- ------------
Event of Default or Unmatured Event of Default that has occurred and is
continuing or, if there is any such event, describing it and the steps, if any,
being taken to cure it; and (b) an updated organizational chart listing all
Subsidiaries and the locations of their businesses.
10.1.5 Reports to SEC and to Shareholders. Promptly upon the filing or
----------------------------------
sending thereof, copies of all regular, periodic or special reports of the
Company or any Subsidiary filed with the SEC (excluding exhibits thereto,
provided that the Company shall promptly deliver any such exhibit to either
Agent or any Bank upon request therefor); copies of all registration statements
of the Company or any Subsidiary filed with the SEC (other than on Form S-8);
and copies of all proxy statements or other communications made to security
holders generally concerning material developments in the business of the
Company or any Subsidiary.
10.1.6 Notice of Default, Litigation and ERISA Matters. Immediately upon
-----------------------------------------------
becoming aware of any of the following, written notice describing the same and
the steps being taken by the Company or the Subsidiary affected thereby with
respect thereto:
(a) the occurrence of an Event of Default or an Unmatured Event
of Default;
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(b) any litigation, arbitration or governmental investigation or
proceeding not previously disclosed by the Company to the Banks which has
been instituted or, to the knowledge of the Company, is threatened against
the Company or any Subsidiary or to which any of the properties of any
thereof is subject which, if adversely determined, might reasonably be
expected to have a Material Adverse Effect;
(c) the institution of any steps by any member of the Controlled
Group or any other Person to terminate any Pension Plan, or the failure of
any member of the Controlled Group to make a required contribution to any
Pension Plan (if such failure is sufficient to give rise to a lien under
Section 302(f) of ERISA) or to any Multiemployer Pension Plan, or the
taking of any action with respect to a Pension Plan which could result in
the requirement that the Company furnish a bond or other security to the
PBGC or such Pension Plan, or the occurrence of any event with respect to
any Pension Plan or Multiemployer Pension Plan which could result in the
incurrence by any member of the Controlled Group of any material liability,
fine or penalty (including any claim or demand for withdrawal liability or
partial withdrawal from any Multiemployer Pension Plan), or any material
increase in the contingent liability of the Company with respect to any
post-retirement Welfare Plan benefit, or any notice that any Multiemployer
Pension Plan is in reorganization, that increased contributions may be
required to avoid a reduction in plan benefits or the imposition of an
excise tax, that any such plan is or has been funded at a rate less than
that required under Section 412 of the Code, that any such plan is or may
be terminated, or that any such plan is or may become insolvent;
(d) any cancellation (without replacement) or material change in
any insurance maintained by the Company or any Subsidiary;
(e) any event (including any violation of any Environmental Law
or the assertion of any Environmental Claim) which might reasonably be
expected to have a Material Adverse Effect; or
(f) any setoff, claims (including, with respect to the
environmental claims) withholdings or other defenses to which any of the
collateral granted under any Collateral Document, or the Banks' rights with
respect to any such collateral, are subject.
10.1.7 Subsidiaries. Promptly upon any change in the list of its
------------
Subsidiaries, a written report of such change.
10.1.8 Management Reports. Promptly upon the request of either Agent or
------------------
any Bank, copies of all detailed financial and management reports submitted to
the Company by independent auditors in connection with each annual or interim
audit made by such auditors of the books of the Company.
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10.1.9 Projections. As soon as practicable and in any event within 60
-----------
days after the commencement of each Fiscal Year, financial projections for the
Company and its Subsidiaries for such Fiscal Year prepared in a manner
consistent with those projections delivered by the Company to the Banks prior to
the Effective Date or otherwise in a manner satisfactory to the U.S.
10.1.10 Other Information. From time to time such other information
-----------------
concerning the Company and its Subsidiaries as any Bank or either Agent may
reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each Subsidiary to
------------------------------
keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
GAAP; permit, and cause each Subsidiary to permit, any Bank or either Agent or
any representative thereof to inspect the properties and operations of the
Company and of such Subsidiary; and permit, and cause each Subsidiary to permit,
at any reasonable time and with reasonable notice (or at any time without notice
if an Event of Default exists), any Bank or either Agent or any representative
thereof to visit any or all of its offices, to discuss its financial matters
with its officers and its independent auditors (and the Company hereby
authorizes such independent auditors to discuss such financial matters with any
Bank or either Agent or any representative thereof whether or not any
representative of the Company or any Subsidiary is present), and to examine
(and, at the expense of the Company or the applicable Subsidiary, photocopy
extracts from) any of its books or other corporate records.
10.3 Insurance. Maintain, and cause each Subsidiary to maintain, with
---------
responsible insurance companies, such insurance as may be required by any law or
governmental regulation or court decree or order applicable to it and such other
insurance, to such extent and against such hazards and liabilities, as is
customarily maintained by companies similarly situated; and, upon request of
either Agent or any Bank, furnish to such Agent or such Bank a certificate
setting forth in reasonable detail the nature and extent of all insurance
maintained by the Company and its Subsidiaries.
10.4 Compliance with Laws; Payment of Taxes and Liabilities. (a) Comply,
------------------------------------------------------
and cause each Subsidiary to comply, in all material respects with all
applicable laws (including Environmental Laws), rules, regulations, decrees,
orders, judgments, licenses and permits; and (b) pay, and cause each Subsidiary
to pay, prior to delinquency, all taxes and other governmental charges against
it or any of its property, as well as claims of any kind which, if unpaid, might
become a Lien on any of its property; provided, however, that the foregoing
-------- -------
shall not require the Company or any Subsidiary to pay any such tax or charge so
long as it shall contest the validity thereof in good faith by appropriate
proceedings and shall set aside on its books adequate reserves with respect
thereto in accordance with GAAP.
10.5 Maintenance of Existence, etc. Maintain and preserve, and (subject
-----------------------------
to Section 10.11) cause each Subsidiary to maintain and preserve, (a) its
-------------
existence and good standing in the jurisdiction of its incorporation and (b) its
qualification and good standing as a foreign
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corporation in each jurisdiction where the nature of its business makes such
qualification necessary (except in those instances in which the failure to be
qualified or in good standing does not have a Material Adverse Effect).
10.6 Financial Covenants.
-------------------
10.6.1 Minimum Net Worth. Not permit its Net Worth at the end of any
-----------------
month to be less than the sum of (a) U.S.$45,000,000 plus (b) 75% of the sum of
----
Consolidated Net Income plus any extraordinary gains during the period beginning
on October 1, 1997 and ending on the last day of the most recently-ended Fiscal
Quarter (provided that, if the sum of Consolidated Net Income plus any
--------
extraordinary gains is less than zero for any Fiscal Quarter, for purposes of
this Section 10.6.1 such sum will be deemed to have been zero for such quarter)
--------------
plus (c) 100% of the net proceeds of any equity issued by the Company or any of
- ----
its Subsidiaries (on a consolidated basis) after October 1, 1997.
10.6.2 Maximum Leverage. Not permit (a) the ratio of (i) Funded Debt to
----------------
(ii) Funded Debt plus Net Worth to exceed 0.60 to 1.0 at any time; or (b) the
----
ratio of (i) Senior Debt to (ii) Funded Debt plus Net Worth to exceed at any
----
time the applicable ratio set forth below during any period set forth below:
FISCAL SENIOR DEBT TO FUNDED DEBT
--------------------------
QUARTER ENDING: PLUS NET WORTH RATIO
--------------- --------------------
Effective Date through 12/31/98 0.55 to 1.0
1/1/99 through 12/31/99 0.50 to 1.0
1/1/2000 and thereafter 0.45 to 1.0
10.6.3 Minimum Interest Coverage. Not permit the Interest Coverage Ratio
-------------------------
for any Computation Period to be less than the applicable ratio set forth below:
COMPUTATION INTEREST
PERIOD ENDING: COVERAGE RATIO
-------------- --------------
3/31/98 through 12/31/98 1.5 to 1.0
3/31/99 through 12/31/99 2.0 to 1.0
3/31/2000 and thereafter 2.25 to 1.0.
10.6.4 Funded Debt to Cash Flow Ratio. Not permit the Funded Debt to
------------------------------
Cash Flow Ratio as of the last day of any Fiscal Quarter to exceed the
applicable ratio set forth below:
FISCAL FUNDED DEBT TO
QUARTER ENDING: CASH FLOW RATIO
-------------- ---------------
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12/31/97 through 12/31/98 3.50 to 1.0
3/31/99 through 12/31/99 3.25 to 1.0
3/31/2000 and thereafter 3.00 to 1.0.
10.6.5 Senior Debt to Tangible Assets. Not permit the ratio of (i)
------------------------------
Senior Debt to (ii) Tangible Assets to exceed the applicable ratio set forth
below during any period set forth below:
SENIOR DEBT TO
PERIOD: TANGIBLE ASSETS RATIO:
------ ---------------------
Effective Date through 12/31/98 1.25 to 1.0
1/1/99 and thereafter 1.00 to 1.0.
10.7 Limitations on Debt. Not, and not permit any Subsidiary to, create,
-------------------
incur, assume or suffer to exist any Debt, except:
(a) obligations hereunder and under the other Loan Documents;
(b) unsecured Debt of the Company (excluding Contingent Payments and
Seller Subordinated Debt); provided that the aggregate principal amount of
--------
all such unsecured Debt (other than Holdbacks) shall not at any time exceed
a Dollar Equivalent amount equal to U.S.$5,000,000;
(c) Debt in respect of Capital Leases or arising in connection with the
acquisition of equipment that, in each case, either is identified in
Schedule 10.7(c) or is incurred, or assumed in connection with an asset
----------------
purchase permitted by Section 10.11, after the date hereof (it being
-------------
understood that for purposes of this Section 10.7 Debt of any Person which
------------
becomes a Subsidiary after the date hereof shall be deemed to be incurred,
and equipment of such Person shall be deemed to be acquired, on the date
such Person becomes a Subsidiary so long as such Debt is not incurred in
contemplation of such Person becoming a Subsidiary), and refinancings of
any such Debt so long as the terms applicable to such refinanced Debt are
no less favorable to the Company or the applicable Subsidiary than the
terms in effect immediately prior to such refinancing, provided that the
--------
aggregate amount of all such Debt at any time outstanding shall not exceed
a Dollar Equivalent amount equal to U.S.$30,000,000;
(d) Debt of Subsidiaries owed to the Company; provided that the aggregate
amount of all such Debt of Foreign Subsidiaries owed to the Company shall
not at any time exceed a Dollar Equivalent amount equal to U.S.$40,000,000;
(e) unsecured Debt of the Company to Subsidiaries;
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<PAGE>
(f) Subordinated Debt; provided that the aggregate principal amount of
--------
all Seller Subordinated Debt at any time outstanding shall not exceed a
Dollar Equivalent amount of U.S.$15,000,000;
(g) other Debt, not of a type described in clause (c), outstanding on the
----------
date hereof and listed in Schedule 10.7(g); and
----------------
(h) Contingent Payments, provided that the Company shall not, and shall
--------
not permit any Subsidiary to, incur any obligation to make Contingent
Payments the maximum possible amount of which exceeds a Dollar Equivalent
amount of U.S.$15,000,000 in the aggregate for all Contingent Payments at
any time outstanding.
For purposes of the foregoing, a Contingent Payment shall be deemed to be
"outstanding" from the time that the Company or any Subsidiary enters into the
agreement containing the obligation to make such Contingent Payment until such
time as either such Contingent Payment has been made in full or it has become
certain that such Contingent Payment will never have to be made.
10.8 Liens. Not, and not permit any Subsidiary to, create or permit to
-----
exist any Lien on any of its real or personal properties, assets or rights of
whatsoever nature (whether now owned or hereafter acquired), except:
(a) Liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or being contested in good
faith by appropriate proceedings and, in each case, for which it maintains
adequate reserves;
(b) Liens arising in the ordinary course of business (such as (i) Liens
of carriers, warehousemen, mechanics and materialmen and other similar
Liens imposed by law and (ii) Liens incurred in connection with worker's
compensation, unemployment compensation and other types of social security
(excluding Liens arising under ERISA) or in connection with surety bonds,
bids, performance bonds and similar obligations) for sums not overdue or
being contested in good faith by appropriate proceedings and not involving
any deposits or advances or borrowed money or the deferred purchase price
of property or services, and, in each case, for which it maintains adequate
reserves;
(c) Liens identified in Schedule 10.8;
-------------
(d) Liens securing Debt permitted by clause (c) of Section 10.7 (and
---------- ------------
attaching only to the property being leased (in the case of Capital Leases)
or the purchase price for which was or is being financed by such Debt (in
the case of other Debt));
(e) attachments, appeal bonds, judgments and other similar Liens, for
sums not exceeding a Dollar Equivalent amount of U.S.$250,000 arising in
connection with court
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proceedings, provided the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings;
(f) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any
material respect with the ordinary conduct of the business of the Company
or any Subsidiary; and
(g) Liens in favor of either Agent for the benefit of the Banks arising
under the Loan Documents.
10.9 Operating Leases. Not, and not permit any Subsidiary to, be party to
----------------
Operating Leases requiring rental payments in excess of a Dollar Equivalent
amount of U.S.$20,000,000 in the aggregate (excluding intercompany leases) in
any Fiscal Year for the Company and its Subsidiaries taken as a whole.
10.10 Restricted Payments. Not, and not permit any Subsidiary to, (a)
-------------------
declare or pay any dividends on any of its capital stock (other than stock
dividends), (b) purchase or redeem any such stock or any warrants, units,
options or other rights in respect of such stock, (c) make any other
distribution to shareholders, (d) prepay, purchase, defease or redeem any
Subordinated Debt or (e) set aside funds for any of the foregoing; provided that
--------
(i) any Subsidiary may declare and pay dividends to the Company or to any other
wholly-owned Subsidiary; and (ii) so long as (x) no Event of Default or
Unmatured Event of Default exists or would result therefrom and (y) the
aggregate amount of all purchases of stock, warrants or units since October 1,
1997 does not exceed a Dollar Equivalent amount of U.S.$12,000,000, the Company
may purchase its common stock or warrants, or units issued in respect thereof,
from time to time on terms consistent with those set forth under the heading
"Certain Agreements Relating to the Outstanding Securities" in the Company's
Private Placement Memorandum dated September 12, 1997.
10.11 Mergers, Consolidations, Amalgamations, Sales. Not, and not permit
---------------------------------------------
any Subsidiary to, be a party to any merger, consolidation or amalgamation, or
purchase or otherwise acquire all or substantially all of the assets or any
stock of any class of, or any partnership or joint venture interest in, any
other Person, or, except in the ordinary course of its business (including sales
of equipment consistent with industry practice), sell, transfer, convey or lease
all or any substantial part of its assets, or sell or assign with or without
recourse any receivables, except for (a) any such merger or consolidation,
amalgamation, sale, transfer, conveyance, lease or assignment of or by any
wholly-owned Subsidiary into the Company or into, with or to any other wholly-
owned Subsidiary; (b) any such purchase or other acquisition by the Company or
any wholly-owned Subsidiary of the assets or stock of any wholly-owned
Subsidiary; (c) any such purchase or other acquisition by the Company or any
wholly-owned Subsidiary of the assets or stock of any other Person where (1)
such assets (in the case of an asset purchase) are for use, or such Person (in
the case of a stock purchase) is engaged, solely in the equipment rental and
related businesses; (2) immediately before and after giving effect to
such purchase or acquisition,
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<PAGE>
no Event of Default or Unmatured Event of Default shall have occurred and be
continuing; and (3) either (i) the aggregate consideration to be paid by the
Company and its Subsidiaries (including any Debt assumed or issued in connection
therewith, the amount thereof to be calculated in accordance with GAAP) in
connection with such purchase or other acquisition (or any series of related
acquisitions) is less than a Dollar Equivalent amount of U.S.$20,000,000 or (ii)
(x) the Company is in pro forma compliance with all the financial ratios and
restrictions set forth in Section 10.6 and (y) unless after giving effect to
------------
such purchase or acquisition the pro forma Funded Debt to Cash Flow Ratio will
--- -----
be less than 1.25 to 1.0, the Required Banks have consented to such purchase or
acquisition; and (d) sales and dispositions of assets (including the stock of
Subsidiaries) so long as the net book value of all assets sold or otherwise
disposed of in any Fiscal Year does not exceed 5% of the net book value of the
consolidated assets of the Company and its Subsidiaries as of the last day of
the preceding Fiscal Year.
10.12 Modification of Organizational Documents. Not permit the
----------------------------------------
Certificate or Articles of Incorporation, By-Laws or other organizational
documents of the Company or any Subsidiary to be amended or modified in any way
which might reasonably be expected to materially adversely affect the interests
of the Banks.
10.13 Use of Proceeds. Use the proceeds of the Loans, and the Letters of
---------------
Credit, solely to finance the Company's working capital, for acquisitions
permitted by Section 10.11, for capital expenditures and for other general
-------------
corporate purposes; and not use or permit any proceeds of any Loan to be used,
either directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of "purchasing or carrying" any Margin Stock.
10.14 Further Assurances. Take, and cause each Subsidiary to take, such
------------------
actions as are necessary or as either Agent or the Required Banks may reasonably
request from time to time (including the execution and delivery of guaranties,
security agreements, pledge agreements, financing statements and other
documents, the filing or recording of any of the foregoing, and the delivery of
stock certificates and other collateral with respect to which perfection is
obtained by possession) to ensure that (i) the obligations of the Company
hereunder and under the other Loan Documents are secured by substantially all of
the assets (other than real property) of the Company and guaranteed by all of
the U.S. Subsidiaries (including, promptly upon the acquisition or creation
thereof, any U.S. Subsidiary acquired or created after the date hereof) by
execution of a counterpart of the U.S. Guaranty, (ii) the obligations of each
U.S. Subsidiary under the U.S. Guaranty are secured by substantially all of the
assets (other than real property) of such U.S. Subsidiary, (iii) the obligations
of UR Canada hereunder and under the other Loan Documents are secured by
substantially all of the assets (other than real property) of UR Canada and
guaranteed by all of the Canadian Subsidiaries (including, promptly upon the
acquisition or creation thereof, any Canadian Subsidiary acquired or created
after the date hereof) by execution of a Canadian Guaranty and (iv) the
obligations of each Canadian Subsidiary under its Canadian Guaranty are secured
by substantially all assets (other than real property) of such Canadian
Subsidiary. In addition, upon the occurrence of any Event of Default or
Unmatured Event of Default and the request of U.S. Banks having Percentages
aggregating 80% or more, the
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<PAGE>
Company will cause each Canadian Subsidiary to guaranty all of the obligations
of the Company hereunder and to take all actions necessary so that the
obligations of such Canadian Subsidiary under such guaranty are secured by
substantially all of the assets (other than real property) of such Canadian
Subsidiary (it being understood that, at the request of the Company at any time
thereafter when no Event of Default or Unmatured Event of Default exists, such
guaranties and collateral security shall be released).
10.15 Transactions with Affiliates. Not, and not permit any Subsidiary
----------------------------
to, enter into, or cause, suffer or permit to exist any transaction, arrangement
or contract with any of its other Affiliates (other than the Company and its
Subsidiaries) which is on terms which are less favorable than are obtainable
from any Person which is not one of its Affiliates.
10.16 Employee Benefit Plans. Maintain, and cause each Subsidiary to
----------------------
maintain, each Pension Plan and each Canadian pension plan in substantial
compliance with all applicable requirements of law and regulations.
10.17 Environmental Laws. Conduct, and cause each Subsidiary to conduct,
------------------
its operations and keep and maintain its property in compliance with all
Environmental Laws (other than Immaterial Laws).
10.18 Unconditional Purchase Obligations. Not, and not permit any
----------------------------------
Subsidiary to, enter into or be a party to any contract for the purchase of
materials, supplies or other property or services, if such contract requires
that payment be made by it regardless of whether or not delivery is ever made of
such materials, supplies or other property or services; provided that the
foregoing shall not prohibit the Company or any Subsidiary from entering into
options for the purchase of particular assets or businesses.
10.19 Inconsistent Agreements. Not, and not permit any Subsidiary to,
-----------------------
enter into any agreement containing any provision which (a) would be violated or
breached by any borrowing, or the obtaining of any Letter of Credit, by the
Company hereunder or by the performance by the Company or any Subsidiary of any
of its obligations hereunder or under any other Loan Document or (b) would
prohibit the Company or any Subsidiary from granting to the Agents, for the
benefit of the Banks, a Lien on any of its assets.
10.20 Business Activities. Not, and not permit any Subsidiary to, engage
-------------------
in any line of business other than the equipment rental business and businesses
reasonably related thereto.
10.21 Advances and Other Investments. Not, and not permit any Subsidiary
------------------------------
to, make, incur, assume or suffer to exist any Investment in any other Person,
except (without duplication) the following:
(a) equity Investments existing on the Effective Date in wholly-owned
Subsidiaries identified in Schedule 9.8;
------------
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<PAGE>
(b) equity Investments in Subsidiaries acquired after the Effective Date
in transactions permitted as acquisitions of stock or assets pursuant to
Section 10.11;
-------------
(c) in the ordinary course of business, contributions by the Company to
the capital of any of its Subsidiaries, or by any such Subsidiary to the
capital of any of its Subsidiaries;
(d) in the ordinary course of business, Investments by the Company in
any Subsidiary or by any of the Subsidiaries in the Company, by way of
intercompany loans, advances or guaranties, all to the extent permitted by
Section 10.7;
------------
(e) Suretyship Liabilities permitted by Section 10.7;
------------
(f) good faith deposits made in connection with prospective acquisitions
of stock or assets permitted by Section 10.11;
-------------
(g) loans to officers and employees not exceeding (i) a Dollar
Equivalent amount of U.S.$100,000 in the aggregate to any single individual
or (ii) a Dollar Equivalent amount of U.S.$300,000 in the aggregate for all
such individuals; and
(h) Cash Equivalent Investments;
provided, however, that (x) any Investment which when made complies with the
- -------- -------
requirements of the definition of the term "Cash Equivalent Investment" may
--------------------------
continue to be held notwithstanding that such Investment if made thereafter
would not comply with such requirements; (y) no Investment otherwise permitted
by clause (b), (c), (d), (e), (f) or (g) shall be permitted to be made if,
---------- --- --- --- --- ---
immediately before or after giving effect thereto, any Event of Default or
Unmatured Event of Default shall have occurred and be continuing; and (z) the
aggregate principal amount of Investments by the Company in Foreign Subsidiaries
pursuant to clauses (b), (c), (d), (e), and (f) plus, without duplication, the
----------- --- --- --- ---
aggregate amount of all Canadian Loans shall not at any time exceed a Dollar
Equivalent amount equal to U.S.$60,000,000.
10.22 Location of Assets. Not permit at any time more than 15% of the
------------------
consolidated assets of the Company and its Subsidiaries to be owned by Foreign
Subsidiaries.
SECTION 11 EFFECTIVENESS; CONDITIONS OF LENDING, ETC.
11.1 Effectiveness. This Agreement shall become effective, and all
-------------
outstanding loans made and letters of credit issued under the Existing Agreement
shall be deemed to have been made and issued (respectively) hereunder, on the
date (the "Effective Date") that the U.S. Agent shall have received (a) all
--------------
amounts which are then due and payable pursuant to Section 5 and (to the extent
---------
billed) Section 15.6 and (b) all of the following, each duly executed and dated
------------
the Effective Date (or such earlier date as shall be satisfactory to the U.S.
Agent), in form and substance satisfactory to the U.S. Agent, and each (except
for the Notes, of which only the
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originals shall be signed) in sufficient number of signed counterparts to
provide one for each Bank:
11.1.1 Notes. The Notes.
-----
11.1.2 Resolutions. Certified copies of resolutions of the Board of
-----------
Directors of each Borrower authorizing or ratifying the execution, delivery and
performance by such Borrower of this Agreement and the other Loan Documents to
which such Borrower is a party; and certified copies of resolutions of the Board
of Directors of each Subsidiary which is to execute and deliver any document
pursuant to Section 11.1.5, 11.1.6 or 11.1.7 authorizing or ratifying the
-------------- ------ ------
execution, delivery and performance by such Subsidiary of each Loan Document to
which such Subsidiary is a party.
11.1.3 Consents, etc. Certified copies of all documents evidencing any
--------------
necessary corporate action, consents and governmental approvals (if any)
required for the execution, delivery and performance by the Company, UR Canada
and each other Subsidiary of the documents referred to in this Section 11.
----------
11.1.4 Incumbency and Signature Certificates. A certificate of the
-------------------------------------
Secretary or an Assistant Secretary of the Company, UR Canada and each other
Subsidiary as of the Effective Date certifying the names of the officer or
officers of such entity authorized to sign the Loan Documents to which such
entity is a party, together with a sample of the true signature of each such
officer (it being understood that each Agent and each Bank may conclusively rely
on each such certificate until formally advised by a like certificate of any
changes therein).
11.1.5 Guaranties. A counterpart of the U.S. Guaranty executed by each
----------
U.S. Subsidiary as of the Effective Date which has not previously executed such
Guaranty; and a Canadian Guaranty executed by each Subsidiary of UR Canada as of
the Effective Date.
11.1.6 Security Agreements. The U.S. Security Agreement executed by the
-------------------
Company and each Subsidiary as of the Effective Date, a Canadian Security
Agreement executed by UR Canada and each Subsidiary thereof as of the Effective
Date and the Bank Act Security, together with evidence, satisfactory to the U.S.
Agent, that all filings necessary to perfect the Liens on any collateral granted
under the U.S. Security Agreement, the Canadian Security Agreements and the Bank
Act Security have been duly made and are in full force and effect.
11.1.7 Pledge Agreements. The Company Pledge Agreement and pledge
-----------------
agreements, substantially in the form of Exhibit F, issued by each Subsidiary
---------
(if any) as of the Effective Date that in turn has one or more Subsidiaries, in
each case together with all collateral and other items required to be delivered
in connection therewith.
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11.1.8 Opinions of Counsel for the Borrowers. The opinions of (a) Weil,
-------------------------------------
Gotshal & Manges LLP, special counsel to the Company, (b) Oscar D. Folger,
counsel to the Company and (c) Heenan Blaikie, counsel to UR Canada.
11.1.9 Confirmation. A Confirmation, substantially in the form of
------------
Exhibit K, executed by the Company and each applicable Subsidiary.
- ------- -
11.1.10 Other. Such other documents as either Agent or any Bank may
-----
reasonably request.
11.2 Conditions to all Credit Extensions. The obligation (a) of each
-----------------------------------
Bank to make each Loan and (b) of the Issuing Bank to issue each Letter of
Credit is subject to the following further conditions precedent that:
11.2.1 Compliance with Warranties, No Default, etc. Both before and
--------------------------------------------
after giving effect to any borrowing and the issuance of any Letter of Credit
(but, if any Event of Default of the nature referred to in Section 12.1.2 shall
--------------
have occurred with respect to any other Debt, without giving effect to the
application, directly or indirectly, of the proceeds thereof) the following
statements shall be true and correct:
(a) the representations and warranties of the Borrowers and the
Subsidiaries set forth in this Agreement (excluding Sections 9.6 and 9.8)
------------ ---
and the other Loan Documents shall be true and correct in all material
respects with the same effect as if then made (except to the extent stated
to relate to an earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of such
earlier date);
(b) except as disclosed by the Company to the Agents and the
Banks pursuant to Section 9.6,
-----------
(i) no litigation (including derivative actions),
arbitration proceeding, labor controversy or governmental
investigation or proceeding shall be pending or, to the knowledge
of the Company, threatened against the Company or any of its
Subsidiaries which might reasonably be expected to have a
Material Adverse Effect or which purports to affect the legality,
validity or enforceability of this Agreement, the Notes or any
other Loan Document; and
(ii) no development shall have occurred in any litigation
(including derivative actions), arbitration proceeding, labor
controversy or governmental investigation or proceeding disclosed
pursuant to Section 9.6 which might reasonably be expected to
-----------
have a Material Adverse Effect; and
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<PAGE>
(c) no Event of Default or Unmatured Event of Default shall have
then occurred and be continuing, and neither the Company nor any of its
Subsidiaries shall be in violation of any law or governmental regulation or
court order or decree where such violation or violations singly or in the
aggregate might reasonably be expected to have a Material Adverse Effect.
11.2.2 Confirmatory Certificate. If requested by either Agent or any
------------------------
Bank, the applicable Agent shall have received (in sufficient counterparts to
provide one to each Bank) a certificate dated the date of such requested Loan or
Letter of Credit and signed by a duly authorized representative of the Company
as to the matters set out in Section 11.2.1 (it being understood that each
--------------
request by a Borrower for the making of a Loan or the issuance of a Letter of
Credit shall be deemed to constitute a warranty by such Borrower that the
conditions precedent set forth in Section 11.2.1 will be satisfied at the time
--------------
of the making of such Loan or the issuance of such Letter of Credit), together
with such other documents as either Agent or any Bank may reasonably request in
support thereof.
11.3 Conditions to Canadian Loans. The obligation of each Canadian
----------------------------
Bank to make each Canadian Loan is subject to the further condition precedent
that no Canadian Bank has received a notice (which has not been rescinded and
which relates to a matter which has not been either cured or waived in writing
by the Required Banks) from either Agent or any Bank specifying that such Agent
or such Bank believes in good faith that one or more of the conditions precedent
to the making of such Canadian Loan has not been satisfied. If either Agent or
any Bank sends any notice described in the previous sentence to any Canadian
Bank such Agent or Bank shall concurrently send a copy thereof to the Company.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall constitute an
-----------------
Event of Default:
12.1.1 Non-Payment of the Loans, etc. Default in the payment when due of
------------------------------
the principal of any Loan; or default, and continuance thereof for five days, in
the payment when due of any interest, fee, reimbursement obligation with respect
to any Letter of Credit or other amount payable by either Borrower hereunder or
under any other Loan Document.
12.1.2 Non-Payment of Other Debt. Any default shall occur under the
-------------------------
terms applicable to any Debt of the Company or any Subsidiary (excluding
Holdbacks) in an aggregate amount (for all such Debt so affected) exceeding a
Dollar Equivalent amount of U.S.$1,000,000 and such default shall (a) consist of
the failure to pay such Debt when due (subject to any applicable grace period),
whether by acceleration or otherwise, or (b) accelerate the maturity of such
Debt or permit the holder or holders thereof, or any trustee or agent for such
holder or holders, to cause such Debt to become due and payable prior to its
expressed maturity; or any default of the type referred to in clause (a) or (b)
---------- ---
above shall occur under the terms of any Holdback owed by the Company or any
Subsidiary in an aggregate amount (for all Holdbacks so affected) exceeding a
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Dollar Equivalent amount of U.S.$6,000,000, provided that no amount payable in
--------
respect of any Holdback shall be deemed to be in default to the extent that the
obligation to pay such amount is being contested by the Company or the
applicable Subsidiary in good faith and by appropriate proceedings and
appropriate reserves have been set aside in respect of such amount.
12.1.3 Other Material Obligations. Default in the payment when due, or
--------------------------
in the performance or observance of, any material obligation of, or condition
agreed to by, the Company or any Subsidiary with respect to any material
purchase or lease of goods or services where such default, singly or in the
aggregate with other such defaults might reasonably be expected to have a
Material Adverse Effect (except only to the extent that the existence of any
such default is being contested by the Company or such Subsidiary in good faith
and by appropriate proceedings and appropriate reserves have been made in
respect of such default).
