<PAGE>
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 September 30, 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 1-14387
UNITED RENTALS, INC.
COMMISSION FILE NUMBER 1-13663
UNITED RENTALS (NORTH AMERICA), INC.
(Exact names of Registrants as specified in their charters)
06-1522496
Delaware 06-1493538
--------------------------- -------------------
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification Nos.)
Four Greenwich Office Park, Greenwich, Connecticut 06830
- -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code (203) 622-3131
--------------
Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. X Yes _____ No
-----
As of November 10, 1998 there were 68,407,964 shares of the United Rentals, Inc.
common stock, $.01 par value outstanding.
There is no market for the common stock of United Rentals (North America), Inc.,
all outstanding shares of which are owned by United Rentals, Inc.
This combined Form 10-Q is separately filed by (i) United Rentals, Inc. and (ii)
United Rentals (North America), Inc. (which is a wholly owned subsidiary of
United Rentals, Inc.). United Rentals (North America), Inc. meets the
conditions set forth in general instruction H(1)(A)and(B)of Form 10-Q and is
therefore filing this form with the reduced disclosure format permitted by such
instruction.
<PAGE>
UNITED RENTALS, INC.
UNITED RENTALS (NORTH AMERICA), INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I FINANCIAL INFORMATION
Item 1 Unaudited Consolidated Financial Statements
United Rentals, Inc. Consolidated Balance Sheets
as of September 30, 1998 and December 31, 1997
(unaudited).................................................. 7
United Rentals, Inc. Consolidated Statements of
Operations for the Nine and Three Months
Ended September 30, 1998 and 1997 (unaudited)................ 8
United Rentals, Inc. Consolidated Statements of
Stockholders' Equity for the Nine Months Ended
September 30, 1998 (unaudited)............................... 10
United Rentals, Inc. Consolidated Statements of Cash Flows
for the Nine Months Ended September 30,
1998 and 1997 (unaudited).................................... 11
United Rentals (North America), Inc. Consolidated Balance
Sheets as of September 30, 1998 and December 31, 1997
(unaudited).................................................. 13
United Rentals (North America), Inc. Consolidated
Statements of Operations for the Nine and Three Months
Ended September 30, 1998 and 1997 (unaudited)................ 14
United Rentals (North America), Inc. Consolidated Statements
Of Cash Flows for the Nine Months Ended September 30, 1998
and 1997 (unaudited)......................................... 15
Notes to Unaudited Consolidated Financial Statements......... 17
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 33
PART II OTHER INFORMATION
Item 2 Changes in Securities........................................ 52
Item 4 Submission of Matters to a Vote of Security Holders.......... 53
Item 6 Exhibits and Reports on Form 8-K............................. 54
Signatures................................................... 59
</TABLE>
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<PAGE>
Unless otherwise indicated, all references herein to "the Company" or "United
Rentals" refer collectively to United Rentals, Inc. and its subsidiaries.
INTRODUCTION
THE COMPANY
United Rentals is the largest equipment rental company in North
America. The Company, through its network of over 400 branch locations, offers a
wide variety of equipment for rent (on a daily, weekly or monthly basis) to
customers that include construction industry participants, industrial companies,
homeowners and others. The Company also sells used rental equipment, acts as a
dealer for certain new equipment, and sells related merchandise and parts.
United Rentals began operations in October 1997 with the acquisition of six
well-established rental companies and has grown through a combination of
internal growth, the acquisition of 76 additional companies, and a merger in
September 1998 with U.S. Rentals, Inc. At the time of the merger, U.S. Rentals
was the second largest equipment rental company in the United States based on
1997 rental revenues.
The rental equipment offered by the Company includes a broad range of
light to heavy construction and industrial equipment (such as backhoes,
forklifts, aerial lifts, skid-steer loaders, compressors, pumps and generators)
and general tools and equipment (such as hand tools and garden and landscaping
equipment). The equipment mix varies at each of the Company's locations, with
some locations offering a general mix and some specializing in specific
equipment categories. As of October 1, 1998, the Company's rental equipment
included approximately 260,000 units, had an original purchase price of
approximately $1.8 billion and had a weighted average age (based on original
purchase price)of approximately 26 months.
STRATEGY
The Company's strategy is to continue to expand through a combination
of internal growth and a disciplined acquisition program. The Company is
seeking to increase internal growth by expanding and modernizing its equipment
fleet, opening new rental locations, and capitalizing on the significant cost
and operating advantages available to the Company due to its size and
geographical diversification. These advantages include the ability of the
Company to:
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. use its purchasing power to buy equipment at prices that are
significantly lower than those generally available to smaller rental
companies;
. obtain capital at a lower cost than is generally available to many
smaller companies;
. market items of equipment through multiple branches, rather than a
single branch, using the Company's new information technology system
which enables each branch within a geographic region to track and
access equipment anywhere in the region;
. cross-market the expertise and specialties of different branches in
the same region - for example, the Company's high-reach equipment is
marketed at its general rental locations;
. reduce costs by centralizing the common business functions, such as
payroll, credit and collection, and heavy maintenance, of clusters of
branches within a geographic region;
. access multiple used equipment re-sale markets across the country
through the Company's network of branch locations, field sales force
and web site;
. transfer equipment from regions where the economy may be weakening to
those where demand is increasing;
. maintain the quantity and diversity of equipment required to serve the
needs of large industrial companies, thereby providing the Company
with the potential to further penetrate this growing market for rental
equipment and mitigate cyclical swings in demand from construction
activities;
. maintain the quantity and diversity of equipment required to provide
customers with the benefits of "one-stop shopping".
The Company's acquisition strategy is to acquire multiple locations within
the regions that it enters, with the goal of creating clusters of locations that
can share equipment, marketing resources, back office functions and certain
maintenance functions. The Company is seeking to acquire companies of varying
size, including relatively large companies to serve as platforms for the
development of new regional clusters and smaller companies to complement
existing or
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<PAGE>
anticipated locations. In evaluating potential acquisition targets, the Company
considers a number of factors, including the quality of the target's rental
equipment and management, the opportunities to improve operating margins and
increase internal growth at the target, the economic prospects of the region in
which the target is located, the potential for additional acquisitions in the
region, and the competitive landscape in the target's markets. As the Company
completes acquisitions, the Company focuses substantial efforts on improving
operating margins at the acquired companies through the efficient integration of
new and existing operations, the elimination of duplicative costs, reduction in
overhead, and centralization of functions such as purchasing and information
technology.
INDUSTRY BACKGROUND
The Company estimates that the U.S. equipment rental industry
(including used and new equipment sales by rental companies) generates annual
revenues in excess of $20 billion. The combined equipment rental revenues of the
100 largest equipment rental companies have increased at an estimated compound
annual rate of approximately 23% from 1992 through 1997 (based upon 1992
revenues and 1997 pro forma revenues, giving effect to certain acquisitions
completed after the beginning of 1997, reported by the Rental Equipment
Register, an industry trade publication). The Company believes growth in the
equipment rental industry primarily reflects the following trends:
Recognition of Advantages of Renting. There is increasing recognition
of the many advantages that equipment rental may offer compared with ownership,
including the ability to: (i) avoid the large capital investment required for
equipment purchases, (ii) reduce storage and maintenance costs, (iii) supplement
owned equipment thereby increasing the range and number of jobs that can be
worked on, (iv) access a broad selection of equipment and select the equipment
best suited for each particular job, (v) obtain equipment as needed and minimize
the costs associated with idle equipment, and (vi) access the latest technology
without investing in new equipment.
Increase in Contractor Rentals. There has been a fundamental shift in
the way contractors meet their equipment needs. While contractors have
historically used rental equipment on a temporary basis--to provide for peak
period capacity, meet
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<PAGE>
specific job requirements or replace broken equipment--many contractors are now
also using rental equipment on an ongoing basis to meet their long-term
equipment requirements.
Outsourcing Trend. The general trend toward the corporate outsourcing
of non-core competencies is leading large industrial companies increasingly to
rent, rather than purchase, equipment that they require for repairing,
maintaining and upgrading their facilities.
The equipment rental industry is highly fragmented, consisting of a
small number of multi-location regional or national operators and a large number
of relatively small, independent businesses serving discrete local markets.
Based upon rental revenues reported by the Rental Equipment Register for 1997:
(i) there were only 10 equipment rental companies that had 1997 equipment rental
revenues in excess of $100 million (with the largest company having had 1997
equipment rental revenues of approximately $460 million), (ii) the largest 100
equipment rental companies combined had less than a 22% share of the market
based on 1997 equipment rental revenues and the Company's estimate of the size
of the market (with the largest company having had a market share of less than
3%), and (iii) there were approximately 100 equipment rental companies that had
1997 equipment rental revenues between $5 million and $100 million. In addition,
the Company estimates that there are more than 20,000 companies with annual
equipment rental revenues of less than $5 million. The Company believes that the
fragmented nature of the industry presents substantial consolidation and growth
opportunities for companies with the ability to implement a disciplined
acquisition program. The Company also believes that the extensive experience of
its management team in acquiring and effectively integrating acquisition targets
should enable the Company to capitalize on these opportunities.