12.1.4 Bankruptcy, Insolvency, etc. The Company or any Subsidiary
----------------------------
becomes insolvent or generally fails to pay, or admits in writing its inability
or refusal to pay, debts as they become due; or the Company or any Subsidiary
applies for, consents to, or acquiesces in the appointment of a trustee,
receiver or other custodian for the Company or such Subsidiary or any property
thereof, or makes a general assignment for the benefit of creditors; or, in the
absence of such application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for the Company or any Subsidiary or for a
substantial part of the property of any thereof and is not discharged within 60
days; or any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding (except the voluntary dissolution, not under any
bankruptcy or insolvency law, of any Subsidiary other than UR Canada), is
commenced in respect of the Company or any Subsidiary, and if such case or
proceeding is not commenced by the Company or such Subsidiary, it is consented
to or acquiesced in by the Company or such Subsidiary, or remains for 60 days
undismissed; or the Company or any Subsidiary takes any corporate action to
authorize, or in furtherance of, any of the foregoing.
12.1.5 Non-Compliance with Provisions of This Agreement. (a) Failure by
------------------------------------------------
the Company to comply with or to perform any covenant set forth in Sections 10.5
-------------
through 10.13, 10.15 or 10.16; or (b) failure by the Company to comply with or
----- ----- -----
to perform any other provision of this Agreement (and not constituting an Event
of Default under any of the other provisions of this Section 12) and continuance
----------
of such failure described in this clause (b) for 30 days (or, in the case of
----------
Section 10.14, five Business Days) after notice thereof to the Company from
- -------------
either Agent, any Bank or the holder of any Note.
12.1.6 Warranties. Any warranty made or deemed made by either Borrower
----------
herein is breached or is false or misleading in any material respect, or any
schedule, certificate, financial statement, report, notice or other writing
furnished by either Borrower to either Agent or any Bank in connection herewith
is false or misleading in any material respect on the date as of which the facts
therein set forth are (or are deemed) stated or certified.
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12.1.7 Pension Plans. (i) Institution of any steps by the Company or any
-------------
other Person to terminate a Pension Plan if as a result of such termination the
Company could be required to make a contribution to such Pension Plan, or could
incur a liability or obligation to such Pension Plan, in excess of
U.S.$1,000,000; (ii) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302(f) of ERISA; or (iii)
there shall occur any withdrawal or partial withdrawal from a Multiemployer
Pension Plan and the withdrawal liability (without unaccrued interest) to
Multiemployer Pension Plans as a result of such withdrawal (including any
outstanding withdrawal liability that the Company and the Controlled Group have
incurred on the date of such withdrawal) exceeds U.S.$1,000,000.
12.1.8 Judgments. Final judgments which exceed an aggregate Dollar
---------
Equivalent amount of U.S.$1,000,000 shall be rendered against the Company or any
Subsidiary and shall not have been paid, discharged or vacated or had execution
thereof stayed pending appeal within 30 days after entry or filing of such
judgments.
12.1.9 Invalidity of Guaranties, etc. Any Guaranty shall cease to be in
------------------------------
full force and effect with respect to any applicable Subsidiary, any applicable
Subsidiary shall fail (subject to any applicable grace period) to comply with or
to perform any applicable provision of the applicable Guaranty, or any
Subsidiary (or any Person by, through or on behalf of such Subsidiary) shall
contest in any manner the validity, binding nature or enforceability of the
applicable Guaranty with respect to such Subsidiary.
12.1.10 Invalidity of Collateral Documents, etc. Any Collateral Document
----------------------------------------
shall cease to be in full force and effect with respect to the Company or any
Subsidiary, the Company or any Subsidiary shall fail (subject to any applicable
grace period) to comply with or to perform any applicable provision of any
Collateral Document to which such entity is a party, or the Company or any
Subsidiary (or any Person by, through or on behalf of the Company or such
Subsidiary) shall contest in any manner the validity, binding nature or
enforceability of any Collateral Document.
12.1.11 Change in Control. (a) Any Person or group of Persons (within
-----------------
the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, but
excluding the executive managers of the Company as of the Effective Date) shall
acquire beneficial ownership (within the meaning of Rule 13d-3 promulgated under
such Act) of 25% or more of the outstanding shares of common stock of the
Company; (b) during any 24-month period, individuals who at the beginning of
such period constituted the Company's Board of Directors (together with any new
directors whose election by the Company's Board of Directors or whose nomination
for election by the Company's shareholders was approved by a vote of at least
two-thirds of the directors who either were directors at beginning of such
period or whose election or nomination was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Company; or (c)
a period of 30 consecutive days shall have elapsed during which any two of the
individuals named in Schedule 12.1.11 shall have ceased to hold executive
----------------
offices with the Company at least equal in seniority to their present offices,
as set out in such Schedule 12.1.11,
----------------
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excluding any such individual who has been replaced by another individual or
- ---------
individuals reasonably satisfactory to the Required Banks (it being understood
that any such replacement individual shall be deemed added to Schedule 12.1.11
----------------
on the date of approval thereof by the Required Banks).
12.2 Effect of Event of Default. If any Event of Default described in
--------------------------
Section 12.1.4 shall occur, the Commitments (if they have not theretofore
- --------------
terminated) shall immediately terminate and the Notes and all other obligations
hereunder shall become immediately due and payable and the Company shall become
immediately obligated to deliver to the U.S. Agent cash collateral in an amount
equal to the outstanding face amount of all Letters of Credit, all without
presentment, demand, protest or notice of any kind; and, if any other Event of
Default shall occur and be continuing, the U.S. Agent (upon written request of
the Required Banks) shall declare the Commitments (if they have not theretofore
terminated) to be terminated and/or declare all Notes and all other obligations
hereunder to be due and payable and/or demand that the Company immediately
deliver to the U.S. Agent cash collateral in amount equal to the outstanding
face amount of all Letters of Credit, whereupon the Commitments (if they have
not theretofore terminated) shall immediately terminate and/or all Notes and all
other obligations hereunder shall become immediately due and payable and/or the
Company shall immediately become obligated to deliver to the U.S. Agent cash
collateral in an amount equal to the face amount of all Letters of Credit, all
without presentment, demand, protest or notice of any kind. The U.S. Agent
shall promptly advise the Borrowers of any such declaration, but failure to do
so shall not impair the effect of such declaration. Notwithstanding the
foregoing, the effect as an Event of Default of any event described in Section
-------
12.1.1 or Section 12.1.4 may be waived by the written concurrence of all of the
- ------ --------------
Banks, and the effect as an Event of Default of any other event described in
this Section 12 may be waived by the written concurrence of the Required Banks.
----------
Any cash collateral delivered hereunder shall be held by the U.S. Agent (without
liability for interest thereon) and applied to obligations arising in connection
with any drawing under a Letter of Credit. After the expiration or termination
of all Letters of Credit, such cash collateral shall be applied by the U.S.
Agent to any remaining obligations hereunder and any excess shall be delivered
to the Company or as a court of competent jurisdiction may elect.
SECTION 13 THE AGENTS.
13.1 Appointment and Authorization. (a) Each Bank hereby irrevocably
-----------------------------
(subject to Section 13.9) appoints, designates and authorizes each Agent to take
------------
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, neither Agent shall have any duties or
responsibilities except those expressly set forth herein, nor shall either Agent
have or be deemed to have any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties,
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obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against either Agent.
(b) The Issuing Bank shall act on behalf of the Banks with respect to
the Letters of Credit issued by it and the documents associated therewith until
such time and except for so long as the U.S. Agent may agree at the request of
the Required Banks to act for the Issuing Bank with respect thereto; provided,
--------
however, that the Issuing Bank shall have all of the benefits and immunities (i)
- -------
provided to the Agents in this Section 13 with respect to any acts taken or
----------
omissions of the Issuing Bank in connection with Letters of Credit issued by it
or proposed to be issued by it and the applications and agreements for letters
of credit pertaining to the Letters of Credit as fully as if the term "Agent",
as used in this Section 13, included the Issuing Bank with respect to such acts
----------
or omissions, and (ii) as additionally provided in this Agreement with respect
to the Issuing Bank.
(c) The Swing Line Bank shall have all of the benefits and immunities
(i) provided to the Agents in this Section 13 with respect to any acts taken or
----------
omissions suffered by the Swing Line Bank in connection with Swing Line Loans
made or proposed to be made by it as fully as if the term "Agent", as used in
this Section 13, included the Swing Line Bank with respect to such acts or
----------
omissions and (ii) as additionally provided in this Agreement with respect to
the Swing Line Bank.
(d) The Banks appoint the Canadian Agent as the holder of an irrevocable
power of attorney (within the meaning of the Civil Code of Quebec) for the
purposes of holding security on the properties and assets of the Company and its
Subsidiaries pursuant to the laws of Quebec for the due payment and performance
of their respective obligations under the Loan Documents. The Canadian Agent
agrees to act in such capacity. Each Bank agrees that, notwithstanding the
provisions of Section 32 of the Special Corporate Powers Act (Quebec), the
Canadian Agent may, as the person holding the power of attorney for the Banks,
acquire title to indebtedness secured by a hypothec in its favour related to the
Loan Documents.
13.2 Delegation of Duties. Each Agent may execute any of its duties
--------------------
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Neither Agent shall be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
13.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
------------------
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Company, UR Canada or any
other Subsidiary or Affiliate of the Company, or any officer thereof, contained
in this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or
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<PAGE>
provided for in, or received by either Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Company, UR Canada or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No Agent-
Related Person shall be under any obligation to any Bank to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of the Company, UR Canada or any of the
Company's other Subsidiaries or Affiliates.
13.4 Reliance by Agents. Each Agent shall be entitled to rely, and shall
------------------
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to either
Borrower), independent accountants and other experts selected by such Agent.
Each Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless it shall first receive
such advice or concurrence of the Required Banks (or, if required, all Banks) as
it deems appropriate and, if it so requests, confirmation from the Banks of
their obligation to indemnify such Agent against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. Each Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Required Banks (or, if required, all
Banks) and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Banks.
13.5 Notice of Default. Neither Agent shall be deemed to have knowledge
-----------------
or notice of the occurrence of any Event of Default or Unmatured Event of
Default except with respect to defaults in the payment of principal, interest
and fees required to be paid to such Agent for the account of the Banks, unless
such Agent shall have received written notice from a Bank or a Borrower
referring to this Agreement, describing such Event of Default or Unmatured Event
of Default and stating that such notice is a "notice of default". If either
Agent receives such a notice, such Agent will promptly notify the Banks of its
receipt thereof. Each Agent shall take such action with respect to such Event
of Default or Unmatured Event of Default as may be requested by the Required
Banks (or, if required, all Banks) in accordance with Section 12; provided,
---------- --------
however, that unless and until such Agent has received any such request, such
- -------
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Event of Default or Unmatured Event of
Default as it shall deem advisable or in the best interest of the Banks.
13.6 Credit Decision. Each Bank acknowledges that none of the Agent-
---------------
Related Persons has made any representation or warranty to it, and that no act
by either Agent hereafter taken, including any review of the affairs of either
Borrower or any Subsidiary, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Bank. Each Bank
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<PAGE>
represents to each Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of either Borrower or any Subsidiary, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Borrowers
hereunder. Each Bank also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrowers.
Except for notices, reports and other documents expressly herein required to be
furnished to the Banks by an Agent, neither Agent shall have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial or other
condition or creditworthiness of either Borrower which may come into the
possession of any of the Agent-Related Persons.
13.7 Indemnification. Whether or not the transactions contemplated
---------------
hereby are consummated, the Banks shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Borrowers and
without limiting the obligation of the Borrowers to do so), pro rata, from and
against any and all Indemnified Liabilities; provided, however, that no Bank
-------- -------
shall be liable for any payment to the Agent-Related Person of any portion of
the Indemnified Liabilities resulting solely from such Person's gross negligence
or willful misconduct. Without limitation of the foregoing (but subject to the
proviso to the foregoing sentence), each Bank shall reimburse each Agent upon
demand for its ratable share of any costs or out-of-pocket expenses (including
reasonable fees of attorneys for such Agent (including the allocable costs of
internal legal services and all disbursements of internal counsel)) incurred by
such Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the Agent
is not reimbursed for such expenses by or on behalf of the Borrowers. The
undertaking in this Section shall survive repayment of the Loans, cancellation
of the Notes, any foreclosure under, or any modification, release or discharge
of, any or all of the Collateral Documents, any termination of this Agreement
and the resignation or replacement of either Agent.
For the purposes of this Section 13.7, "Indemnified Liabilities" shall
------------ -----------------------
mean: any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements (including
reasonable fees of attorneys for either Agent (including the allocable costs of
internal legal services and all disbursements of internal counsel)) of any kind
or nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of either
Agent or the replacement of any Bank) be imposed on, incurred by or asserted
against any Agent-Related Person in any way
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relating to or arising out of this Agreement or any document contemplated by or
referred to herein, or the transactions contemplated hereby, or any action taken
or omitted by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding (including
(a) any case, action or proceeding before any court or other governmental
authority relating to bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up or relief of debtors, or (b) any general
assignment for the benefit of creditors, composition, marshalling of assets for
creditors, or other, similar arrangement in respect of its creditors generally
or any substantial portion of its creditors; undertaken under U.S. Federal,
state or foreign law, including the Bankruptcy Code, and including any appellate
proceeding) related to or arising out of this Agreement or the Commitments or
the use of the proceeds thereof, whether or not any Agent-Related Person, any
Bank or any of their respective officers, directors, employees, counsel, agents
or attorneys-in-fact is a party thereto.
13.8 Agent in Individual Capacity. BofA and its Affiliates may make
----------------------------
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the U.S. Agent, the Issuing
Bank and the Swing Line Bank and BAC were not the Canadian Agent, and without
notice to or consent of the Banks. The Banks acknowledge that, pursuant to such
activities, BofA or its Affiliates may receive information regarding the Company
or its Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company or such Affiliate) and acknowledge that
BofA and its Affiliates shall be under no obligation to provide such information
to them. With respect to their respective Loans, BofA and its Affiliates shall
have the same rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not an Agent, the Issuing Bank or the Swing
Line Bank, and the terms "Bank" and "Canadian Bank" include BofA and its
Affiliates, to the extent applicable, in their individual capacities.
13.9 Successor Agent; Assignment of Agency. Either Agent may, and at the
-------------------------------------
request of the Required Banks shall, resign as Agent upon 30 days' notice to the
Banks. If either Agent resigns under this Agreement, the Required Banks shall,
with (so long as no Event of Default exists) the consent of the Company (which
shall not be unreasonably withheld or delayed), appoint from among the Banks a
successor U.S. Agent or Canadian Agent, as applicable, for the Banks. If no
successor agent is appointed prior to the effective date of the resignation of
the applicable Agent, such Agent may appoint, after consulting with the Banks
and the Company, a successor agent from among the Banks. Upon the acceptance of
its appointment as successor agent hereunder, such successor agent shall succeed
to all the rights, powers and duties of the retiring Agent and the term "U.S.
Agent" or "Canadian Agent", as applicable, shall mean such successor agent, and
the retiring Agent's appointment, powers and duties as an Agent shall be
terminated. After any retiring Agent's resignation hereunder as an Agent, the
provisions of this Section 13 and Sections 15.6 and 15.13 shall inure to its
---------- ------------- -----
benefit as to any actions taken or omitted to be taken by it while it was an
Agent under this Agreement. If no successor agent has
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accepted appointment as the applicable Agent by the date which is 30 days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Banks (or, in
the case of the Canadian Agent, the Canadian Banks) shall perform all of the
duties of such Agent hereunder until such time, if any, as the Required Banks
appoint a successor agent as provided for above. Notwithstanding the foregoing,
however, BofA may not be removed as the U.S. Agent at the request of the
Required Banks unless BofA or any Affiliate of BofA (including BAC) shall also
simultaneously be replaced as a "Canadian Bank," as the "Issuing Bank" and as
the "Swing Line Bank" hereunder pursuant to documentation in form and substance
reasonably satisfactory to BofA and, if applicable, such Affiliate.
13.10 Withholding Tax.
---------------
(a) If any U.S. Bank is a "foreign corporation, partnership or
trust" within the meaning of the Code and such U.S. Bank claims exemption
from, or a reduction of, U.S. withholding tax under Section 1441 or 1442 of
the Code, such U.S. Bank agrees to deliver to the U.S. Agent:
(i) if such U.S. Bank claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty,
properly completed Internal Revenue Service ("IRS") Forms 1001 and W-8
---
before the payment of any interest in the first calendar year and
before the payment of any interest in each third succeeding calendar
year during which interest may be paid under this Agreement;
(ii) if such U.S. Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
U.S. Bank, two properly completed and executed copies of IRS Form 4224
before the payment of any interest is due in the first taxable year of
such U.S. Bank and in each succeeding taxable year of such U.S. Bank
during which interest may be paid under this Agreement, and IRS Form
W-9; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Any such U.S. Bank agrees to promptly notify the U.S. Agent of any change
in circumstances which would modify or render invalid any claimed exemption
or reduction.
(b) If any U.S. Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001
and such Bank sells, assigns, grants a participation in, or otherwise
transfers all or part of the obligations of the Company to such U.S. Bank,
such U.S. Bank agrees to
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notify the U.S. Agent of the percentage amount in which it is no longer the
beneficial owner of such obligations of the Company hereunder. To the
extent of such percentage amount, the U.S. Agent will treat such Bank's IRS
Form 1001 as no longer valid.
(c) If any U.S. Bank claiming exemption from United States withholding
tax by filing IRS Form 4224 with the U.S. Agent grants a participation in
all or part of the obligations of the Company to such U.S. Bank hereunder,
such U.S. Bank agrees to undertake sole responsibility for complying with
the withholding tax requirements imposed by Sections 1441 and 1442 of the
Code.
(d) If any U.S. Bank is entitled to a reduction in the applicable
withholding tax, the U.S. Agent may withhold from any interest payment to
such U.S. Bank an amount equivalent to the applicable withholding tax after
taking into account such reduction. If the forms or other documentation
required by subsection (a) of this Section are not delivered to the U.S.
--------------
Agent, then the U.S. Agent may withhold from any interest payment to such
U.S. Bank not providing such forms or other documentation an amount
equivalent to the applicable withholding tax.
(e) If the IRS or Revenue Canada or any other governmental authority
of the United States, Canada or any other jurisdiction asserts a claim that
an Agent did not properly withhold tax from amounts paid to or for the
account of any Bank (because such Bank failed to notify the applicable
Agent of a change in circumstances which rendered an exemption from, or
reduction of, withholding tax ineffective), such Bank shall indemnify such
Agent fully for all amounts paid, directly or indirectly, by such Agent as
tax or otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on the amounts payable to such Agent under this
Section, together with all costs and expenses (including reasonable fees of
attorneys for such Agent (including the allocable costs of internal legal
services and all disbursements of internal counsel)). The obligations of
the Banks under this subsection shall survive the repayment of the Loans,
cancellation of the Notes, any termination of this Agreement and the
resignation or replacement of either Agent.
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13.11 Collateral Matters. The Banks irrevocably authorize each Agent, at
------------------
its option and in its discretion, to release any Lien granted to or held by such
Agent under any Collateral Document (i) upon termination of the Commitments and
payment in full of all Loans and all other obligations of the Borrowers
hereunder and the expiration or termination of all Letters of Credit; (ii)
covering property sold or to be sold or disposed of as part of or in connection
with any disposition permitted hereunder; or (iii) subject to Section 15.1, if
------------
approved, authorized or ratified in writing by the Required Banks. Upon request
by either Agent at any time, the Banks will confirm in writing such Agent's
authority to release particular types or items of collateral pursuant to this
Section 13.11.
- -------------
13.12 Co-Agents. None of the Banks identified on the facing page of this
---------
Agreement as a "Co-Agent" shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Banks as such. Without limiting the foregoing, none of the Banks so identified
as a "Co-Agent" shall have or be deemed to have any fiduciary relationship with
any Bank. Each Bank acknowledges that it has not relied, and will not rely, on
any of the Banks so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder.
SECTION 14 GUARANTY BY THE COMPANY
14.1 Guaranty. The Company hereby absolutely, unconditionally and
--------
irrevocably guarantees the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the principal of and interest on
each Note issued by UR Canada, and the full and punctual payment of all other
amounts payable by UR Canada under this Agreement. Upon failure by UR Canada to
pay punctually any such amount, the Company shall forthwith on demand pay the
amount not so paid at the place, in the currency and in the manner specified in
this Agreement. In addition (and without limiting the foregoing), upon any Loan
to UR Canada being declared or otherwise becoming immediately due and payable
pursuant to Section 12.2, the Company shall forthwith on demand pay all amounts
------------
payable in respect of such Loan at the place, in the currency and in the manner
specified in this Agreement.
14.2 Guaranty Unconditional. The obligations of the Company under this
----------------------
Section 14 shall be absolute, unconditional and irrevocable and, without
- ----------
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of UR Canada under this Agreement or
any Note, by operation of law or otherwise;
(b) any modification or amendment of or supplement to this
Agreement or any Note;
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(c) any release, impairment, non-perfection or invalidity of any other
guaranty or of any direct or indirect security for any obligation of UR
Canada under this Agreement or any Note;
(d) any change in the corporate existence, structure or ownership of
UR Canada or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting UR Canada or UR Canada's assets or any resulting
release or discharge of any obligation of UR Canada contained in this
Agreement or any Note;
(e) the existence of any claim, set-off or other right which the
Company may have at any time against UR Canada, either Agent, any Bank or
any other Person, whether in connection herewith or any unrelated
transaction, provided that nothing herein shall prevent the assertion of
--------
any such claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against UR
Canada for any reason of this Agreement or any Note, or any provision of
applicable law or regulation purporting to prohibit the payment by UR
Canada of the principal of or interest on any Note or any other amount
payable by UR Canada under this Agreement; or
(g) any other act or omission to act or delay of any kind by UR
Canada, either Agent, any Bank or any other Person or any other
circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of the Company's
obligations as guarantor hereunder.
14.3 Discharge only upon Payment in Full; Reinstatement in Certain
-------------------------------------------------------------
Circumstances. The Company's obligations as guarantor hereunder shall remain in
- -------------
full force and effect until the Commitments shall have terminated and all
obligations of UR Canada under this Agreement and each Note shall have been paid
in full. If at any time any payment of principal, interest or any other amount
payable by UR Canada under this Agreement or any Note is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or reorganization
of UR Canada or otherwise, the Company's obligations hereunder with respect to
such payment shall be reinstated as though such payment had been due but not
made at such time.
14.4 Waiver by the Company. The Company irrevocably waives acceptance
---------------------
hereof, presentment, demand, protest and any notice not provided for herein, as
well as any requirement that at any time any action be taken by any Person
against UR Canada or any other Person.
14.5 Subrogation. Notwithstanding any payment made by or for the account
-----------
of UR Canada pursuant to this Section 14, the Company shall not be subrogated to
----------
any right of either Agent or any Bank until such time as the Agents and the
Banks shall have received final payment in cash of the full amount of all
obligations of UR Canada hereunder.
-68-
<PAGE>
14.6 Stay of Acceleration. If acceleration of the time for payment of
--------------------
any amount payable by UR Canada under this Agreement or any Note is stayed upon
the insolvency, bankruptcy or reorganization of UR Canada, all such amounts
otherwise subject to acceleration under the terms of this Agreement shall
nonetheless be payable by the Company hereunder forthwith on demand by the U.S.
Agent made at the request of the Required Banks.
SECTION 15 GENERAL.
15.1 Waiver; Amendments. No delay on the part of either Agent, any Bank
------------------
or any other holder of a Note 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 any 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 or the Notes shall in any event be effective unless the same shall be
in writing and signed and delivered by Banks having an aggregate Percentage of
not less than the aggregate Percentage expressly designated herein with respect
thereto or, in the absence of such designation as to any provision of this
Agreement or the Notes, by the Required Banks, and then any such amendment,
modification, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No amendment, modification,
waiver or consent shall change the Percentage or the Canadian Percentage of any
Bank without the consent of such Bank. No amendment, modification, waiver or
consent shall (i) extend or increase the amount of the Commitments, (ii) extend
the date for payment of any principal of or interest on the Loans or any fees
payable hereunder, (iii) reduce the principal amount of any Loan, the rate of
interest thereon or any fees payable hereunder, (iv) release any Guaranty (other
than with respect to a Person which ceases to be a Subsidiary as a result of a
transaction permitted hereunder), any obligation of the Company under Section 14
----------
or all or substantially all of the collateral granted under the Collateral
Documents or (v) reduce the aggregate Percentage required to effect an
amendment, modification, waiver or consent without, in each case, the consent of
all Banks. No provision hereof affecting Canadian Banks in their capacity as
such shall be amended, modified or waived without the written consent of
Canadian Banks having Canadian Percentages aggregating 66 - 2/3% or more. No
provision of Section 13 or other provision of this Agreement affecting either
----------
Agent in its capacity as such shall be amended, modified or waived without the
written consent of such Agent. No provision of this Agreement affecting the
Issuing Bank in its capacity as such shall be amended, modified or waived
without the written consent of the Issuing Bank. No provision of this Agreement
affecting the Swing Line Bank in its capacity as such shall be amended, modified
or waived without the written consent of the Swing Line Bank.
15.2 Confirmations. Each Borrower and each holder of a Note agree from
-------------
time to time, upon written request received by it from the other, to confirm to
the other in writing (with a copy of each such confirmation to the applicable
Agent) the aggregate unpaid principal amount of the Loans then outstanding under
such Note.
-69-
<PAGE>
15.3 Notices. Except as otherwise provided in Sections 2.2 and 2.3, all
------- ------------ ---
notices hereunder shall be in writing (including facsimile transmission) and
shall be sent to the applicable party at its address shown on Schedule 15.3 or
-------------
at such other address as such party may, by written notice received by the other
parties, have designated as its address for such purpose. Notices sent by
facsimile transmission shall be deemed to have been given when sent; notices
sent by mail shall be deemed to have been given three Business Days after the
date when sent by registered or certified mail, postage prepaid; and notices
sent by hand delivery or overnight courier service shall be deemed to have been
given when received. For purposes of Sections 2.2, 2.3 and 2.5, each Agent and
------------ --- ---
the Swing Line Bank shall be entitled to rely on telephonic instructions from
any person that such Agent or the Swing Line Bank in good faith believes is an
authorized officer or employee of the applicable Borrower, and such Borrower
shall hold each Agent, the Swing Line Bank and each other Bank harmless from any
loss, cost or expense resulting from any such reliance.
15.4 Computations. Where the character or amount of any asset or
------------
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with GAAP, consistently applied; provided that if the Company
--------
notifies the U.S. Agent that the Company wishes to amend any covenant in Section
-------
10 to eliminate or to take into account the effect of any change in GAAP on the
- --
operation of such covenant (or if the U.S. Agent notifies the Company that the
Required Banks wish to amend Section 10 for such purpose), then the Company's
----------
compliance with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either
such notice is withdrawn or such covenant is amended in a manner satisfactory to
the Company and the Required Banks.
15.5 Regulation U. Each Bank represents that it in good faith is not
------------
relying, either directly or indirectly, upon any Margin Stock as collateral
security for the extension or maintenance by it of any credit provided for in
this Agreement.
15.6 Costs, Expenses and Taxes. The Company agrees to pay on demand all
-------------------------
reasonable out-of-pocket costs and expenses of the Agents (including the
reasonable fees and charges of counsel for the Agents and of local counsel, if
any, who may be retained by said counsel) in connection with the preparation,
execution, delivery and administration of this Agreement, the other Loan
Documents and all other documents provided for herein or delivered or to be
delivered hereunder or in connection herewith (including any amendments,
supplements or waivers to any Loan Documents), and all reasonable out-of-pocket
costs and expenses (including reasonable attorneys' fees, court costs and other
legal expenses and allocated costs of staff counsel) incurred by each Agent and
each Bank after an Event of Default in connection with the enforcement of this
Agreement, the other Loan Documents or any such other documents. In addition,
the Company agrees to pay, and to save the Agents and the Banks harmless from
all liability for, (a) any stamp or other taxes (excluding income taxes and
franchise taxes based on
-70-
<PAGE>
net income) which may be payable in connection with the execution and delivery
of this Agreement, the borrowings hereunder, the issuance of the Notes or the
execution and delivery of any other Loan Document or any other document provided
for herein or delivered or to be delivered hereunder or in connection herewith
and (b) any fees of the Company's auditors in connection with any reasonable
exercise by the Agents and the Banks of their rights pursuant to Section 10.2.
------------
All obligations provided for in this Section 15.6 shall survive repayment of the
------------
Loans, cancellation of the Notes and any termination of this Agreement.
15.7 Judgment. If, for the purposes of obtaining judgment in any court,
--------
it is necessary to convert a sum due hereunder or under any other Loan Document
in one currency into another currency, the rate of exchange used shall be that
at which in accordance with normal banking procedures the U.S. Agent could
purchase the first currency with such other currency on the Business Day
preceding that on which final judgment is given. The obligation of each
Borrower in respect of any such sum due from it to either Agent or any Bank
hereunder or under any other Loan Document shall, notwithstanding any judgment
in a currency (the "Judgment Currency") other than that in which such sum is
-----------------
denominated in accordance with the applicable provisions of this Agreement (the
"Agreement Currency"), be discharged only to the extent that on the Business Day
------------------
following receipt by such Agent or such Bank of any sum adjudged to be so due in
the Judgment Currency, such Agent or such Bank may in accordance with normal
banking procedures purchase the Agreement Currency with the Judgment Currency.
If the amount of the Agreement Currency so purchased is less than the sum
originally due to such Agent or such Bank in the Agreement Currency, the
applicable Borrower agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify such Agent or such Bank against such loss. If the
amount of the Agreement Currency so purchased is greater than the sum originally
due to such Agent or such Bank in such currency, such Agent or such Bank agrees
to return the amount of any excess to the applicable Borrower (or to any other
Person who may be entitled thereto under applicable law).
15.8 Captions. Section captions used in this Agreement are for
--------
convenience only and shall not affect the construction of this Agreement.
15.9 Assignments; Participations.
---------------------------
15.9.1 Assignments. Any Bank may, with the prior written consents of the
-----------
Company and the U.S. Agent (which consents shall not be unreasonably delayed or
withheld), at any time assign and delegate to one or more commercial banks or
other Persons (any Person to whom such an assignment and delegation is to be
made being herein called an "Assignee") all or any fraction of such Bank's Loans
--------
and Commitment (which assignment and delegation shall be of a constant, and not
a varying, percentage of all the assigning Bank's Loans and Commitment) in a
minimum aggregate amount equal to the lesser of (i) the amount of the assigning
Bank's remaining Commitment and (ii) a Dollar Equivalent amount of
U.S.$5,000,000; provided, however, that (a) no assignment and delegation may be
-------- -------
made to any Person if, at the time of such assignment and delegation, either
Borrower would be obligated to pay any greater amount under Section 7.6 or
-----------
-71-
<PAGE>
Section 8 to the Assignee than such Borrower is then obligated to pay to the
- ---------
assigning Bank under such Sections (and if any assignment is made in violation
of the foregoing, the applicable Borrower will not be required to pay the
incremental amounts); (b) unless the Borrowers and the Agents otherwise consent,
(i) no Canadian Bank may make an assignment and delegation unless such Bank (if
it is also a U.S. Bank) or the affiliate of such Bank which designated such Bank
as a Canadian Bank concurrently assigns to the same Assignee (or to an affiliate
of the applicable Assignee which is or will be a U.S. Bank) a corresponding
portion of its U.S. Loans and its obligation to make U.S. Loans and (ii) no U.S.
Bank may make an assignment and delegation unless such Bank (if it is also a
Canadian Bank) or the affiliate of such Bank which has been designated as
Canadian Bank concurrently assigns to the same Assignee (or to an affiliate of
the applicable Assignee which is or will be a Canadian Bank) a corresponding
portion of its Canadian Loans and its obligation to make Canadian Loans; and (c)
the Borrowers and the Agents shall be entitled to continue to deal solely and
directly with such Bank in connection with the interests so assigned and
delegated to an Assignee until the date when all of the following conditions
shall have been met:
(x) five Business Days (or such lesser period of time as the U.S.
Agent and the assigning Bank shall agree) shall have passed after written
notice of such assignment and delegation, together with payment
instructions, addresses and related information with respect to such
Assignee, shall have been given to the Company and the U.S. Agent by such
assigning Bank and the Assignee,
(y) the assigning Bank and the Assignee shall have executed and
delivered to the Company and the U.S. Agent an assignment agreement
substantially in the form of Exhibit H (an "Assignment Agreement"),
--------- --------------------
together with any documents required to be delivered thereunder, which
Assignment Agreement shall have been accepted by the U.S. Agent, and
(z) the assigning Bank or the Assignee shall have paid the U.S. Agent
a processing fee of U.S.$3,500.
From and after the date on which the conditions described above have been met,
(x) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a U.S. Bank and/or a Canadian Bank, as applicable,
hereunder, and (y) the assigning Bank, to the extent that rights and obligations
hereunder have been assigned and delegated by it pursuant to such Assignment
Agreement, shall be released from its obligations hereunder. Within five
Business Days after the effectiveness of any assignment and delegation, each
applicable Borrower shall execute and deliver to the U.S. Agent (for delivery to
the Assignee and the Assignor, as applicable) a new Note in such Assignee's
Percentage of the Aggregate Commitment and/or such Assignee's Canadian
Percentage of the Canadian Commitment, as applicable, and, if the assigning Bank
has retained a Commitment hereunder, a replacement Note in such assigning Bank's
new Percentage
-72-
<PAGE>
of the Aggregate Commitment and/or Canadian Percentage of the Aggregate Canadian
Commitment, as applicable. Each such Note shall be dated the effective date of
such assignment. The assigning Bank shall mark each predecessor Note "exchanged"
and deliver each such Note to the Company. Any attempted assignment and
delegation not made in accordance with this Section 15.9.1 shall be null and
--------------
void.
Notwithstanding the foregoing provisions of this Section 15.9.1 or any
--------------
other provision of this Agreement, any Bank may at any time assign all or any
portion of its Loans and its Note to a Federal Reserve Bank (but no such
assignment shall release any Bank from any of its obligations hereunder).
15.9.2 Participations. Any Bank may at any time sell to one or more
--------------
commercial banks or other Persons participating interests in any Loan owing to
such Bank, any Note held by such Bank, the commitments of such Bank hereunder,
the direct or participation interest of such Bank in any Letter of Credit or any
other interest of such Bank hereunder (any Person purchasing any such
participating interest being herein called a "Participant"). In the event of a
-----------
sale by a Bank of a participating interest to a Participant, (x) such Bank shall
remain the holder of each applicable Note for all purposes of this Agreement,
(y) the Borrowers and the Agents shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations hereunder and
(z) all amounts payable by the Borrowers shall be determined as if such Bank had
not sold such participation and shall be paid directly to such Bank. No
Participant shall have any direct or indirect voting rights hereunder except
with respect to any of the events described in the fourth sentence of Section
-------
15.1. Each Bank agrees to incorporate the requirements of the preceding
- ----
sentence into each participation agreement which such Bank enters into with any
Participant. The Borrowers agree that if amounts outstanding under this
Agreement and the Notes are due and payable (as a result of acceleration or
otherwise), each Participant shall be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement, any
Note and with respect to any Letter of Credit to the same extent as if the
amount of its participating interest were owing directly to it as a Bank under
this Agreement or such Note; provided that such right of setoff shall be subject
--------
to the obligation of each Participant to share with the Banks, and the Banks
agree to share with each Participant, as provided in Section 7.5. The Borrowers
-----------
also agree that each Participant shall be entitled to the benefits of Section
-------
7.6 and Section 8 as if it were a Bank (provided that no Participant shall
- --- ---------
receive any greater compensation pursuant to Section 7.6 or Section 8 than would
----------- ---------
have been paid to the participating Bank if no participation had been sold).
15.10 Governing Law. This Agreement and each Note shall be a contract
-------------
made under and governed by the internal laws of the State of Illinois. 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 or the remaining provisions of this
Agreement. All obligations of the Borrowers and rights of the Agents, the Banks
and any other holder of a Note
-73-
<PAGE>
expressed herein or in any other Loan Document shall be in addition to and not
in limitation of those provided by applicable law.
15.11 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.
15.12 Successors and Assigns. This Agreement shall be binding upon the
----------------------
Borrowers, the Banks and the Agents and their respective successors and assigns,
and shall inure to the benefit of the Borrowers, the Banks and the Agents and
the successors and assigns of the Banks and the Agents. Neither Borrower may
assign its rights or obligations hereunder without the prior written consent of
all Banks.
15.13 Indemnification by the Company.
------------------------------
(a) In consideration of the execution and delivery of this Agreement by
the Agents and the Banks and the agreement to extend the Commitments provided
hereunder, the Company hereby agrees to indemnify and exonerate each Agent, each
Bank and each of the officers, directors, employees, Affiliates and agents of
each Agent and each Bank (each a "Bank Party") against, and hold each Bank Party
----------
free and harmless from, any and all actions, causes of action, suits, losses,
liabilities, damages and expenses, including reasonable attorneys' fees and
charges and allocated costs of staff counsel (collectively, for purposes of this
Section 15.13, called the "Indemnified Liabilities"), incurred by the Bank
- ------------- -----------------------
Parties or any of them as a result of, or arising out of, or relating to (i) any
tender offer, merger, amalgamation purchase of stock, purchase of assets or
other similar transaction financed or proposed to be financed in whole or in
part, directly or indirectly, with the proceeds of any of the Loans, (ii) the
use, handling, release, emission, discharge, transportation, storage, treatment
or disposal of any hazardous substance at any property owned or leased by the
Company or any Subsidiary, (iii) any violation of any Environmental Laws with
respect to conditions at any property owned or leased by the Company or any
Subsidiary or the operations conducted thereon, (iv) the investigation, cleanup
or remediation of offsite locations at which the Company or any Subsidiary or
their respective predecessors are alleged to have directly or indirectly
disposed of hazardous substances or (v) the execution, delivery, performance or
enforcement of this Agreement or any other Loan Document by any of the Bank
Parties, except for any such Indemnified Liabilities arising on account of any
such Bank Party's gross negligence or willful misconduct. If and to the extent
that the foregoing undertaking may be unenforceable for any reason, the Company
hereby agrees to make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law. Nothing set forth above shall be construed to relieve any Bank Party from
any obligation it may have under this Agreement.
-74-
<PAGE>
(b) All obligations provided for in this Section 15.13 shall survive
-------------
repayment of the Loans, cancellation of the Notes, any foreclosure under, or
any modification, release or discharge of any or all of the Collateral Documents
and any termination of this Agreement.
15.14 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED
-------------------------------------------
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
-------- -------
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE U.S. AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. EACH BORROWER FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF ILLINOIS. EACH BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER 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 EACH
BORROWER HAS 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
ITSELF OR ITS PROPERTY, SUCH BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
15.15 WAIVER OF JURY TRIAL. EACH BORROWER, EACH AGENT AND EACH BANK
--------------------
HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
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<PAGE>
15.16 Authorization of Execution of Confirmation by U.S. Agent. Each
--------------------------------------------------------
Bank hereby authorizes the U.S. Agent to execute a Confirmation substantially in
the form of Exhibit K hereto.
----------
-76-
<PAGE>
Delivered at Chicago, Illinois, as of the day and year first above written.
UNITED RENTALS, INC.
By_____________________________________
Chief Financial Officer
UNITED RENTALS OF CANADA, INC.
By_____________________________________
Title__________________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as U.S. Agent
By_____________________________________
Title__________________________________
BANK OF AMERICA NATIONAL TRUST AND SAVING
ASSOCIATION, as a U.S. Bank, as Issuing Bank
and as Swing Line Bank
By_____________________________________
Title__________________________________
THE BANK OF NEW YORK, as a U.S. Bank
By_____________________________________
S-1
<PAGE>
Title__________________________________
CREDIT LYONNAIS NEW YORK BRANCH, as a U.S.
Bank
By_____________________________________
Title__________________________________
DEUTSCHE BANK AG, New York Branch and/or
Cayman Islands Branch, as a U.S. Bank
By_____________________________________
Title__________________________________
By_____________________________________
Title__________________________________
FIRST NATIONAL BANK OF MARYLAND, as a U.S.
Bank
By_____________________________________
Title__________________________________
SUMMIT BANK, as a U.S. Bank
By_____________________________________
Title__________________________________
NATIONAL CITY BANK, as a U.S. Bank
By_____________________________________
Title__________________________________
S-2
<PAGE>
BANKBOSTON, N.A., as a U.S. Bank
By_____________________________________
Title__________________________________
COMERICA BANK, as a U.S. Bank
By_____________________________________
Title__________________________________
FLEET BANK, N.A., as a U.S. Bank
By_____________________________________
Title__________________________________
HARRIS TRUST AND SAVINGS BANK, as a U.S.
Bank
By_____________________________________
Title__________________________________
LASALLE NATIONAL BANK, as a U.S. Bank
By_____________________________________
Title__________________________________
THE BANK OF NOVA SCOTIA, as a U.S. Bank
By_____________________________________
Title__________________________________
S-3
<PAGE>
UNION BANK OF CALIFORNIA, N.A., as a
U.S. Bank
By_____________________________________
Title__________________________________
THE CHASE MANHATTAN BANK, as a U.S. Bank
By_____________________________________
Title__________________________________
BANK OF AMERICA CANADA, as Canadian Agent
By_____________________________________
Title__________________________________
BANK OF AMERICA CANADA, as a Canadian Bank
By_____________________________________
Title__________________________________
CREDIT LYONNAIS CANADA, as a Canadian Bank
By_____________________________________
Title__________________________________
THE BANK OF NOVA SCOTIA, as a Canadian Bank
By_____________________________________
Title__________________________________
S-4
<PAGE>
DEUTSCHE BANK CANADA, as a Canadian Bank
By_____________________________________
Title__________________________________
S-5
<PAGE>
SCHEDULE 1.1(A)
<TABLE>
<CAPTION>
Portion of Aggregate
U.S. Bank Commitment Percentage
- --------- -------------------- ----------
<S> <C> <C>
Bank of America National U.S.$34,000,000 11.3333334%
Trust and Savings Association
BankBoston, N.A. U.S.$25,000,000 8.3333333%
Comerica Bank U.S.$25,000,000 8.3333333%
Credit Lyonnais New York Branch U.S.$25,000,000 8.3333333%
Deutsche Bank AG U.S.$25,000,000 8.3333333%
Fleet Bank, N.A. U.S.$25,000,000 8.3333333%
The Bank of New York U.S.$17,000,000 5.6666667%
First National Bank of Maryland U.S.$17,000,000 5.6666667%
Summit Bank U.S.$17,000,000 5.6666667%
National City Bank U.S.$15,000,000 5.0000000%
Harris Trust and Savings Bank U.S.$15,000,000 5.0000000%
LaSalle National Bank U.S.$15,000,000 5.0000000%
The Bank of Nova Scotia U.S.$15,000,000 5.0000000%
The Chase Manhattan Bank U.S.$15,000,000 5.0000000%
Union Bank of California, N.A. U.S.$15,000,000 5.0000000%
___________ ____
TOTALS U.S.$300,000,000 100%
</TABLE>
<PAGE>
SCHEDULE 1.1(B)
<TABLE>
<CAPTION>
Portion of Aggregate Canadian
Canadian Bank Canadian Commitment Percentage
- ------------- -------------------- ----------
<S> <C> <C>
Bank of America Canada U.S.$10,000,000 25.0000000%
Deutsche Bank Canada U.S.$10,000,000 25.0000000%
Credit Lyonnais Canada U.S.$10,000,000 25.0000000%
The Bank of Nova Scotia U.S.$10,000,000 25.0000000%
___________ ____
TOTALS U.S. $40,000,000 100%
</TABLE>
<PAGE>
SCHEDULE 1.1(C)
PRICING SCHEDULE
The Floating Rate Margin, the Fixed Rate Margin, the rate per annum
applicable for facility fees and the rate per annum applicable for letter of
credit fees for Financial Letters of Credit and Non-Financial Letters of Credit,
respectively, shall be determined in accordance with the table below and the
other provisions of this Schedule 1.1(C).
---------------
<TABLE>
<CAPTION>
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
<S> <C> <C> <C> <C> <C>
Rate for
Facility Fee 0.375% 0.375% 0.375% 0.375% 0.375%
Fixed Rate Margin 2.125% 1.875% 1.625% 1.375% 1.125%
Floating Rate Margin
0.250% 0.250% 0 0 0
Rate for
Non-Financial LC Fee 0.875% 0.750% 0.625% 0.500% 0.375%
Rate for
Financial LC Fee 2.125% 1.875% 1.625% 1.375% 1.125%
</TABLE>
Level I applies when the Funded Debt to Cash Flow Ratio is equal to or
-------
greater than 3.25 to 1.0.
Level II applies when the Funded Debt to Cash Flow Ratio is equal to
--------
or greater than 2.75 to 1.0 but less than 3.25 to 1.0.
Level III applies when the Funded Debt to Cash Flow Ratio is equal to
---------
or greater than 2.25 to 1.0 but less than 2.75 to 1.0.
Level V applies when the Funded Debt to Cash Flow Ratio is less than
-------
1.75 to 1.0.
The applicable Level shall be adjusted, to the extent applicable, 45
days (or, in the case of the last Fiscal Quarter of any Fiscal Year, 90 days)
after the end of each Fiscal Quarter based on the Funded Debt to Cash Flow Ratio
as of the last day of such Fiscal Quarter; provided that if the Company fails to
--------
deliver the financial statements required by Section 10.1.1 or 10.1.2, as
-------------- ------
applicable, and the related certificate required by Section 10.1.4 by the 45th
--------------
day (or, if applicable, the 90th day) after any Fiscal Quarter, Level I shall
apply until such financial statements are delivered.
<PAGE>
SCHEDULE 9.6(a)
LITIGATION AND CONTINGENT LIABILITIES
NONE
<PAGE>
SCHEDULE 9.6(b)
CONTINGENT PAYMENTS
The Company agreed to pay the former owners of J&J Rental Services, Inc. and BNR
Equipment, Inc. a percentage of such companies' future revenues until an
aggregate of $2.8 million and Cdn. $4.0 million has been paid, respectively.
<PAGE>
SCHEDULE 9.7
PROPERTIES
The Company uses its name as a trademark or servicemark in offering products and
services to customers, and the Company may also determine to pursue federal
registration of this mark. The Company is aware of other entities which do
business in certain states under the name United Rentals, Inc. The Company
believes but cannot assure that these entities do not use the name as a
trademark or servicemark, and that such other entities should not be in a
position successfully to prevent the Company from using or registering the name
as a trademark or servicemark.
The Company uses the logo which is owned by United Waste Systems, Inc. The
Company has received informal permission to use a logo which is owned by United
Waste Systems, Inc.
<PAGE>
SCHEDULE 9.8
SUBSIDIARIES
A&A TOOL RENTALS AND SALES, INC.
ACCESS LIFT EQUIPMENT INC.
ACCESS RENTALS, INC.
ASC EQUIPMENT COMPANY, INC.
BNR EQUIPMENT INC.
BRONCO HI-LIFT INC.
BUTLER & DERBYSHIRE, INC.
BUTLER & SON, INC.
CORAN ENTERPRISES INCORPORATED
EQUIPMENT RENTAL AND SALES OF MONROE, INC.
J&J RENTAL SERVICES, INC.
MANCHESTER EQUIPMENT RENTAL & SALES, INC.
MERCER EQUIPMENT COMPANY
MISSION VALLEY RENTALS, INC.
NEVADA HIGH REACH EQUIPMENT, INC.
RENTAL EQUIPMENT, INC.
RENTALS UNLIMITED, INCORPORATED
RENT-IT CENTER, INC.
RIVER CITY MACHINERY CO., INC.
PRO RENTALS, INC.
SAN LEANDRO EQUIPMENT RENTAL SERVICE
SANTA FE SUPPLY AND RENTAL, INC.
UNITED RENTALS OF CANADA, INC.
UNITED RENTALS OF UTAH, INC. (INACTIVE)
UNITED RENTS ET AL., INC. (INACTIVE)
<PAGE>
SCHEDULE 9.15
ENVIRONMENTAL MATTERS
1) RENT-IT CENTER, INC. - SALT LAKE CITY, UT
The leaking underground petroleum storage tanks (USTs) at the Rent-It
Center, Inc. property on the west side of Salt Lake City previously were
removed. There remain low levels of several contaminants in soil and
groundwater on the property. However, due to considerable contamination of
groundwater in the vicinity of this property from other sources, it is
unclear that such contamination is solely from Rent-It Center, Inc.'s
former USTs. An environmental report was completed at this site in 1996
and was submitted to the state authorities requesting the UST removal case
to be considered closed. To date, there has been no response to this
request. It is unlikely further remediation would be required. However,
if continued monitoring would be necessary, the maximum exposure is
estimated to be $20,000.
2) A-1 RENTAL - STORY ROAD, SAN JOSE, CA
A-1's Story Road, San Jose store was subject to the removal of USTs in
1986. Although the local agency has advised the Company on how to obtain a
Conditional Case Closure (for cases where groundwater has not been
impacted), the Company has never followed up, and the UST removal case
apparently remains open. The Company has been indemnified for any future
costs associated with this matter, and is following up with the regulatory
agency to determine what future actions may be required, on behalf of the
previous owners. The maximum exposure to the Company if it has to complete
the closure is estimated to be $20,000.
3) MISSION VALLEY RENTALS, INC. - OSGOOD ROAD PROPERTY, FREMONT, CA
Two USTs were removed in 1990 by Mission Valley, and a soil remediation
project followed; this UST case remains open with the local program
administering agency, the Alameda County Water District (ACWD), which had
requested additional monitoring. The Company has recently had the
groundwater wells sampled, which indicated no remaining contamination.
These results will be presented to the ACWD with a request for case
closure. The maximum exposure to the Company is estimated to be $70,000,
which has been provided to the Company by the previous owners to resolve
this matter.
<PAGE>
SCHEDULE 10.7(c)
EXISTING EQUIPMENT DEBT
NONE
<PAGE>
SCHEDULE 10.7(g)
OTHER EXISTING DEBT
NONE
<PAGE>
SCHEDULE 10.8
EXISTING LIENS
NONE
<PAGE>
SCHEDULE 12.1.11
KEY EXECUTIVES
<TABLE>
<CAPTION>
Name Current Office(s)
- ---- -----------------
<S> <C>
Bradley S. Jacobs Chairman, Chief Executive Officer and Director
John N. Milne Vice Chairman, Secretary, Director and Chief
Acquisition Officer
Michael J. Nolan Chief Financial Officer
Robert P. Miner Vice President, Finance
</TABLE>
<PAGE>
SCHEDULE 15.3
ADDRESSES FOR NOTICES
UNITED RENTALS, INC.
- --------------------
Four Greenwich Office Park
Greenwich, Connecticut 06830
Attention: Chief Financial Officer
Telephone: 203/622-3131
Facsimile: 203/622-6080
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as U.S. Agent
- --------------------------------------
Agency Management Services
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Jay McKeown
Telephone: 312/828-7299
Facsimile: 312/974-9102
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a U.S. Bank,
as Issuing Bank and as Swing Line Bank
- --------------------------------------
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Robert Rospierski
Telephone: 312/828-8363
Facsimile: 312/828-1974
THE BANK OF NEW YORK, as a U.S. Bank
- ------------------------------------
10 Mason Street, 3rd Floor
Greenwich, CT 06830
Attention: Patrick J. Kelly
Telephone: 203/863-2679
Facsimile: 203/863-2610
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH,
as a U.S. Bank
- --------------
1301 Avenue of the Americas
12th Floor
New York, NY 10019
Attention: Thomas Randolph
Telephone: 212/261-7431
Facsimile: 212/459-3179
FIRST NATIONAL BANK OF MARYLAND,
as a U.S. Bank
- --------------
25 South Charles Street
Mail Code 101-501
Baltimore, MD 21203
Attention: Tom McLoughlin
Telephone: 410/244-4906
Facsimile: 410/244-4295
SUMMIT BANK, as a U.S. Bank
- ---------------------------
Raritan Plaza II
Fieldcrest Avenue
Edison, NJ 08837
Attention: David Bardwil
Telephone: 732/417-3789
Facsimile: 732/417-0254
NATIONAL CITY BANK, as a U.S. Bank
- ----------------------------------
1900 East Ninth Street
Cleveland, OH 44114-3484
Attention: Brian J. Cullina
Telephone: 216/575-2822
Facsimile: 216/575-9396
-2-
<PAGE>
BANKBOSTON, N.A., as a U.S. Bank
- --------------------------------
100 Federal Street
MC-01-08-02
Boston, MA 02110
Attention: Arthur Oberheim
Telephone: 617/434-1956
Facsimile: 617/434-2160
COMERICA BANK, as a U.S. Bank
- -----------------------------
One Detroit Center
6th Floor
500 Woodward Avenue
Detroit, MI 48226
Attention: Mark Koszyk
Telephone: 313/222-7441
Facsimile: 313/222-3503
DEUTSCHE BANK AG, as a U.S. Bank
- --------------------------------
31 West 52nd Street
New York, NY 10019
Attention: Sue Pearson
Telephone: 212/469-7140
Facsimile: 212/469-8212
FLEET BANK, N.A., as a U.S. Bank
- --------------------------------
1185 Avenue of the Americas, 3rd Floor
New York, NY 10036
Attention: Chris Mayrose
Telephone: 212/819-5727
Facsimile: 212/819-4113
HARRIS TRUST AND SAVINGS BANK, as a U.S. Bank
- ---------------------------------------------
111 West Monroe Street, 10W
PO Box 755
Chicago, IL 60690
Attention: William McDonnell
Telephone: 312/461-5244
-3-
<PAGE>
Facsimile: 312/461-2591
LASALLE NATIONAL BANK, as a U.S. Bank
- -------------------------------------
135 South LaSalle Street, Suite 307
Chicago, IL 60603
Attention: Mike Foster
Telephone: 312/443-2791
Facsimile: 312/443-2689
THE BANK OF NOVA SCOTIA, as a U.S. Bank
- ---------------------------------------
1 Liberty Plaza, 26th Floor
New York, New York 10006
Attention: Kevin McCarthy
Telephone: 212/225-5074
Facsimile: 212/225-5090
THE CHASE MANHATTAN BANK, as a U.S. Bank
- ----------------------------------------
999 Broad Street
Bridgeport, CT 06604
Attention: David Short
Telephone: 203/382-5362
Facsimile: 203/382-6314
UNION BANK OF CALIFORNIA, N.A., as a U.S. Bank
- ----------------------------------------------
350 California Street, 6th Floor
San Francisco, CA 94104
Attention: Alison Mason
Telephone: 415/705-7452
Facsimile: 415/705-7566
BANK OF AMERICA CANADA, as Canadian
Agent and as a Canadian Bank
- ----------------------------
200 Front Street West, Suite 2500
Toronto, Ontario M5V 3L2
Attention: Nelson Lam
Telephone: 416/349-4100
Facsimile: 416/349-4283
-4-
<PAGE>
DEUTSCHE BANK CANADA, as a Canadian Bank
- ----------------------------------------
222 Bay Street, Suite 1200
Toronto Dominion Center
Toronto, Ontario M5K 1H6
Attention: Calvin Younger
Telephone: 416/682-8430
Facsimile: 416/682-8484
CREDIT LYONNAIS CANADA, as a Canadian Bank
- ------------------------------------------
One Adelaide St. East, Suite 2505
Toronto, Ontario M5C 2V9
Attention: Caroline Stade
Telephone: 416/202-6508
Facsimile: 416/202-6525
THE BANK OF NOVA SCOTIA, as a Canadian Bank
- -------------------------------------------
44 King Street West, 16th Floor
Toronto, Ontario M5H 1H1
Attention: Kathleen Coulson
Telephone: 416/866-6078
Facsimile: 416/866-2009
-5-
<PAGE>
EXHIBIT A
FORM OF NOTE
$__________ _________, 1997
Chicago, Illinois
On the Termination Date (as defined in the Credit Agreement referred to
below), the undersigned, for value received, promises to pay to the order of
__________________ at the principal office of Bank of America National Trust and
Savings Association (the "Agent"), in Chicago, Illinois,
-----
______________________________________ Dollars ($__________) or, if less, the
aggregate unpaid amount of all Loans made by the payee to the undersigned
pursuant to the Credit Agreement (as shown in the records of the payee or, at
the payee's option, on the schedule attached hereto and any continuation
thereof).
The undersigned further promises to pay interest on the unpaid principal
amount of each Loan evidenced hereby from the date of such Loan until such Loan
is paid in full, payable at the rate(s) and at the time(s) set forth in the
Credit Agreement. Payments of both principal and interest are to be made in
lawful money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement dated as of October 8, 1997 (as
amended or otherwise modified from time to time, the "Credit Agreement"), among
----------------
the undersigned, certain financial institutions (including the payee) and the
Agent, to which Credit Agreement reference is hereby made for a statement of the
terms and provisions under which this Note may or must be paid prior to its due
date or may have its due date accelerated.
In addition to and not in limitation of the foregoing and the provisions of
the Credit Agreement, the undersigned further agrees, subject only to any
limitation imposed by applicable law, to pay all reasonable expenses, including
reasonable attorneys' fees and legal expenses, incurred by the holder of this
Note in endeavoring to collect any amounts payable hereunder which are not paid
when due, whether by acceleration or otherwise.
<PAGE>
This Note is made under and governed by the laws of the State of Illinois
applicable to contracts made and to be performed entirely within such State.
UNITED RENTALS, INC.
By:____________________________
Name Printed:__________________
Title:_________________________
<PAGE>
Schedule Attached to Note dated _______, 1997 of UNITED RENTALS, INC. payable to
the order of _________________________.
Date and Unpaid
Amount of Date and Amount Principal Notation
Loan of Repayment Balance Made by
<PAGE>
EXHIBIT A-1
FORM OF NOTE (U.S.)
U.S. ____________ $_________, 1998
Chicago, Illinois
On the Termination Date (as defined in the Credit Agreement referred to
below), the undersigned, for value received, promises to pay to the order of
________________ at the principal office of Bank of America National Trust and
Savings Association (the "U.S. Agent"), in Chicago, Illinois,
----------
________________________ U.S. Dollars (U.S.$__________) or, if less, the
aggregate unpaid amount of all Loans made by the payee to the undersigned
pursuant to the Credit Agreement (as shown in the records of the payee or, at
the payee's option, on the schedule attached hereto and any continuation
thereof).
The undersigned further promises to pay interest on the unpaid principal
amount of each Loan evidenced hereby from the date of such Loan until such Loan
is paid in full, payable at the rate(s) and at the time(s) set forth in the
Credit Agreement. Payments of both principal and interest are to be made in
lawful money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Second Amended and Restated Credit Agreement dated
as of March 30, 1998 (as amended or otherwise modified from time to time, the
"Credit Agreement") among the undersigned, United Rentals of Canada, Inc.,
- -----------------
certain financial institutions (including the payee), Bank of America Canada, as
Canadian Agent, and the U.S. Agent, to which Credit Agreement reference is
hereby made for a statement of the terms and provisions under which this Note
may or must be paid prior to its due date or may have its due date accelerated.
In addition to and not in limitation of the foregoing and the provisions of
the Credit Agreement, the undersigned further agrees, subject only to any
limitation imposed by applicable law, to pay all reasonable expenses, including
reasonable attorneys' fees and legal expenses, incurred by the holder of this
Note in endeavoring to collect any amounts payable hereunder which are not paid
when due, whether by acceleration or otherwise.
<PAGE>
This Note is made under and governed by the laws of the State of Illinois
applicable to contracts made and to be performed entirely within such State.
UNITED RENTALS, INC.
By:____________________________
Name Printed:__________________
Title:_________________________
<PAGE>
Schedule Attached to Note dated March 30, 1998 of UNITED RENTALS, INC. payable
to the order of ___________________________________________.
DATE AND AMOUNT DATE AND AMOUNT UNPAID NOTATION MADE BY:
OF LOAN OF PRINCIPAL
REPAYMENT BALANCE
<PAGE>
EXHIBIT A-2
FORM OF NOTE (Canadian)
_________, 1998
Chicago, Illinois
On the Termination Date (as defined in the Credit Agreement referred to
below), the undersigned, for value received, promises to pay to the order of
at the principal office of Bank of America Canada (the
- ------------------
"Canadian Agent"), in Toronto, Ontario, Canada, in Canadian Dollars the
- ---------------
aggregate unpaid amount of all Loans made by the payee to the undersigned
pursuant to the Credit Agreement (as shown in the records of the payee or, at
the payee's option, on the schedule attached hereto and any continuation
thereof).
The undersigned further promises to pay interest on the unpaid principal
amount of each Loan evidenced hereby from the date of such Loan until such Loan
is paid in full, payable at the rate(s) and at the time(s) set forth in the
Credit Agreement. Payments of both principal and interest are to be made in
lawful money of Canada.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Second Amended and Restated Credit Agreement dated
as of March 30, 1998 (as amended or otherwise modified from time to time, the
"Credit Agreement") among the undersigned, United Rentals, Inc., certain
- -----------------
financial institutions (including the payee), Bank of America National Trust and
Savings Association, as U.S. Agent, and the Canadian Agent, to which Credit
Agreement reference is hereby made for a statement of the terms and provisions
under which this Note may or must be paid prior to its due date or may have its
due date accelerated.
In addition to and not in limitation of the foregoing and the provisions of
the Credit Agreement, the undersigned further agrees, subject only to any
limitation imposed by applicable law, to pay all reasonable expenses, including
reasonable attorneys' fees and legal expenses, incurred by the holder of this
Note in endeavoring to collect any amounts payable hereunder which are not paid
when due, whether by acceleration or otherwise.
<PAGE>
This Note is made under and governed by the laws of the State of Illinois
applicable to contracts made and to be performed entirely within such State.
UNITED RENTALS OF CANADA, INC.
By:____________________________
Name Printed:__________________
Title:_________________________
<PAGE>
Schedule Attached to Note dated March ___, 1998 of UNITED RENTALS OF CANADA,
INC. payable to the order of _________________________.
DATE AND AMOUNT DATE AND AMOUNT OF UNPAID PRINCIPAL NOTATION MADE BY:
OF LOAN REPAYMENT BALANCE
<PAGE>
EXHIBIT B
UNITED RENTALS, INC.
FINANCIAL COMPLIANCE CERTIFICATE
FOR PERIOD ENDED _____________
To: Bank of America National Trust
and Savings Association, as U.S. Agent
Reference is made to Section 10.1.4 of the Second Amended and Restated
Credit Agreement dated as of March 30, 1998 (as amended or otherwise modified
from time to time, the "Credit Agreement") among United Rentals, Inc. (the
----------------
"Company"), United Rentals of Canada, Inc., various financial institutions, Bank
- --------
of America Canada, as Canadian Agent, and Bank of America National Trust and
Savings Association, as U.S. Agent. Capitalized terms used but not otherwise
defined herein are used as defined in the Credit Agreement.