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<PAGE>
UNITED RENTALS, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA SEPTEMBER 30 DECEMBER 31
1998 1997
------------ -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 21,795 $ 72,411
Accounts receivable, net of
allowance for doubtful accounts
of $29,577 in 1998 and
$11,085 in 1997 232,448 82,592
Inventory 74,895 21,778
Prepaid expenses and other assets 36,700 17,167
Rental equipment, net 1,191,448 461,026
Property and equipment, net 180,622 98,268
Intangible assets, net of
accumulated amortization
of $8,675 in 1998 and
$568 in 1997 819,094 73,648
---------- --------
$2,557,002 $826,890
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 137,339 $ 41,392
Debt 1,235,508 264,573
Deferred income taxes 20,761 25,275
Accrued expenses and other liabilities 155,356 49,262
---------- --------
Total liabilities 1,548,964 380,502
Commitments and contingencies
Company-obligated mandatorily redeemable
convertible preferred securities of
a subsidiary trust 300,000
Stockholders' equity:
Preferred stock--$.01 par value,
5,000,000 shares authorized, no
shares issued and outstanding
Common stock--$.01 par value,
500,000,000 shares authorized in
1998 and 75,000,000 in 1997,
68,406,401 in 1998
and 56,239,375 in 1997 shares
issued and outstanding 684 562
Additional paid-in capital 689,102 401,758
Retained earnings 18,535 44,068
Cumulative translation adjustments (283)
---------- --------
Total stockholders' equity 708,038 446,388
---------- --------
$2,557,002 $826,890
========== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-7-
<PAGE>
UNITED RENTALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
IN THOUSANDS, EXCEPT PER SHARE DATA SEPTEMBER 30 SEPTEMBER 30
-------------------------------- ---------------------
1998 1997 1998 1997
----------- ------------ --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Equipment rentals $ 592,502 $ 263,249 $ 282,818 $ 104,835
Sales of rental equipment 73,703 26,990 30,481 10,026
Sales of new equipment,
merchandise and other revenues 138,057 37,585 65,775 14,159
----------- ------------ --------- ---------
Total revenues 804,262 327,824 379,074 129,020
Cost of revenues:
Cost of equipment rentals, excluding
depreciation 263,529 127,799 119,594 46,687
Depreciation of rental equipment 119,970 56,715 52,953 21,221
Cost of rental equipment sales 39,820 13,084 17,261 4,594
Cost of new equipment and merchandise sales and
other operating costs 106,893 30,040 50,549 10,870
----------- ------------ --------- ---------
Total cost of revenues 530,212 227,638 240,357 83,372
----------- ------------ --------- ---------
Gross profit 274,050 100,186 138,717 45,648
Selling, general and administrative expenses 128,763 48,488 60,413 21,002
Merger-related expenses 42,216 42,216
Non-rental depreciation and amortization 23,693 9,223 11,201 3,492
Termination cost of deferred compensation agreements 20,290
----------- ------------ --------- ---------
Operating income 79,378 22,185 24,887 21,154
Interest expense 39,170 6,316 23,924 2,624
Preferred dividends of a subsidiary trust 2,979 2,979
Other (income) expense (4,524) (1,356) (291) (531)
----------- ------------ --------- ---------
Income (loss) before provision for
income taxes and extraordinary items 41,753 17,225 (1,725) 19,061
Provision for income taxes 25,229 21,875 8,431 7,363
----------- ------------ --------- ---------
Income (loss) before extraordinary items 16,524 (4,650) (10,156) 11,698
Extraordinary items, net of income taxes of $14,255
in 1998 and $995 in 1997 21,337 1,511 21,337
----------- ------------ --------- ---------
Net income (loss) $ (4,813) $ (6,161) $ (31,493) $ 11,698
=========== ============ ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
-8-
<PAGE>
UNITED RENTALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - CON'T
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
IN THOUSANDS, EXCEPT PER SHARE DATA SEPTEMBER 30 SEPTEMBER 30
1998 1997 1998 1997
------- ------- -------- -------
<S> <C> <C> <C> <C>
Earnings (loss) per equivalent share - basic:
Income (loss) before extraordinary items $ 0.26 $ (0.10) $ (0.15) $ 0.24
Extraordinary items, net 0.33 0.03 0.31
------- ------- -------- -------
Net income (loss) $ (0.07) $ (0.13) (0.46) 0.24
======= ======= ======== =======
Earnings (loss) per equivalent share - diluted:
Income (loss) before extraordinary items $ 0.23 $ (0.10) $ (0.13) $ 0.24
Extraordinary items, net 0.30 0.03 0.28
------- ------- -------- -------
Net income (loss) $ (0.07) $ (0.13) $ (0.41) $ 0.24
======= ======= ======== =======
Supplemental pro forma data:
Historical income (loss) before provision
for income taxes and extraordinary items $41,753 $17,225 $ (1,725) $19,061
Pro forma provision for income taxes 27,162 21,637 9,604 7,803
------- ------- -------- -------
Pro forma net income (loss) before
extraordinary items $14,591 $(4,412) $(11,329) $11,258
======= ======= ======== =======
Pro forma basic net income (loss) before
extraordinary items per share $ 0.23 $ (0.10) $ (0.17) $ 0.24
======= ======= ======== =======
Pro forma diluted net income (loss) before
extraordinary items per share $ 0.21 $ (0.09) $ (0.15) $ 0.24
======= ======= ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-9-
<PAGE>
UNITED RENTALS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
IN THOUSANDS, EXCEPT SHARE DATA
<TABLE>
<CAPTION>
COMMON STOCK
--------------------
NUMBER ADDITIONAL CUMULATIVE
OF PAID-IN RETAINED TRANSLATION
SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENTS
----------- --------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1997 56,239,375 $562 $401,758 $ 44,068 --
Issuance of
common stock 10,807,790 108 267,559
Translation
adjustments $(283)
Conversion of
convertible note 14,814 200
Cancellation of
common stock (137,600) (1) 1
Reclassification of
Subchapter S
accumulated
earnings to paid-in
capital 18,979 (18,979)
Pooling-of-interest 1,456,997 15 (14) 1,795
Exercise of common
stock options 25,025 619
Subchapter S
distributions of
a pooled entity (3,536)
Net loss (4,813)
Balance, ----------- --------- ----------- ----------- ------------
September 30, 1998 68,406,401 $684 $689,102 $ 18,535 $(283)
=========== ========= =========== =========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-10-
<PAGE>
UNITED RENTALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
IN THOUSANDS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
---------------------------
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,813) $ (6,161)
Adjustments to reconcile
net loss to net cash
provided by operating
activities:
Depreciation and amortization 143,663 65,938
Amortization of original issue discount
and deferred financing fees 527
Extraordinary items 35,592 2,506
Write down of assets held for sale 4,040
Gain on sale of rental equipment (33,883) (13,906)
Deferred income taxes 402 12,829
Changes in operating assets and
liabilities:
Accounts receivable (59,718) (17,612)
Inventory (9,414) (3,100)
Prepaid expenses and other assets 10,272 (3,880)
Accounts payable 68,161 5,759
Accrued expenses and
other liabilities 53,269 4,319
------------ ------------
Net cash provided by operating
activities 208,098 46,692
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of rental equipment (426,717) (188,041)
Purchases of property and equipment (66,134) (34,258)
Proceeds from sales of rental
equipment 73,703 26,990
In-process acquisition costs (4,413)
Payment of contingent purchase price (2,617)
Purchases of other companies (833,297) (36,607)
------------ ------------
Net cash used in investing activities (1,259,475) (231,916)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common
stock, net of issuance costs 206,993 240,922
Proceeds from debt 1,934,137 105,776
Repayments of debt (1,410,122) (100,541)
Payment of debt financing costs (26,711) (3,841)
Proceeds from the issuance of redeemable
convertible preferred securities 300,000
Distribution to stockholders (3,536)
------------ ------------
Net cash provided by financing
activities 1,000,761 242,316
Net increase (decrease) in cash and
cash equivalents (50,616) 57,092
Cash and cash equivalents at
beginning of period 72,411 2,906
------------ ------------
Cash and cash equivalents at
end of period $ 21,795 $ 59,998
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
UNITED RENTALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CON'T
(UNAUDITED)
IN THOUSANDS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
-----------------------
1998 1997
--------- -----------
<S> <C> <C>
Supplemental disclosure of cash flow
information:
Cash paid during the period:
Interest $17,795 $ 11,131
Income taxes $ 9,679 $ 11,681
Supplemental disclosure of non-cash
investing and financing activities:
During the nine month period ended
September 30, 1998, a convertible note
in the principal amount of $200 was
converted into 15 shares of common
stock.
The Company acquired the net assets
and assumed certain liabilities of
other companies as follows:
Assets, net of cash acquired 1,335,091 36,607
Liabilities assumed (441,120)
Less:
Amounts paid in common stock and
warrants (60,674)
---------- ---------
Net cash paid $ 833,297 $ 36,607
========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
THE FOLLOWING FINANCIAL STATEMENTS PRESENT THE
FINANCIAL POSITION AND RESULTS OF OPERATIONS
OF UNITED RENTALS (NORTH AMERICA), INC. AND
SUBSIDIARIES AS ISSUER OF 9.5% AND 8.8%
SENIOR SUBORDINATED NOTES BOTH DUE 2008.
UNITED RENTALS (NORTH AMERICA), INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
IN THOUSANDS
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1998 1997
------------ -----------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 21,793 $ 72,411
Accounts receivable, net of
allowance for doubtful accounts
of $29,577 in 1998 and
$11,085 in 1997 232,448 82,592
Inventory 74,895 21,778
Prepaid expenses and other assets 23,316 17,167
Rental equipment, net 1,191,448 461,026
Property and equipment, net 168,689 98,268
Intangible assets, net of
accumulated amortization
of $8,675 in 1998 and
$568 in 1997 819,094 73,648
------------ -----------
$2,531,683 $826,890
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 127,217 $ 41,392
Debt 1,235,508 264,573
Deferred income taxes 20,761 25,275
Accrued expenses and other
liabilities 145,993 49,262
------------ -----------
Total liabilities 1,529,479 380,502
Commitments and contingencies
Stockholders' equity:
Common stock 334 562
Additional paid-in capital 981,860 401,758
Retained earnings 20,293 44,068
Cumulative translation adjustments (283)
------------ -----------
Total stockholders' equity 1,002,204 446,388
------------ -----------
$2,531,683 $826,890
============ ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
UNITED RENTALS (NORTH AMERICA), INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
IN THOUSANDS SEPTEMBER 30 SEPTEMBER 30
------------------------- -----------------------
1998 1997 1998 1997
--------- -------- --------- ----------
<S> <C> <C> <C> <C>
Revenues:
Equipment rentals $592,502 $263,249 $282,818 $104,835
Sales of rental equipment 73,703 26,990 30,481 10,026
Sales of new equipment,
merchandise and other revenues 138,057 37,585 65,775 14,159
--------- -------- --------- ----------
Total revenues 804,262 327,824 379,074 129,020
Cost of revenues:
Cost of equipment rentals, excluding
depreciation 263,529 127,799 119,594 46,687
Depreciation of rental equipment 119,970 56,715 52,953 21,221
Cost of rental equipment sales 39,820 13,084 17,261 4,594
Cost of new equipment and merchandise
sales and other operating costs 106,893 30,040 50,549 10,870
--------- -------- --------- ----------
Total cost of revenues 530,212 227,638 240,357 83,372
--------- -------- --------- ----------
Gross profit 274,050 100,186 138,717 45,648
Selling, general and administrative expenses 128,763 48,488 60,413 21,002
Merger-related expenses 42,216 42,216
Non-rental depreciation and amortization 23,693 9,223 11,201 3,492
Termination cost of deferred compensation agreements 20,290
--------- -------- --------- ----------
Operating income 79,378 22,185 24,887 21,154
Interest expense 39,170 6,316 23,924 2,624
Other (income) expense (4,524) (1,356) (291) (531)
--------- -------- --------- ----------
Income before provision for
income taxes and extraordinary items 44,732 17,225 1,254 19,061
Provision for income taxes 26,450 21,875 9,652 7,363
--------- -------- --------- ----------
Income (loss) before extraordinary items 18,282 (4,650) (8,398) 11,698
Extraordinary items, net of income taxes of $14,255
in 1998 and $995 in 1997 21,337 1,511 21,337
--------- -------- --------- ----------
Net income (loss) $ (3,055) $ (6,161) $(29,735) $ 11,698
========= ======== ========= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-14-
<PAGE>
UNITED RENTALS (NORTH AMERICA), INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
IN THOUSANDS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
------------------------
1998 1997
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,055) $ (6,161)
Adjustments to reconcile
net loss to net cash
provided by operating
activities:
Depreciation and amortization 143,663 65,938
Amortization of original issue discount
and deferred financing fees 527
Extraordinary items 35,592 2,506
Write down of assets held for sale 4,040
Gain on sale of rental equipment (33,883) (13,906)
Deferred income taxes 402 12,829
Changes in operating assets and
liabilities:
Accounts receivable (58,440) (17,612)
Inventory (9,414) (3,100)
Prepaid expenses and other assets 23,654 (3,880)
Accounts payable 58,039 5,759
Accrued expenses and
other liabilities 43,906 4,319
----------- ---------
Net cash provided by operating
activities 205,031 46,692
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of rental equipment (426,717) (188,041)
Purchases of property and equipment (53,997) (34,258)
Proceeds from sales of rental
equipment 73,703 26,990
In-process acquisition costs (4,413)
Payment of contingent purchase price (2,617)
Purchases of other companies (833,297) (36,607)
----------- ---------
Net cash used in investing activities (1,247,338) (231,916)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common
stock, net of issuance costs 206,993 240,922
Proceeds from debt 1,934,137 105,776
Repayments of debt (1,410,122) (100,541)
Payment of debt financing costs (26,711) (3,841)
Capital contribution by parent 290,928
Distribution to stockholders (3,536)
----------- ---------
Net cash provided by financing
activities 991,689 242,316
----------- ---------
Net increase (decrease) in cash and
cash equivalents (50,618) 57,092
Cash and cash equivalents at
beginning of period 72,411 2,906
Cash and cash equivalents at
end of period $ 21,793 $ 59,998
=========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-15-
<PAGE>
UNITED RENTALS (NORTH AMERICA), INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CON'T
(UNAUDITED)
IN THOUSANDS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
------------------------
1998 1997
---------- ------------
<S> <C> <C>
Supplemental disclosure of cash flow
information:
Cash paid during the period:
Interest $17,795 $11,131
Income taxes $ 9,679 $11,681
Supplemental disclosure of non-cash
investing and financing activities:
During the nine month period ended
September 30, 1998, a convertible note in the
principal amount of $200 was converted
into 15 shares of common stock.
The Company acquired the net assets
and assumed certain liabilities of
other companies as follows:
Assets, net of cash acquired 1,335,091 36,607
Liabilities assumed (441,120)
Less:
Amounts paid in common stock and
warrants (60,674)
---------- --------
Net cash paid $ 833,297 $36,607
========== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-16-
<PAGE>
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND 1997
1. BASIS OF PRESENTATION
General
United Rentals, Inc. is principally a holding company ("Holdings") and
conducts its operations principally through its wholly owned subsidiary United
Rentals (North America), Inc. ("URI") and subsidiaries of URI. URI was
incorporated in August 1997, initially capitalized in September 1997 and
commenced equipment rental operations in October 1997. Holdings was
incorporated in July 1998 and became the parent of URI on August 5, 1998,
pursuant to the reorganization of the legal structure of URI described in Note
4. Prior to such reorganization, the name of URI was United Rentals, Inc.
References herein to the "Company" refer to Holdings and its subsidiaries, with
respect to periods following the reorganization, and to URI and its
subsidiaries, with respect to periods prior to the reorganization. Prior to the
formation of Holdings, the consolidated financial statements of the Company
represented the accounts of URI and its subsidiaries. Separate footnote
information is not presented for the financial statements of URI and
subsidiaries as that information is substantially equivalent to that presented
below. Earnings per share data is not provided for the operating results of URI
and its subsidiaries as they are wholly owned subsidiaries of Holdings.