The Company hereby certifies and warrants to you that the following are
true and correct computations of the financial ratios and restrictions set forth
in Section 10.6 of the Credit Agreement for the period ended
______________________________:
10.6.1 Minimum Net Worth
- ------------------------
Net Worth U.S.$____________
Initial minimum: U.S.$45,000,000
Plus: 75% of Consolidated
Net Income plus
extraordinary gains
since October 1,
1997 (excluding Fiscal U.S.$___________
Quarters in which there
is a loss)
U.S.$___________
Plus: 100% of net equity
proceeds since
October 1, 1997
Total U.S.$___________
Minimum required U.S.$___________
<PAGE>
10.6.2 Maximum Leverage (a)
- -----------------------
Funded Debt __________(x)
Funded Debt
plus Net Worth __________(y)
- ----
Ratio of (x) to (y) ____ to ____
Maximum allowed 0.60 to 1.0
10.6.2 Maximum Senior
- ---------------------
Leverage (b)
- --------
Senior Debt _________ (x)
Funded Debt plus Net Worth _________ (y)
Ratio of (x) to (y) ____ to ____
Maximum allowed ____ to ____
10.6.3 Minimum Interest Coverage
- --------------------------------
Consolidated Net Income U.S.$___________
Plus: Interest Expense U.S.$___________
taxes U.S.$___________
Earnings before interest and taxes U.S.$_________(x)
Interest Expense __________(y)
Ratio of (x) to (y) ____ to ____
Minimum Required ____ to ____
2
<PAGE>
10.6.4 Funded Debt to Cash
- --------------------------
Flow Ratio
- ----------
Funded Debt U.S.$_________(x)
Consolidated Net Income U.S.$___________
Plus: Interest Expense U.S.$___________
Income tax expense U.S.$___________
Depreciation and
amortization U.S.$___________
Total U.S.$_________(y)
Ratio of (x) to (y) ____ to ____
Maximum allowed ____ to ____
10.6.5 Senior Debt to Tangible Assets Ratio
- -------------------------------------------
Senior Debt U.S.$________ (x)
Tangible Assets U.S.$________ (y)
Ratio of (x) to (y) ____ to ____
Maximum allowed ____ to ____
10.7(c) Equipment Debt
- ----------------------
Total Equipment Debt (not to exceed U.S.$_________
U.S.$30,000,000)
10.7(d) Foreign Subsidiary Debt
- -------------------------------
Total Debt of Foreign Subsidiaries owed to U.S.$_________
the Company (not to exceed
U.S.$40,000,000)
3
<PAGE>
10.21 Investments in Foreign Subsidiaries
- -----------------------------------------
Total Investments by the Company in U.S.$_________
Foreign Subsidiaries plus Canadian Loans
(not to exceed U.S.$60,000,000)
10.22 Location of Assets ________%
- ------------------------
Percentage of consolidated assets of the
Company and its Subsidiaries owned by
Foreign Subsidiaries (not to exceed 15%)
The Company further certifies to you that no Event of Default or Unmatured
Event of Default has occurred and is continuing.
IN WITNESS WHEREOF, the Company has caused this Certificate to be executed
and delivered by its duly authorized officer this ____ day of _________, ____.
UNITED RENTALS, INC.
By_________________________
Title________________________
4
<PAGE>
EXHIBIT C
GUARANTY
THIS GUARANTY dated as of _______________, 1997 is executed in favor of
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"), individually
----
and as Agent (as defined below), and the Banks (as defined below).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, United Rentals, Inc. (the "Company"), various financial
-------
institutions (the "Banks") and BofA, as agent for the Banks (in such capacity,
-----
the "Agent"), have entered into the Credit Agreement dated as of October 8, 1997
-----
(as amended, restated or otherwise modified from time to time, the "Credit
------
Agreement"); and
- ---------
WHEREAS, each of the undersigned will benefit from the making of loans and
the issuance of letters of credit pursuant to the Credit Agreement and is
willing to guaranty the Liabilities (as defined below) as hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the undersigned hereto
agrees as follows:
1. Definitions. Capitalized terms used herein but not defined herein
-----------
have the meanings assigned to such terms in the Credit Agreement.
2. Guaranty. Each of the undersigned hereby jointly and severally
--------
unconditionally, as primary obligor and not merely as surety, guarantees the
full and prompt payment when due, whether by acceleration or otherwise, and at
all times thereafter, of all obligations of the Company howsoever created,
arising or evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, which arise out of or in connection
with any of the Loan Documents, as the same may be amended, modified, extended
or renewed from time to
<PAGE>
time (all such obligations being herein collectively called the "Liabilities");
-----------
provided, however, that the liability of each of the undersigned hereunder
- -------- -------
shall be limited to the maximum amount of the Liabilities which such undersigned
may guaranty without violating any fraudulent conveyance or fraudulent transfer
law (plus all costs and expenses paid or incurred by the Agent or any Bank in
enforcing this Guaranty against such undersigned).
Each of the undersigned agrees that, in the event of the occurrence of any
Event of Default under Section 12.1.4 of the Credit Agreement, and if such event
shall occur at a time when any of the Liabilities may not then be due and
payable, such undersigned will pay to the Agent for the account of the Banks
forthwith the full amount which would be payable hereunder by such undersigned
if all Liabilities were then due and payable.
To secure all obligations of each of the undersigned hereunder, the Agent
and each Bank shall have a lien on and security interest in (and may, without
demand or notice of any kind, at any time and from time to time when any amount
shall be due and payable by such undersigned hereunder, appropriate and apply
toward the payment of such amount, in such order of application as the Agent or
the Banks may elect, in accordance with the Credit Agreement, if then in effect)
any and all balances, credits, deposits, accounts or moneys of or in the name of
such undersigned now or hereafter with the Agent or such Bank and any and all
property of every kind or description of or in the name of such undersigned now
or hereafter, for any reason or purpose whatsoever, in the possession or control
of, or in transit to, the Agent or such Bank or any agent or bailee for the
Agent or such Bank.
This Guaranty shall in all respects be a continuing, irrevocable, absolute
and unconditional guaranty of payment and performance and not only
collectibility, and shall remain in full force and effect (notwithstanding,
without limitation, the dissolution of any of the undersigned, that at any time
or from time to time no Liabilities are outstanding or any other circumstance)
until all Commitments have terminated and all Liabilities have been paid in
full.
<PAGE>
The undersigned further agree that if at any time all or any part of any
payment theretofore applied by the Agent or any Bank to any of the Liabilities
is or must be rescinded or returned by the Agent or such Bank for any reason
whatsoever (including, without limitation, the insolvency, bankruptcy or
reorganization of the Company or any of the undersigned), such Liabilities
shall, for the purposes of this Guaranty, to the extent that such payment is or
must be rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by the Agent or such Bank, and this Guaranty
shall continue to be effective or be reinstated, as the case may be, as to such
Liabilities, all as though such application by the Agent or such Bank had not
been made.
The Agent or any Bank may, from time to time, at its sole discretion and
without notice to the undersigned (or any of them), take any or all of the
following actions: (a) retain or obtain a security interest in any property to
secure any of the Liabilities or any obligation hereunder, (b) retain or obtain
the primary or secondary obligation of any obligor or obligors, in addition to
the undersigned, with respect to any of the Liabilities, (c) extend or renew any
of the Liabilities for one or more periods (whether or not longer than the
original period), alter or exchange any of the Liabilities, or release or
compromise any obligation of any of the undersigned hereunder or any obligation
of any nature of any other obligor with respect to any of the Liabilities, (d)
release its security interest in, or surrender, release or permit any
substitution or exchange for, all or any part of any property securing any of
the Liabilities or any obligation hereunder, or extend or renew for one or more
periods (whether or not longer than the original period) or release, compromise,
alter or exchange any obligations of any nature of any obligor with respect to
any such property, and (e) resort to the undersigned (or any of them) for
payment of any of the Liabilities when due, whether or not the Agent or such
Bank shall have resorted to any property securing any of the Liabilities or any
obligation hereunder or shall have proceeded against any other of the
undersigned or any other obligor primarily or secondarily obligated with respect
to any of the Liabilities.
<PAGE>
Any amounts received by the Agent or any Bank from whatever source on
account of the Liabilities may be applied by it toward the payment of the
Liabilities in accordance with the Credit Agreement; and, notwithstanding any
payments made by or for the account of any of the undersigned pursuant to this
Guaranty, the undersigned shall not be subrogated to any rights of the Agent or
any Bank until such time as this Guaranty shall have been discontinued as to all
of the undersigned and the Agent and the Banks shall have received payment of
the full amount of all Liabilities of the undersigned hereunder.
The undersigned hereby expressly waive: (a) notice of the acceptance by
the Agent or any Bank of this Guaranty, (b) notice of the existence or creation
or non-payment of all or any of the Liabilities, (c) presentment, demand, notice
of dishonor, protest, and all other notices whatsoever, and (d) all diligence in
collection or protection of or realization upon any Liabilities or any security
for or guaranty of any Liabilities.
Each of the undersigned further agrees to pay all expenses (including
reasonable attorneys' fees and legal expenses) paid or incurred by the Agent or
any Bank in endeavoring to collect the Liabilities of such undersigned, or any
part thereof, and in enforcing this Guaranty against such undersigned.
The creation or existence from time to time of additional Liabilities to
the Agent or any Bank or any of them is hereby authorized, without notice to the
undersigned (or any of them), and shall in no way affect or impair the rights of
the Agent or any Bank or the obligations of the undersigned under this Guaranty.
The Agent and any Bank may from time to time, without notice to the
undersigned (or any of them), assign or transfer any or all of the Liabilities
or any interest therein; and, notwithstanding any such assignment or transfer or
any subsequent assignment or transfer thereof, such Liabilities shall be and
remain Liabilities for the purposes of this Guaranty, and each and every
immediate and successive assignee or transferee of any of the Liabilities or of
any interest therein shall, to the extent of the interest of such assignee or
transferee in the
<PAGE>
Liabilities, be entitled to the benefits of this Guaranty to the same extent as
if such assignee or transferee were a Bank.
No delay on the part of the Agent or any Bank in the exercise of any right
or remedy shall operate as a waiver thereof, and no single or partial exercise
by the Agent or any Bank of any right or remedy shall preclude other or further
exercise thereof or the exercise of any other right or remedy; nor shall any
modification or waiver of any provision of this Guaranty be binding upon the
Agent or any Bank except as expressly set forth in a writing duly signed and
delivered on behalf of the Agent (or, if at any time there is no Agent, the
Required Banks or, if required pursuant to Section 14.1 of the Credit Agreement
all Banks). No action of the Agent or any Bank permitted hereunder shall in any
way affect or impair the rights of the Agent or any Bank or the obligations of
the undersigned under this Guaranty. For purposes of this Guaranty, Liabilities
shall include all obligations of the Company to the Agent or any Bank arising
under or in connection with any Loan Document, notwithstanding any right or
power of the Company or anyone else to assert any claim or defense as to the
invalidity or unenforceability of any obligation, and no such claim or defense
shall affect or impair the obligations of the undersigned hereunder.
Pursuant to the Credit Agreement, (a) this Guaranty has been delivered to
the Agent and (b) the Agent has been authorized to enforce this Guaranty on
behalf of itself and each of the other Banks. All payments by the undersigned
pursuant to this Guaranty shall be made to the Agent for application as set
forth in the Credit Agreement or, if there is no Agent, to the Banks for their
ratable benefit.
This Guaranty shall be binding upon the undersigned and the successors and
assigns of the undersigned; and to the extent that the Company or any of the
undersigned is either a partnership or a corporation, all references herein to
the Company and to the undersigned, respectively, shall be deemed to include any
successor or successors, whether immediate or remote, to such partnership or
corporation. The term "undersigned" as used herein shall mean all parties
-----------
executing this Guaranty and each of
<PAGE>
them, and all such parties shall be jointly and severally obligated hereunder.
This Guaranty has been delivered at Chicago, Illinois, and shall be
construed in accordance with and governed by the internal laws of the State of
Illinois. Wherever possible each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
This Guaranty may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed to be an original but all such counterparts shall together
constitute one and the same Guaranty. At any time after the date of this
Guaranty, one or more additional persons or entities may become parties hereto
by executing and delivering to the Agent a counterpart of this Guaranty.
Immediately upon such execution and delivery (and without any further action),
each such additional person or entity will become a party to, and will be bound
by all of the terms of, this Guaranty.
This Guaranty is secured pursuant to a Security Agreement dated as of even
date herewith (as amended or otherwise modified from time to time) and may be
secured by one or more other agreements (including, without limitation, one or
more pledge agreements, mortgages, deeds of trust or other similar documents).
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT
-------- -------
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE
<PAGE>
FOUND. EACH OF THE UNDERSIGNED HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. EACH OF THE UNDERSIGNED FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE
ADDRESS SET FORTH UNDER ITS NAME IN SCHEDULE I HERETO (OR SUCH OTHER ADDRESS AS
IT SHALL HAVE SPECIFIED IN WRITING TO THE AGENT AND OTHER BANKS AS ITS ADDRESS
FOR NOTICES HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
ILLINOIS. EACH OF THE UNDERSIGNED HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
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 ANY OF THE UNDERSIGNED HAS OR HEREAFTER
MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY LEGAL
PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, SUCH UNDERSIGNED HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF
ITS OBLIGATIONS UNDER THIS GUARANTY AND THE OTHER LOAN DOCUMENTS.
EACH OF THE UNDERSIGNED, AND (BY ACCEPTING THE BENEFITS HEREOF) EACH OF THE
AGENT AND EACH BANK, HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY, OR ANY OTHER
LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR
ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE
FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered as
of the day and year first above written.
[SUBSIDIARIES OF UNITED RENTALS, INC.]
By:___________________________
<PAGE>
Name Printed:_________________
Title:________________________
<PAGE>
Signature page for the Guaranty dated as of
October 20, 1997 issued by various subsidiaries of
United Rentals, Inc.(the "Company") in favor of
Bank of America National Trust and Savings
Association, as Agent under the Amended and
Restated Credit Agreement dated as of December 24,
1997 (the "Credit Agreement") with the Company and
various other parties, and the Banks referred to
in such Credit Agreement.
The Guarant waives all suretyship and other
defenses otherwise available under California law
and the laws of any other jurisdiction, including,
without limitation, all defenses under Sections
2787 through 2855 and Sections 2899 and 3433 of
the California Civil Code and any successor
provisions to those Sections.
The undersigned is executing a counterpart hereof
for purposes of becoming a party hereto:
-------------------------------------------------
By:___________________________
Name Printed:_________________
Title:________________________
<PAGE>
SCHEDULE I
TO GUARANTY
ADDRESSES
---------
Coran Enterprises Incorporated
c/o United Rentals, Inc.
Four Greenwich Office Park
Greenwich, CT 06830
Attn: John N. Milne
Bronco Hi-Lift Inc.
12600 East 38th Avenue
Denver, CO 80239
Rent-It Center, Inc.
955 West 2100 South
Salt Lake City, UT 84119
A&A Tool Rentals & Sales, Inc.
c/o United Rentals, Inc.
Four Greenwich Office Park
Greenwich, CT 06830
Attn: John N. Milne
Mercer Equipment Company
4240 S. Blvd.
Charlotte, NC 28209
J&J Rental Services, Inc.
7667 Mosley
Houston, TX 77017
<PAGE>
Nevada High Reach Equipment, Inc.
296 Parr Boulevard
Reno, NV 89512
Pro Rentals, Inc.
5950 St. Hwy. 303 NE
Bremerton, WA 98311
River City Machinery Co., Inc.
c/o United Rentals, Inc.
Attn: John N. Milne
Four Greenwich Office Park
Greenwich, CT 06830
San Leandro Equipment Rental Service
14273 Washington Ave.
San Leandro, CA 94578
Mission Valley Rentals, Inc.
41655 Osgood Road
Fremont, California 94539
ASC Equipment Company, Inc.
432 Rankin Street
Fayetteville, NC 28301
Access Rentals, Inc.
45 Center Street
Batavia, New York 14020
Manchester Equipment Rental & Sales, Inc.
c/o United Rentals, Inc.
Four Greenwich Office Park
Greenwich, CT 06830
BNR Equipment Inc.
2
<PAGE>
465 Creekside Drive
Amherst, New York 14228
Santa Fe Supply and Rental, Inc.
221 Santa Fe Drive
Pueblo, Colorado 81006
Equipment Rental and Sales of Monroe, Inc.
1490 Walkup Avenue
Monroe, NC 28110
Rentals Unlimited, Incorporated
c/o United Rentals, Inc.
Four Greenwich Office Park
Greenwich, CT 06830
Butler & Son, Inc.
c/o United Rentals, Inc.
Four Greenwich Office Park
Greenwich, CT 06830
Rental Equipment, Inc.
c/o United Rentals, Inc.
Four Greenwich Office Park
Greenwich, CT 06830
Butler & Derbyshire, Inc.
c/o United Rentals, Inc.
Four Greenwich Office Park
Greenwich, CT 06830
3
<PAGE>
EXHIBIT D
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") dated as of October 8, 1997 is
---------
among UNITED RENTALS, INC. (the "Company"), each subsidiary of the Company
-------
listed on the signature pages hereof, each other person or entity which from
time to time becomes a party hereto (collectively, including the Company, the
"Debtors" and individually each a "Debtor") and BANK OF AMERICA NATIONAL TRUST
- -------- ------
AND SAVINGS ASSOCIATION ("BofA"), in its capacity as Agent (as defined below)
----
for the Banks (as defined below).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company, various financial institutions (the "Banks") and
-----
BofA, as agent for the Banks (in such capacity, the "Agent"), have entered into
-----
the Credit Agreement dated as of October 8, 1997 (as amended, restated or
otherwise modified from time to time, the "Credit Agreement");
----------------
WHEREAS, each of the Debtors other than the Company has executed and
delivered a guaranty (the "Guaranty") of the obligations of the Company in
--------
respect of the Loan Documents; and
WHEREAS, the obligations of the Company in respect of the Loan Documents
and the obligations of each other Debtor under the Guaranty are to be secured
pursuant to this Agreement;
NOW, THEREFORE, for and in consideration of the premises, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. When used herein, (a) the terms Certificated Security,
----------- ---------------------
Chattel Paper, Deposit Account, Document, Equipment, Fixture, Goods, Inventory,
- ------------- --------------- -------- --------- ------- ----- ---------
Instrument, Security and Uncertificated Security shall have the respective
- ---------- -------- -----------------------
meanings assigned to such terms in the Uniform Commercial Code (as defined
below), (b) the terms Commodity Account, Commodity Contract, Investment
----------------- ------------------ ----------
Property, Security Entitlement and Securities Account
-------------------- ------------------
<PAGE>
shall have the respective meanings assigned thereto in the 1994 Amendments to
Articles 8 and 9 of the Uniform Commercial Code promulgated by the American Law
Institute and the National Conference of Commissioners for Uniform State Laws,
(c) capitalized terms used but not defined have the meanings assigned to such
terms in the Credit Agreement and (d) the following terms have the following
meanings (such definitions to be applicable to both the singular and plural
forms of such terms):
Account Debtor means, with respect to any Debtor, any party who is
--------------
obligated on or under any Account Receivable, Contract Right or General
Intangible of such Debtor.
Account Receivable means, with respect to any Debtor, any right of such
------------------
Debtor to payment for goods sold or leased or for services rendered.
Agent - see the recitals.
-----
Agreement - see the introductory paragraph.
---------
Assignee Deposit Account - see Section 4.
------------------------ ---------
BofA - see the introductory paragraph.
----
Banks - see the recitals.
-----
Business Day means any day on which BofA is open for commercial banking
------------
business in Chicago, New York and San Francisco.
Collateral means, with respect to any Debtor, all property and rights of
----------
such Debtor in which a security interest is granted hereunder.
Company - see the introductory paragraph.
-------
Computer Hardware and Software means, with respect to any Debtor, (i) all
------------------------------
computer and other electronic data processing hardware, whether now or hereafter
owned, licensed or leased by such Debtor, including, without limitation, all
integrated computer systems, central processing units, memory units, display
2
<PAGE>
terminals, printers, features, computer elements, card readers, tape drives,
hard and soft disk drives, cables, electrical supply hardware, generators, power
equalizers, accessories and all peripheral devices and other related computer
hardware; (ii) all software programs, whether now or hereafter owned, licensed
or leased by such Debtor, designed for use on the computers and electronic data
processing hardware described in clause (i) above, including, without
----------
limitation, all operating system software, utilities and application programs in
whatsoever form (source code and object code in magnetic tape, disk or hard copy
format or any other listings whatsoever); (iii) all firmware associated
therewith, whether now or hereafter owned, licensed or leased by such Debtor;
and (iv) all documentation for such hardware, software and firmware described in
the preceding clauses (i), (ii) and (iii), whether now or hereafter owned,
----------- ---- -----
licensed or leased by such Debtor, including, without limitation, flow charts,
logic diagrams, manuals, specifications, training materials, charts and pseudo
codes.
Contract Right means, with respect to any Debtor, any right of such Debtor
--------------
to payment under a contract for the sale or lease of goods or the rendering of
services, which right is at the time not yet earned by performance.
Credit Agreement - see the recitals.
----------------
Debtor - see the introductory paragraph.
------
Default means the occurrence of any of the following events: (i) any
-------
Unmatured Event of Default under Section 12.1.4 of the Credit Agreement with
respect to the Company, (ii) any Event of Default or (iii) any warranty of any
Debtor herein is untrue or misleading in any material respect and, as a result
thereof, the Agent's security interest in any material portion of the Collateral
(of all Debtors taken as a whole) is not perfected or the Agent's rights and
remedies with respect to any material portion of the Collateral of all Debtors
(taken as a whole) is materially impaired or otherwise materially adversely
affected.
General Intangibles means, with respect to any Debtor, all of such Debtor's
-------------------
"general intangibles" as defined in the Uniform Commercial Code and, in any
event, includes (without limitation)
3
<PAGE>
all of such Debtor's trademarks, trade names, patents, copyrights, trade
secrets, customer lists, inventions, designs, software programs, mask works,
goodwill, registrations, licenses, franchises, tax refund claims, guarantee
claims, security interests and rights to indemnification.
Guaranty - see the recitals.
--------
Intellectual Property means all past, present and future: trade secrets and
---------------------
other proprietary information; trademarks, service marks, business names,
designs, logos, indicia, and/or other source and/or business identifiers and the
goodwill of the business relating thereto and all registrations or applications
for registrations which have heretofore been or may hereafter be issued thereon
throughout the world; copyrights (including, without limitation, copyrights for
computer programs) and copyright registrations or applications for registrations
which have heretofore been or may hereafter be issued throughout the world and
all tangible property embodying the copyrights; unpatented inventions (whether
or not patentable); patent applications and patents; industrial designs,
industrial design applications and registered industrial designs; license
agreements related to any of the foregoing set forth in this definition and
income therefrom; books, records, writings, computer tapes or disks, flow
diagrams, specification sheets, source codes, object codes and other physical
manifestations, embodiments or incorporations of any of the foregoing set forth
in this definition; the right to sue for all past, present and future
infringements of any of the foregoing set forth in this definition; and all
common law and other rights throughout the world in and to all of the foregoing
set forth in this definition.
Liabilities means (a) as to the Company, all obligations of the Company,
-----------
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due, which arise out
of or in connection with any of the Loan Documents (including, without
limitation, with respect to Letters of Credit), as the same may be amended,
modified, extended or renewed from time to time, and (b) with respect to each
Debtor other than the Company, all
4
<PAGE>
obligations of such Debtor under the Guaranty or any other Collateral Document.
Non-Tangible Collateral means, with respect to any Debtor, collectively,
-----------------------
such Debtor's Accounts Receivable, Contract Rights and General Intangibles.
Permitted Liens - see Section 3.
--------------- ---------
Trademark - see Section 3.
--------- ---------
Uniform Commercial Code means the Uniform Commercial Code as in effect in
-----------------------
the State of Illinois on the date of this Agreement; provided, however, as used
-------- -------
in Section 8 hereof and in the definitions of "Commodity Account", "Commodity
---------
Contract", "Investment Property", "Security Entitlement" and "Securities
Account", "Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect from time to time in the applicable jurisdiction.
2. Grant of Security Interest. As security for the payment of all
--------------------------
Liabilities, each Debtor hereby assigns to the Agent for the benefit of the
Banks, and grants to the Agent for the benefit of the Banks a continuing
security interest in, the following, whether now or hereafter existing or
acquired:
All of such Debtor's:
(i) Accounts Receivable;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all rights with respect
thereto, including, without limitation, any and all licenses,
options, warranties, service contracts, program services, test
rights, maintenance rights, support rights, improvement rights,
renewal rights and indemnifications, and any substitutions,
replacements, additions or model conversions of any of the
foregoing;
5
<PAGE>
(v) Contract Rights;
(vi) Deposit Accounts;
(vii) Documents;
(viii) General Intangibles;
(ix) Goods (including, without limitation, all its Equipment, Fixtures
and Inventory), together with all accessions, additions,
attachments, improvements, substitutions and replacements thereto
and therefor;
(x) Instruments;
(xi) Intellectual Property;
(xii) money (of every jurisdiction whatsoever);
(xiii) Commodity Accounts, Commodity Contracts, Investment Property,
Security Entitlements and Securities Accounts;
(xiv) Uncertificated Securities;
(xv) to the extent not included in the foregoing, maps, surveys and
similar items used or useful in such Debtor's business; and
(xvi) to the extent not included in the foregoing, other personal
property of any kind or description;
together with all books, records, writings, data bases, information and
other property relating to, used or useful in connection with, evidencing,
embodying, incorporating or referring to any of the foregoing, and all
proceeds, products, offspring, rents, issues, profits and returns of and
from any of the foregoing.
3. Warranties. Each Debtor warrants that: (i) no financing statement
----------
(other than any which may have been filed on
6
<PAGE>
behalf of the Agent) covering any of the Collateral is on file in any public
office; (ii) such Debtor is and will be the lawful owner of all Collateral, free
of all liens and claims whatsoever, other than the security interest hereunder
and liens and claims expressly permitted by the Credit Agreement ("Permitted
Liens"), with full power and authority to execute this Agreement and perform
such Debtor's obligations hereunder, and to subject the Collateral to the
security interest hereunder; (iii) all information with respect to Collateral
and Account Debtors set forth in any schedule, certificate or other writing at
any time heretofore or hereafter furnished by such Debtor to the Agent or any
Bank and all other written information heretofore or hereafter furnished by such
Debtor to the Agent or any Bank in connection with the Credit Agreement will be
true and correct in all material respects as of the date furnished; (iv) such
Debtor's chief executive office and principal place of business are as set forth
on Schedule I hereto (and such Debtor has not maintained its chief executive
office and principal place of business at any other location at any time after
March 31, 1997); (v) each other location where such Debtor maintains a place of
business is set forth on Schedule II hereto; (vi) except as disclosed on
Schedule III, such Debtor is not now known and during the five years preceding
the date hereof has not previously been known by any trade name; (vii) except as
disclosed on Schedule III, during the five years preceding the date hereof such
Debtor has not been known by any legal name different from the one set forth on
the signature page of this Agreement nor has such Debtor been the subject of any
merger or other corporate reorganization; (viii) Schedule IV hereto contains a
complete listing of all of such Debtor's Intellectual Property which is subject
to registration statutes; (ix) such Debtor is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation; (x) the execution and delivery of this Agreement and the
performance by such Debtor of its obligations hereunder are within such Debtor's
corporate powers, have been duly authorized by all necessary corporate action,
have received all necessary governmental approval (if any shall be required),
and do not and will not contravene or conflict with any provision of law or of
the charter or by-laws of such Debtor or of any material agreement, indenture,
instrument or other document, or any material judgment, order or decree, which
is binding upon such
7
<PAGE>
Debtor; (xi) this Agreement is a legal, valid and binding obligation of such
Debtor, enforceable in accordance with its terms, except that the enforceability
of this Agreement may be limited by bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and by
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law); and (xii) such Debtor is in compliance with the
requirements of all applicable laws (including, without limitation, the
provisions of the Fair Labor Standards Act), rules, regulations and orders of
every governmental authority, the non-compliance with which would materially
adversely affect the business, properties, assets, operations or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole or
the value of the Collateral or the worth of the Collateral as collateral
security.
4. Collections, etc. Until such time during the existence of a Default
----------------
as the Agent shall notify such Debtor of the revocation of such power and
authority, each Debtor (a) may, in the ordinary course of its business, at its
own expense, sell, lease or furnish under contracts of service any of the
Inventory normally held by such Debtor for such purpose, use and consume, in the
ordinary course of its business, any raw materials, work in process or materials
normally held by such Debtor for such purpose, and use, in the ordinary course
of its business (but subject to the terms of the Credit Agreement), the cash
proceeds of Collateral and other money which constitutes Collateral, (b) will,
at its own expense, endeavor to collect, as and when due, all amounts due under
any of the Non-Tangible Collateral, including the taking of such action with
respect to such collection as the Agent may reasonably request or, in the
absence of such request, as such Debtor may deem advisable, and (c) may grant,
in the ordinary course of business, to any party obligated on any of the Non-
Tangible Collateral, any rebate, refund or allowance to which such party may be
lawfully entitled, and may accept, in connection therewith, the return of Goods,
the sale or lease of which shall have given rise to such Non-Tangible
Collateral. The Agent, however, may, at any time that a Default exists, whether
before or after any revocation of such power and authority or the maturity of
any of the Liabilities, notify any
8
<PAGE>
parties obligated on any of the Non-Tangible Collateral to make payment to the
Agent of any amounts due or to become due thereunder and enforce collection of
any of the Non-Tangible Collateral by suit or otherwise and surrender, release
or exchange all or any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any indebtedness
thereunder or evidenced thereby. Upon request of the Agent during the existence
of a Default, each Debtor will, at its own expense, notify any parties obligated
on any of the Non-Tangible Collateral to make payment to the Agent of any
amounts due or to become due thereunder.
Upon request by the Agent during the existence of a Default, each Debtor
will forthwith, upon receipt, transmit and deliver to the Agent, in the form
received, all cash, checks, drafts and other instruments or writings for the
payment of money (properly endorsed, where required, so that such items may be
collected by the Agent) which may be received by such Debtor at any time in full
or partial payment or otherwise as proceeds of any of the Collateral. Except as
the Agent may otherwise consent in writing, any such items which may be so
received by any Debtor during the existence of a Default will not be commingled
with any other of its funds or property, but will be held separate and apart
from its own funds or property and upon express trust for the Agent until
delivery is made to the Agent. Each Debtor will comply with the terms and
conditions of any consent given by the Agent pursuant to the foregoing sentence.
During the existence of a Default, all items or amounts which are delivered
by any Debtor to the Agent on account of partial or full payment or otherwise as
proceeds of any of the Collateral shall be deposited to the credit of a deposit
account (each an "Assignee Deposit Account") of such Debtor with the Agent, as
------------------------
security for payment of the Liabilities. No Debtor shall have any right to
withdraw any funds deposited in the applicable Assignee Deposit Account. The
Agent may, from time to time, in its discretion, and shall upon request of the
applicable Debtor made not more than once in any week, apply all or any of the
then balance, representing collected funds, in the Assignee Deposit Account,
toward payment of the Liabilities, whether or not then due, in such order of
application as the Agent may determine, and the Agent may, from time to time, in
its
9
<PAGE>
discretion, release all or any of such balance to the applicable Debtor.
If and to the extent that a perfected security interest hereunder in any
Collateral shall cease to be perfected for any reason whatsoever (including,
without limitation, release of all or any balance in any Assignee Deposit
Account or use or disposition by any Debtor of any proceeds of Collateral), then
such Collateral (referred to in this paragraph as "released Collateral") shall
be deemed thereby released from the security interest hereunder in exchange, as
of the time of such release, for any other Collateral of equivalent value in
which a perfected security interest hereunder is being obtained
contemporaneously or has been most recently obtained, but only to the extent
such other Collateral does not represent either (a) Collateral in exchange for
which any previously released Collateral shall have been deemed released, or (b)
Collateral of equivalent value to any loan or advance (otherwise than by renewal
or extension) from the Agent to the Company in which Collateral a perfected
security interest hereunder shall have been obtained contemporaneously with or
most recently prior to such loan or advance.
During the existence of a Default, the Agent is authorized to endorse, in
the name of the applicable Debtor, any item, howsoever received by the Agent,
representing any payment on or other proceeds of any of the Collateral.
5. Certificates, Schedules and Reports. Each Debtor will from time to
-----------------------------------
time deliver to the Agent such schedules, certificates and reports respecting
all or any of the Collateral at the time subject to the security interest
hereunder, and the items or amounts received by such Debtor in full or partial
payment of any of the Collateral, as the Agent may reasonably request. Any such
schedule, certificate or report shall be executed by a duly authorized officer
of such Debtor and shall be in such form and detail as the Agent may specify.
Each Debtor shall immediately notify the Agent of the occurrence of any event
causing any loss or depreciation in the value of its Inventory or other Goods
which is material to the Company and its Subsidiaries taken as a whole, and such
notice shall specify the amount of such loss or depreciation.
10
<PAGE>
6. Agreements of the Debtors. Each Debtor (a) will, upon request of the
-------------------------
Agent, execute such financing statements and other documents (and pay the cost
of filing or recording the same in all public offices reasonably deemed
appropriate by the Agent) and do such other acts and things (including, without
limitation, delivery to the Agent of any Instruments or Certificated Securities
which constitute Collateral), all as the Agent may from time to time reasonably
request, to establish and maintain a valid security interest in the Collateral
(free of all other liens, claims and rights of third parties whatsoever, other
than Permitted Liens) to secure the payment of the Liabilities; (b) will keep
all its Inventory at, and will not maintain any place of business at any
location other than, its address(es) shown on Schedules I and II hereto or at
----------- --
such other addresses of which such Debtor shall have given the Agent not less
than 10 days' prior written notice; (c) will keep its records concerning the
Non-Tangible Collateral in such a manner as will enable the Agent or its
designees to determine at any time the status of the Non-Tangible Collateral;
(d) will furnish the Agent such information concerning such Debtor, the
Collateral and the Account Debtors as the Agent may from time to time reasonably
request; (e) will permit the Agent and its designees, from time to time, on
reasonable notice and at reasonable times and intervals during normal business
hours (or at any time without notice during the existence of a Default) to
inspect such Debtor's Inventory and other Goods, and to inspect, audit and make
copies of and extracts from all records and all other papers in the possession
of such Debtor pertaining to the Collateral and the Account Debtors, and will,
upon request of the Agent during the existence of a Default, deliver to the
Agent all of such records and papers; (f) will, upon request of the Agent, stamp
on its records concerning the Collateral and add on all Chattel Paper
constituting a portion of the Collateral, a notation, in form satisfactory to
the Agent, of the security interest of the Agent hereunder; (g) except for the
sale or lease of Inventory in the ordinary course of its business and sales of
Equipment which is no longer useful in its business or which is being replaced
by similar Equipment or as otherwise permitted by the Credit Agreement, will not
sell, lease, assign or create or permit to exist any lien on or security
interest in any Collateral other than Permitted Liens and liens and security
interests in favor of the Agent; (h) will at all times keep all its Inventory
and other
11
<PAGE>
Goods insured under policies maintained with reputable, financially sound
insurance companies against loss, damage, theft and other risks to such extent
as is customarily maintained by companies similarly situated, and cause all such
policies to provide that loss thereunder shall be payable to the Agent as its
interest may appear (it being understood that (A) so long as no Default shall be
existing, the Agent shall deliver any proceeds of such insurance which may be
received by it to such Debtor and (B) whenever a Default shall be existing, the
Agent may apply any proceeds of such insurance which may be received by it
toward payment of the Liabilities, whether or not due, in such order of
application as the Agent may determine) and such policies or certificates
thereof shall, if the Agent so requests, be deposited with or furnished to the
Agent; (i) will take such actions as are reasonably necessary to keep its
Inventory in good repair and condition, ordinary wear and tear excepted; (j)
will take such actions as are reasonably necessary to keep its Equipment (other
than obsolete Equipment) in good repair and condition and in good working or
running order, ordinary wear and tear excepted; (k) will promptly pay when due
all license fees, registration fees, taxes, assessments and other charges which
may be levied upon or assessed against the ownership, operation, possession,
maintenance or use of its Equipment and other Goods (as applicable); provided,
however, that such Debtor shall not be required to pay any such fee, tax,
assessment or other charge if the validity thereof is being contested by such
Debtor in good faith by appropriate proceedings, so long as forfeiture of any
substantial part of its Equipment or other Goods will not result from the
failure of such Debtor to pay any such fee, tax, assessment or other charge
during the period of such contest; (l) will, upon request of the Agent, (i)
cause to be noted on the applicable certificate, in the event any of its
Equipment is covered by a certificate of title, the security interest of the
Agent in the Equipment covered thereby and (ii) deliver all such certificates to
the Agent or its designees; (m) will take all steps reasonably necessary to
protect, preserve and maintain all of its rights in the Collateral; (n) will
keep all of the tangible Collateral in the continental United States; and (o)
will reimburse the Agent for all expenses, including reasonable attorneys' fees
and legal expenses, incurred by the Agent in seeking to collect or enforce any
rights in respect of such Debtor's Collateral.
12
<PAGE>
Any expenses incurred in protecting, preserving and maintaining any
Collateral shall be borne by the applicable Debtor. Whenever a Default shall be
existing, the Agent shall have the right to bring suit to enforce any or all of
the Intellectual Property or licenses thereunder, in which event the applicable
Debtor shall at the request of the Agent do any and all lawful acts and execute
any and all proper documents required by the Agent in aid of such enforcement
and such Debtor shall promptly, upon demand, reimburse and indemnify the Agent
for all reasonable costs and expenses incurred by the Agent in the exercise of
its rights under this Section 6, except to the extent any of the foregoing
result from the gross negligence or willful misconduct of the Agent.
Notwithstanding the foregoing, the Agent shall have no obligations or
liabilities regarding the Collateral or any thereof by reason of, or arising out
of, this Agreement.
7. Default. Whenever a Default shall be existing, the Agent may exercise
-------
from time to time any rights and remedies available to it under applicable law.
Each Debtor agrees, in case of Default, (i) to assemble, at its expense, all its
Inventory and other Goods (other than Fixtures) at a convenient place or places
acceptable to the Agent, and (ii) at the Agent's request, to execute all such
documents and do all such other things which may be necessary or desirable in
order to enable the Agent or its nominee to be registered as owner of the
Intellectual Property with any competent registration authority. Any
notification of intended disposition of any of the Collateral required by law
shall be deemed reasonably and properly given if given at least five days before
such disposition. Any proceeds of any disposition by the Agent of any of the
Collateral may be applied by the Agent to payment of expenses in connection with
the Collateral, including reasonable attorneys' fees and legal expenses, and any
balance of such proceeds may be applied by the Agent toward the payment of such
of the Liabilities, and in such order of application, as the Agent may from time
to time elect.
8. General. The Agent shall be deemed to have exercised reasonable care
-------
in the custody and preservation of any of the Collateral in its possession if it
takes such action for that purpose as any applicable Debtor requests in writing,
but failure
13
<PAGE>
of the Agent to comply with any such request shall not of itself be deemed a
failure to exercise reasonable care, and no failure of the Agent to preserve or
protect any rights with respect to such Collateral against prior parties, or to
do any act with respect to the preservation of such Collateral not so requested
by any Debtor, shall be deemed a failure to exercise reasonable care in the
custody or preservation of such Collateral.
All notices hereunder shall be in writing (including facsimile
transmission) and shall be sent to the applicable party at its address shown on
Schedule I hereto or at such other address as such party may, by written notice
- ----------
received by the Agent, have designated as its address for such purpose. Notices
sent by facsimile transmission shall be deemed to have been given when sent;
notices sent by mail shall be deemed to have been given three Business Days
after the date when sent by registered or certified mail, postage prepaid; and
notices sent by hand delivery or overnight courier shall be deemed to have been
given when received.
Each of the Debtors agrees to pay all expenses (including reasonable
attorney's fees and legal expenses) paid or incurred by the Agent or any Bank in
endeavoring to collect the Liabilities of such Debtor, or any part thereof, and
in enforcing this Agreement against such Debtor, and such obligations will
themselves be Liabilities.
No delay on the part of the Agent in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by the
Agent of any right or remedy shall preclude other or further exercise thereof or
the exercise of any other right or remedy.
This Security Agreement shall remain in full force and effect until all
Liabilities have been paid in full and all Commitments have terminated. If at
any time all or any part of any payment theretofore applied by the Agent or any
Bank to any of the Liabilities is or must be rescinded or returned by the Agent
or such Bank for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of any Debtor), such Liabilities shall,
for the purposes of this Agreement, to the extent that such payment is or must
be
14
<PAGE>
rescinded or returned, be deemed to have continued in existence, notwithstanding
such application by the Agent or such Bank, and this Agreement shall continue to
be effective or be reinstated, as the case may be, as to such Liabilities, all
as though such application by the Agent or such Bank had not been made.
This Agreement has been delivered at Chicago, Illinois, and shall be
construed in accordance with and governed by the internal laws of the State of
Illinois, subject, however, to the applicability of the Uniform Commercial Code
of any jurisdiction in which any Goods of any Debtor may be located at any given
time. 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 or the
remaining provisions of this Agreement.
The rights and privileges of the Agent hereunder shall inure to the benefit
of its successors and assigns.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same Agreement. At any time after the date of this
Agreement, one or more additional persons or entities may become parties hereto
by executing and delivering to the Agent a counterpart of this Agreement
(including supplements to the Schedules hereto). Immediately upon such execution
and delivery (and without any further action), each such additional person or
entity will become a party to, and will be bound by all the terms of, this
Agreement.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT
-------- -------
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE
15
<PAGE>
FOUND. EACH DEBTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION
OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS
SET FORTH ABOVE. EACH DEBTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE ADDRESS SET FORTH ON
SCHEDULE I HERETO (OR SUCH OTHER ADDRESS AS IT SHALL HAVE SPECIFIED IN WRITING
TO THE AGENT AS ITS ADDRESS FOR NOTICES HEREUNDER) OR BY PERSONAL SERVICE WITHIN
OR WITHOUT THE STATE OF ILLINOIS. EACH DEBTOR HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER 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 ANY DEBTOR HAS 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 ITSELF OR ITS
PROPERTY, SUCH DEBTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
EACH OF EACH DEBTOR, THE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF) EACH
BANK HEREBY 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 LOAN DOCUMENT AND
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
16
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first above written.
UNITED RENTALS, INC.
By:______________________________
Name Printed:____________________
Title: Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent for
the Banks
By:______________________________
Name Printed:____________________
Title:___________________________
17
<PAGE>
Signature page for the Security Agreement dated as of
October 8, 1997 among United Rentals, Inc. (the "Company"),
various subsidiaries of the Company and Bank of America
National Trust and Savings Association, as U.S. Agent (as
defined in the Second Amended and Restated Credit Agreement
dated as of March 30, 1998 (the "Credit Agreement") with the
Company and various other parties) for the Banks referred to
in such Credit Agreement.
The undersigned is executing a counterpart hereof for
purposes of becoming a party hereto:
---------------------------------
By:______________________________
Name Printed:____________________
Title:___________________________
<PAGE>
SCHEDULE I
TO SECURITY AGREEMENT
CHIEF EXECUTIVE OFFICES
-----------------------
United Rentals, Inc.
Four Greenwich Office Park
Greenwich, CT 06830
Coran Enterprises Incorporated
355 East Market Street
Salinas, CA 93901
Monterey Bay Equipment Rentals, Inc.
355 East Market Street
Salinas, CA 93901
Bronco Hi-Lift Inc.
12600 East 38th Avenue
Denver, CO 80239
Rent-It Center, Inc.
955 West 2100 South
Salt Lake City, UT 84119
A&A Tool Rentals & Sales, Inc.
2911 E. Fremont Street
Stockton, CA 95205
Mercer Equipment Company
4240 S. Blvd.
Charlotte, NC 28209
<PAGE>
J&J Rental Services, Inc.
7667 Mosley
Houston, TX 77017
Nevada High Reach Equipment, Inc.
296 Parr Boulevard
Reno, NV 89512
Pro Rentals, Inc.
5950 St. Hwy. 303 NE
Bremerton, WA 98311
River City Machinery Co., Inc.
12952 Pond Springs Road
Austin, TX 78729
San Leandro Equipment Rental Service
14273 Washington Ave.
San Leandro, CA 94578
Mission Valley Rentals, Inc.
41655 Osgood Road
Fremont, California 94539
ASC Equipment Company, Inc.
432 Rankin Street
Fayetteville, NC 28301
Access Rentals, Inc.
45 Center Street
Batavia, New York 14020
[Santa Fe Supply & Rental Inc.]
221 Santa Fe Drive
Pueblo, Colorado 81006
2
<PAGE>
Equipment Rentals & Sales of Monroe, Inc.
Rentals Unlimited, Incorporated
Butler & Son, Inc.
Rental Equipment, Inc.
Butler & Derbershire
3
<PAGE>
SCHEDULE II
TO SECURITY AGREEMENT
ADDRESSES OF OTHER LOCATIONS
----------------------------
United Rentals, Inc.
1006 Vista
Pasadena, TX 77504
12952 Pond Springs Road
Austin, TX 78729
Coran Enterprises Incorporated
2860 Monterey Road
San Jose, California
1145 Story Road
San Jose, California
2330 Del Monte Ave.
Monterey, California
Bronco Hi-Lift Inc.
None
Rent-It Center, Inc.
None
A&A Tool Rentals & Sales, Inc.
2911 E. Fremont St.
Stockton, California 95205
200 Winmore Way
Modesto, California 95358
Mercer Equipment Company
<PAGE>
101 Mooresville Road
Salisbury, North Carolina 28144
121 Mooresville Road
Salisbury, North Carolina 28144
705 N. Anderson Road
Rock Hill, South Carolina 29730
732 Mount Gallant Road
Rock Hill, South Carolina 29730
4850 Old York Road
Rock Hill, South Carolina 29732
155 Corporate Blvd.
Indian Trail, North Carolina 28079
6004 West Market St.
Greensboro, North Carolina 27419
J&J Rental Services, Inc.
7115 Airport Boulevard
Houston, Texas 77017
710 I-35 South
Round Rock, Texas 78681
2326 Skymaster
Galveston, TX 77554
1006 Vista
Pasadena, TX 77504
2929 Texas Avenue
Texas City, TX
Nevada High Reach Equipment, Inc.
1510 West Fourth Street
Reno, Nevada 89503
2
<PAGE>
12095 Old Virginia Rd.
Reno, Nevada 89511
1550 Chestnut Street
Susanville, CA 96130
Pro Rentals, Inc.
1234 Navy Yard Hwy.
Bremerton, WA 98312
3302 Hunt Dr.
Gig Harbor, WA 98335
10001 Lakeview
Lakewood, WA 98499
3368 E. Hwy. 101
Port Angeles, WA 98362
6702 Bethel Rd. SE
Port Orchard, WA 98366
River City Machinery Co., Inc.
5311 SIH 35
Georgetown, TX 78626
1006 Vista
Pasadena, TX 77504
San Leandro Equipment Rental Service
None
Mission Valley Rentals, Inc.
5555 Stevenson Boulevard
Fremont, California 94538
3818 Rhonda Way
Tracy, California 95376
3
<PAGE>
6457 Dublin Court
Dublin, California 94568
ASC Equipment Company, Inc.
301 Center Street
Jacksonville, NC 28450
102 Bellfork Road
Jacksonville, NC 28450
1002 N. Williams Street
Goldsboro, NC 27530
Access Rentals, Inc.
42 Railroad Ave.
Albany, NY 12205
3191 Trewington Road
Colmar, PA 18915
68 Alna Lane
East Hartford, CT 06108
17425-1 Birchwood Lane
Fort Myers, FL 33908
14350 Jetport Loop
Fort Myers, Fl 33913
2216 S.W. 13th Street
Gainesville, FL
4108 South US Highway 31
Franklin, IN 46131
3810 Firestone Road
Jacksonville, FL 33210
616 Trolley Boulevard
Rochester, NY 14606
4
<PAGE>
3 Commercial Avenue
Garden City, NY 11530
1633 Ferrell Park
Memphis, TN 38116
1385 Lookout Drive
North Mankato, MN 46001
13135 43rd Street, N.E.
St. Michael, MN 55376
200 Sterling Mine Road
Sloatsburg, NY 10974
87 Bakersfield Street
North York, Ontario M3J1Z4
23 Clawson Street
Piscataway, NJ 08854
12610 NE 178th Street
Wondinville, WA 98072
360 Highway 183
Piedmont, SC 29673
7178 Schuyler Road
East Syracuse, NY 13507
613 Beechcroft Road
Spring Hill, TN 37174
[Santa Fe Supply & Rental Inc.]
None
Equipment Rentals & Sales of Monroe, Inc.
Rentals Unlimited, Incorporated
5
<PAGE>
Butler & Son, Inc.
Rental Equipment, Inc.
Butler & Derbershire
6
<PAGE>
SCHEDULE III
TO SECURITY AGREEMENT
TRADENAMES
----------
United Rentals, Inc.
None
Coran Enterprises Incorporated
Coran Enterprises Incorporated d/b/a A-1 Rents
Monterey Bay Equipment Rentals, Inc.
None
Bronco Hi-Lift Inc.
None
Rent-It Center, Inc.
None
A&A Tool Rentals & Sales, Inc.
None
Mercer Equipment Company
None
Nevada High Reach Equipment, Inc.
Nevada High Reach Equipment
<PAGE>
Pro Rentals, Inc.
Pro Rentals
River City Machinery Co., Inc.
River City Air & Hydraulics
San Leandro Equipment Rental Service
None
Mission Valley Rentals, Inc.
Mission Valley Equipment Rentals, Inc.
ASC Equipment Company, Inc.
None
Access Rentals, Inc.
None
Santa Fe Supply & Rental, Inc.
None
Equipment Rentals & Sales of Monroe, Inc.
Rentals Unlimited, Incorporated
Butler & Son, Inc.
Rental Equipment, Inc.
Butler & Derbershire
2
<PAGE>
SCHEDULE IV
TO SECURITY AGREEMENT
LIST OF INTELLECTUAL PROPERTY
-----------------------------
United Rentals, Inc.
None
Coran Enterprises Incorporated
None
Monterey Bay Equipment Rentals, Inc.
None
Bronco Hi-Lift Inc.
None
Rent-It Center, Inc.
None
A&A Tool Rentals & Sales, Inc.
None
Mercer Equipment Company
None
Nevada High Reach Equipment, Inc.
None
<PAGE>
Pro Rentals, Inc.
None
River City Machinery Co., Inc.
None
San Leandro Equipment Rental Service
None
Mission Valley Rentals, Inc.
None
ASC Equipment Company, Inc.
None
Access Rentals, Inc.
None
Santa Fe Equipment Rental, Inc.
None
Equipment Rentals & Sales of Monroe, Inc.
Rentals Unlimited, Incorporated
Butler & Son, Inc.
Rental Equipment, Inc.
Butler & Derbershire
2
<PAGE>
EXHIBIT E
COMPANY PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") dated as of October 8, 1997, is
---------
between UNITED RENTALS, INC., a ____________ corporation (the "Company"), and
-------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"), as Agent (as
----
defined below) for the Banks (as defined below).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company, various financial institutions (the "Banks") and
-----
BofA, as agent for the Banks (in such capacity, the "Agent"), have entered into
-----
the Credit Agreement dated as of October 8, 1997 (as amended, restated or
otherwise modified from time to time, the "Credit Agreement");
----------------
and
WHEREAS, the obligations of the Company in respect of the Loan Documents
(as defined in the Credit Agreement) are to be secured pursuant to this
Agreement;
NOW, THEREFORE, for and in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. When used herein, (a) the capitalized terms used but not
-----------
defined have the meanings assigned to such terms in the Credit Agreement and (b)
the following terms have the following meanings (such meanings to be applicable
to both the singular and plural forms of such terms):
Agent - see the recitals.
-----
Agreement - see the introductory paragraph.
---------
BofA - see the introductory paragraph.
----
Banks - see the recitals.
-----
Collateral - see Section 2.
---------- ---------
Company - see the introductory paragraph.
-------
Credit Agreement - see the recitals.
----------------
Default means the occurrence of any of the following events: (i) any
-------
Unmatured Event of Default with respect to the Company under Section 12.1.4
of the Credit Agreement, (ii) any Event of Default or (iii) any warranty of
the Company herein is untrue or misleading in any material respect and, as
a result thereof, the Agent's security interest in any material portion of
the Collateral is not
<PAGE>
perfected or the Agent's rights and remedies with respect to any material
portion of the Collateral are materially impaired or otherwise materially
adversely affected.
Guarantor means, on any day, each Subsidiary that has executed a
---------
counterpart of the Guaranty on or prior to that day (or is required to
execute a counterpart of the Guaranty on that date).
Issuer means the issuer of any of the shares of stock or other
------
securities representing all or any of the Collateral.
Liabilities means all obligations of the Company howsoever created,
-----------
arising or evidenced, whether direct or indirect, absolute or contingent,
now or hereafter existing, or due or to become due, which arise out of or
in connection with any of the Loan Documents (including, without
limitation, with respect to Letters of Credit), as the same may be amended,
modified, extended or renewed from time to time.
2. Pledge. As security for the payment of all Liabilities, the Company
------
hereby pledges to the Agent for the benefit of the Banks, and grants to the
Agent for the benefit of the Banks a continuing security interest in, all of the
following:
A. All of the shares of stock and other securities described in
Schedule I hereto, all of the certificates and/or instruments representing
----------
such shares of stock and other securities, and all cash, securities,
dividends, rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of such shares or other securities;
B. All additional shares of stock of any of the Issuers listed in
Schedule I hereto at any time and from time to time acquired by the Company
----------
in any manner, all of the certificates representing such additional shares,
and all cash, securities, dividends, rights and other property at any time
and from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares;
2
<PAGE>
C. All other property hereafter delivered to the Agent in
substitution for or in addition to any of the foregoing, all certificates
and instruments representing or evidencing such property, and all cash,
securities, interest, dividends, rights and other property at any time and
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all thereof; and
D. All products and proceeds of all of the foregoing.
All of the foregoing are herein collectively called the "Collateral".
The Company agrees to deliver to the Agent, promptly upon receipt and in
due form for transfer (i.e., endorsed in blank or accompanied by stock or bond
powers executed in blank), any Collateral (other than dividends which the
Company is entitled to receive and retain pursuant to Section 5 hereof) which
---------
may at any time or from time to time be in or come into the possession or
control of the Company; and prior to the delivery thereof to the Agent, such
Collateral shall be held by the Company separate and apart from its other
property and in express trust for the Agent.
3. Warranties; Further Assurances. The Company warrants to the Agent for
------------------------------
the benefit of each Bank that: (a) the Company is (or at the time of any future
delivery, pledge, assignment or transfer thereof will be) the legal and
equitable owner of the Collateral free and clear of all liens, security
interests and encumbrances of every description whatsoever other than the
security interest created hereunder; (b) the pledge and delivery of the
Collateral pursuant to this Agreement will create a valid perfected security
interest in the Collateral in favor of the Agent; (c) all shares of stock
referred to in Schedule I hereto are duly authorized, validly issued, fully paid
----------
and non-assessable; (d) as to each Issuer whose name appears in Schedule I
----------
hereto, the Collateral represents on the date hereof not less than the
applicable percent (as shown in Schedule I hereto) of the total shares of
----------
capital stock issued and outstanding of such Issuer; and (e) the information
contained in Schedule I hereto is true and accurate in all respects.
----------
3
<PAGE>
So long as any of the Liabilities shall be outstanding or any commitment
shall exist on the part of any Bank with respect to the creation of any
Liabilities, the Company (i) shall not, except as permitted by the Credit
Agreement or with the express prior written consent of the Agent, sell, assign,
exchange, pledge or otherwise transfer, encumber, or grant any option, warrant
or other right to purchase the stock of any Issuer which is pledged hereunder,
or otherwise diminish or impair any of its rights in, to or under any of the
Collateral; (ii) shall execute such Uniform Commercial Code financing statements
and other documents (and pay the costs of filing and recording or re-filing and
re-recording the same in all public offices reasonably deemed necessary or
appropriate by the Agent) and do such other acts and things, all as the Agent
may from time to time reasonably request, to establish and maintain a valid,
perfected security interest in the Collateral (free of all other liens, claims
and rights of third parties whatsoever) to secure the performance and payment of
the Liabilities; (iii) will execute and deliver to the Agent such stock powers
and similar documents relating to the Collateral, satisfactory in form and
substance to the Agent, as the Agent may reasonably request; and (iv) will
furnish the Agent or any Bank such information concerning the Collateral as the
Agent or such Bank may from time to time reasonably request, and will permit the
Agent or any Bank or any designee of the Agent or such Bank, from time to time
at reasonable times and on reasonable notice (or at any time without notice
during the existence of a Default), to inspect, audit and make copies of and
extracts from all records and all other papers in the possession of the Company
which pertain to the Collateral, and will, upon request of the Agent at any time
when a Default has occurred and is continuing, deliver to the Agent all of such
records and papers.
4. Holding in Name of Agent, etc. The Agent may from time to time after
-----------------------------
the occurrence and during the continuance of a Default, without notice to the
Company, take all or any of the following actions: (a) transfer all or any part
of the Collateral into the name of the Agent or any nominee or sub-agent for the
Agent, with or without disclosing that such Collateral is subject to the lien
and security interest hereunder, (b) appoint one or more sub-agents or nominees
for the purpose of retaining physical possession of the Collateral, (c) notify
the parties
4
<PAGE>
obligated on any of the Collateral to make payment to the Agent of any amounts
due or to become due thereunder, (d) endorse any checks, drafts or other
writings in the name of the Company to allow collection of the Collateral, (e)
enforce collection of any of the Collateral by suit or otherwise, and surrender,
release or exchange all or any part thereof, or compromise or renew for any
period (whether or not longer than the original period) any obligations of any
nature of any party with respect thereto, and (f) take control of any proceeds
of the Collateral.
5. Voting Rights, Dividends, etc. (a) Notwithstanding certain provisions
-----------------------------
of Section 4 hereof, so long as the Agent has not given the notice referred to
---------
in paragraph (b) below:
-------------
A. The Company shall be entitled to exercise any and all voting or
consensual rights and powers and stock purchase or subscription rights (but
any such exercise by the Company of stock purchase or subscription rights
may be made only from funds of the Company not comprising part of the
Collateral) relating or pertaining to the Collateral or any part thereof
for any purpose; provided, however, that the Company agrees that it will
-------- -------
not exercise any such right or power in any manner which would have a
material adverse effect on the value of the Collateral or any part thereof.
B. The Company shall be entitled to receive and retain any and all
lawful dividends payable in respect of the Collateral which are paid in
cash by any Issuer if such dividends are permitted by the Credit Agreement,
but all dividends and distributions in respect of the Collateral or any
part thereof made in shares of stock or securities or other property or
representing any return of capital, whether resulting from a subdivision,
combination or reclassification of Collateral or any part thereof or
received in exchange for Collateral or any part thereof or as a result of
any merger, consolidation, acquisition or other exchange of assets to which
any Issuer may be a party or otherwise or as a result of any exercise of
any stock purchase or subscription right, shall be and become part of the
Collateral hereunder and, if received by the Company, shall be forthwith
delivered to the Agent in due form for transfer (i.e., endorsed in blank or
accompanied by stock or
5
<PAGE>
bond powers executed in blank) to be held for the purposes of this
Agreement.
C. The Agent shall execute and deliver, or cause to be executed and
delivered, to the Company, all such proxies, powers of attorney, dividend
orders and other instruments as the Company may request for the purpose of
enabling the Company to exercise the rights and powers which it is entitled
to exercise pursuant to clause (A) above and to receive the dividends which
----------
it is authorized to retain pursuant to clause (B) above.
----------
(b) Upon notice from the Agent during the existence of a Default, and so
long as the same shall be continuing, all rights and powers which the Company is
entitled to exercise pursuant to Section 5(a)(A) hereof, and all rights of the
---------------
Company to receive and retain dividends pursuant to Section 5(a)(B) hereof,
---------------
shall forthwith cease, and all such rights and powers shall thereupon become
vested in the Agent which shall have, during the continuance of such Default,
the sole and exclusive authority to exercise such rights and powers and to
receive such dividends. Any and all money and other property paid over to or
received by the Agent pursuant to this paragraph (b) shall be retained by the
-------------
Agent as additional Collateral hereunder and applied in accordance with the
provisions hereof.
6. Remedies. Whenever a Default shall exist, the Agent may exercise from
--------
time to time any rights and remedies available to it under the Uniform
Commercial Code as in effect in Illinois or otherwise available to it. Without
limiting the foregoing, whenever a Default shall exist the Agent (a) may, to the
fullest extent permitted by applicable law, without notice, advertisement,
hearing or process of law of any kind, (i) sell any or all of the Collateral,
free of all rights and claims of the Company therein and thereto, at any public
or private sale or brokers' board and (ii) bid for and purchase any or all of
the Collateral at any such public sale and (b) shall have the right, for and in
the name, place and stead of the Company, to execute endorsements, assignments,
stock powers and other instruments of conveyance or transfer with respect to all
or any of the Collateral. The Company hereby expressly waives, to the fullest
extent permitted by applicable law, any and all notices,
6
<PAGE>
advertisements, hearings or process of law in connection with the exercise by
the Agent of any of its rights and remedies during the continuance of a Default.
Any notification of intended disposition of any of the Collateral shall be
deemed reasonably and properly given if given at least ten (10) days before such
disposition. Any proceeds of any of the Collateral may be applied by the Agent
to the payment of expenses in connection with the Collateral, including, without
limitation, reasonable attorneys' fees and legal expenses, and any balance of
such proceeds may be applied by the Agent toward the payment of such of the
Liabilities, and in such order of application, as the Agent may from time to
time elect (and, after payment in full of all Liabilities, any excess shall be
delivered to the Company or as a court of competent jurisdiction shall direct).
The Agent is hereby authorized to comply with any limitation or restriction
in connection with any sale of Collateral as it may be advised by counsel is
necessary in order to (a) avoid any violation of applicable law (including,
without limitation, compliance with such procedures as may restrict the number
of prospective bidders and purchasers and/or further restrict such prospective
bidders or purchasers to persons or entities who will represent and agree that
they are purchasing for their own account for investment and not with a view to
the distribution or resale of such Collateral) or (b) obtain any required
approval of the sale or of the purchase by any governmental regulatory authority
or official, and the Company agrees that such compliance shall not result in
such sale being considered or deemed not to have been made in a commercially
reasonable manner and that the Agent shall not be liable or accountable to the
Company for any discount allowed by reason of the fact that such Collateral is
sold in compliance with any such limitation or restriction.
7. General. The Agent shall be deemed to have exercised reasonable care
-------
in the custody and preservation of the Collateral if it takes such action for
that purpose as the Company shall request in writing, but failure of the Agent
to comply with any such request shall not of itself be deemed a failure to
exercise reasonable care, and no failure of the Agent to preserve or protect any
rights with respect to the Collateral against prior parties, or to do any act
with respect to preservation of the
7
<PAGE>
Collateral not so requested by the Company, shall be deemed a failure to
exercise reasonable care in the custody or preservation of any Collateral.
No delay on the part of the Agent in exercising any right, power or remedy
shall operate as a waiver thereof, and no single or partial exercise of any such
right, power or remedy shall preclude any 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 be
effective unless the same shall be in writing and signed and delivered by the
Agent, and then such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
All obligations of the Company and all rights, powers and remedies of the
Agent and the Banks expressed herein are in addition to all other rights, powers
and remedies possessed by them, including, without limitation, those provided by
applicable law or in any other written instrument or agreement relating to any
of the Liabilities or any security therefor.