The Company's consolidated balance sheet, statements of operations and
statements of cash flows as of December 31, 1997, and for the nine and three
month periods ended September 30, 1998 and 1997, have been restated to include
the accounts of certain acquisitions completed in 1998, that were accounted for
as poolings-of-interests. See Note 2.
The Consolidated Financial Statements of 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 periods presented. Interim
financial statements do not require all disclosures normally presented in year-
end financial statements, and,
-17-
<PAGE>
accordingly, certain disclosures have been omitted. Results of operations for
the nine and three month periods ended September 30, 1998 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1998. The Consolidated Financial Statements 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 Statement of
Financial Accounting Standards ("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.
In February 1998, the Financial Accounting Standards Board issued SFAS No.
132, "Employers' Disclosures about Pensions and Other Post Retirement Benefits."
SFAS No. 132 revises employers' disclosures about pension and other post
retirement benefit plans but does not change the measurement or recognition of
those plans. The Company is required to adopt SFAS No. 132 by December 31,
1998. The adoption of SFAS No. 132 is not expected to have a material effect on
the Company's consolidated financial position or results of operations.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes a new model for
-18-
<PAGE>
accounting for derivatives and hedging activities. The Company is required to
adopt SFAS No. 133 beginning January 1, 2000. The adoption of SFAS No. 133 is
not expected to have a material ffect on the Company's consolidated financial
position or results of operations.
2. ACQUISITIONS
During the nine months ended September 30, 1998, the Company completed 69
acquisitions. Three of such acquisitions were accounted for as poolings-of-
interests (the "Pooling Transactions")and 66 were accounted for as purchases.
Acquisitions Accounted for as Poolings-of-Interests
On August 24, 1998, the Company issued 2,744,368 shares of its Common Stock
for all of the outstanding shares of common stock of Rental Tools and Equipment
Co. ("Rental Tools"). This transaction was accounted for as a pooling-of-
interests and, accordingly, the consolidated financial statements at December
31, 1997 and for all periods presented have been restated to include the
accounts of Rental Tools.
On September 24, 1998, the Company issued 1,456,997 shares of its Common
Stock for all of the outstanding shares of common stock of Wynne Systems, Inc.
("Wynne"). The transaction was accounted for as a pooling-of-interests;
however, this transaction was not material to the Company's consolidated
operations and financial position and, therefore, the Company's financial
statements have not been restated for this transaction.
On September 29, 1998, a merger (the "Merger")of United Rentals, Inc. and
U.S. Rentals, Inc. ("U.S. Rentals") was completed. The Merger was effected by
having a wholly owned subsidiary of United Rentals, Inc. merge with and into
U.S. Rentals. Following the Merger, United Rentals, Inc. contributed the
capital stock of U.S. Rentals to URI, a wholly owned subsidiary of United
Rentals, Inc. Pursuant to the Merger, each outstanding share of common stock of
U.S. Rentals was converted into the right to receive 0.9625 of a share of common
stock of United Rentals, Inc. An aggregate of approximately 29.6 million shares
of United Rentals, Inc. Common Stock were issued in the
-19-
<PAGE>
Merger in exchange for the outstanding shares of U.S. Rentals common stock. The
Merger was accounted for as a pooling-of-interests and, accordingly, the
consolidated financial statements at December 31, 1997, and for all periods
presented have been restated to include the accounts of U.S. Rentals.
The table below shows the separate revenue and net income (loss) of the
Company, U.S. Rentals and Rental Tools for periods prior to combination (in
thousands):
<TABLE>
<CAPTION>
The Company U.S. Rentals Rental Tools Combined
------------------ ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Nine months ended
September 30, 1998
Revenues $311,919 $451,101 $41,242 $804,262
Net income (loss) (53,178) 43,670 4,695 (4,813)
Nine months ended
September 30, 1997
Revenues 291,501 36,323 327,824
Net income (loss) (273) (6,471) 583 (6,161)
Three months ended
September 30, 1998
Revenues 184,566 178,219 16,289 379,074
Net income (loss) (61,398) 27,190 2,715 (31,493)
Three months ended
September 30, 1997
Revenues 114,020 15,000 129,020
Net income (loss) (273) 10,857 1,114 11,698
</TABLE>
Rental Tools was accounted for as a Subchapter S Corporation prior to being
acquired by the Company. In general, the income or loss of a Subchapter S
Corporation is passed through to its stockholders rather than being subjected to
taxes at the corporate level.
Acquisitions Accounted for as Purchases
The acquisitions completed by the Company in the first nine months of 1998
include 66 that were accounted for as purchases. The results of operations of
the businesses acquired in these acquisitions have been included in the
Company's results of operations from their respective acquisition dates.
-20-
<PAGE>
The aggregate initial consideration paid by the Company for such
acquisitions that were accounted for as purchases was $878.6 million and
consisted of approximately $818.4 million in cash and 5.1 million 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 in such acquisitions in the aggregate amount of $418.6
million. The Company also agreed in connection with 12 of such acquisitions to
pay additional amounts to the former owners based upon specified future revenues
and/or new store openings (such amounts being limited to (i) $10.0 million, $2.0
million, $1.4 million, 1.0 million, $0.8 million, $0.8 million, $0.5 million,
$0.5 million, $0.5 million $0.4 million and Cdn. $4.0 million, respectively,
with respect to 11 of such acquisitions and (ii) an amount based on the revenues
of a single store with respect to the other acquisition).
The purchase prices for such acquisitions have been allocated to the assets
acquired and liabilities assumed based on their respective fair values at their
respective acquisition dates. However, the Company has not completed its
valuation of all of its purchases and, accordingly, 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
results of operations of the Company for the nine months ended September 30,
1998 as though each acquisition described above that was accounted for as a
purchase was completed on January 1, 1998 (in thousands, except per share data):
NINE MONTHS ENDED
SEPTEMBER 30,1998
-----------------
Revenues $1,070,883
Net income 34,006
Basic earnings per share $ 0.49
Diluted earnings per share $ 0.44
-21-
<PAGE>
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.
Merger-Related Expenses and Extraordinary Item
The results of operations for the third quarter of 1998 include pre-tax
expenses related to the three Pooling Transactions totaling approximately $42.2
million ($29.5 million after-tax), consisting of (i) $18.5 million for
investment banking, legal, accounting services and other merger costs, (ii)
$14.5 million of expenses relating to the closing of duplicate facilities, (iii)
$6.3 million for employee severance and (iv) $2.9 million in other expenses.
Certain merger related expenses are transitional in nature and, in accordance
with generally accepted accounting principles, are not presently accruable and
will be expensed in future quarters.
Additionally, in the third quarter of 1998, the Company recorded a pre-tax
extraordinary charge of $35.6 million ($21.3 million after-tax) relating to
early extinguishment of debt primarily related to the Merger with U.S. Rentals.
3. REVOLVING CREDIT FACILITY
In connection with the Merger, URI obtained a new credit facility (the
"Credit Facility") dated as of September 29, 1998, with a group of financial
institutions. The credit facility enables URI to borrow up to $762.5 million on
a revolving basis and permits a Canadian subsidiary of URI (the "Canadian
Subsidiary") to directly borrow up to $40 million under the Credit Facility
(provided that the aggregate borrowings of URI and the Canadian Subsidiary do
not exceed $762.5 million). Up to $25 million is available in the form of
letters of credit. The agreement governing the Credit Facility requires that the
aggregate commitment shall be reduced on the last day of each calendar quarter,
beginning September 30, 2001 and continuing through June 30, 2003 by an amount
equal to $19.1 million. The Credit Facility terminates on September 26, 2003, at
which time all outstanding indebtedness is due. The amount of indebtedness
outstanding under the Credit Facility was $535.0 million at September 30, 1998.
-22-
<PAGE>
Borrowings by URI under the Credit Facility accrue interest at URI's
option, at either (a) the Base Rate (which is equal to the greater of (i)the
Federal Funds Rate plus 0.5% or (ii) Bank of America's reference rate) or (b)
the Eurodollar Rate (which for borrowings by URI is equal to Bank of America's
reserve adjusted eurodollar rate) plus a margin ranging from 0.950% to 1.625%
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), (y) the BA Rate (which
is equal to Bank of America Canada's BA Rate) plus a margin ranging from 0.950%
to 1.625% per annum or (z) the Eurodollar Rate (which for borrowing by the
Canadian Subsidiary is equal to the Bank of America Canada's reserve adjusted
Eurodollar Rate) plus a margin ranging from 0.95% to 1.625% per annum. If at any
time an event of default (as defined in the agreement governing the Credit
Facility) exists, the interest rate applicable to each loan will increase by 2%
per annum. The Company is also required to pay the banks an annual facility fee
equal to 0.375% of the banks' $762.5 million aggregate lending commitment under
the Credit Facility (which fee may be reduced to 0.300% for periods during which
the Company maintains a specified funded debt to cash flow ratio).
4. HOLDING COMPANY REORGANIZATION
URI was formerly named United Rentals, Inc. On August 5, 1998, a
reorganization was effected pursuant to which (i) URI became a wholly owned
subsidiary of Holdings a newly formed holding company, (ii) the name of URI was
changed from United Rentals, Inc. to United Rentals (North America), Inc., (iii)
the name of the new holding company became United Rentals, Inc., (iv) the
outstanding common stock of URI was automatically converted, on a share-for-
share basis, into Common Stock of Holdings and (v) the Common Stock of Holdings
commenced trading on the New York Stock Exchange under the symbol "URI" instead
of the common stock of URI. The purpose of the reorganization was to facilitate
certain financings. The business operations of the Company did not change as a
result of the new legal structure. The stockholders of Holdings have the same
rights, privileges and interests with respect to Holdings as they had with
respect to URI immediately prior to the reorganization.
-23-
<PAGE>
5. TERM LOAN
In July 1998, URI obtained a $250 million term loan from a group of
financial institutions (the "Term Loan"). The Term Loan matures on June 30,
2005. The term loan accrues interest, at the Company's option, at either (a) the
Base Rate (as defined with respect to the Credit Facility) plus a margin ranging
from 0% to 0.5% per annum, or (b) the Eurodollar Rate (as defined with respect
to the Credit Facility for borrowings by URI) plus a margin ranging from 1.875%
to 2.375% per annum. The Term Loan is secured pari passu with the Credit
Facility. URI used the net proceeds from the Term Loan for acquisitions.
6. SENIOR SUBORDINATED NOTES
In May 1998, the Company issued $200 million aggregate principal amount of
9 1/2% Senior Subordinated Notes which are due June 1, 2008. The Company used
$102.8 million of the net proceeds from the sale of such notes to repay all of
the then outstanding indebtedness under the Company's credit facility and used
the balance of such net proceeds from this offering for acquisitions, capital
expenditures and general corporate purposes.
In August 1998, URI issued $205 million aggregate principal amount of 8.80%
Senior Subordinated Notes which are due August 15, 2008. URI used $90.3 million
of the net proceeds from the sale of such notes to repay all of the then
outstanding indebtedness under the Company's credit facility and used the
balance of such net proceeds from this offering for acquisitions, capital
expenditures and general corporate purposes.
7. ISSUANCE OF 6 1/2% CONVERTIBLE QUARTERLY INCOME PREFERRED SECURITIES
On August 5, 1998, a subsidiary trust (the "Trust") of Holdings issued and
sold in a private offering (the "Preferred Securities Offering") $300 million of
6 1/2% Convertible Quarterly Income Preferred Securities (the "Preferred
Securities"). The net proceeds from the Preferred Securities Offering were
approximately $290 million. The Trust used the proceeds from the Preferred
Securities Offering to purchase convertible subordinated debentures from
Holdings which resulted in Holdings receiving all of the net proceeds of the
Preferred Securities Offering. Holdings in turn contributed the net
-24-
<PAGE>
proceeds of the Preferred Securities Offering to URI. URI used approximately
$281 million of such net proceeds to repay the then outstanding indebtedness
under the Company's credit facility and used the balance of such net proceeds
for acquisitions.
8. COMMON STOCK
On March 11, 1998, the Company completed a public offering of 8,625,000
shares of Common Stock. The net proceeds to the Company from this offering were
approximately $207.4 million (after deducting the underwriting discounts and
offering expenses). The Company used $132.7 million of the net proceeds from
this offering to repay all of the then outstanding indebtedness under the
Company's credit facility and used the balance of such net proceeds for
acquisitions. At a special meeting of stockholders held on September 29, 1998,
the shareholders approved an amendment to the Company's Certificate of
Incorporation increasing the number of authorized shares of Common Stock to
500,000,000.
9. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per share (in thousands, except per share data):
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
----------------- -----------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Numerator:
Income (loss) before extraordinary items $16,524 $(4,650) $(10,156) $11,698
======= ======= ======== =======
Denominator:
Denominator for basic
earnings per share
weighted-average shares 64,363 46,072 68,415 47,863
Effect of dilutive securities:
Employee stock options 2,335 2,720
Warrants 4,296 1,644 4,437 1,644
Dilutive potential common
shares
Denominator for diluted
earnings per share -
adjusted weighted-average
shares 70,994 47,716 75,572 49,507
Basic earnings before extraordinary
items per share $ 0.26 $ (0.10) $ (0.15) $ 0.24
======= ======= ======== =======
Diluted earnings before
extraordinary items per share $ 0.23 $ (0.10) $ (0.13) $ 0.24
======= ======= ======== =======
</TABLE>
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<PAGE>
10. CONDENSED CONSOLIDATING FINANCIAL INFORMATION OF GUARANTOR SUBSIDIARIES
Certain indebtedness of URI is guaranteed by URI's United States
subsidiaries (the "guarantor subsidiaries") but is not guaranteed by URI's
foreign subsidiaries (the "non-guarantor subsidiaries"). The guarantor
subsidiaries are all wholly-owned and the guarantees are made on a joint and
several basis and are full and unconditional (subject to subordination
provisions and subject to a standard limitation which provides that the maximum
amount guaranteed by each guarantor will not exceed the maximum amount that can
be guaranteed without making the guarantee void under fraudulent conveyance
laws). Separate consolidated financial statements of the guarantor subsidiaries
have not been presented because management has determined that such information
would not be material to investors. However, condensed consolidating financial
information as of September 30, 1998 and for the nine and three months ended
September 30, 1998, are presented. The condensed consolidating financial
information as of and for the periods ended December 31, 1997 have been omitted
since the non-guarantors subsidiaries came into existence during 1998. The
condensed consolidating financial information of URI and its subsidiaries are as
follows:
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<PAGE>
CONDENSED CONSOLIDATING BALANCE SHEET
IN THOUSANDS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
------------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR CONSOLIDATED
URI SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
----------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 4,907 $ 13,492 $ 3,394 $ 21,793
Accounts receivable, net 217,279 15,169 232,448
Intercompany receivable
(payable) 766,764 (720,507) (46,257)
Inventory 68,931 5,964 74,895
Prepaid expenses and
other assets 11,290 10,368 1,658 23,316
Rental equipment, net 1,150,965 40,483 1,191,448
Property and equipment,
net 162,801 5,888 168,689
Investment in
subsidiaries 1,338,107 $(1,338,107)
Intangible assets, net 145 764,731 54,218 819,094
---------- ---------- -------- ----------- ----------
$2,121,213 $1,668,060 $ 80,517 $(1,338,107) $2,531,683
========== ========== ======== =========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities:
Accounts payable $ 6,572 $ 112,937 $ 7,708 $ 127,217
Debt 1,206,500 23,846 5,162 1,235,508
Deferred income taxes 1,906 18,855 20,761
Accrued expenses and
other liabilities 34,906 109,689 1,398 145,993
---------- ---------- -------- ----------- ----------
Total liabilities 1,249,884 265,327 14,268 1,529,479
Commitments and contingencies
Stockholders' equity:
Common stock 334 334
Additional paid-in
capital 963,076 1,296,837 60,054 $(1,338,107) 981,860
Retained earnings (92,081) 105,896 6,478 20,293
Cumulative translation
adjustments (283) (283)
---------- ---------- -------- ----------- ----------
Total stockholders'
equity 871,329 1,402,733 66,249 (1,338,107) 1,002,204
---------- ---------- -------- ----------- ----------
$2,121,213 $1,668,060 $ 80,517 $(1,338,107) $2,531,683
========== ========== ======== =========== ==========
</TABLE>
-27-
<PAGE>
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
IN THOUSANDS
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
------------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR CONSOLIDATED
URI SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
----------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals $572,884 $19,618 $592,502
Sales of rental
equipment 71,019 2,684 73,703
Sales of new
equipment,
merchandise and
other revenues 127,216 10,841 138,057
-------- -------- ------- -------- --------
Total revenues 771,119 33,143 804,262
Cost of revenues:
Cost of equipment
rentals,
excluding
depreciation 255,345 8,184 263,529
Depreciation of
rental equipment 116,974 2,996 119,970
Cost of rental
equipment sales 38,235 1,585 39,820
Cost of new
equipment and
merchandise sales
and other
operating costs 98,157 8,736 106,893
-------- -------- ------- -------- --------
Total cost of revenues 508,711 21,501 530,212
-------- -------- ------- -------- --------
Gross profit 262,408 11,642 274,050
Selling, general and
administrative
expenses $ 13,091 111,479 4,193 128,763
Merger-related expenses 24,048 18,168 42,216
Non-rental depreciation and
amortization 400 22,532 761 23,693
-------- -------- ------- -------- --------
Operating income (loss) (37,539) 110,229 6,688 79,378
Interest expense 20,389 18,542 239 39,170
Other(income)expense 297 (4,788) (33) (4,524)
-------- -------- ------- -------- --------
Income (loss) before
provision for income
taxes and extraordinary
item (58,225) 96,475 6,482 44,732
Provision for
income taxes 14,138 12,312 26,450
-------- -------- ------- -------- --------
Income (loss) before
extraordinary item and
equity in net earnings
of subsidiaries (72,363) 84,163 6,482 18,282
Extraordinary item, net 1,640 19,697 21,337
-------- -------- ------- -------- --------
Income (loss) before
equity in net earnings of
subsidiaries (74,003) 64,466 6,482 (3,055)
Equity in net earnings of
subsidiaries 70,948 $(70,948)
-------- -------- ------- -------- --------
Net income (loss) $ (3,055) $ 64,466 $ 6,482 $(70,948) $ (3,055)
======== ======== ======= ======== ========
</TABLE>
-28-
<PAGE>
CONSOLIDATING STATEMENT OF OPERATIONS
IN THOUSANDS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
-------------------------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR CONSOLIDATED
URI SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------------- ---------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals $270,920 $11,898 $282,818
Sales of rental
equipment 29,417 1,064 30,481
Sales of new
equipment,
merchandise and
other revenues 60,155 5,620 65,775
------------- ---------------- ----------------- ----------------- ----------------
Total revenues 360,492 18,582 379,074
Cost of revenues:
Cost of equipment
rentals,
excluding
depreciation 114,649 4,945 119,594
Depreciation of
rental equipment 51,207 1,746 52,953
Cost of rental
equipment sales 16,714 547 17,261
Cost of new
equipment and
merchandise sales
and other
operating costs 46,381 4,168 50,549
------------- ---------------- ----------------- ----------------- ----------------
Total cost of revenues 228,951 11,406 240,357
------------- ---------------- ----------------- ----------------- ----------------
Gross profit 131,541 7,176 138,717
Selling, general and
administrative
expenses $ 5,463 52,735 2,215 60,413
Merger-related expenses 24,048 18,168 42,216
Non-rental depreciation
and amortization 83 10,609 509 11,201
------------- ---------------- ----------------- ----------------- ----------------
Operating income (loss) (29,594) 50,029 4,452 24,887
Interest expense 15,804 7,977 143 23,924
Other(income)expense 346 (626) (11) (291)
------------- ---------------- ----------------- ----------------- ----------------
Income (loss) before
provision for income
taxes and extraordinary
item (45,744) 42,678 4,320 1,254
Provision for
income taxes 8,435 1,217 9,652
------------- ---------------- ----------------- ----------------- ----------------
Income (loss) before
extraordinary item
and equity in net
earnings of
subsidiaries (54,179) 41,461 4,320 (8,398)
Extraordinary item, net 1,640 19,697 21,337
------------- ---------------- ----------------- ----------------- ----------------
Income (loss) before
equity in net earnings
of subsidiaries (55,819) 21,764 4,320 (29,735)
Equity in net earnings of
subsidiaries 26,084 $(26,084)
------------- ---------------- ----------------- ----------------- ----------------
Net income (loss) $(29,735) $ 21,764 $ 4,320 $(26,084) $(29,735)
============= ================ ================= ================= ================
</TABLE>
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<PAGE>
CONDENSED CONSOLIDATING CASH FLOW INFORMATION
IN THOUSANDS
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
-------------------------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR CONSOLIDATED
URI SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
--------------- -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities $ (443,929) $ 638,566 $10,394 $ 205,031
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of rental
equipment (418,182) (8,535) (426,717)
Purchase of property
and equipment (8,887) (44,467) (643) (53,997)
Proceeds from sales of
rental equipment 71,019 2,684 73,703
In-process acquisition
costs (4,413) (4,413)
Payment of contingent
purchase price (2,111) (506) (2,617)
Purchase of other companies (820,787) (12,510) (833,297)
--------------- -------------- --------------- -------------- --------------
Net cash used in
investing activities (834,087) (406,251) (7,000) (1,247,338)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance
of common stock and
warrants, net of
issuance costs 206,993 206,993
Proceeds from debt 1,923,950 10,187 1,934,137
Repayment of debt (1,179,437) (230,685) (1,410,122)
Payment of debt
financing costs (26,711) (26,711)
Capital contribution by
parent 290,928 290,928
Distribution to
stockholders (3,536) (3,536)
--------------- -------------- --------------- -------------- --------------
Net cash provided by
(used in)financing
activities 1,215,723 (224,034) 991,689
Net increase (decrease)
in cash and cash
equivalents (62,293) 8,281 3,394 (50,618)
Cash and cash
equivalents at
beginning of period 67,200 5,211 72,411
--------------- -------------- --------------- -------------- --------------
Cash and cash
equivalents at
end of period $ 4,907 $ 13,492 $ 3,394 $ 21,793
=============== ============== ============== ============== ==============
</TABLE>
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<PAGE>
CONDENSED CONSOLIDATING CASH FLOW INFORMATION
IN THOUSANDS
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
--------------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR CONSOLIDATED
URI SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
----------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Supplemental disclosure of
cash flow information:
Cash paid during the period:
Interest $ 6,630 $11,098 $ 67 $ 17,795
Income taxes $ 7,434 $2,245 $ 9,679
Supplemental disclosure of
non-cash investing and
financing activities:
During the nine month period
ended September 30, 1998, a
convertible note in the
principal amount of
$200 was converted
into 15 shares of
common stock
The Company acquired the
net assets and assumed
certain liabilities of
other companies as
follows:
Assets, net of cash
acquired $1,335,091 $1,335,091
Liabilities assumed (441,120) (441,120)
Less:
Amounts paid in common
stock and warrants (60,674) (60,674)
----------- -------------- -------------- -------------- -------------
Net cash paid $ 833,297 $ 833,297
=========== ============== ============== ============== =============
</TABLE>
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11. SUBSEQUENT EVENTS
Completed Acquisitions
Subsequent to September 30, 1998 (through November 10, 1998), the Company
completed the acquisition of eight equipment rental companies. The aggregate
consideration paid by the Company for these acquisitions was $22.9 million and
consisted of approximately $18.8 million in cash and notes, and 4,868 shares of
Common Stock. The Company also agreed in connection with one of the acquisitions
to pay the former owners additional amounts based upon specified future revenues
not to exceed $300,000 in the aggregate. 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.
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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 the nine and
three months ended September 30, 1998 and 1997 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 Plans," "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 below "Factors that May Influence Results
and Accuracy of Forward-Looking Statements".
United Rentals, Inc. is principally a holding company and conducts its
operations principally through its wholly owned subsidiary United Rentals (North
America), Inc. and subsidiaries of United Rentals (North America), Inc. Unless
otherwise indicated, (i) the term "Holdings" refers to United Rentals, Inc.,
(ii) the term "URI" refers to United Rentals (North America), Inc. a wholly
owned subsidiary of Holdings, and (iii) the term "the Company" refers to
Holdings and its subsidiaries (URI and its subsidiaries with respect to periods
prior to the reorganization described in Note 4 to the Unaudited Consolidated
Financial Statements of the Company included elsewhere herein).
Introduction
The Company commenced equipment rental operations in October 1997 by
acquiring six established equipment rental companies. The Company completed 77
additional acquisitions in the first eleven months of 1998 (through November 10,
1998), including a merger with U.S. Rentals (the "U.S. Rentals Merger") which
was completed in September 1998.
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Three of the acquisitions completed by the Company (including the U.S.
Rentals Merger) were accounted for as "poolings-of-interests", and the
Company's financial statements have been restated to include the accounts of the
companies acquired in such transactions (excluding one that was not material).
See Note 2 to the Unaudited Consolidated Financial Statements of the Company
included elsewhere herein. As a result of such restatement, the Company's
financial statements include periods that precede the date on which the Company
commenced operations.