This Agreement has been delivered at Chicago, Illinois, and shall be
construed in accordance with and governed by the internal laws of the State of
Illinois. Wherever 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
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
This Agreement shall be binding upon the Company and the Agent and their
respective successors and assigns, and shall inure to the benefit of the Company
and the Agent and the successors and assigns of the Agent.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed an original but all such
8
<PAGE>
counterparts shall together constitute but one and the same Agreement.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT
-------- -------
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE COMPANY HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS
AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE COMPANY FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, TO THE ADDRESS OF THE COMPANY SPECIFIED IN, OR PURSUANT TO, THE LOAN
DOCUMENTS, AS APPLICABLE, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
ILLINOIS. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER 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 COMPANY HAS 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 ITSELF OR ITS PROPERTY, THE COMPANY HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
EACH OF THE COMPANY, THE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF) EACH
BANK HEREBY 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 LOAN DOCUMENT AND
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
9
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as
of the day and year first written above.
UNITED RENTALS, INC.
Address:
By:_____________________________
Four Greenwich Office Park Name Printed:___________________
Greenwich, CT 06830 Title: Chief Financial Officer
Attention: Chief Financial Officer
Facsimile: (203) 622-6080
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
Address:
By:__________________________
231 South LaSalle Street Name Printed:________________
Chicago, IL 60697 Title: Vice President
Attention: Service Industries Group
Facsimile: (312) 828-1974
10
<PAGE>
SCHEDULE I
TO PLEDGE AGREEMENT
STOCK
-----
Pledged Shares
No. of as % of Total Total Shares
Certificate Pledged Shares Issued of Issuer
Issuer No. Shares and Outstanding Outstanding
- ------ ----------- ------- --------------- ------------
11
<PAGE>
EXHIBIT F
FORM OF
SUBSIDIARY PLEDGE AGREEMENT
THIS SUBSIDIARY PLEDGE AGREEMENT (this "Agreement") dated as of
---------
is between , a corporation (the
- ------------ -------------------- ----------
"Pledgor"), and Bank of America National Trust and Savings Association in its
- --------
capacity as U.S. Agent for the Banks referred to below.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Second Amended and Restated Credit Agreement dated
as of March 30, 1998 (as amended or otherwise modified from time, the "Credit
------
Agreement") among United Rentals, Inc. (the "Company"), United Rentals of
- --------- -------
Canada, Inc., various financial institutions, Bank of America Canada, as
Canadian Agent, and the U.S. Agent, the Banks have agreed to make loans to, and
to issue or participate in letters of credit for the account of, the Borrowers
from time to time;
WHEREAS, the Pledgor has executed and delivered a guaranty (the "Guaranty")
--------
of the obligations of the Company under the Credit Agreement; and
WHEREAS, the obligations of the Pledgor under the Guaranty are to be
secured pursuant to this Agreement;
NOW, THEREFORE, for and in consideration of any loan, advance or other
financial accommodation heretofore or hereafter made to the Company under or in
connection with the Credit Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. When used herein, (a) capitalized terms used but not
-----------
defined have the meanings assigned to such terms in the Credit Agreement and (b)
the following terms have the following meanings (such meanings to be applicable
to both the singular and plural forms of such terms):
<PAGE>
Collateral - see Section 2.
---------- ---------
Default means the occurrence of any of the following events: (a) any
-------
Unmatured Event of Default under Section 12.1.4 of the Credit Agreement
with respect to the Company; (b) any Event of Default; or (c) any warranty
of the Pledgor herein is untrue or misleading in any material respect and,
as a result thereof, the U.S. Agent's security interest in any material
portion of the Collateral is not perfected or the U.S. Agent's rights and
remedies with respect to any material portion of the Collateral is
materially impaired or otherwise materially adversely affected.
Issuer means the issuer of any of the shares of stock or other
------
securities representing all or any of the Collateral.
Liabilities means all obligations (monetary or otherwise) of the
-----------
Pledgor under the Guaranty, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due.
2. Pledge. As security for the payment of all Liabilities, the Pledgor
------
hereby pledges to the U.S. Agent, and grants to the U.S. Agent a continuing
security interest in, all of the following:
A. All of the shares of stock and other securities described in
Schedule I hereto, all of the certificates and/or instruments representing
----------
such shares of stock and other securities, and all cash, securities,
dividends, rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of such shares or other securities;
B. All additional shares of stock of any of the Issuers listed in
Schedule I hereto at any time and from time to time acquired by the Pledgor
----------
in any manner, all of the certificates representing such additional shares,
and
2
<PAGE>
all cash, securities, dividends, rights and other property at any time and
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such shares;
C. All other property hereafter delivered to the U.S. Agent in
substitution for or in addition to any of the foregoing, all certificates
and instruments representing or evidencing such property, and all cash,
securities, interest, dividends, rights and other property at any time and
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all thereof; and
D. All products and proceeds of all of the foregoing.
All of the foregoing are herein collectively called the "Collateral".
----------
The Pledgor agrees to deliver to the U.S. Agent, promptly upon receipt and
in due form for transfer (i.e., endorsed in blank or accompanied by stock or
bond powers executed in blank), any Collateral (other than dividends which the
Company is entitled to receive and retain pursuant to Section 5 hereof) which
---------
may at any time or from time to time be in or come into the possession or
control of the Pledgor; and prior to the delivery thereof to the U.S. Agent,
such Collateral shall be held by the Pledgor separate and apart from its other
property and in express trust for the U.S. Agent.
3. Warranties; Further Assurances. The Pledgor warrants to the U.S.
------------------------------
Agent and each Bank that: (a) the Pledgor is (or at the time of any future
delivery, pledge, assignment or transfer thereof will be) the legal and
equitable owner of the Collateral free and clear of all liens, security
interests and encumbrances of every description whatsoever other than the
security interest created hereunder; (b) the pledge and delivery of the
Collateral pursuant to this Agreement will create a valid perfected security
interest in the Collateral in favor of the U.S. Agent; (c) all shares of stock
referred to in Schedule I hereto are duly authorized, validly issued, fully paid
----------
and non-assessable; (d) as to each Issuer whose name appears in Schedule I
----------
hereto, the
3
<PAGE>
Collateral represents on the date hereof not less than the applicable percent
(as shown in Schedule I hereto) of the total shares of capital stock issued
----------
and outstanding of such Issuer; and (e) the information contained in Schedule I
----------
hereto is true and accurate in all respects.
So long as any of the Liabilities shall be outstanding or any commitment
shall exist on the part of the U.S. Agent or any Bank with respect to the making
of any Loans or the creation of any other Liabilities, the Pledgor (i) shall
not, except as permitted by the Credit Agreement or with the express prior
written consent of the U.S. Agent, sell, assign, exchange, pledge or otherwise
transfer, encumber, or grant any option, warrant or other right to purchase the
stock of any Issuer which is pledged hereunder, or otherwise diminish or impair
any of its rights in, to or under any of the Collateral; (ii) shall execute such
Uniform Commercial Code financing statements and other documents (and pay the
costs of filing and recording or re-filing and re-recording the same in all
public offices deemed necessary or appropriate by the U.S. Agent) and do such
other acts and things, all as the U.S. Agent may from time to time reasonably
request, to establish and maintain a valid, perfected security interest in the
Collateral (free of all other liens, claims and rights of third parties
whatsoever) to secure the performance and payment of the Liabilities; (iii) will
execute and deliver to the U.S. Agent such stock powers and similar documents
relating to the Collateral, satisfactory in form and substance to the U.S.
Agent, as the U.S. Agent may reasonably request; and (iv) will furnish the U.S.
Agent or any Bank such information concerning the Collateral as the U.S. Agent
or such Bank may from time to time reasonably request, and will permit the U.S.
Agent or any Bank or any designee of the U.S. Agent or any Bank, from time to
time at reasonable times and on reasonable notice (or at any time without notice
during the existence of a Default), to inspect, audit and make copies of and
extracts from all records and all other papers in the possession of the Pledgor
which pertain to the Collateral, and will, upon request of the U.S. Agent at any
time when a Default has occurred and is continuing, deliver to the U.S. Agent
all of such records and papers.
4. Holding in Name of U.S. Agent, etc. The U.S. Agent may from time to
----------------------------------
time after the occurrence and during the continuance
4
<PAGE>
of a Default, without notice to the Pledgor, take all or any of the following
actions: (a) transfer all or any part of the Collateral into the name of the
U.S. Agent or any nominee or sub-agent for the U.S. Agent, with or without
disclosing that such Collateral is subject to the lien and security interest
hereunder, (b) appoint one or more sub-agents or nominees for the purpose of
retaining physical possession of the Collateral, (c) notify the parties
obligated on any of the Collateral to make payment to the U.S. Agent of any
amounts due or to become due thereunder, (d) endorse any checks, drafts or other
writings in the name of the Pledgor to allow collection of the Collateral, (e)
enforce collection of any of the Collateral by suit or otherwise, and surrender,
release or exchange all or any part thereof, or compromise or renew for any
period (whether or not longer than the original period) any obligations of any
nature of any party with respect thereto, and (f) take control of any proceeds
of the Collateral.
5. Voting Rights, Dividends, etc. (a) Notwithstanding certain provisions
-----------------------------
of Section 4 hereof, so long as the U.S. Agent has not given the notice referred
---------
to in paragraph (b) below:
-------------
A. The Pledgor shall be entitled to exercise any and all voting or
consensual rights and powers and stock purchase or subscription rights (but
any such exercise by the Pledgor of stock purchase or subscription rights
may be made only from funds of the Pledgor not comprising part of the
Collateral) relating or pertaining to the Collateral or any part thereof
for any purpose; provided, however, that the Pledgor agrees that it will
-------- -------
not exercise any such right or power in any manner which would have a
material adverse effect on the value of the Collateral or any part thereof.
B. The Pledgor shall be entitled to receive and retain any and all
lawful dividends payable in respect of the Collateral which are paid in
cash by any Issuer if such dividends are permitted by the Credit Agreement,
but all dividends and distributions in respect of the Collateral or any
part thereof made in shares of stock or other property or representing any
return of capital, whether resulting from a subdivision, combination or
reclassification of Collateral or any part thereof or received in exchange
for
5
<PAGE>
Collateral or any part thereof made in shares of stock or other property or
representing any return of capital, whether resulting from a subdivision,
combination or reclassification of Collateral or any part thereof or
received in exchange for Collateral or any part thereof or as a result of
any merger, consolidation, acquisition or other exchange of assets to which
any Issuer may be a party or otherwise or as a result of any exercise of
any stock purchase or subscription right, shall be and become part of the
Collateral hereunder and, if received by the Pledgor, shall be forthwith
delivered to the U.S. Agent in due form for transfer (i.e., endorsed in
blank or accompanied by stock or bond powers executed in blank) to be held
for the purposes of this Agreement.
C. The U.S. Agent shall execute and deliver, or cause to be executed
and delivered, to the Pledgor, all such proxies, powers of attorney,
dividend orders and other instruments as the Pledgor may request for the
purpose of enabling the Pledgor to exercise the rights and powers which it
is entitled to exercise pursuant to clause (A) above and to receive the
----------
dividends which it is authorized to retain pursuant to clause (B) above.
----------
(b) Upon notice from the U.S. Agent during the existence of a Default, and
so long as the same shall be continuing, all rights and powers which the Pledgor
is entitled to exercise pursuant to Section 5(a)(A) hereof, and all rights of
---------------
the Pledgor to receive and retain dividends pursuant to Section 5(a)(B) hereof,
---------------
shall forthwith cease, and all such rights and powers shall thereupon become
vested in the U.S. Agent which shall have, during the continuance of such
Default, the sole and exclusive authority to exercise such rights and powers and
to receive such dividends. Any and all money and other property paid over to or
received by the U.S. Agent pursuant to this paragraph (b) shall be retained by
-------------
the U.S. Agent as additional Collateral hereunder and applied in accordance with
the provisions hereof.
6. Remedies. Whenever a Default shall exist, the U.S. Agent may exercise
--------
from time to time any rights and remedies available to it under the Uniform
Commercial Code as in effect in Illinois or otherwise available to it. Without
limiting the foregoing, whenever a Default shall exist the U.S. Agent (a) may,
to the fullest extent permitted by applicable law, without notice,
advertisement, hearing or process of law of any kind, (i) sell any or all of the
Collateral, free of all rights and claims of the Pledgor therein and thereto, at
any public or private sale
6
<PAGE>
or brokers' board and (ii) bid for and purchase any or all of the Collateral at
any such public sale and (b) shall have the right, for and in the name, place
and stead of the Pledgor, to execute endorsements, assignments, stock powers and
other instruments of conveyance or transfer with respect to all or any of the
Collateral. The Pledgor hereby expressly waives, to the fullest extent permitted
by applicable law, any and all notices, advertisements, hearings or process of
law in connection with the exercise by the U.S. Agent of any of its rights and
remedies during the continuance of a Default. Any notification of intended
disposition of any of the Collateral shall be deemed reasonably and properly
given if given at least ten (10) days before such disposition. Any proceeds of
any of the Collateral may be applied by the U.S. Agent to the payment of
expenses in connection with the Collateral, including, without limitation,
reasonable attorneys' fees and legal expenses, and any balance of such proceeds
may be applied by the U.S. Agent toward the payment of such of the Liabilities,
and in such order of application, as the U.S. Agent may from time to time elect
(and, after payment in full of all Liabilities, any excess shall be delivered to
the Pledgor or as a court of competent jurisdiction shall direct).
The U.S. Agent is hereby authorized to comply with any limitation or
restriction in connection with any sale of Collateral as it may be advised by
counsel is necessary in order to (a) avoid any violation of applicable law
(including, without limitation, compliance with such procedures as may restrict
the number of prospective bidders and purchasers and/or further restrict such
prospective bidders or purchasers to persons or entities who will represent and
agree that they are purchasing for their own account for investment and not with
a view to the distribution or resale of such Collateral) or (b) obtain any
required approval of the sale or of the purchase by any governmental regulatory
authority or official, and the Pledgor agrees that such compliance shall not
result in such sale being considered or deemed not to have been made in a
commercially reasonable manner and that the U.S. Agent shall not be liable or
accountable to the Pledgor for any discount allowed by reason of the fact that
such Collateral is sold in compliance with any such limitation or restriction.
7
<PAGE>
7. General. The U.S. Agent shall be deemed to have exercised reasonable
-------
care in the custody and preservation of the Collateral if it takes such action
for that purpose as the Pledgor shall request in writing, but failure of the
U.S. Agent to comply with any such request shall not of itself be deemed a
failure to exercise reasonable care, and no failure of the U.S. Agent to
preserve or protect any rights with respect to the Collateral against prior
parties, or to do any act with respect to preservation of the Collateral not so
requested by the Pledgor, shall be deemed a failure to exercise reasonable care
in the custody or preservation of any Collateral.
No delay on the part of the U.S. Agent in exercising any right, power or
remedy shall operate as a waiver thereof, and no single or partial exercise of
any such right, power or remedy shall preclude any 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 be effective unless the same shall be in writing and signed and
delivered by the U.S. Agent, and then such amendment, modification, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
All obligations of the Pledgor and all rights, powers and remedies of the
U.S. Agent and the Banks expressed herein are in addition to all other rights,
powers and remedies possessed by them, including, without limitation, those
provided by applicable law or in any other written instrument or agreement
relating to any of the Liabilities or any security therefor.
This Agreement has been delivered at Chicago, Illinois, and shall be
construed in accordance with and governed by the internal laws of the State of
Illinois. Wherever 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
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
8
<PAGE>
This Agreement shall be binding upon the Pledgor and the U.S. Agent and
their respective successors and assigns, and shall inure to the benefit of the
Pledgor and the U.S. Agent and the successors and assigns of the U.S. Agent.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed an original but all such counterparts shall together constitute
but one and the same Agreement.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT
-------- -------
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE U.S. AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE PLEDGOR HEREBY EXPRESSLY
AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF
ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE PLEDGOR
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, TO THE ADDRESS OF THE PLEDGOR SHOWN BELOW OR AT ANY OTHER
ADDRESS OF THE PLEDGOR APPEARING ON THE RECORDS OF THE U.S. AGENT, OR BY
PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE PLEDGOR HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER 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 PLEDGOR HAS 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
ITSELF OR ITS PROPERTY, THE PLEDGOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
EACH OF THE PLEDGOR, THE U.S. AGENT AND (BY ACCEPTING THE BENEFITS HEREOF)
EACH BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
TO ENFORCE OR DEFEND ANY RIGHTS
9
<PAGE>
UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
10
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as
of the day and year first written above.
[PLEDGOR]
Address:
By: ________________________
_____________________ Name: ________________________
_____________________ Title: ________________________
Attention: __________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as U.S. Agent
Address:
By:
_________________________
231 South LaSalle Street Name: _________________________
Chicago, Illinois 60697 Title: Vice President
Attention: Service
Industries Group
11
<PAGE>
SCHEDULE I
TO
SUBSIDIARY PLEDGE AGREEMENT
STOCK
-----
Pledged Shares
No. of as % of Total Total Shares of
Certificate Pledged Shares Issued Issuer
Issuer No. Shares and Outstanding Outstanding
- -------- ----------- ------- --------------- ---------------
12
<PAGE>
EXHIBIT G
SUBORDINATION PROVISIONS APPLICABLE TO
SUBORDINATED DEBT
1. The indebtedness evidenced by the subordinated notes/*/ shall at all times
be wholly subordinate and junior in right or payment to any and all
Superior Indebtedness (as defined below) in the manner and with the force
and effect hereafter set forth:
a. In the event of any liquidation, dissolution or winding up of the
Company, or of any execution sale, receivership, insolvency,
bankruptcy, reorganization or other similar proceeding relative to the
Company or its property, all principal, interest, fees, reimbursement
obligations and other amounts owing on all Superior Indebtedness shall
first be paid in full before any payment is made upon the indebtedness
evidenced by the subordinated notes; and in any such event any payment
or distribution of any kind or character, whether in cash, property or
securities (other than in securities or other evidences of
indebtedness, the payment of which is subordinated to the same extent
as the indebtedness evidenced hereby to the payment of all Superior
Indebtedness which may at the time be outstanding) which shall be made
upon or in respect of the subordinated notes shall be paid over to the
holders of such Superior Indebtedness, pro rata, for application in
payment thereof until such Superior Indebtedness shall have been paid
or satisfied in full.
b. (a) During the continuance of any default in any agreement pursuant to
which any Superior Indebtedness is issued which arises from the
failure to pay when due (whether by acceleration or otherwise) any
principal of, premium, if any, interest on, fees or other amounts in
respect of such Superior Indebtedness (a "Superior
--------
- ---------------
/*/ Or debentures or other designation as may be appropriate.
<PAGE>
Payment Default"), no payment of principal, premium or interest shall
---------------
be made on the subordinated notes if either (i) notice in writing of
such default has been given to the Company by any holder or holders of
any Superior Indebtedness or (ii) judicial proceedings shall be
pending in respect of such default.
(b) During the continuance of any event of default or unmatured event
of default in any agreement pursuant to which any Superior
Indebtedness is issued other than a Superior Payment Default (a
"Superior Non-Payment Default") as to which the Company has received
-----------------------------
notice in writing from any holder or holders of Superior Indebtedness,
no payment of principal, premium or interest shall be made on the
subordinated notes for a period (each, a "Payment Blockage Period")
-----------------------
commencing on the date of receipt by the Company of such notice and
terminating on the earliest to occur of the following dates: (i) the
date of acceleration of the Superior Indebtedness, (ii) 180 days after
the Company's receipt of such written notice, (iii) the date such
Superior Non-Payment Default shall have been cured or waived, or shall
have ceased to exist, (iv) the date the Superior Indebtedness shall
have been discharged or paid in full in cash, or (v) the date such
Payment Blockage Period shall have been terminated by written notice
to the Company from the holder or holders of Superior Indebtedness
initiating such Payment Blockage Period, after which, in the case of
clauses (ii), (iii), (iv) and (v), the Company shall resume making
------------ ----- ---- ---
payments in respect of the subordinated notes, unless clause (a) above
----------
is then applicable.
c. If the subordinated notes are declared or become due and payable
because of the occurrence of any default thereunder or under the
agreement or instrument under which they are issued or otherwise than
at the option of the Company, under circumstances when clause (a)
----------
above shall not be applicable, the holders of the subordinated notes
shall not be entitled to payments until sixty (60) days after such
event and then only if
2
<PAGE>
such payment is permitted under clauses (a) and (b) above.
2. The holder of each subordinated note undertakes and agrees for the benefit
of each holder of Superior Indebtedness to execute, verify, deliver and
file any proof of claim, consent, assignment or other instrument which any
holder of Superior Indebtedness may at any time require in order to prove
and realize upon any right or claim pertaining to the subordinated notes
and to effectuate the full benefit of the subordination contained herein;
and upon failure of the holder of any subordinated note so to do any such
holder of Superior Indebtedness shall be deemed to be irrevocably appointed
the agent and attorney-in-fact of the holder of such note to execute,
verify, deliver and file any such proof of claim, consent, assignment or
other instrument.
3. No right of any holder of any Superior Indebtedness to enforce
subordination as herein provided shall at any time or in any way be
affected or impaired by any failure to act on the part of the Company or
any holder of Superior Indebtedness, or by any non-compliance by the
Company with any term, provision or covenant of the subordinated notes or
the agreement under which they are issued, regardless of any knowledge
thereof that any such holder of Superior Indebtedness may have or be
otherwise charged with.
4. The Company agrees, for the benefit of the holders of Superior
Indebtedness, that in the event that any subordinated note is declared due
and payable before its expressed maturity because of the occurrence of a
default thereunder or under the agreement under which it was issued, the
Company will give prompt notice in writing of such happening to the holders
of Superior Indebtedness.
5. "Superior Indebtedness" means (a) all obligations of the Company under or
---------------------
in connection with the Second Amended and Restated Credit Agreement, dated
as of March 30, 1998 among the Company, United Rentals of Canada, Inc.,
various financial institutions, Bank of America Canada, as Canadian Agent,
and Bank of America National Trust and Savings Association, as U.S. Agent
(as amended, restated, amended
3
<PAGE>
and restated or otherwise modified from time to time, the "Credit
Agreement"), whether for principal, interest (including any interest that
would accrue but for the filing of a petition initiating any bankruptcy,
insolvency or like proceeding, whether or not such interest is an allowed
claim enforceable against the debtor), fees, expenses or otherwise and (b)
all obligations of the Company under or in connection with any interest
rate swap agreement or similar hedging arrangement (as amended or otherwise
modified from time to time) with any financial institution which is a party
to the Credit Agreement.
4
<PAGE>
EXHIBIT H
FORM OF
ASSIGNMENT AGREEMENT/*/
Reference is made to Section 15.9.1 of the Second Amended and Restated
Credit Agreement dated as of March 30, 1998 (as amended or otherwise modified,
the "Credit Agreement"), among United Rentals, Inc., United Rentals of Canada,
----------------
Inc. various financial institutions, Bank of America Canada, as Canadian Agent,
and Bank of America National Trust and Savings Association, as U.S. Agent.
Unless otherwise defined herein or the context otherwise requires, terms used
herein have the meanings provided in the Credit Agreement.
_____________________________________ (the "Assignor") and
--------
__________________________________________ (the "Assignee") hereby agree as
--------
follows:
The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, that interest in and to the
Assignor's rights and obligations under the Credit Agreement and the other Loan
Documents as of the date hereof equal to _____% of all of the Assignor's
Commitment, together with a corresponding portion of the Assignor's outstanding
U.S. Loans and rights in respect of its participation in respect of the Letters
of Credit and the Swing Line Loans, such purchase and assignment to be effective
as of the effective date set forth herein. After giving effect to such
assignment and delegation, the Assignor's and Assignee's Percentages for the
purposes of the Credit Agreement will be as set forth opposite each such
Person's name on the signature pages hereof.
The effective date of this Agreement shall be the date when the consents of
the U.S. Agent and the Company to this Agreement have been received and the
conditions set forth in clauses (x), (y) and (z) of the proviso to the first
paragraph of Section 15.9.1 of the Credit Agreement shall be either met or
waived.
- ---------------
/*/ Appropriate adjustments should be made to this Agreement if all or a
portion of the Commitment of any Canadian Bank is to be assigned.
<PAGE>
The Assignor hereby instructs the Agents to make all payments after the
effective date hereof in respect of the interest assigned hereby directly to the
Assignee. The Assignor and the Assignee agree that all interest and fees
accrued up to, but not including, the effective date of the assignment and
delegation being made hereby are the property of the Assignor, and not the
Assignee. The Assignee agrees that, upon receipt of any such interest or fees,
the Assignee will promptly remit the same to the Assignor.
The Assignee hereby confirms that it has received a copy of the Credit
Agreement and the exhibits related thereto, together with copies of the
documents which were required to be delivered under the Credit Agreement as a
condition to the making of the Loans and the issuing of Letters of Credit
thereunder. The Assignee acknowledges and agrees that it (i) has made and will
continue to make such inquiries and has taken and will take such care on its own
behalf as would have been the case had its Commitment been granted, the Letters
of Credit been issued and its Loans been made directly by such Assignee to or
for the benefit of the applicable Borrower without the intervention of the
Agents, the Assignor or any other Bank and (ii) has made and will continue to
make, independently and without reliance upon the Agents, the Assignor or any
other Bank and based on such documents and information as it deems appropriate,
its own credit analysis and decisions relating to the Credit Agreement. The
Assignee further acknowledges and agrees that the Agents, the Assignor and the
other Banks make no representations or warranties about the creditworthiness of
either Borrower or any other party to the Credit Agreement or any other Loan
Document or with respect to the legality, validity, sufficiency or
enforceability of the Credit Agreement or any other Loan Document or the value
of any security therefor.
The Assignor represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim.
The Assignee represents and warrants to the Agents and the Borrowers that,
as of the date hereof, the Borrowers will not be obligated to pay any greater
amount under Section 7.6 or Section
<PAGE>
8 of the Credit Agreement than the Borrowers are obligated to pay to the
Assignor under such Sections.
Except as otherwise provided in the Credit Agreement, effective as of the
date of acceptance hereof by the U.S. Agent:
(a) the Assignee (i) shall be deemed automatically to have become a party
to the Credit Agreement and have all the rights and obligations of a
"Bank" under the Credit Agreement as if it were an original signatory
thereto to the extent specified in the second paragraph hereof; and
(ii) agrees to be bound by the terms and conditions set forth in the
Credit Agreement as if it were an original signatory thereto; and
(b) the Assignor shall be released from its obligations under the Credit
Agreement to the extent specified in the second paragraph hereof.
The Assignor and the Assignee hereby agree that the [Assignor/Assignee]
will pay the Agent the processing fee referred to in Section 15.9.1 of the
Credit Agreement.
<PAGE>
The Assignee hereby advises each of you of the following administrative
details with respect to the Assignee:
(A) Address for Notices:
Institution Name: _________________________________
Address: __________________________________________
Attention: ___________________
Telephone: ___________________
Facsimile: _______________
(B) Payment Instructions:
_____________________________
_____________________________
_____________________________
_____________________________
_____________________________
_____________________________
_____________________________
[The Assignee has delivered to the Company and the U.S. Agent, or is
delivering to the Company and the U.S. Agent concurrently herewith, the tax
forms referred to in Section 7.6 of the Credit Agreement.] [INSERT THIS
PARAGRAPH IF ASSIGNEE IS ORGANIZED UNDER THE LAW OF A JURISDICTION OUTSIDE THE
UNITED STATES.]
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed this _____day of ___________, ____.
Percentage = ______% [NAME OF ASSIGNEE]
- ----------
By:
--------------------------
Name Printed:
-----------------
Title:
-----------------------
<PAGE>
Adjusted Percentage = ______% [NAME OF ASSIGNOR]
- -------------------
By:
--------------------------
Name Printed:
-----------------
Title:
------------------------
ACCEPTED AND CONSENTED TO
this ____ day of _______, ____
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as U.S. Agent
By:_____________________________
Name Printed:___________________
Title:__________________________
CONSENTED TO
this ____ day of _______, ____
UNITED RENTALS, INC.
By:_____________________________
Name Printed:___________________
Title:__________________________
<PAGE>
EXHIBIT I
FORM OF CANADIAN GUARANTEE
GUARANTEE dated [o] made by [GUARANTOR] (the "GUARANTOR") to and in
favour of the Agent and the Lenders (as hereinafter defined).
WHEREAS:
A. Bank of America Canada and such other financial institutions
(collectively, the "LENDERS") as may from time to time be parties to the Credit
Agreement (as hereinafter defined) have made certain credit facilities available
to United Rentals of Canada, Inc. (the "BORROWER") upon the terms and conditions
contained in a second amended and restated credit agreement dated as of March
30, 1998, among United Rentals, Inc., the Borrower, Bank of America Canada, as
agent for and on behalf of the Canadian Banks (as such term is defined in the
Credit Agreement) (in such capacity, the "AGENT"), Bank of America National
Trust and Savings Association, as agent for and on behalf of the Lenders, and
the Lenders (as amended, modified, extended, renewed, replaced, restated,
supplemented or refinanced from time to time and including any agreement
extending the maturity of, or refinancing or restructuring (including the
inclusion of additional borrowers thereunder or any increase in the amount
borrowed) all or any portion of, the indebtedness under such agreement or any
successor agreements, whether or not with the same agents, co-agents or lenders,
the "CREDIT AGREEMENT"); and
B. one of the conditions of the Lenders agreeing to make credit
facilities available to United Rentals, Inc. and the Borrower under the Credit
Agreement was that the Guarantor execute and deliver this guarantee, to and in
favour of the Agent and the Lenders, guaranteeing the payment and performance of
all present and future debts, liabilities and obligations, direct or indirect,
absolute or contingent, of the Borrower to the Agent and the Lenders arising
under, in connection with or pursuant to the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement); and
C. the Guarantor is a wholly-owned subsidiary (as construed in
accordance with the Business Corporations Act (Ontario)) of the Borrower and the
Guarantor has determined that it is in the best interests of the Guarantor to
enter into this guarantee;
NOW THEREFORE in consideration of the foregoing, the sum of $10.00 now
paid by the Agent and the Lenders to the Guarantor and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
Guarantor agrees as follows:
<PAGE>
-2-
ARTICLE 1
GUARANTEE
SECTION 1.1. GUARANTEE. The Guarantor absolutely, irrevocably and
unconditionally guarantees the due and punctual payment to the Lenders and the
Agent, whether at stated maturity, by acceleration or otherwise, of all present
and future debts, liabilities and obligations, direct or indirect, absolute or
contingent, of the Borrower to the Lenders and the Agent or any of them arising
pursuant to, or in respect of, the Credit Agreement and the other Loan Documents
(such obligations, the "GUARANTEED OBLIGATIONS") and promises to pay, on demand,
any and all out-of-pocket expenses (including reasonable counsel fees and
disbursements) incurred by or on behalf of the Lenders and the Agent in
enforcing any of their respective rights under this guarantee.