The other 66 acquisitions completed by the Company during the first nine
months of 1998 were accounted for as purchases. The results of operations of the
businesses acquired in these acquisitions are included in the Company's
financial statements only from their respective dates of acquisition. In view
of the fact that the Company's operating results for 1997 and 1998 were impacted
by these acquisitions that were accounted for as purchases, the Company believes
that the results of its operations for such periods are not directly comparable.
GENERAL
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 and
supplies.
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 advertising and
marketing expenses, management salaries, and clerical and administrative
overhead.
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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
net assets acquired.
RESULTS OF OPERATIONS
Nine months ended September 30, 1998 and 1997
Revenues. Revenues for the first nine months of 1998 were $804.3 million,
representing an increase of 145.3% over revenues for the first nine months of
1997 of $327.8 million. Of this increase, approximately 126.2 percentage points
were attributable to new rental locations acquired through acquisitions and the
start-up of new locations. The remaining increase of approximately 19.1
percentage points was due to increased revenues at rental locations owned for
more than one year, primarily attributable to an increase in the volume of
rental transactions.
Gross Profit. Gross profit increased to $274.1 million during the first
nine months of 1998 from $100.2 million during the first nine months of 1997.
This increase in gross profit was primarily attributable to the increase in
revenues described above. As a percentage of revenue, gross profit was 34.1%
during 1998 and 30.6% during 1997.
Selling, General and Administrative Expense. Selling, general and
administrative expense ("SG&A") was $128.8 million or 16.0% of total revenues
during the first nine months of 1998 and $48.5 million or 14.8% of total
revenues during the first nine months of 1997. The increase in SG&A as a
percentage of revenues in 1998 primarily reflected the additional expenses for
senior management and corporate overhead that the Company began incurring in the
third quarter of 1997 as it built the management team and infrastructure
required to support its growth strategy.
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<PAGE>
Merger-Related Expenses. The Company incurred merger-related expenses in
the first nine months of 1998 of $42.2 million ($29.5 million after-tax) in
connection with three acquisitions completed by the Company in 1998 that were
accounted for as poolings-of-interests. These expenses consisted of (i) $18.5
million for investment banking, legal, accounting services and other merger
costs, (ii) $14.5 million of expenses relating to the closing of duplicate
facilities, (iii) $6.3 million for employee severance and (iv) $2.9 million in
other expenses. Certain merger related expenses are transitional in nature and,
in accordance with generally accepted accounting principles, are not presently
accruable and will be expensed in future quarters.
Non-rental Depreciation and Amortization. Non-rental depreciation and
amortization was $23.7 million or 2.9% of total revenues during the first nine
months of 1998 and $9.2 million or 2.8% of total revenues during the first nine
months of 1997. The increase in the dollar amount of non-rental depreciation and
amortization in 1998 primarily reflected the amortization of goodwill
attributable to the acquisitions completed at the end of 1997 and in 1998.
Termination Cost of Deferred Compensation Agreements. The Company's results
for the first nine months of 1997 were impacted by $20.3 million of expenses for
"termination costs of deferred compensation agreements." These expenses reflect
one-time expenses that were incurred by U.S. Rentals in connection with the
termination of certain deferred incentive compensation agreements in connection
with its initial public offering.
Interest Expense. Interest expense increased to $39.2 million during the
first nine months of 1998 from $6.3 million during the first nine months of
1997. This increase primarily reflected the fact that the Company's indebtedness
increased subsequent to the first nine months of 1997 primarily as a result of
the completion of acquisitions.
Preferred Dividends of a Subsidiary Trust. During the first nine months of
1998, preferred dividends of a subsidiary trust were $3.0 million. These
dividends relate to the
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<PAGE>
preferred securities issued in August 1998 by a subsidiary trust of the Company
(as described under "--Liquidity and Capital Resources--Recent Financings").
Other(Income)Expense. Other income was $4.5 million during the first nine
months of 1998 compared with $1.4 million during the first nine months of 1997.
The increase in other income in 1998 primarily reflected increased interest
income in 1998 as a result of higher cash balances resulting from the financing
transactions completed in the fourth quarter of 1997 and in 1998.
Income Taxes. Income taxes increased to $25.2 million, or an effective
rate of 60.4%, during the first nine months of 1998 from $21.9 million, or an
effective rate of 127.0% during the first nine months of 1997. During 1998 the
Company's high effective tax rate reflected (i) the non-deductibility of certain
merger related expenses and (ii) a $4.8 million charge to recognize deferred tax
liabilities of a company, which was an S Corporation prior to being acquired by
the Company. During 1997 the Company's high effective tax rate reflected (i) a
$7.5 million charge to recognize deferred tax liabilities of U.S. Rentals, which
was an S Corporation prior to its initial public offering, and (ii) the non-
deductibility for income tax purposes of certain losses that were incurred by
U.S. Rentals prior to a recapitalization effected in connection with its initial
public offering.
Extraordinary Items. The Company recorded an extraordinary charge of $35.6
million ($21.3 million net of taxes) in the first nine months of 1998 and an
extraordinary charge of $1.5 million in the first nine months of 1997. Such
charge in 1998 was incurred in connection with the early extinguishment of
certain debt and primarily reflected prepayment penalties on certain debt of
U.S. Rentals. Such charges in 1997 were incurred by U.S. Rentals in connection
with the prepayment of certain debt.
Three months ended September 30, 1998 and 1997
Revenues. Revenues for three months ended September 30, 1998 were $379.1
million, representing an increase of 193.8% over revenues for the three months
ended September 30, 1997 of $129.0 million. Of this increase, approximately
166.0
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<PAGE>
percentage points were attributable to new rental locations acquired through
acquisitions and the start-up of new locations. The remaining increase of
approximately 27.8 percentage points was due to increased revenues at rental
locations owned for more than one year, primarily attributable to an increase in
the volume of rental transactions.
Gross Profit. Gross profit increased to $138.7 million during the three
months ended September 30, 1998 from $45.6 million during the three months ended
September 30, 1997. This increase in gross profit was primarily attributable to
the increase in revenues described above. As a percentage of revenue, gross
profit was 36.6% during the 1998 period and 35.4% during the 1997 period.
Selling, General and Administrative Expense. SG&A increased to $60.4
million during the three months ended September 30, 1998 from $21.0 million
during the three months ended September 30, 1997, but as a percentage of total
revenues decreased to 15.9% in the 1998 period from 16.3% in the 1997 period.
The decrease in SG&A as a percentage of revenues in 1998 primarily reflected the
fact that revenues increased without a commensurate increase in senior
management and corporate overhead expenses.
Merger-Related Expenses. The Company incurred merger-related expenses in
the three months ended September 30, 1998 of $42.2 million($29.5 million after-
tax) in connection with three acquisitions completed by the Company in such
period that were accounted for as poolings-of-interests. These expenses
consisted of (i) $18.5 million for investment banking, legal, accounting
services and other merger costs, (ii) $14.5 million of expenses relating to the
closing of duplicate facilities, (iii) $6.3 million for employee severance and
(iv) $2.9 million in other expenses. Certain merger related expenses are
transitional in nature and, in accordance with generally accepted accounting
principles, are not presently accruable and will be expensed in future quarters.
Non-rental Depreciation and Amortization. Non-rental depreciation and
amortization was $11.2 million or 3.0% of total revenues during the three months
ended September 30, 1998 and $3.5 million or 2.7% of total revenues during the
three months ended September 30, 1997. The increase in the dollar amount of
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<PAGE>
non-rental depreciation and amortization in 1998 primarily reflected the
amortization of goodwill attributable to the acquisitions completed at the end
of 1997 and in 1998.
Interest Expense. Interest expense increased to $23.9 million during the
three months ended September 30, 1998 from $2.6 million during the three months
ended September 30, 1997. This increase primarily reflected the fact that the
Company's indebtedness increased subsequent to September 30, 1997 primarily as a
result of the completion of acquisitions.
Preferred Dividends of a Subsidiary Trust. During the three months ended
September 30, 1998, preferred dividends of a subsidiary trust were $3.0 million.
These dividends relate to the preferred securities issued in August 1998 by a
subsidiary trust of the Company (as described under "--Liquidity and Capital
Resources--Recent Financings").
Other(Income) Expense. Other income was $0.3 million during the three
months ended September 30, 1998 and $0.5 million during three months ended
September 30, 1997.
Income Taxes. Income taxes increased to $8.4 million during the three
months ended September 30, 1998 from $7.4 million, or an effective rate of
38.6%, during the three months ended September 30, 1997. During the 1998 period,
the Company recorded a provision for income taxes despite a pretax loss because
(i) certain merger-related expenses were not deductible for income tax purposes
and (ii) a $4.8 million charge was recorded to recognize deferred tax
liabilities of a company, which was an S Corporation prior to being acquired by
the Company.
Extraordinary Items. The Company recorded an extraordinary charge of $35.6
million ($21.3 million net of taxes) during the three months ended September 30,
1998. Such charge was incurred in connection with the early extinguishment of
certain debt and primarily reflected prepayment penalties on certain debt of
U.S. Rentals.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
The Company had cash-on-hand at the beginning of 1998 of approximately
$72.4 million, primarily representing the net proceeds of the Company's initial
public offering not used to repay indebtedness. During the first nine months of
1998, the Company(i) generated cash from operations of approximately $208.1
million,(ii) generated cash from the sales of rental equipment of approximately
$73.7 million and (iii) had net cash from financing activities of approximately
$1,000.8 million.
During the first nine months of 1998, the Company used cash principally to
(i) pay consideration for acquisitions (approximately $833.3 million), (ii)
repay indebtedness in connection with the U.S. Rentals Merger and Rental Tools
transaction (approximately $450.3 million), (iii) purchase rental equipment
(approximately $426.7 million) and (iv) purchase other property and equipment
(approximately $66.1 million). These cash expenditures were the principal
reason for the decrease in cash at September 30, 1998 compared with December 31,
1997.
The acquisitions and the equipment purchases made in 1998 (and the
financing of such acquisitions and purchases) were the principal reasons for the
increase in the following items at September 30, 1998 compared with December 31,
1997: accounts receivable, inventory, rental equipment, property and equipment,
intangible assets, accounts payable, debt, and accrued expenses and other
liabilities.
The increase in prepaid expenses and other assets at September 30, 1998
compared with December 31, 1997 primarily reflects (i) an 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 acquisitions that were capitalized.
The increase in stockholders' equity at September 30, 1998 compared with
December 31, 1997, primarily reflects (i) the sale of 8,625,000 shares of Common
Stock in a public offering in
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<PAGE>
March 1998 for aggregate consideration of $207.4 million (after deducting the
underwriting discounts and estimated offering expenses) and (ii) the issuance of
an aggregate of 3,580,230 shares of Common Stock during the nine months ended
September 30, 1998 as consideration for acquisitions.
CERTAIN INFORMATION CONCERNING URI'S CREDIT FACILITY
In September 1998, URI obtained a new $762.5 million revolving credit
facility (the "Credit Facility"), with a group of financial institutions which
replaced the credit facility that had previously been used by URI. Set forth
below is certain information concerning the terms of the Credit Facility.
The Credit Facility enables URI to borrow up to $762.5 million on a
revolving basis and permits the a Canadian subsidiary of URI (the "Canadian
Subsidiary") to directly borrow up to $40 million under the Credit Facility
(provided that the aggregate borrowings of URI and the Canadian Subsidiary do
not exceed $762.5 million). Up to $25 million of the Credit Facility is
available in the form of letters of credit. The agreement governing the Credit
Facility requires that the aggregate commitment shall be reduced on the last day
of each calendar quarter, beginning September 30, 2001 and continuing through
June 30, 2003 by an amount equal to $19.1 million. The Credit Facility
terminates on September 26, 2003, at which time all outstanding indebtedness is
due. The amount of indebtedness outstanding under the Credit Facility was $535.0
million at September 30, 1998, and $583.0 million at November 10, 1998 (not
including undrawn outstanding letters of credit in the amount of $3.3 million).
Borrowings by URI under the Credit Facility accrue interest at URI's
option, at either (a) the Base Rate (which is equal to the greater of (i) the
Federal Funds Rate plus 0.5% or(ii) Bank of America's reference rate) or (b) the
Eurodollar Rate (which for borrowings by URI is equal to Bank of America's
reserve adjusted eurodollar rate) plus a margin ranging from 0.950% to 1.625%
per annum. Borrowings by the Canadian Subsidiary under the Credit Facility
accrue interest, at such subsidiary's option,
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at either (x) the Prime Rate (which is equal to Bank of America Canada's prime
rate), (y) the BA Rate (which is equal to Bank of America Canada's BA Rate) plus
a margin ranging from 0.950% to 1.625% 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 0.95% to
1.625% per annum. If at any time an event of default (as defined in the
agreement governing the Credit Facility) exists, the interest rate applicable to
each loan will increase by 2% per annum. The Company is also required to pay
the banks an annual facility fee equal to 0.375% of the banks' $762.5 million
aggregate lending commitment under the Credit Facility (which fee may be reduced
to 0.300% for periods during which the Company maintains a specified funded debt
to cash flow ratio).