SECTION 1.2. ABSOLUTE LIABILITY. The Guarantor guarantees that the
Guaranteed Obligations will be paid to the Agent and Lenders strictly in
accordance with their terms and conditions, that the Guarantor shall be liable
as principal debtor and not solely as surety with respect to the payment of the
Guaranteed Obligations and that the liability of the Guarantor under this
guarantee shall be absolute, irrevocable and unconditional irrespective of:
(a) the lack of validity or enforceability of any terms of any of the Loan
Documents;
(b) any contest by the Borrower, United Rentals, Inc. or any other Person as
to the amount of the Guaranteed Obligations, the validity or enforceability of
any terms of the Loan Documents or the priority of any security granted to the
Agent or the Lenders;
(c) any defence, counter-claim or right of set-off available to the
Borrower;
(d) any extension of the time or times for payment of the Guaranteed
Obligations or any other indulgences which the Lenders or the Agent may grant to
the Borrower, United Rentals, Inc. or any other Person or any amendment to, or
alteration or renewal of, any of the Loan Documents or the Guaranteed
Obligations;
(e) any dealings with the security which the Lenders or the Agent hold or
may hold pursuant to the terms and conditions of the Loan Documents, including
the taking, giving up or exchange of securities, their variation or realization,
the accepting of compositions and the granting of releases and discharges, and
any release of any other guarantor of the Guaranteed Obligations;
(f) the assignment of all or any part of the benefits of this guarantee;
(g) any invalidity, non-perfection or unenforceability of any security held
by the Lenders or the Agent or any irregularity or defect in the manner or
procedure by which the Agent and the Lenders realize on such security; and
<PAGE>
-3-
(h) any other circumstances which might otherwise constitute a defence
available to, or a discharge of, the Guarantor, the Borrower, United Rentals,
Inc. or any other Person in respect of the Guaranteed Obligations or this
guarantee.
ARTICLE 2
ENFORCEMENT
SECTION 2.1. REMEDIES. The Lenders and the Agent shall not be bound to
exhaust their recourse against the Borrower, United Rentals, Inc. or any other
Person or realize on any security they may hold in respect of the Guaranteed
Obligations before being entitled to payment under this guarantee and the
Guarantor renounces all benefits of discussion and division.
SECTION 2.2. IMPAIRMENT OF SECURITY. Any loss of, or loss of value of,
any security granted to any of the Lenders or the Agent by the Borrower, United
Rentals, Inc. or any other Person shall not discharge pro tanto or limit or
lessen the liability of the Guarantor under this guarantee.
SECTION 2.3. AMOUNT OF GUARANTEED OBLIGATIONS. Any account settled or
stated by or between the Agent and the Borrower, or if any such account has not
been settled or stated immediately before demand for payment under this
guarantee, any account stated by the Agent shall, in the absence of manifest
mathematical error, be accepted by the Guarantor as conclusive evidence of the
amount of the Guaranteed Obligations which is due by the Borrower to the Lenders
and the Agent or remains unpaid by the Borrower to the Lenders and the Agent.
SECTION 2.4. PAYMENT ON DEMAND. The obligation of the Guarantor to pay
the amount of the Guaranteed Obligations and all other amounts payable by it to
the Lenders or the Agent under this guarantee shall arise, and the Guarantor
shall make such payments, immediately after demand for same is made in writing
to it. The liability of the Guarantor shall bear interest from the date of such
demand at the rate or rates of interest then applicable to the Guaranteed
Obligations under and calculated in the manner provided in the Loan Documents
(including any adjustment to give effect to the provisions of the Interest Act
(Canada)).
SECTION 2.5. ASSIGNMENT AND POSTPONEMENT. (1) All obligations,
liabilities and indebtedness of the Borrower or United Rentals, Inc. to the
Guarantor of any nature whatsoever and all security therefor (the
"INTERCORPORATE INDEBTEDNESS") are assigned and transferred to the Agent for the
benefit of the Agent and the Lenders as continuing and collateral security for
the Guarantor's obligations under this guarantee. Subject to clauses (2) and (3)
of this Section , until notice by the Agent or the Guarantor that the Guaranteed
Obligations have become due and payable, the Guarantor may receive payments in
respect of the Intercorporate Indebtedness in accordance with their terms. The
Guarantor shall not assign all or any part of the Intercorporate Indebtedness to
any Person other than the Agent or the Lenders.
<PAGE>
-4-
(2) Upon the occurrence and during the continuance of an Event of
Default, or an Unmatured Event of Default under Section 12.1.4 of the Credit
Agreement, all Intercorporate Indebtedness shall be held in trust for the
Lenders and the Agent and shall be collected, enforced or proved subject to, and
for the purpose of, this guarantee and any payments received by the Guarantor in
respect of the Intercorporate Indebtedness shall be segregated from other funds
and property held by the Guarantor and immediately paid to the Agent on account
of the Guaranteed Obligations.
(3) Upon the occurrence and during the continuance of an Event of
Default, or an Unmatured Event of Default under Section 12.1.4 of the Credit
Agreement, the Lenders and the Agent shall be entitled to receive payment of the
Guaranteed Obligations in full before the Guarantor receives any payment on
account of the Intercorporate Indebtedness. In such case, the Intercorporate
Indebtedness shall not be released or withdrawn by the Guarantor unless the
Agent's written consent to the release or withdrawal is first obtained. The
Guarantor shall not permit the prescription of the Intercorporate Indebtedness
by any statute of limitations or ask for or obtain any security or negotiable
paper for, or other evidence of, the Intercorporate Indebtedness except for the
purpose of delivering the same to the Agent.
SECTION 2.6. SUSPENSION OF GUARANTOR RIGHTS. The Guarantor irrevocably
waives any rights which it may at any time have by reason of the performance of
any of its obligations under this guarantee (i) to be indemnified by the
Borrower, (ii) to claim contribution from any other guarantor of the debts,
liabilities or obligations of the Borrower, or (iii) subject to Section 2.8, to
take the benefit (in whole or in part and whether by way of subrogation or
otherwise) of any rights of the Lenders or the Agent under any of the Loan
Documents.
SECTION 2.7. NO PREJUDICE TO LENDERS OR AGENT. The Lenders and the
Agent shall not be prejudiced in any way in the right to enforce any provision
of this guarantee by any act or failure to act on the part of the Borrower,
United Rentals, Inc., the Lenders or the Agent. The Agent and the Lenders may,
at any time and from time to time, in such manner as any of them may determine
is expedient, without any consent of, or notice to, the Guarantor and without
impairing or releasing the obligations of the Guarantor (i) change the manner,
place, time or terms of payment of, or renew or alter, the Guaranteed
Obligations, (ii) renew, increase or otherwise vary any credit or credit
facilities to, or the terms or conditions of any transaction with, the Borrower,
United Rentals, Inc. or any other Person, (iii) release, compound or vary the
liability of the Borrower, United Rentals, Inc. or any other Person liable in
any manner under or in respect of the Guaranteed Obligations, (iv) exercise or
enforce or refrain from exercising or enforcing any right or security against
the Borrower, United Rentals, Inc., the Guarantor or any other Person, and (v)
apply any sums from time to time received to the Guaranteed Obligations. In
their dealings with the Borrower and United Rentals, Inc., the Agent and the
Lenders need not enquire into the authority or power of any Person purporting to
act for or on behalf of the Borrower or United Rentals, Inc.
<PAGE>
-5-
SECTION 2.8. NO SUBROGATION. The Guarantor irrevocably waives any
claim, remedy or other right which it may now have or hereafter acquire against
the Borrower that arises from the existence, payment, performance or enforcement
of the Guarantor's obligations under this guarantee, including any right of
subrogation, reimbursement, exoneration or indemnification or any right to
participate in any claim or remedy of the Lenders or the Agent against the
Borrower or any collateral which the Lenders or the Agent now have or hereafter
acquire, whether or not such claim, remedy or other right is reduced to judgment
or is liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured, and whether or not such claim, remedy or other
right arises in equity or under contract, statute or common law. The Guarantor
further agrees that the Borrower shall be an intended third party beneficiary of
the Guarantor's waiver contained in this Section 2.8. If any amount is paid to
the Guarantor in violation of this section and, at such time, the Lenders' and
the Agent's claims against the Borrower in respect of the Guaranteed Obligations
shall not have been paid in full, any amount paid to the Guarantor shall be
deemed to have been paid to the Guarantor for the benefit of, and held in trust
for, the Lenders and the Agent, and shall immediately be paid to the Agent to be
credited and applied upon such Guaranteed Obligations. The Guarantor
acknowledges that it will receive direct and indirect benefits from the
transactions contemplated by this guarantee and that the waiver in this Section
2.8 is knowingly made in contemplation of such benefits.
SECTION 2.9. NO SET-OFF. To the fullest extent permitted by law, the
Guarantor shall make all payments under this guarantee without regard to any
defence, counter-claim or right of set-off available to it.
SECTION 2.10. SUCCESSORS OF THE BORROWER. Any change or changes in the
name of, or reorganization (whether by way of reconstruction, consolidation,
amalgamation, merger, transfer, sale, lease or otherwise) of, the Borrower or
its business shall not affect or in any way limit or lessen the liability of the
Guarantor under this guarantee or under any of the Guarantor Security Agreements
(as defined below). This guarantee and the Guarantor Security Agreements shall
extend to any person, firm or corporation acquiring or from time to time
carrying on the business of the Borrower.
SECTION 2.11. CONTINUING GUARANTEE. This guarantee is a continuing
guarantee. It extends to all present and future Guaranteed Obligations, applies
to and secures the ultimate balance of the Guaranteed Obligations due or
remaining due to the Agent and the Lenders and shall be binding as a continuing
obligation of the Guarantor until the Agent and the Lenders release the
Guarantor. This guarantee shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the Guaranteed Obligations
is rescinded or must otherwise be returned by the Lenders or the Agent upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as
though the payment had not been made.
SECTION 2.12. SUPPLEMENTAL SECURITY. This guarantee is in addition and
without prejudice to and supplemental to all other guarantees and securities
held or which may hereafter be held by the Lenders or the Agent.
<PAGE>
-6-
SECTION 2.13. SECURITY FOR GUARANTEE. The Guarantor acknowledges that
this guarantee is intended to secure payment of the Guaranteed Obligations and
that the payment of the Guaranteed Obligations and the other obligations of the
Guarantor under this guarantee are secured pursuant to the terms and provisions
of those agreements described in Schedule "A" (collectively, the "GUARANTOR
SECURITY AGREEMENTS").
SECTION 2.14. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, or any Unmatured Event of Default under
Section 12.1.4 of the Credit Agreement, the Agent and each of the Lenders are
authorized by the Guarantor at any time and from time to time and may, to the
fullest extent permitted by law, 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 the Agent or the Lenders to or for the credit
or the account of the Guarantor against any and all of the obligations of the
Guarantor now or hereafter existing irrespective of whether or not (i) the
Lenders or the Agent have made any demand under this guarantee, or (ii) any of
the obligations comprising the Guaranteed Obligations are contingent or
unmatured. The rights of the Agent and the Lenders under this Section 2.14 are
in addition and without prejudice to and supplemental to other rights and
remedies which the Agent and the Lenders may have.
SECTION 2.15. INTEREST ACT (CANADA). The Guarantor acknowledges that
certain of the rates of interest applicable to the Guaranteed Obligations may be
computed on the basis of a year of 360 days or 365 days, as the case may be and
paid for the actual number of days elapsed. For purposes of the Interest Act
(Canada), whenever any interest is calculated using a rate based on a year of
360 days or 365 days, as the case may be, such rate determined pursuant to such
calculation, when expressed as an annual rate is equivalent to (i) the
applicable rate based on a year of 360 days or 365 days, as the case may be,
(ii) multiplied by the actual number of days in the calendar year in which the
period for such interest is payable (or compounded) ends, and (iii) divided by
360 or 365, as the case may be.
SECTION 2.16. TAXES AND OTHER TAXES. (1) All payments to the Lenders
by the Guarantor under this guarantee or under any of the Guarantor Security
Agreements shall be made free and clear of and without deduction or withholding
for any present or future income, excise, stamp or franchise taxes and other
taxes, fees, duties, withholdings or other charges of any nature whatsoever
imposed by any taxing authority, but excluding franchise taxes and taxes imposed
on or measured by any Lender's net income or receipts (all non-excluded items
being called "TAXES"). If any withholding or deduction from any payment to be
made by the Guarantor hereunder (including any additional amount or amounts to
be paid under this Section 2.16) is required in respect of any Taxes pursuant to
any applicable law, rule or regulation, then the Guarantor will:
(a) pay directly to the relevant authority the full amount required to be so
withheld or deducted;
<PAGE>
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(b) promptly forward to the Agent an official receipt or other documentation
satisfactory to the Agent evidencing such payment to such authority; and
(c) pay to the Agent for the account of the Lenders such additional amount
or amounts as is necessary to ensure that the net amount actually received by
each Lender will equal the full amount such Lender would have received had no
such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder, the
Agent or such Lender may pay such Taxes and the Guarantor will promptly pay such
additional amounts (including any penalty, interest and expense) as is necessary
in order that the net amount received by such Person after the payment of such
Taxes (including any Taxes on such additional amount) shall equal the amount
such Person would have received had such Taxes not been asserted.
(2) If the Guarantor fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Agent, for the account of
the applicable Lenders, the required receipts or other required documentary
evidence, the Guarantor shall indemnify such Lenders for any incremental Taxes,
interest or penalties that may become payable by any such Lender as a result of
any such failure. For purposes of this Section 2.16, a distribution hereunder by
the Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Guarantor.
(3) The provisions of this Section 2.16 shall survive the
termination of this guarantee.
SECTION 2.17. JUDGMENT CURRENCY. (1) If for the purposes of obtaining
judgment in any court it is necessary to convert all or any part of the
Guaranteed Obligations or any other amount due to a Lender or the Agent in
respect of the Guarantor's obligations under this guarantee in any currency (the
"ORIGINAL CURRENCY") into another currency (the "OTHER CURRENCY"), the
Guarantor, to the fullest extent that it may effectively do so, agrees that the
rate of exchange used shall be that at which, in accordance with normal banking
procedures, such Lender or the Agent, as the case may be, could purchase the
Original Currency with the Other Currency on the Business Day preceding that on
which final judgment is paid or satisfied.
(2) The obligations of the Guarantor in respect of any sum due in
the Original Currency from it to any Lender shall, notwithstanding any judgment
in any Other Currency, be discharged only to the extent that on the Business Day
following receipt by such Lender of any sum adjudged to be so due in such Other
Currency such Lender may, in accordance with its normal banking procedures,
purchase the Original Currency with such Other Currency. If the amount of the
Original Currency so purchased is less than the sum originally due to such
Lender in the Original Currency, the Guarantor agrees, as a separate obligation
and notwithstanding any such judgment, to indemnify such Lender against such
loss, and if the amount of the Original Currency so purchased exceeds the sum
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originally due to such Lender in the Original Currency, such Lender agrees to
remit such excess to the Guarantor.
ARTICLE 3
GENERAL
SECTION 3.1. NOTICES, ETC. Any notice, direction or other
communication to be given under this guarantee shall, except as otherwise
permitted, be in writing and given by delivering it or sending it by telecopy or
other similar form of recorded communication addressed:
(a) if to the Guarantor, to it at:
c/o United Rentals, Inc.
Four Greenwich Office Park
Greenwich, Connecticut 06830
USA
Attention: Chief Financial Officer
Telephone: (203) 622-3131
Facsimile: (203) 622-6080
(b) if to the Agent or the Lenders, to the Agent at:
200 Front Street West
Suite 2500
Toronto, Ontario
M5V 3L2
Attention: Nelson Lam
Telephone: (416) 349-4100
Telecopier: (416) 349-4283
Any such communication shall be deemed to have been validly and effectively
given (i) if personally delivered, on the date of such delivery if such date is
a Business Day and such delivery was made prior to 4:00 p.m. (Toronto time),
otherwise on the next Business Day, and (ii) if transmitted by facsimile or
similar means of recorded communication, on the Business Day following the date
of transmission. Any party may change its address for service from time to time
by notice given in accordance with the foregoing and any subsequent notice shall
be sent to the party at its changed address.
SECTION 3.2. DEFINED TERMS. Capitalized terms used in this guarantee
and not otherwise defined have the meanings specified in the Credit Agreement.
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SECTION 3.3. GENDER AND NUMBER. Any reference in this guarantee to
gender shall include all genders and words importing the singular number only
shall include the plural and vice versa.
SECTION 3.4. HEADINGS, ETC. The division of this guarantee into
Articles and Sections and the insertion of headings are for convenient reference
only and are not to affect the interpretation of this guarantee.
SECTION 3.5. CURRENCY. All references in this guarantee to dollars,
unless otherwise specifically indicated, are expressed in Canadian currency.
SECTION 3.6. SUCCESSORS AND ASSIGNS. This guarantee shall be binding
upon the Guarantor, its successors and assigns, and shall enure to the benefit
of the Lenders, the Agent and their respective successors and assigns. All
rights of the Agent and the Lenders shall be assignable and in any action
brought by an assignee to enforce any such right, the Guarantor shall not assert
against the assignee any claim or defence which the Guarantor now has or
hereafter may have against the Agent or any of the Lenders.
SECTION 3.7. SEVERABILITY. If any provision of this guarantee is
deemed by any court of competent jurisdiction to be invalid or void, the
remaining provisions shall remain in full force and effect.
SECTION 3.8. GOVERNING LAW. This guarantee shall be governed by and
interpreted and enforced in accordance with the laws of the Province of Ontario
and the federal laws of Canada applicable therein.
IN WITNESS WHEREOF the Guarantor has caused this guarantee to be
executed by its duly authorized officer as of the date first above written.
[GUARANTOR]
Per: __________________________c/s
Authorized Signing Officer
<PAGE>
SCHEDULE "A"
GUARANTOR SECURITY
<PAGE>
EXHIBIT J
FORM OF CANADIAN SECURITY AGREEMENT
Security agreement dated as of [o], made by [CANADIAN SUBSIDIARY] (the
"OBLIGOR") to and in favour of the Agent (as hereinafter defined).
WHEREAS:
A. Bank of America Canada and such other financial institutions
(collectively, the "LENDERS") as may from time to time be parties to the Credit
Agreement (as hereinafter defined) have made certain credit facilities available
to United Rentals of Canada, Inc. (the "BORROWER") upon the terms and conditions
contained in a second amended and restated credit agreement dated as of March
30, 1998, among United Rentals, Inc., the Borrower, Bank of America Canada, as
agent for and on behalf of the Canadian Banks (as such term is defined in the
Credit Agreement) (in such capacity, the "AGENT"), Bank of America National
Trust and Savings Association, as agent for and on behalf of the Lenders, and
the Lenders (as amended, modified, extended, renewed, replaced, restated,
supplemented or refinanced from time to time and including any agreement
extending the maturity of, or refinancing or restructuring (including the
inclusion of additional borrowers thereunder or any increase in the amount
borrowed) all or any portion of, the indebtedness under such agreement or any
successor agreements, whether or not with the same agents, co-agents or lenders,
the "CREDIT AGREEMENT");
B. the Obligor has, pursuant to a guarantee dated as of the date
hereof (the "GUARANTEE") in favour of the Agent and the Lenders, guaranteed the
payment and performance of all present and future debts, liabilities and
obligations, direct or indirect, absolute or contingent, of the Borrower to the
Agent and the Lenders arising under, in connection with or pursuant to the
Credit Agreement and the other Loan Documents (as defined in the Credit
Agreement); and
C. the Obligor has agreed to execute and deliver this security
agreement to and in favour of the Agent as security for the payment and
performance of all debts, liabilities and obligations including all charges and
fees of the Agent and the Lenders due from the Obligor to the Agent and the
Lenders pursuant to or in connection with the Guarantee and each of the other
Loan Documents (as defined in the Credit Agreement) to which it is a party;
NOW THEREFORE in consideration of the foregoing, the sum of $10.00 now
paid by the Agent and the Lenders to the Obligor and other good and valuable
<PAGE>
consideration, the receipt and sufficiency of which are acknowledged by the
Obligor, the Obligor agrees as follows:
ARTICLE 1
SECURITY
SECTION 1.1. TERMS INCORPORATED BY REFERENCE. Terms defined in the
Personal Property Security Act (Ontario) (as amended from time to time, the
"PPSA") and used in this security agreement shall have the same meanings.
SECTION 1.2. GRANT OF SECURITY. Subject to Section 1.5, the Obligor
grants to the Agent, for its own benefit as a Lender and as agent and in trust
for the rateable benefit of itself and the other Lenders, a security interest in
all the Obligor's right, title and interest in and to the personal property and
undertaking of the Obligor now owned or hereafter acquired (collectively, the
"COLLATERAL") including, without limitation, any and all of the Obligor's:
(a) inventory including goods held for sale, lease or resale, goods
furnished or to be furnished to third parties under contracts of lease,
consignment or service, goods which are raw materials or work in process, goods
used in or procured for packing and materials used or consumed in the business
of the Obligor;
(b) equipment, machinery, furniture, fixtures, plants, vehicles and other
goods of every kind and description and all licences and other rights and all
records, files, charts, plans, drawings, specifications, manuals and documents
relating thereto;
(c) accounts due or accruing due and all agreements, books, accounts,
invoices, letters, documents and papers recording, evidencing or relating
thereto;
(d) money, documents of title, chattel paper, instruments and securities;
(e) intangibles including all security interests, goodwill, choses in
action and other contractual benefits and all trade marks, trade mark
registrations and pending trade mark applications, patents and pending patent
applications and copyrights and other intellectual property (collectively, the
"INTELLECTUAL PROPERTY");
(f) substitutions and replacements of and increases, additions and, where
applicable, accessions to the property described in Sections 1.2(a)-(e)
inclusive; and
(g) proceeds in any form derived directly or indirectly from any dealing
with all or any part of the property described in Sections 1.2(a)-(f) inclusive
or the proceeds of such proceeds.
SECTION 1.3. OBLIGATIONS SECURED. (1) The security interest granted
hereby (the "SECURITY INTEREST") secures the payment and performance of all
debts, liabilities and obligations including all charges and fees of the Agent
and the Lenders due from the Obligor to the Agent and the Lenders pursuant to or
in connection with the Guarantee and
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each of the other Loan Documents (as defined in the Credit Agreement) to which
it is a party (collectively, and together with the expenses, costs and charges
set out in Section 1.3(2), the "OBLIGATIONS").
(2) All expenses, costs and charges incurred by or on behalf of the
Agent and the Lenders in connection with this security agreement, the Security
Interest or the Collateral, including all legal fees, court costs, receiver's or
agent's remuneration and other expenses of taking possession of, repairing,
protecting, insuring, preparing for disposition, realizing, collecting, selling,
transferring, delivering or obtaining payment for the Collateral, and of taking,
defending or participating in any action or proceeding in connection with any of
the foregoing matters or otherwise in connection with the Agent's or any
Lender's interest in any Collateral, whether or not directly relating to the
enforcement of this security agreement or any other Loan Document (as defined in
the Credit Agreement), shall be added to and form a part of the Obligations.
SECTION 1.4. ATTACHMENT. (1) The Obligor acknowledges that (i)
value has been given, (ii) it has rights in the Collateral (other than after-
acquired Collateral), (iii) it has not agreed to postpone the time of attachment
of the Security Interest, and (iv) it has received a duplicate original copy of
this security agreement.
(2) If the Obligor acquires Collateral consisting of chattel paper,
instruments, securities or negotiable documents of title (collectively,
"NEGOTIABLE COLLATERAL"), the Obligor will, immediately upon receipt, deliver to
the Agent the Negotiable Collateral, other than Negotiable Collateral that is
chattel paper or instruments and has been acquired by the Obligor in the
ordinary course of business, and shall, at the request of the Agent (i) cause
the transfer of the Negotiable Collateral to the Agent to be registered
wherever, in the opinion of the Agent, such registration may be required or
advisable, (ii) duly endorse the same for transfer in blank or as the Agent may
direct, and (iii) immediately deliver to the Agent any and all consents or other
documents which may be necessary to effect the transfer of the Negotiable
Collateral to the Agent or any third party.
(3) The Obligor will promptly inform the Agent in writing of the
acquisition by the Obligor of any personal property which is not adequately
described in this security agreement, and the Obligor will execute and deliver,
at its own expense, from time to time, amendments to this security agreement or
additional security agreements as may be required by the Agent.
SECTION 1.5. SCOPE OF SECURITY INTEREST. (1) To the extent that the
creation of the Security Interest would constitute a breach or permit the
acceleration or termination of any agreement, right, licence or permit of the
Obligor (each, a "RESTRICTED ASSET"), the Security Interest shall not attach to
the Restricted Asset but the Obligor shall hold its interest in the Restricted
Asset in trust for the Agent and the Lenders, and shall assign such Restricted
Asset to the Agent for the benefit of the Agent and the Lenders or as the Agent
may direct immediately upon obtaining the consent of the other party.
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(2) Until the Security Interest shall have become enforceable, the
grant of the Security Interest in the Intellectual Property shall not affect in
any way the Obligor's rights to commercially exploit the Intellectual Property,
defend it, enforce the Obligor's rights in it or with respect to it against
third parties in any court or claim and be entitled to receive any damages with
respect to any infringement of it.
(3) The Security Interest shall not extend to consumer goods.
(4) The Security Interest shall not extend or apply to the last day of
the term of any lease or sublease or any agreement for a lease or sublease, now
held or hereafter acquired by the Obligor in respect of real property, but the
Obligor shall stand possessed of any such last day upon trust to assign and
dispose of it as the Agent may direct.
SECTION 1.6. GRANT OF LICENCE TO USE INTELLECTUAL PROPERTY. For
purposes of enabling the Agent to exercise its rights and remedies pursuant to
Article 2, at such time as the Agent shall be lawfully entitled to exercise its
rights and remedies and for no other purpose, the Obligor grants to the Agent an
irrevocable, nonexclusive licence (exercisable without payment of royalty or
other compensation to the Obligor) to use, assign or sublicense any of the
Intellectual Property wherever the same may be located, including in such
licence access to (i) all media in which any of the licensed items may be
recorded or stored, and (ii) all computer programs used for compilation or
print-out.
SECTION 1.7. CARE AND CUSTODY OF COLLATERAL. (1) The Agent and the
Lenders shall have no obligation to keep Collateral in their possession
identifiable.
(2) The Agent may, after the Security Interest shall have become
enforceable, (i) notify any person obligated on an account or on chattel paper
or any obligor on an instrument to make payments to the Agent whether or not the
Obligor was previously making collections on such accounts, chattel paper or
instruments, and (ii) assume control of any proceeds arising from the
Collateral.
ARTICLE 2
ENFORCEMENT
SECTION 2.1. ENFORCEMENT. The Security Interest shall be and become
enforceable against the Obligor upon the occurrence and during the continuance
of an Event of Default (as defined in the Credit Agreement) or an Unmatured
Event of Default (as defined in the Credit Agreement) under Section 12.1.4 of
the Credit Agreement.
SECTION 2.2. REMEDIES. Whenever the Security Interest has become
enforceable, the Agent may realize upon the Collateral and enforce the rights of
the Agent and the Lenders by:
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(a) entry onto any premises where Collateral consisting of tangible
personal property may be located;
(b) entry into possession of the Collateral by any method permitted by
law;
(c) sale or lease of all or any part of the Collateral;
(d) collection of any proceeds arising in respect of the Collateral;
(e) collection, realization or sale of, or other dealing with, the
accounts;
(f) appointment by instrument in writing of a receiver (which term as used
in this security agreement includes a receiver and manager) or agent of all or
any part of the Collateral and removal or replacement from time to time of any
receiver or agent;
(g) institution of proceedings in any court of competent jurisdiction for
the appointment of a receiver of all or any part of the Collateral;
(h) institution of proceedings in any court of competent jurisdiction for
sale or foreclosure of all or any part of the Collateral;
(i) filing of proofs of claim and other documents to establish claims to
the Collateral in any proceeding relating to the Obligor; and
(j) any other remedy or proceeding authorized or permitted under the PPSA
or otherwise by law or equity.
Such remedies may be exercised from time to time separately or in combination
and are in addition to, and not in substitution for, any other rights of the
Agent and the Lenders however created. The Agent shall not be bound to exercise
any right or remedy, and the exercise of rights and remedies shall be without
prejudice to the rights of the Agent and the Lenders in respect of the
Obligations including the right to claim for any deficiency.
SECTION 2.3 ADDITIONAL RIGHTS. In addition to the remedies set forth
in Section 2.2, the Agent may, whenever the Security Interest has become
enforceable:
(a) require the Obligor, at the Obligor's expense, to assemble the
Collateral at a place or places designated by notice in writing and the Obligor
agrees to so assemble the Collateral;
(b) require the Obligor, by notice in writing, to disclose to the Agent
the location or locations of the Collateral and the Obligor agrees to make such
disclosure when so required;
<PAGE>
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(c) repair, process, modify, complete or otherwise deal with the
Collateral and prepare for the disposition of the Collateral, whether on the
premises of the Obligor or otherwise;
(d) carry on all or any part of the business of the Obligor and, to the
exclusion of all others including the Obligor, enter upon, occupy and use all or
any of the premises, buildings, and other property of or used by the Obligor for
such time as the Agent sees fit, free of charge, and the Agent and the Lenders
shall not be liable to the Obligor for any act, omission or negligence in so
doing or for any rent, charges, depreciation or damages incurred in connection
with or resulting from such action;
(e) borrow for the purpose of carrying on the business of the Obligor or
for the maintenance, preservation or protection of the Collateral and grant a
security interest in the Collateral, whether or not in priority to the Security
Interest, to secure repayment; and
(f) commence, continue or defend any judicial or administrative
proceedings for the purpose of protecting, seizing, collecting, realizing on or
obtaining possession or payment of the Collateral, and give good and valid
receipts and discharges in respect of the Collateral and compromise or give time
for the payment or performance of all or any part of the accounts or any other
obligation of any third party to the Obligor.
SECTION 2.4. RECEIVER'S POWERS. (1) Any receiver appointed by the
Agent shall be vested with the rights and remedies which could have been
exercised by the Agent in respect of the Obligor or the Collateral and such
other powers and discretions as are granted in the instrument of appointment and
any supplemental instruments. The identity of the receiver, its replacement and
its remuneration shall be within the sole and unfettered discretion of the
Agent.
(2) Any receiver appointed by the Agent shall act as agent for the
Agent for the purposes of taking possession of the Collateral, but otherwise and
for all other purposes (except as provided below), as agent for the Obligor. The
receiver may sell, lease, or otherwise dispose of Collateral as agent for the
Obligor or as agent for the Agent as the Agent may determine in its discretion.
The Obligor agrees to ratify and confirm all actions of the receiver acting as
agent for the Obligor, and to release and indemnify the receiver in respect of
all such actions.
(3) The Agent, in appointing or refraining from appointing any
receiver, shall not incur liability to the receiver, the Obligor or otherwise
and shall not be responsible for any misconduct or negligence of such receiver.
SECTION 2.5. APPOINTMENT OF ATTORNEY. The Obligor irrevocably
appoints the Agent (and any of its officers) as attorney of the Obligor (with
full power of substitution) to do, make and execute, in the name of and on
behalf of the Obligor, all such further acts, documents, matters and things
which the Agent may deem necessary or advisable to accomplish the purposes of
this security agreement including the execution, endorsement and delivery of
documents and any notices, receipts, assignments or
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verifications of the accounts. All acts of the attorney are ratified and
approved, and the attorney shall not be liable for any act, failure to act or
any other matter or thing, except for its own gross negligence or wilful
misconduct.
SECTION 2.6. DEALING WITH THE COLLATERAL. (1) The Agent and the
Lenders shall not be obliged to exhaust their recourse against the Obligor or
any other person or against any other security they may hold in respect of the
Obligations before realizing upon or otherwise dealing with the Collateral in
such manner as the Agent may consider desirable.
(2) The Agent and the Lenders may grant extensions or other
indulgences, take and give up securities, accept compositions, grant releases
and discharges and otherwise deal with the Borrower and the Obligor and with
other persons, sureties or securities as they may see fit without prejudice to
the Obligations, the liability of the Obligor or the rights of the Agent and the
Lenders in respect of the Collateral.