The obligations of URI under the Credit Facility are (i) secured by
substantially all of its assets, the stock of its United States subsidiaries and
a portion of the stock of the Company's Canadian subsidiaries and (ii)
guaranteed by Holdings and secured by the stock of URI. The obligations of the
Canadian Subsidiary under the Credit Facility are guaranteed by URI and secured
by substantially all of the assets of the Canadian Subsidiary and the stock of
the subsidiaries of the Canadian Subsidiary.
The Credit Facility contains certain covenants that require the Company to,
among other things, satisfy certain financial tests relating to: (a) maximum
leverage, (b) the ratio of senior debt to cash flow, (c) minimum interest
coverage ratio, (d) the ratio of funded debt to cash flow, and (e) the ratio of
senior debt to tangible assets. The agreements governing the Credit Facility
also contains various other covenants that restrict the Company's ability to,
among other things, (i) incur additional indebtedness, (ii) permit liens to
attach to its assets, (iii) pay dividends or make other restricted payments on
its common stock and certain other securities and (iv) make acquisitions unless
certain financial conditions are satisfied. In addition, the agreement governing
the Credit Facility requires the Company to maintain certain financial ratios
and (b) provides that failure by any two of Messrs. Jacobs, Milne, Nolan and
Miner to continue to hold executive positions with the Company for a
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period of 30 consecutive days constitutes an event of default unless replacement
officers satisfactory to the lenders are appointed.
RECENT FINANCINGS
Set forth below is certain information concerning certain financing
transactions completed by the Company in the third quarter of 1998.
TERM LOAN. In July 1998, URI obtained a $250 million term loan from a
group of financial institutions. The Term Loan matures on June 30, 2005. Prior
to maturity, quarterly installments of principal in the amount of $625,000 are
due on the last day of each calendar quarter, commencing September 30, 1999. The
amount due at maturity is $235,625,000. The Term Loan accrues interest, at URI's
option, at either (a) the Base Rate (as defined above with respect to the Credit
Facility) plus a margin ranging from 0% to 0.5% per annum, or (b) the Eurodollar
Rate (as defined above with respect to the Credit Facility for borrowings by
URI) plus a margin ranging from 1.875% to 2.375% per annum. The Term Loan is
secured pari passu with the Credit Facility, and the agreement governing the
Term Loan contains restrictive covenants substantially similar to those provided
by the Credit Facility.
8.80% SENIOR SUBORDINATED NOTES. In August 1998, URI issued $205 million
aggregate principal amount of 8.80% Senior Subordinated (the "8.80% Notes")
which are due August 15, 2008. The 8.80% Notes are unsecured.
PREFERRED SECURITIES. In August 1998, a subsidiary trust (the "Trust") of
Holdings sold in a private offering (the "Preferred Securities Offering") $300
million of 6 1/2% Convertible Quarterly Income Preferred Securities. The net
proceeds from the Preferred Securities Offering were approximately $290.0
million. The Trust used the proceeds from the Preferred Securities Offering to
purchase convertible subordinated debentures from Holdings which resulted in
Holdings receiving all of the proceeds from the Preferred Securities Offering.
Holdings in turn contributed the net proceeds of the Preferred Securities
Offering to its wholly owned subsidiary URI.
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<PAGE>
URI used approximately $281.0 million of such net proceeds to repay outstanding
indebtedness under its credit facility and used the balance of such net proceeds
for acquisitions. The preferred securities are convertible into Common Stock of
the Company at a conversion price equivalent to $43.63 per share.
CASH REQUIREMENTS RELATED TO OPERATIONS
The Company expects that its principal needs for cash relating to its
existing operations over the next 12 months will be to fund (i) operating
activities and working capital, (ii) the purchase of rental equipment and
inventory of items offered for sale and (iii) debt service. The Company plans to
fund such cash requirements relating to its existing operations from cash
generated from operations supplemented, if required, by borrowings available
under the Credit Facility.
The Company estimates that equipment expenditures over the next 12 months
will be approximately $425 million for the existing operations of the Company.
These expenditures are comprised of approximately $225 million of expenditures
in order to maintain the average age of the Company's rental fleet and $200
million of discretionary expenditures to increase the size of the Company's
rental fleet. The Company expects to fund such expenditures from cash generated
from operations. 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 equipment expenditures that will be
required in connection with new acquisitions.
Principal elements of the Company's strategy include continued 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 expects that
it will require additional financing for future acquisitions and, consequently,
the Company's indebtedness may increase as the Company implements its growth
strategy. There can be no assurance, however, that any additional financing will
be available or, if available, will be on terms satisfactory to the Company.
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The Company is in the process of developing two start-up locations. The
Company estimates that the aggregate costs associated with such start-up
locations will be in the range of $3 million to $5 million (including
expenditures of approximately $250,000 paid to date). The Company plans to fund
the cash requirements relating to such start-up locations from cash generated
from operations supplemented, if required, by borrowings available under the
Credit Facility.
The Company is in the process of extending its information technology
system to the locations acquired through the U.S. Rentals Merger and other
recent acquisitions. The Company estimates that the cost of completing this work
will be approximately $5.1 million.
Based upon the terms of the Company's currently outstanding indebtedness,
the Company is scheduled to repay approximately $1.9 million of indebtedness
during the balance of 1998 and $9.0 million during 1999. In addition, the
Company may be required at any time to repay a $21.5 million demand note that
the Company assumed in connection with the U.S. Rentals Merger.
YEAR 2000 COMPLIANCE
The Company has been informed by its software vendors that the Company's
new information technology system is year 2000 compliant. The Company has,
therefore, not developed any contingency plans relating to year 2000 issues and
has not budgeted any funds for year 2000 issues. Although the Company believes
that its system is year 2000 compliant, there can be no assurance that
unanticipated year 2000 problems will not arise which, depending on the nature
and magnitude of the problem, could have a material adverse effect on the
Company's business and financial condition. Furthermore, year 2000 problems
involving third parties may have a negative impact on the general economy or on
the ability of businesses generally to receive essential services (such as
telecommunications, banking services, etc.). Any such occurrence could have a
material adverse effect on the Company's business and financial condition.
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RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board Issued Statement of
Financial Accounting Standards ("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.
In February 1998, the Financial Accounting Standards Board issued SFAS No.
132, "Employers' Disclosures about Pensions and Other Post Retirement Benefits."
SFAS No. 132 revises employers' disclosures about pension and other post
retirement benefit plans but does not change the measurement or recognition of
those plans. The Company is required to adopt SFAS No. 132 by December 31,
1998. The adoption of SFAS No. 132 is not expected to have a material effect on
the Company's consolidated financial position or results of operations.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes a new model for accounting for derivatives and hedging activities.
The Company will adopt SFAS No. 133 beginning January 1, 2000. The adoption of
SFAS No. 133 is not expected to have a material effect on the Company's
consolidated financial position or results of operations.
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FACTORS THAT MAY INFLUENCE FUTURE RESULTS AND ACCURACY OF FORWARD-LOOKING
STATEMENTS
SENSITIVITY TO GENERAL ECONOMIC AND WEATHER CONDITIONS
The Company believes that the equipment rental business is sensitive to
changes in general economic conditions and may be temporarily disrupted 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 changes in construction and industrial
activity, or increases in prevailing interest rates, or (ii) adverse weather
conditions that may temporarily decrease construction and industrial activity in
any one particular geographic area.
RISKS RELATING TO GROWTH STRATEGY
The Company's growth strategy includes continued expansion through internal
growth, its ongoing acquisition program and the start-up of new locations.
However, there can be no assurance that the Company will successfully implement
its growth strategy or that this strategy will result in continued
profitability. In addition, under the terms of certain of the agreements
governing certain of the Company's outstanding indebtedness, the Company may not
make acquisitions unless certain financial conditions are satisfied or the
consent of the lenders is obtained. Furthermore, there can be no assurance that
the Company's growth rate will be comparable to the past or future growth rate
of the overall equipment rental industry or any segment thereof. 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.
Competition for acquisitions could have the effect of increasing prices required
to be paid for such acquisitions. There can be no assurance that
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<PAGE>
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
Realization of the anticipated benefits of completed and future acquisitions
will depend, in part, upon the efficient, effective and timely integration of
acquired operations. Accordingly, the Company intends to continue 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.
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 establishing each start-up location and (ii) it will generally take some
time following the commencement of operations for a start-up location to become
profitable. Although start-ups can generate long-term growth, there can be no
assurance that any start-up location will become profitable within any specific
time period, 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 borrowing facilities
is not sufficient to fund the Company's capital requirements, the Company will
require additional debt and/or equity financing.
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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 of the Company.
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. In connection with acquisitions, the
Company seeks to minimize the impact of these liabilities by obtaining
indemnities and warranties from the sellers 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 agreements governing the Credit Facility (as defined
herein) and Term Loan (as defined herein) provide 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 and Term Loan unless replacement
officers satisfactory to the lenders are appointed.
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<PAGE>
COMPETITION
The equipment rental industry is highly fragmented and competitive. The
Company's competitors include public companies or divisions of public companies;
regional competitors which operate in one or more states; small, independent
businesses with one or two rental locations; and equipment vendors and dealers
who both sell and rent equipment directly to customers. 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.
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 period
not meeting expectations, which could have a 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 the Company's delivery and service personnel
and compensation and
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other employment related claims. The Company carries abroad range of insurance
for the protection of its assets and operations. However, such coverage is
subject to a deductible of $1,000,000 and limited to a maximum of $97 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.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
United Rental's operations outside the United States are subject to risks
normally associated with international operations, including currency conversion
risks and complying with foreign laws.
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PART II OTHER INFORMATION
ITEM 2 CHANGES IN SECURITIES
Sale of Unregistered Securities
Set forth below is certain information concerning sales by the Company of
unregistered securities during the third quarter of 1998. The issuances by the
Company of the securities sold in the transactions 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.
<TABLE>
<CAPTION>
SHARES
MONTH ISSUED
- ----- ------
<S> <C>
July 343,882
August 2,792,524
September 1,456,997
---------
Total 4,593,403
=========
</TABLE>
Of the shares indicated above, 4,591,914 shares were issued as consideration
in connection with seven acquisitions and 1,489 shares were issues pursuant to
an employment agreement with an executive officer.
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ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of stockholders was held on September 29, 1998. The
holders of 29,989,352 shares were present either in person or by proxy. There
were 2,990,469 broker non-votes at the meeting. The following three matters were
voted on and approved at such meeting.
1. An amendment of the Certificate of Incorporation increasing the number of
authorized shares of the Company's Common Stock from 75,000,000 to
500,000,000.
<TABLE>
<CAPTION>
Abstain
For or Withheld Against
--- ----------- -------
<S> <C> <C>
22,709,189 32,267 7,247,896
</TABLE>
2. The issuance of the Company's Common Stock pursuant to an Agreement and Plan
of Merger, as amended and restated and dated on August 31, 1998, among the
Company, UR Acquisitions Corporation, a wholly owned subsidiary of the
Company and U.S. Rentals, Inc.
<TABLE>
<CAPTION>
Abstain
For or Withheld Against
--- ----------- -------
<S> <C> <C>
29,923,152 23,558 42,642
</TABLE>
3. The adoption of the United Rentals 1998 Stock Option Plan.
<TABLE>
<CAPTION>
Abstain
For or Withheld Against
--- ----------- -------
<S> <C> <C>
24,575,082 348,647 5,065,623
</TABLE>
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ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
2 Amended and Restated Agreement and Plan of Merger dated as of August 31,
1998, among United Rentals, Inc., UR Acquisition Corporation and U.S.
Rentals, Inc. (incorporated by reference to Exhibit 2 of United Rentals,
Inc. Registration Statement on Form S-4, Registration No. 333-63171).
3.1 Amended and Restated Certificate of Incorporation of United Rentals, Inc.,
in effect as of the date hereof (incorporated by reference to exhibit 3.1
of United Rentals, Inc. Report on From 10-Q for the quarter ended June 30,
1998).
3.2 By-laws of United Rentals, Inc., in effect as of the date hereof
(incorporated by reference to exhibit 3.2 of United Rentals, Inc. Report on
Form 10-Q for the quarter ended June 30,1998).
4.1 Certificate of Trust of United Rentals Trust I (incorporated by reference
to Exhibit 4(a) of United Rentals, Inc. Registration Statement on Form S-1,
Registration No. 333-64463)
4.2 Amended and Restated Trust Agreement dated August 5, 1998 among United
Rentals, Inc., The Bank of New York, as Property Trustee, The Bank of New
York (Delaware), as Delaware Trustee, and the Administrative Trustees named
therein (incorporated by reference to Exhibit 10(ii) of United Rentals,
Inc. Registration Statement on Form S-4, Registration No. 333-63171)
4.3 Indenture dated August 5, 1998 by and between United Rentals, Inc. and The
Bank of New York, as Trustee (incorporated by reference to Exhibit 10(hh)
of United Rentals, Inc. Registration Statement on Form S-4, Registration
No. 333-63171)
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4.4 Guarantee Agreement dated August 5, 1998 between United Rentals, Inc. and
The Bank of New York (incorporated by reference to Exhibit 10(jj) of United
Rentals, Inc. Registration Statement on Form S-4, Registration No.333-
63171)
4.5 Form of Certificate representing 6 1/2% Convertible Quarterly Income
Preferred Securities (incorporated by reference to Exhibit 4(e) of United
Rentals, Inc. Registration Statement on Form S-1, Registration No. 333-
64463)
4.6 Form of Certificate representing 6 1/2% Convertible Subordinated Debentures
(incorporated by reference to Exhibit 4(f) of United Rentals, Inc.
Registration Statement on Form S-1, Registration No. 333-64463)
10.1 First Amendment to Third Amended and Restated Credit Agreement dated as of
July 10, 1998 (incorporated by reference to Exhibit 10(a)(iii) to the
Registration Statement on Form S-4 filed by United Rentals (North America),
Inc. Registration No. 333-60467)
10.2 Credit Agreement dated as of September 29, 1998, between United Rentals
(North America), Inc., various financial institutions, Bank of America
Canada, as Canadian agent, and Bank of America National Trust, as U.S.
Agent.
10.3 First Amendment to the Term Loan Agreement dated as of September 29, 1998
among United Rentals (North America), Inc., various financial institutions
and Bank of America National Trust and Savings Association, as Agent.
10.4 Share Purchase Agreement dated July 30, 1998 among United Rentals (North
America), Inc. and the parties listed therein for all of the outstanding
shares of McClinch Equipment Services, Inc. (incorporated by reference to
Exhibit 10(ll) of United Rentals, Inc. Registration Statement on Form S-4,
Registration No. 333-63171)
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10.5 Share Purchase Agreement dated July 30, 1998 among United Rentals (North
America), Inc. and the parties listed therein for all of the outstanding
shares of Grey Fox Equipment, Inc. (incorporated by reference to Exhibit
10(mm) of United Rentals, Inc. Registration Statement on Form S-4,
Registration No. 333-63171).
10.6 Share Purchase Agreement dated July 30, 1998 among United Rentals (North
America), Inc. and the parties listed therein for all of the outstanding
shares of McClinch, Inc. (incorporated by reference to Exhibit 10(dd) of
United Rentals, Inc. Registration Statement on Form S-4, Registration No.
333-63171).
10.7 Purchase Agreement dated July 30, 1998 relating to the initial sale by
United Rentals Trust I of $300 million aggregate principal amount of 6 1/2%
Convertible Quarterly Income Preferred Securities convertible into common
stock of United Rentals, Inc. (incorporated by reference to Exhibit
10(hh)of Amendment No. 1 to the Registration Statement on Form S-4 filed by
United Rentals (North America), Inc. Registration No. 333-60467).
10.8 Registration Rights Agreement dated August 5, 1998 between United Rentals
(North America), Inc., United Rentals, Inc., United Rentals Trust I,
Goldman Sachs & Co. and the other purchasers names therein (incorporated by
reference to exhibit 10(kk) of United Rentals, Inc. Registration Statement
on Form S-4, Registration No. 333-63171.
10.9 Purchase Agreement dated August 7, 1998 relating to the initial sale by
United Rentals (North America), Inc. of $205 million aggregate principal
amount of 8.80% Senior Subordinated Notes due 2008 (incorporated by
reference to exhibit 10(mm) of Amendment No. 1 to the Registration
Statement on Form S-4 filed by United Rentals (North America), Inc.,
Registration No. 333-60467.
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10.10 Indenture dated August 12, 1998, among United Rentals (North America),
Inc., the Guarantors named therein and State Street Bank and Trust
Company, as trustee (incorporated by reference to Exhibit 10(bb) of United
Rentals, Inc. Registration Statement on Form S-4, Registration No. 333-
63171).
10.11 Notes Registration Rights Agreement dated as of August 12, 1998, among
United Rentals (North America), Inc., the subsidiaries of United Rentals,
Inc. named therein, and Merrill Lynch & Co. (incorporated by reference to
Exhibit 10(cc) of United Rentals, Inc. Registration Statement on Form S-4,
Registration No. 333-63171
10.12 Form of Employment Agreement with William Berry (incorporated by reference
to Exhibit 10(ee) of United Rentals, Inc. Registration Statement on
Form S-4, Registration No. 333-63171).
10.13 Form of Employment Agreement with John McKinney (incorporated by reference
to Exhibit 10(ff) of United Rentals, Inc. Registration Statement on
From S-4 Registration No. 333-63171).
10.14 Form of Registration Rights Agreement with certain affiliates of U.S.
Rentals (Incorporated by reference to exhibit 10(gg) of United Rentals,
Inc. Registration Statement on Form S-4, Registration No. 333-63171)
10.15 1998 Stock Option Plan of United Rentals, Inc. (incorporated by reference
to Exhibit 99.1 to United Rentals, Inc. Registration Statement on Form S-
4, Registration No. 333-63171).
27 Financial Data Schedule
27.1 Financial Data Schedule
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(b) Reports on Form 8-K:
1 Form 8-K dated July 21, 1998 (earliest event reported July 10, 1998); Items
2 and 7 were reported. The Form 8-K includes (a) The combined financial
statements of Equipment Supply Co., Inc. and Affiliates, and (b) Pro Forma
consolidated financial statements of the Company.
2 Form 8-K dated August 7, 1998 (earliest event reported August 5, 1998),
Item 5 was reported.
3 Form 8-K dated September 16, 1998 (earliest event reported September 1,
1998); Items 2 and 7 were reported. The Form 8-K includes (a) the
consolidated financial statements of McClinch, Inc. and Subsidiaries and
the financial statements of McClinch Equipment Services, Inc., and (b) Pro
Forma consolidated financial statements of the Company.
4 Form 8-K dated October 9, 1998 (earliest event reported September 29,
1998); Items 2 and 7 were reported. The Form 8-K includes (a) the financial
statements of U.S. Rentals, Inc., and (b) Pro Forma consolidated financial
statements of the Company.
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<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: November 13, 1998 By: /s/ Michael J. Nolan
----------------- ----------------------------------
Michael J. Nolan
Chief Financial Officer
(Principal Financial Officer)
Dated: November 13, 1998 By: /s/ Sandra E. Welwood
----------------- ----------------------------------
Sandra E. Welwood
Vice President,
(Chief Accounting Officer)
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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(NORTH AMERICA), INC.
Dated: November 13, 1998 By: /s/Michael J. Nolan
----------------- -----------------------------------
Michael J. Nolan
Chief Financial Officer
(Principal Financial Officer)
Dated: November 13, 1998 By: /s/Sandra E. Welwood
----------------- -----------------------------------
Sandra E. Welwood
Vice President,
Corporate Controller
(Chief Accounting Officer)
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================================================================================
CREDIT AGREEMENT
dated as of September 29, 1998
among
UNITED RENTALS (NORTH AMERICA), INC.,
UNITED RENTALS, INC.,
UNITED RENTALS OF CANADA, INC.,
VARIOUS FINANCIAL INSTITUTIONS,
BANKBOSTON, N.A.,
as Co-Agent,
CREDIT LYONNAIS NEW YORK BRANCH
and
DEUTSCHE BANK AG,
as Documentation Agents,
BANK OF AMERICA CANADA,
as Canadian Agent,
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as U.S. Agent
Arranged by BANCAMERICA SECURITIES, INC.
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1 DEFINITIONS................................................................... 1
1.1 Definitions.................................................................... 1
1.2 Other Interpretive Provisions.................................................. 18
SECTION 2 COMMITMENTS OF THE BANKS; BORROWING, CONVERSION AND
LETTER OF CREDIT PROCEDURES; SWING LINE LOANS....................................... 18
2.1 Commitments.................................................................... 18
2.1.1 U.S. Loan Commitment.................................................. 18
2.1.2 Canadian Loan Commitment.............................................. 19
2.1.3 Letter of Credit Commitment.......................................... 19
2.1.4 Commitment Limits..................................................... 19
2.1.5 Valuation of Canadian Loans........................................... 19
2.2 U.S. Loan Procedures........................................................... 19
2.2.1 Various Types of U.S. Loans........................................... 19
2.2.2 Borrowing Procedures for U.S. Loans................................... 19
2.2.3 Conversion and Continuation Procedures for U.S. Loans................. 20
2.3 Canadian Loan Procedures....................................................... 21
2.3.1 Various Types of Canadian Loans....................................... 21
2.3.2 Borrowing Procedures for Canadian Loans............................... 21
2.3.3 Conversion and Continuation Procedures for Canadian Loans............. 22
2.3.4 Participations in Canadian Loans...................................... 23
2.3.5 Canadian Participation Obligations Unconditional...................... 24
2.3.6 Canadian Loan Reports................................................. 25
2.4 Letter of Credit Procedures.................................................... 25
2.4.1 L/C Applications...................................................... 25
2.4.2 Participations in Letters of Credit................................... 25
2.4.3 Reimbursement Obligations............................................. 25
2.4.4 Limitation on the Issuing Bank's Obligations.......................... 26
2.4.5 Funding by U.S. Banks to the Issuing Bank............................. 26
2.4.6 Repayment of Participations........................................... 27
2.4.7 Participation Obligations Unconditional............................... 27
2.5 Swing Line Loans............................................................... 27
2.5.1 Swing Line Loans...................................................... 27
2.5.2 Swing Line Loan Procedures............................................ 27
2.5.3 Refunding of, or Funding of Participations in, Swing Line Loans....... 28
2.5.4 Repayment of Participations........................................... 29
2.5.5 Participation Obligations Unconditional............................... 29
2.5.6 Swing Line Loan Reports............................................... 29
2.6 Pro Rata Treatment............................................................. 29
</TABLE>
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<TABLE>
<S> <C>
2.7 Commitments Several........................................................ 29
2.8 Certain Conditions......................................................... 30
SECTION 3 NOTES EVIDENCING LOANS............................................... 30
3.1 Notes............................................................ 30
3.2 Recordkeeping.................................................... 30
SECTION 4 INTEREST............................................................. 30
4.1 Interest Rates................................................... 30
4.2 Interest Payment Dates........................................... 31
4.3 Setting and Notice of Certain Rates.............................. 31
4.4 Computation of Interest.......................................... 31
SECTION 5 FEES................................................................. 32
5.1 Facility Fee..................................................... 32
5.2 Letter of Credit Fees............................................ 32
5.3 Arrangement and Agents' Fees..................................... 33
5.4 Closing Fees..................................................... 33
SECTION 6 REDUCTION, INCREASE OR TERMINATION OF THE AGGREGATE
COMMITMENT; PREPAYMENTS............................................... 33
6.1 Changes in Aggregate Commitment.................................. 33
6.1.1 Reduction or Termination of the Aggregate Commitment... 33
6.1.2 Optional Increase in Aggregate Commitment.............. 33
6.2 Prepayments...................................................... 34
6.2.1 Mandatory Prepayments.................................. 34
6.2.2 Voluntary Prepayments.................................. 34
6.2.3 All Prepayments........................................ 35
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES...................... 35
7.1 Making of Payments............................................... 35
7.2 Application of Certain Payments.................................. 36
7.3 Due Date Extension............................................... 36
7.4 Setoff........................................................... 36
7.5 Proration of Payments............................................ 37
7.6 Taxes............................................................ 37
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR FIXED RATE LOANS............. 39
8.1 Increased Costs.................................................. 39
8.2 Basis for Determining Interest Rate Inadequate or Unfair......... 41
8.3 Changes in Law Rendering Fixed Rate Loans Unlawful............... 41
8.4 Funding Losses................................................... 42
</TABLE>
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<TABLE>
<S> <C>
8.5 Right of Banks to Fund through Other Offices.......................... 42
8.6 Discretion of Banks as to Manner of Funding........................... 42
8.7 Mitigation of Circumstances; Replacement of Affected Bank............. 42
8.8 Conclusiveness of Statements; Survival of Provisions.................. 43
SECTION 9 WARRANTIES.......................................................... 43
9.1 Organization, etc.................................................... 43
9.2 Authorization; No Conflict........................................... 44
9.3 Validity and Binding Nature.......................................... 44
9.4 Information.......................................................... 44
9.5 Financial Information; No Material Adverse Change.................... 45
9.6 Litigation and Contingent Liabilities................................ 45
9.7 Ownership of Properties; Liens....................................... 45
9.8 Subsidiaries......................................................... 45
9.9 Pension and Welfare Plans............................................ 46
9.10 Investment Company Act............................................... 46
9.11 Public Utility Holding Company Act................................... 46
9.12 Regulation U......................................................... 46
9.13 Taxes................................................................ 47
9.14 Solvency, etc........................................................ 47
9.15 Environmental Matters................................................ 47