(3) Except as otherwise provided by law or this security agreement,
the Agent and the Lenders shall not be (i) liable or accountable for any failure
to collect, realize on or obtain payment in respect of the Collateral, (ii)
bound to institute proceedings for the purpose of collecting, enforcing,
realizing on or obtaining payment of the Collateral or for the purpose of
preserving any rights of any persons in respect of the Collateral, (iii)
responsible for any loss occasioned by any sale or other dealing with the
Collateral or by the retention of or failure to sell or otherwise deal with the
Collateral, or (iv) bound to protect the Collateral from depreciating in value
or becoming worthless.
SECTION 2.7. STANDARDS OF SALE. Without prejudice to the ability of
the Agent to dispose of the Collateral in any manner which is commercially
reasonable, the Obligor acknowledges that:
(a) Collateral may be disposed of in whole or in part;
(b) Collateral may be disposed of by public auction, public tender or
private contract, with or without advertising and without any other formality;
(c) any assignee of such Collateral may be a customer of the Agent or a
Lender;
(d) a disposition of Collateral may be on such terms and conditions as to
credit or otherwise as the Agent, in its sole discretion, may deem advantageous;
and
(e) the Agent may establish an upset or reserve bid or price in respect of
Collateral.
SECTION 2.8. DEALINGS BY THIRD PARTIES. (1) No person dealing with
the Agent, any of the Lenders or an agent or receiver shall be required to
determine (i) whether the Security Interest has become enforceable, (ii) whether
the powers which such person is purporting to exercise have become exercisable,
(iii) whether any money remains
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due to the Agent or the Lenders by the Obligor, (iv) the necessity or expediency
of the stipulations and conditions subject to which any sale or lease is made,
(v) the propriety or regularity of any sale or other dealing by the Agent or any
Lender with the Collateral, or (vi) how any money paid to the Agent or Lenders
has been applied.
(2) Any purchaser of all or any part of the Collateral from the Agent
or any receiver or agent shall hold the Collateral absolutely, free from any
claim or right of whatever kind, including any equity of redemption, of the
Obligor, which it specifically waives (to the fullest extent permitted by law)
as against any such purchaser together with all rights of redemption, stay or
appraisal which the Obligor has or may have under any rule of law or statute now
existing or hereafter adopted.
ARTICLE
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.1. REPRESENTATIONS AND WARRANTIES. The Obligor hereby
represents and warrants to and in favour of the Agent and the Lenders
acknowledging and confirming that the Agent and each Lender is relying thereon
without independent inquiry in connection with the acceptance of this security
agreement as security for the Obligations, that:
(a) no financing statement or other document creating a security interest
(other than (i) any which may have been filed on behalf of the Agent, and (ii)
financing statements registered under the PPSA which are expressly permitted by
the Credit Agreement) covering any of the Collateral is on file in any public
office;
(b) the Obligor is and will be the lawful owner of all Collateral, free of
all liens and claims whatsoever, other than the security interest hereunder and
liens and claims expressly permitted by the Credit Agreement (the "PERMITTED
LIENS"), with full power and authority to execute this security agreement and
perform the Obligor's obligations hereunder, and to subject the Collateral to
the security interest hereunder;
(c) all information with respect to Collateral and account debtors of the
Obligor set forth in any schedule, certificate or other writing at any time
heretofore or hereafter furnished by the Obligor to the Agent or any Lender and
all other written information heretofore or hereafter furnished by the Obligor
to the Agent or any Lender in connection with the Guarantee or the other Loan
Documents (as defined in the Credit Agreement) will be true and correct in all
material respects as of the date furnished;
(d) the Obligor's chief executive office and principal place of business
are as set forth on Schedule I hereto (and the Obligor has not maintained its
chief executive office and principal place of business at any other location at
any time);
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(e) each other location where the Obligor maintains a place of business is
set forth on Schedule II hereto;
(f) except as disclosed on Schedule III hereto, the Obligor is not now
known and during the five years preceding the date hereof has not previously
been known by any trade name;
(g) except as disclosed on Schedule III hereto, during the five years
preceding the date hereof the Obligor has not been known by any legal name
different from the one set forth on the signature page of this security
agreement nor has the Obligor been the subject of any merger or other corporate
reorganization;
(h) Schedule IV hereto contains a complete listing of all of the Obligor's
registrations or pending applications in respect of Intellectual Property;
(i) the Obligor is a corporation duly organized, validly existing and in
good standing under the laws of [ONTARIO];
(j) the execution and delivery of this security agreement and the
performance by the Obligor of its obligations hereunder are within the Obligor's
corporate powers, have been duly authorized by all necessary corporate action,
have received all necessary governmental approval (if any shall be required),
and do not and will not contravene or conflict with any provision of law or of
the certificate and articles of incorporation or by-laws of the Obligor or of
any material agreement, indenture, instrument or other document, or any material
judgment, order or decree, which is binding upon the Obligor;
(k) this security agreement is a legal, valid and binding obligation of
the Obligor, enforceable in accordance with its terms, except that the
enforceability of this security agreement may be limited by bankruptcy, winding-
up, insolvency, arrangement, fraudulent preference and conveyance, assignment
and preference and other similar laws now or hereafter in effect relating to
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law); and
(l) the Obligor is in compliance with the requirements of all applicable
laws, rules, regulations and orders of every governmental authority, the non-
compliance with which would materially adversely affect the business,
properties, assets, operations or condition (financial or otherwise) of the
Obligor and its Subsidiaries (as such term is defined in the Credit Agreement)
taken as a whole or the value of the Collateral or the worth of the Collateral
as collateral security.
SECTION 3.2. COVENANTS. The Obligor covenants and agrees that until
the Security Interest has been discharged in accordance with Section 4.2 hereof,
the Obligor will:
<PAGE>
-10-
(a) from time to time deliver to the Agent such schedules, certificates
and reports respecting all or any of the Collateral at the time subject to the
Security Interest hereunder, and the items or amounts received by the Obligor in
full or partial payment of any of the Collateral, as the Agent may reasonably
request. Any such schedule, certificate or report shall be executed by a duly
authorized officer of the Obligor and shall be in such form and detail as the
Agent may specify. The Obligor shall immediately notify the Agent of the
occurrence of any event causing any loss or depreciation in the value of its
inventory or other goods which is material to the Obligor and its Subsidiaries
(as such term is defined in the Credit Agreement) taken as a whole, and such
notice shall specify the amount of such loss or depreciation;
(b) upon request of the Agent, execute such financing statements and other
documents (and pay the cost of filing or recording the same in all public
offices reasonably deemed appropriate by the Agent) and do such other acts and
things (including, without limitation, delivery to the Agent of any instruments
or securities which constitute Collateral), all as the Agent may from time to
time reasonably request, to establish and maintain a valid security interest in
the Collateral (free of all other liens, claims and rights of third parties
whatsoever, other than Permitted Liens) to secure the payment of the
Obligations;
(c) keep all its inventory at, and will not maintain any place of business
at any location other than, its addresses shown on Schedules I and II hereto or
at such other addresses of which the Obligor shall have given the Agent not less
than 10 days' prior written notice;
(d) keep its records concerning the Collateral in Ontario, and keep its
records concerning the intangible Collateral in such a manner as will enable the
Agent or its designees to determine at any time the status of the intangible
Collateral;
(e) furnish the Agent such information concerning the Obligor, the
Collateral and the account debtors of the Obligor as the Agent may from time to
time reasonably request;
(f) permit the Agent and its designees, from time to time, on reasonable
notice and at reasonable times and intervals during normal business hours (or at
any time without notice whenever the Security Interest has become enforceable)
to inspect the Obligor's inventory and other goods, and to inspect, audit and
make copies of and extracts from all records and all other papers in the
possession of the Obligor pertaining to the Collateral and the account debtors
of the Obligor, and will, upon request of the Agent whenever the Security
Interest has become enforceable, deliver to the Agent all of such records and
papers;
(g) upon request of the Agent, stamp on its records concerning the
Collateral and add on all chattel paper constituting a portion of the
Collateral, a notation, in form satisfactory to the Agent, of the security
interest of the Agent hereunder;
<PAGE>
-11-
(h) except for the sale or lease of inventory in the ordinary course of
its business and sales of equipment which is no longer useful in its business or
which is being replaced by similar equipment or as otherwise permitted by the
Credit Agreement, not sell, lease, assign or create or permit to exist any lien
on or security interest in any Collateral other than Permitted Liens and liens
and security interests in favour of the Agent for the benefit of the Agent and
the Lenders;
(i) at all times keep all its inventory and other goods insured under
policies maintained with reputable, financially sound insurance companies
against loss, damage, theft and other risks to such extent as is customarily
maintained by companies similarly situated, and cause all such policies to
provide that loss thereunder shall be payable to the Agent as its interest may
appear (it being understood that (A) so long as the Security Interest has not
become enforceable, the Agent shall deliver any proceeds of such insurance which
may be received by it to the Obligor and (B) whenever the Security Interest has
become enforceable, the Agent may apply any proceeds of such insurance which may
be received by it toward payment of the Obligations, whether or not due, in such
order of application as the Agent may determine) and such policies or
certificates thereof shall, if the Agent, so requests, be deposited with or
furnished to the Agent;
(j) take such actions as are reasonably necessary to keep its inventory in
good repair and condition, ordinary wear and tear excepted;
(k) take such actions as are reasonably necessary to keep its equipment
(other than obsolete equipment) in good repair and condition and in good working
or running order, ordinary wear and tear excepted;
(l) promptly pay when due all license fees, registration fees, taxes,
assessments and other charges which may be levied upon or assessed against the
ownership, operation, possession, maintenance or use of its equipment and other
goods (as applicable); provided, however, that the Obligor shall not be required
to pay any such fee, tax, assessment or other charge if the validity thereof is
being contested by the Obligor in good faith by appropriate proceedings, so long
as forfeiture of any substantial part of its equipment or other goods will not
result from the failure of the Obligor to pay any such fee, tax, assessment or
other charge during the period of such contest;
(m) upon request of the Agent, (i) cause to be noted on the applicable
certificate, in the event any of its equipment is covered by a certificate of
title, the security interest of the Agent for the benefit of the Agent and the
Lenders in the equipment covered thereby and (ii) deliver all such certificates
to the Agent or its designees;
(n) take all steps reasonably necessary to protect, preserve and maintain
all of its rights in the Collateral; and
(o) ensure that all of the Collateral remains at all times within Ontario.
<PAGE>
-12-
ARTICLE 4
GENERAL
SECTION 4.1. NOTICES. Any notices, directions or other
communications provided for in this security agreement shall be in writing and
given in accordance with the provisions of the Guarantee.
SECTION 4.2. DISCHARGE. The Security Interest shall be discharged
upon, but only upon, (i) full payment and performance of the Obligations, and
(ii) the Agent and the Lenders having no obligations under the Loan Documents.
Upon discharge of the Security Interest and at the request and expense of the
Obligor, the Agent shall execute and deliver to the Obligor such releases and
discharges as the Obligor may reasonably require.
SECTION 4.3. NO MERGER. This security agreement shall not operate by
way of merger of any of the Obligations and no judgment recovered by the Agent
or any of the Lenders shall operate by way of merger of, or in any way affect,
the Security Interest, which is in addition to, and not in substitution for, any
other security now or hereafter held by the Agent and the Lenders in respect of
the Obligations.
SECTION 4.4. FURTHER ASSURANCES. The Obligor shall from time to
time, whether before or after the Security Interest shall have become
enforceable, do all acts and things and execute and deliver all transfers,
assignments and instruments as the Agent may reasonably require for (i)
protecting the Collateral, (ii) perfecting the Security Interest, and (iii)
exercising all powers, authorities and discretions conferred upon the Agent. The
Obligor shall, from time to time after the Security Interest has become
enforceable, do all acts and things and execute and deliver all transfers,
assignments and instruments as the Agent may require for facilitating the sale
or other disposition of the Collateral in connection with its realization.
SECTION 4.5. SUPPLEMENTAL SECURITY. This security agreement is in
addition and without prejudice to and supplemental to all other security now
held or which may hereafter be held by the Lenders or the Agent.
SECTION 4.6. SUCCESSORS AND ASSIGNS. This security agreement shall
be binding upon the Obligor, its successors and assigns, and shall enure to the
benefit of the Agent and its successors and assigns. All rights of the Agent
shall be assignable and in any action brought by an assignee to enforce any such
right, the Obligor shall not assert against the assignee any claim or defence
which the Obligor now has or hereafter may have against the Agent or any of the
Lenders.
SECTION 4.7. GENDER AND NUMBER. Any reference in this security
agreement to gender shall include all genders and words importing the singular
number only shall include the plural and vice versa.
<PAGE>
-13-
SECTION 4.8. HEADINGS, ETC. The division of this security agreement
into Articles and Sections and the insertion of headings are for convenient
reference only and are not to affect its interpretation.
SECTION 4.9. NO LIABILITY. Neither the Agent nor any Lender shall
have any obligation or liability regarding the Collateral or any portion thereof
by reason of, or arising out of, this security agreement.
SECTION 4.10. AMENDMENTS. No amendment to, or waiver of, any
provision of this security agreement shall be effective unless in writing and
signed by the Agent (and, in the case of an amendment, signed by the Obligor).
SECTION 4.11. SEVERABILITY. If any provision of this security
agreement is deemed by any court of competent jurisdiction to be invalid or
void, the remaining provisions shall remain in full force and effect.
SECTION 4.12. GOVERNING LAW. This security agreement shall be
governed by and interpreted and enforced in accordance with the laws of the
Province of Ontario and the federal laws of Canada applicable therein.
IN WITNESS WHEREOF the Obligor has caused this security agreement to
be executed by its duly authorized officer as of the date first above written.
[CANADIAN SUBSIDIARY]
Per:
------------------------------
Authorized Signing Officer
<PAGE>
SCHEDULE I
CHIEF EXECUTIVE OFFICE AND PRINCIPAL PLACE OF BUSINESS
<PAGE>
SCHEDULE II
PLACES OF BUSINESS
<PAGE>
SCHEDULE III
TRADENAMES AND LEGAL NAMES
<PAGE>
SCHEDULE IV
INTELLECTUAL PROPERTY
<PAGE>
Exhibit K
CONFIRMATION
Dated as of March 30, 1998
TO: Bank of America National Trust and Savings Association,
as U.S. Agent, Bank of America Canada, as Canadian Agent,
and the Banks which are parties to the Second Amended and
Restated Credit Agreement referred to below
Please refer to (a) the Second Amended and Restated Credit Agreement dated
as of March 30, 1998 (the "Second Amended and Restated Credit Agreement") among
--------------------------------------------
United Rentals, Inc. (the "Company"), United Rentals of Canada, Inc., various
-------
financial institutions (the "Banks"), Bank of America Canada, as Canadian Agent,
-----
and Bank of America National Trust and Savings Association, as U.S. Agent; (b)
the Security Agreement dated as of October 8, 1997 (the "U.S. Security
-------------
Agreement") among the Company, various U.S. Subsidiaries of the Company and the
U.S. Agent; (c) the Guaranty dated as of October 20, 1997 (the "U.S. Guaranty")
-------------
executed by various U.S. Subsidiaries of the Company; (d) the Company Pledge
Agreement dated as of October 20, 1997 (the "Company Pledge Agreement") between
------------------------
the Company and the U.S. Agent; and (e) the Subsidiary Pledge Agreement dated as
of March 17, 1998 (the "Mercer Pledge Agreement") between Mercer Equipment
Company and the U.S. Agent. Each document referred to in items (a) through (e)
above is called a "Credit Document". Capitalized terms used but not defined
---------------
herein shall have the meanings set forth in the Second Amended and Restated
Credit Agreement.
Each of the undersigned (a) confirms to the Banks and the Agents that (i)
each Credit Document to which such undersigned is a party continues in full
force and effect on and after the date hereof, and is the legal, valid and
binding obligation of such undersigned, enforceable against such undersigned in
accordance with its terms and (ii) the obligations and liabilities guaranteed or
secured (as applicable) under each Credit Document include, without limitation,
all obligations and liabilities of the Company under the Second Amended and
Restated Credit Agreement (including all obligations of the Company under
Section 14 of the Second Amended and Restated Credit Agreement); and (b) agrees
that each reference in each Credit Document to the "Credit Agreement" or the
"Amended and Restated Credit Agreement" or any similar term shall, after the
date hereof, be deemed to be a reference to the Second Amended and Restated
Credit Agreement.
By its signature below, the U.S. Agent agrees that, notwithstanding any
provision of the Company Pledge Agreement to the contrary, except under the
circumstances described in the last sentence of Section 10.14 of the Second
Amended and Restated Credit Agreement, the Company
<PAGE>
shall not be required to pledge to the U.S. Agent, and the Company Pledge
Agreement shall not be applicable to, more than 65% of the stock of any Foreign
Subsidiary.
IN WITNESS WHEREOF, each of the undersigned have caused this Confirmation
to be executed and delivered by its duly authorized officer on the date written
above.
UNITED RENTALS, INC.
By:_________________________________
Title:________________________________
A&A TOOL RENTALS AND SALES, INC.
ACCESS RENTALS, INC.
ASC EQUIPMENT COMPANY, INC.
BNR EQUIPMENT INC.
BRONCO HI-LIFT INC.
BUTLER & DERBYSHIRE, INC.
BUTLER & SON, INC.
CORAN ENTERPRISES INCORPORATED
EQUIPMENT RENTAL AND SALES OF
MONROE, INC.
J&J RENTAL SERVICES, INC.
MANCHESTER EQUIPMENT RENTAL &
SALES, INC.
MERCER EQUIPMENT COMPANY
MISSION VALLEY RENTALS, INC.
NEVADA HIGH REACH EQUIPMENT, INC.
RENTAL EQUIPMENT, INC.
RENTALS UNLIMITED, INCORPORATED
RENT-IT CENTER, INC.
RIVER CITY MACHINERY CO., INC.
PRO RENTALS, INC.
SAN LEANDRO EQUIPMENT RENTAL
SERVICE
SANTA FE SUPPLY AND RENTAL, INC.
By:_________________________________
Title:________________________________
Accepted and Agreed to this
30th day of March, 1998
2
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as U.S. Agent
By:___________________________________
Title:_________________________________
3
<PAGE>
EXHIBIT 10.2
AMENDMENT NO. 1 TO PRIVATE PLACEMENT PURCHASE AGREEMENT
-------------------------------------------------------
Mr.
United Rentals, Inc.
Four Greenwich Office park
Greenwich, Connecticut 06830
Re: Private Placement Purchase Agreement dated October __, 1997 (the
"Agreement") between ________ and United Rentals, Inc.
Dear Mr. ____:
1. For good and valuable consideration, the parties hereto hereby agree as
follows:
(a) Section 2(d) of the Agreement is hereby amended to read as follows:
(d) The purchase price for each share of common stock subject to a
Call shall be payable in cash at the Closing (as hereinafter defined)
and shall be equal to $9.125 and the purchase price of each Warrant
subject to a Call shall be payable in cash at the Closing and shall be
equal to $0.625, plus in each case a return thereon accruing at the
rate of 4% per annum from the date hereof until the Closing therefor.
(b) Section 3(d) of the Agreement is hereby amended to read as follows:
(d) (i) Subscriber agrees that until the fifth anniversary of the date
of this Agreement (or, if later, until the second anniversary of any
consummation of a public offering by the Company), Subscriber shall
not without the Company's prior written consent (which may be withheld
or delayed at its discretion, and which may be offered to some
shareholders and not to other shareholders) make any sale or other
disposition of any Units, warrants or common stock except as required
under Section 3(a). The foregoing shall not restrict (A) charitable
gifts which do not for any year after the date of this Agreement
exceed 10% of the number of Units initially purchased by Subscriber
hereunder, and (B) the pledge to a bank or institutional lender (the
"pledgee") of up to an aggregate of _____ shares of common stock to
secure lines of credit or loans extended to Subscriber. The aforesaid
______ amount shall be appropriately adjusted to reflect stock splits,
combinations of shares and the like. Pledges pursuant to the above
shall be subject to a Call until expiration of the Call as provided in
Section (ii) below.
(ii) During the effectiveness of registration number 333-41419 (or any
other registration statement with respect to the sale of the pledged
shares) and after foreclosure by the pledgee on the pledged shares,
the Company shall upon request of the pledgee file a prospectus
supplement which names the pledgee as a selling shareholder with
respect to the pledged shares. The Company shall upon request of the
pledgee deliver to the pledgee a copy of the prospectus supplement and
of the prospectus to which it relates. Upon sale by the pledgee of the
pledged shares pursuant to the effective registration statement as so
supplemented, which sale is preceded by not less than 10 days' and not
more than 20 days' prior written notice to the Company and which sale
is accompanied by delivery by the pledgee to the buyer of the
aforesaid prospectus and prospectus supplement, the Company will
remove all restrictive legends on the pledged shares and the Call
shall automatically expire unless exercised theretofore. The pledgee
shall be a third party beneficiary of the provisions of this Section
(ii).
2. Except as amended hereby, the Agreement is in all respects ratified
and confirmed. This letter may not be changed or terminated orally,
and in any case shall not be amended or terminated or
1
<PAGE>
changed without the written consent of the pledgee, which is initially
expected to be _______.
Dated: ________________________
UNITED RENTALS, INC.
BY_______________________
__________________________
Confirmed :
___________________________
Bradley Jacobs
2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001047166
<NAME> UNITED RENTALS, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 54,785,007
<SECURITIES> 0
<RECEIVABLES> 35,256,000
<ALLOWANCES> 3,813,000
<INVENTORY> 14,933,813
<CURRENT-ASSETS> 0
<PP&E> 158,420,453
<DEPRECIATION> 5,776,064
<TOTAL-ASSETS> 450,127,183
<CURRENT-LIABILITIES> 0
<BONDS> 26,494,068
0
0
<COMMON> 333,137
<OTHER-SE> 384,300,141
<TOTAL-LIABILITY-AND-EQUITY> 450,127,183
<SALES> 39,190,166
<TOTAL-REVENUES> 39,190,166
<CGS> 25,036,658
<TOTAL-COSTS> 33,930,013
<OTHER-EXPENSES> (380,703)
<LOSS-PROVISION> 19,919
<INTEREST-EXPENSE> 1,172,718
<INCOME-PRETAX> 4,468,138
<INCOME-TAX> 1,829,787
<INCOME-CONTINUING> 2,638,351
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,638,351
<EPS-PRIMARY> .10
<EPS-DILUTED> .09
</TABLE>
<PAGE>
EXHIBIT 99.1
FACTORS THAT MAY INFLUENCE FUTURE RESULTS AND ACCURACY OF
FORWARD-LOOKING STATEMENTS
The Company, in an effort to help keep its stockholders and the public
informed about the Company's operations, may from time to time issue certain
statements, either in writing or orally,
that contain or may contain forward-looking information. However, actual
results may materially differ from the Company's expectations, statements or
projections. Factors that could cause actual results to differ from the
Company's expectations, statements or projections include the risks and
uncertainties relating to the Company's business described below.
RISKS RELATING TO GROWTH STRATEGY
Principal components of the Company's growth strategy include continued
expansion through an ongoing acquisition program, the opening of start-up
locations, and internal growth. However, there can be no assurance that the
Company will successfully implement its growth strategy or that, if implemented,
such strategy will result in continued profitability. The Company's growth
strategy involves a number of risks and uncertainties, including:
Availability of Acquisition Targets and Sites for Start-up Locations. The
Company may encounter substantial competition in its efforts to identify and
acquire appropriate acquisition candidates and sites for start-up locations,
which could have the effect of increasing prices for acquisitions or such sites.
There can be no assurance that the Company will succeed in identifying
appropriate acquisition candidates or sites for start-up locations or that the
Company will be able to acquire any acquisition candidate or site that it does
identify on terms that are acceptable to the Company.
Need to Integrate New Operations. As the Company grows, the Company
intends to focus substantial efforts on the efficient integration of new
operations, the elimination of duplicative costs and the reduction of overhead.
There can be no assurance, however, that the Company will be successful in these
efforts or that these efforts may not in certain circumstances adversely affect
existing operations.
Need to Recruit Additional Personnel. The Company will require additional
personnel in order to implement its growth strategy and support expanded
operations. Accordingly, the Company is in the process of recruiting additional
operating, acquisition, finance and other personnel from the equipment rental
industry and from other industries. There can be no assurance, however, that
the Company will succeed in recruiting the requisite qualified personnel as and
when needed.
Certain Risks Related to Start-up Locations. The Company expects that
start-up locations may initially have a negative impact on results of operations
and margins due to several factors, including: (i) the Company will incur
significant start-up expenses in connection with
<PAGE>
establishing each start-up location and (ii) it will generally take some time
following the commencement of operations at a start-up location before
profitability can be achieved. There can be no assurance that any start-up
location will become profitable within the first several years of operations, if
at all.
DEPENDENCE ON ADDITIONAL CAPITAL TO FINANCE GROWTH
The Company's growth strategy will require substantial capital investment.
Capital will be required by the Company for, among other purposes, completing
acquisitions, establishing new rental locations, integrating completed
acquisitions, acquiring rental equipment and maintaining the condition of its
rental equipment. The Company intends to pay for future acquisitions using
cash, capital stock, notes and/or assumption of indebtedness. To the extent
that cash generated internally and cash available under the Company's existing
credit facility is not sufficient to provide the capital required for such
purposes and future operations, the Company will require additional debt and/or
equity financing in order to provide for such capital. There can be no
assurance, however, that such financing will be available or, if available, will
be available on terms satisfactory to the Company. Failure by the Company to
obtain sufficient additional capital in the future could limit the Company's
ability to implement its business strategy. Future debt financings, if
available, may result in increased interest and amortization expense, increased
leverage and decreased income available to fund further acquisitions and
expansion, and may limit the Company's ability to withstand competitive
pressures and render the Company more vulnerable to economic downturns. Future
equity financings may dilute the equity interest of existing stockholders.
POSSIBLE UNDISCOVERED LIABILITIES OF ACQUIRED COMPANIES
Although the Company performs a due diligence investigation of each
business that it acquires, there may nevertheless be liabilities of the Acquired
Companies or future acquired companies that the Company fails or is unable to
discover during its due diligence investigation and for which the Company, as a
successor owner, may be responsible. The Company seeks to minimize the impact
of these liabilities by obtaining indemnities and warranties from the seller
which may be supported by deferring payment of a portion of the purchase price.
However, these indemnities and warranties, if obtained, may not fully cover the
liabilities due to their limited scope, amount, or duration, the financial
limitations of the indemnitor or warrantor, or other reasons.
DEPENDENCE ON MANAGEMENT
The Company is highly dependent upon its senior management team. The loss
of the services of any member of senior management may have a material adverse
effect on the Company. The Company's credit facility provides that the failure
of certain members of the Company's current senior management to continue to
hold executive positions with the Company for a period of 30 consecutive days
constitutes an event of default under the credit facility unless replacement
officers satisfactory to the lenders are appointed. See Item 7-- "Management's
Discussion and Analysis of Financial Condition and Results of
<PAGE>
Operations--Liquidity and Capital Resources." The Company does not presently
maintain "key man" life insurance with respect to members of senior management.
RECENTLY INSTALLED INTEGRATED INFORMATION TECHNOLOGY SYSTEM
The Company has recently installed a new integrated information technology
system as described under "--Information Technology System." The new system is
currently operational at 58 of the Company's existing locations, and the Company
expects that the system will be operational at the remaining existing locations
by mid-April 1998. However, there can be no assurance that the Company will
not encounter unexpected delays. Furthermore, in view of the recent
installation of the system, there can be no assurance that the system will
function in accordance with the Company's expectations. Failure of the system
to function as expected could negatively impact the Company's ability to
implement its growth strategy.
COMPETITION
The equipment rental industry is highly fragmented and competitive.
Certain of the Company's competitors are larger and have greater financial
resources than the Company. There can be no assurance that the Company will not
encounter increased competition from existing competitors or new market entrants
or that equipment manufacturers will not commence, or increase their efforts, to
rent or sell equipment directly to the Company's customers. In addition, to the
extent that competitors seek to gain or retain market share by reducing prices,
the Company may be required to lower its prices, thereby affecting operating
results.
SENSITIVITY TO GENERAL ECONOMIC AND WEATHER CONDITIONS
The Company believes that the equipment rental business is sensitive to
changes in economic conditions and that demand for rental equipment can be
reduced significantly by adverse weather conditions. There can be no assurance
that the Company's business and financial condition will not be adversely
affected by (i) changes in general economic conditions, including national,
regional and local changes in construction and industrial activity, (ii)
increases in interest rates that may result in a higher cost of capital to the
Company, or (iii) adverse weather conditions that may decrease construction and
industrial activity.
QUARTERLY FLUCTUATIONS OF OPERATING RESULTS
The Company expects that its revenues and operating results may fluctuate
from quarter to quarter due to a number of factors, including: seasonal rental
patterns of the Company's customers (with rental activity tending to be lower in
the winter); changes in general economic conditions in the Company's markets;
the timing of acquisitions and the opening of start-up locations (which
generally will require a period of time to become profitable) and related costs;
the effect of the integration of acquired businesses and start-up locations; the
timing of expenditures for new equipment and the disposition of used equipment;
and price changes in response to competitive factors. These factors, among
others, may result in the Company's results of operations in some future periods
not meeting expectations, which could have a
<PAGE>
material adverse impact on the market price of the Common Stock.
LIABILITY AND INSURANCE
The Company is subject to various possible claims, including claims for
personal injury or death caused by equipment rented or sold by the Company or
motor vehicle accidents involving Company delivery and service personnel and
compensation and other employment related claims. The Company carries a broad
range of insurance for the protection of its assets and operations. However,
such coverage is subject to a deductible of $250,000 and limited to a maximum of
$25 million per occurrence. In addition, the Company does not maintain
insurance coverage for environmental liability, since the Company believes that
the cost for such coverage is high relative to the benefit that it provides.
Furthermore, certain types of claims, such as claims for punitive damages or for
damages arising from intentional misconduct, which are often alleged in third
party lawsuits, might not be covered by the Company's insurance. There can be
no assurance that insurance will continue to be available to the Company on
economically reasonable terms, if at all, that existing or future claims will
not exceed the level of the Company's insurance or relate to matters not covered
by the Company's insurance (such as environmental liability), or that the
Company will have sufficient capital available to pay any uninsured claims.
ENVIRONMENTAL REGULATION
As described under "--Environmental Regulation," certain activities of the
Company are subject to various federal, state and local laws and regulations
governing the generation, handling, storage, transportation, treatment and
disposal of hazardous substances and wastes. Under such laws, an owner or
lessee of real estate may be liable for, among other things, (i) the costs of
removal or remediation of certain hazardous or toxic substances located on, in,
or emanating from, such property, as well as related costs of investigation and
property damage and substantial penalties for violations of such laws, and (ii)
environmental contamination at facilities where its waste is or has been
disposed. Such laws often impose such liability without regard to whether the
owner or lessee knew of, or was responsible for, the presence of such hazardous
or toxic substances. Although the Company investigates each business or
property that it acquires or leases and believes there are no existing material
liabilities relating to non-compliance with environmental laws and regulations,
there can be no assurance that there are no undiscovered potential liabilities
relating to non-compliance with environmental laws and regulations, that
historic or current operations have not resulted in undiscovered conditions that
will require investigation and/or remediation under environmental laws, or that
future uses or conditions will not result in the imposition of environmental
liability upon the Company or expose the Company to third-party actions such as
tort suits. Furthermore, there can be no assurance that changes in
environmental regulations in the future will not require the Company to make
significant capital expenditures to change methods of disposal of hazardous
materials or otherwise alter aspects of its operations.