9.16 Year 2000 Problem.................................................... 47
9.17 Senior Debt.......................................................... 47
SECTION 10 COVENANTS........................................................... 47
10.1 Reports, Certificates and Other Information.......................... 47
10.1.1 Audit Report............................................... 48
10.1.2 Quarterly Reports.......................................... 48
10.1.3 Projections................................................ 48
10.1.4 Compliance Certificates.................................... 48
10.1.5 Reports to SEC and to Shareholders......................... 48
10.1.6 Notice of Default, Litigation and ERISA Matters............ 49
10.1.7 Subsidiaries............................................... 50
10.1.8 Management Reports......................................... 50
10.1.9 Other Information.......................................... 50
10.2 Books, Records and Inspections....................................... 50
10.3 Insurance............................................................ 50
10.4 Compliance with Laws; Payment of Taxes and Liabilities............... 50
10.5 Maintenance of Existence, etc........................................ 50
10.6 Financial Covenants.................................................. 51
10.6.1 Maximum Leverage........................................... 51
10.6.2 Minimum Interest Coverage Ratio............................ 51
10.6.3 Funded Debt to Cash Flow Ratio............................. 51
</TABLE>
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<TABLE>
<S> <C>
10.6.4 Senior Debt to Tangible Assets.......................... 51
10.6.5 Senior Debt to Cash Flow Ratio.......................... 51
10.7 Limitations on Debt............................................... 51
10.8 Liens............................................................. 53
10.9 Asset Sales....................................................... 54
10.10 Restricted Payments............................................. 54
10.11 Mergers, Consolidations, Amalgamations, Sales................... 54
10.12 Modification of Documents....................................... 55
10.13 Use of Proceeds................................................. 55
10.14 Further Assurances.............................................. 56
10.15 Transactions with Affiliates.................................... 56
10.16 Employee Benefit Plans.......................................... 56
10.17 Environmental Laws.............................................. 56
10.18 Unconditional Purchase Obligations.............................. 57
10.19 Inconsistent Agreements......................................... 57
10.20 Business Activities............................................. 57
10.21 Advances and Other Investments.................................. 57
10.22 Location of Assets.............................................. 58
10.23 Activities of Parent............................................ 58
SECTION 11 EFFECTIVENESS; CONDITIONS OF LENDING, ETC........................ 58
11.1 Effectiveness..................................................... 58
11.1.1 Notes.................................................. 59
11.1.2 Resolutions............................................ 59
11.1.3 Consents, etc.......................................... 59
11.1.4 Incumbency and Signature Certificates.................. 59
11.1.5 Guaranties............................................. 59
11.1.6 Security Agreements.................................... 59
11.1.7 Pledge Agreements...................................... 60
11.1.8 Opinions of Counsel for the Company.................... 60
11.1.9 Intercreditor Agreement................................ 60
11.1.10 Other.................................................. 60
11.2 Conditions to all Credit Extensions............................... 60
11.2.1 Compliance with Warranties, No Default, etc............ 60
11.2.2 Confirmatory Certificate............................... 61
11.3 Conditions to Canadian Loans...................................... 61
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT............................... 61
12.1 Events of Default................................................. 61
12.1.1 Non-Payment of the Loans, etc........................... 61
12.1.2 Non-Payment of Other Debt............................... 62
12.1.3 Other Material Obligations.............................. 62
12.1.4 Bankruptcy, Insolvency, etc............................. 62
</TABLE>
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<TABLE>
<S> <C>
12.1.5 Non-Compliance with Provisions of This Agreement....... 62
12.1.6 Warranties............................................. 63
12.1.7 Pension Plans.......................................... 63
12.1.8 Judgments.............................................. 63
12.1.9 Invalidity of Guaranties, etc.......................... 63
12.1.10 Invalidity of Collateral Documents, etc............... 63
12.1.11 Change in Control..................................... 63
12.1.12 Invalidity of Parent Guaranty, etc.................... 64
12.2 Effect of Event of Default...................................... 64
SECTION 13 THE AGENTS..................................................... 65
13.1 Appointment and Authorization................................... 65
13.2 Delegation of Duties............................................ 65
13.3 Liability of Agent.............................................. 66
13.4 Reliance by Agents.............................................. 66
13.5 Notice of Default............................................... 66
13.6 Credit Decision................................................. 67
13.7 Indemnification................................................. 67
13.8 Agent in Individual Capacity.................................... 68
13.9 Successor Agent; Assignment of Agency........................... 68
13.10 Withholding Tax................................................ 69
13.11 Collateral Matters............................................. 71
13.12 Documentation Agents; Co-Agent................................. 71
SECTION 14 GUARANTY BY THE COMPANY........................................ 71
14.1 Guaranty........................................................ 71
14.2 Guaranty Unconditional.......................................... 71
14.3 Discharge only upon Payment in Full;
Reinstatement in Certain Circumstances.......................... 72
14.4 Waiver by the Company........................................... 72
14.5 Subrogation..................................................... 72
14.6 Stay of Acceleration............................................ 73
SECTION 15 GENERAL........................................................ 73
15.1 Waiver; Amendments.............................................. 73
15.2 Confirmations................................................... 73
15.3 Notices......................................................... 74
15.4 Computations.................................................... 74
15.5 Regulation U.................................................... 74
15.6 Costs, Expenses and Taxes....................................... 74
15.7 Judgment........................................................ 75
15.8 Captions........................................................ 75
15.9 Assignments; Participations..................................... 75
</TABLE>
-v-
<PAGE>
<TABLE>
<S> <C>
15.9.1 Assignments..................................... 75
15.9.2 Participations.................................. 77
15.10 Governing Law........................................... 77
15.11 Counterparts............................................ 78
15.12 Successors and Assigns.................................. 78
15.13 Indemnification by the Company.......................... 78
15.14 Forum Selection and Consent to Jurisdiction............. 79
15.15 Waiver of Jury Trial.................................... 79
15.16 Authorization of Intercreditor Agreement................ 80
15.17 Waiver Under Existing Agreement......................... 80
</TABLE>
SCHEDULE 1.1(A) U.S. Banks and Initial Percentages
SCHEDULE 1.1(B) Canadian Banks and Initial Percentages
SCHEDULE 1.1(C) Pricing Schedule
SCHEDULE 1.1(D) Existing Letters of Credit
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(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)
-vi-
<PAGE>
EXHIBIT C Form of U.S. Guaranty
(Section 1)
EXHIBIT D Form of U.S. Security Agreement
(Section 1)
EXHIBIT E Form of Company Pledge Agreement
(Section 1)
EXHIBIT F Form of Subsidiary Pledge Agreement
(Section 11.1.7)
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 Intercreditor Agreement
(Section 1)
EXHIBIT L Form of Parent Guaranty
(Section 1)
EXHIBIT M Form of Parent Pledge Agreement
(Section 1)
EXHIBIT N Form of Request for Increase
(Section 6.1.2)
-vii-
<PAGE>
CREDIT AGREEMENT
----------------
This CREDIT AGREEMENT dated as of September 29, 1998 (this "Agreement") is
---------
entered into among UNITED RENTALS (NORTH AMERICA), INC., a Delaware corporation
(the "Company"), UNITED RENTALS, INC., a Delaware corporation ("Parent"), 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.
----
In consideration of the mutual agreements contained herein, 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):
Acquisition Subsidiary means a Subsidiary of Parent organized solely for
----------------------
the purpose of acquiring the stock or assets of a Person as permitted by Section
-------
10.11.
- -----
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.
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.$750,000,000.
<PAGE>
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 Securities, Inc., 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.
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.
-2-
<PAGE>
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.
---------
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 "Lender" under and as defined in the Term Loan
Agreement or a Bank or its holding company) for such a "Lender" or a Bank (any
such Person a "Permitted Bank") rated at least A-l by Standard & Poor's Ratings
Group or P-l by
-3-
<PAGE>
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 Permitted 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 Permitted
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 Permitted Bank (or other
commercial banking institution) thereunder and (e) investments in short-term
asset management accounts offered by any Permitted Bank for the purpose of
investing in loans to any corporation (other than Parent or an Affiliate of
Parent), state or municipality, in each case organized under the laws of any
state of the United States or of the District of Columbia.
Cash Flow means, as of the last day of any Fiscal Quarter, 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, all calculated on a pro forma basis in accordance with Article 11
--- -----
of Regulation S-X of the SEC.
Code means the Internal Revenue Code of 1986.
----
Collateral Agent means BofA in its capacity as Collateral Agent under the
----------------
Intercreditor Agreement and any successor thereto in such capacity.
Collateral Documents means the Company Pledge Agreement, each Subsidiary
--------------------
Pledge Agreement, the Parent Pledge Agreement, the U.S. Security Agreement, each
Canadian Security Agreement, the Bank Act Security and any other agreement
pursuant to which the Company, Parent or any Subsidiary grants a Lien on
collateral to the Collateral Agent, either Agent or any Bank for the benefit of
the Banks.
Commercial Letter of Credit means any Letter of Credit other than a standby
---------------------------
Letter of Credit.
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.
------- --------
-4-
<PAGE>
Company Pledge Agreement means the Second Restated Company Pledge Agreement
------------------------
dated as of September 29, 1998 between the Company and the Collateral Agent,
substantially in the form of Exhibit E.
---------
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 period of
------------------
three Fiscal Quarters ending September 30, 1998 and (ii) 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 Parent and its Subsidiaries
-----------------------
for any period, the net income (or loss) of Parent and its Subsidiaries for such
period, excluding any extraordinary gains during such period and any Pooling
---------
Charges booked 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 Parent or any Subsidiary
in connection with the purchase of any asset or business, where the
obligation of Parent 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 Parent 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 Parent 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 Parent 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 Parent, are treated as a
single employer under Section 414 of the Code or Section 4001 of ERISA.
-5-
<PAGE>
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, (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) all Hedging Obligations of such
Person and (g) all Suretyship Liabilities of such Person.
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.
---------------- ------------
Exchange Act means the Securities Exchange Act of 1934.
------------
Existing Agreement means the Third Amended and Restated Credit Agreement
------------------
dated as of May 12, 1998 among the Company (then known as United Rentals, Inc.),
UR Canada, various financial institutions, BAC, as Canadian Agent, and BofA, as
U.S. Agent, as amended by the First Amendment thereto dated as of July 10, 1998.
Existing Letters of Credit means the letters of credit listed on Schedule
-------------------------- --------
1.1(D).
- ------
Existing U.S. Rentals Agreement means the Credit Agreement dated as of
-------------------------------
February 26, 1997 among U.S. Rentals, various financial institutions and BofA,
as Administrative Agent.
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 standby 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 Parent 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.
-8-
<PAGE>
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 Parent 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.
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 Parent 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 Parent
or any Subsidiary), (ii) Hedging Obligations, (iii) Debt of the Company to
Subsidiaries and Debt of Subsidiaries to the Company or to other Subsidiaries
and (iv) Debt (including guaranties thereof) in respect of the QuIPS Debentures
and the QuIPS Preferred Securities.
Funded Debt to Cash Flow Ratio means, as of the last day of any Fiscal
------------------------------
Quarter, the ratio of (i) Funded Debt as of such day to (ii) Cash Flow as of
such day.
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, commodity and equity 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, commodity prices or equity prices.
-9-
<PAGE>
Holdback means an unsecured, non-interest-bearing obligation of Parent 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 Parent 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 Parent or any Subsidiary; provided that no provision of 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.
Intercreditor Agreement means the Intercreditor Agreement dated as of
-----------------------
September 29, 1998 among BofA, as U.S. Agent, BofA, as agent for the lenders
under the Term Loan Agreement, BofA, as Collateral Agent, and the holders of the
Permitted Senior Secured Debt (or an agent therefor), substantially in the form
of Exhibit K.
---------
Interest Coverage Ratio means the ratio of (a) Consolidated Net Income
-----------------------
before deducting Interest Expense, income tax expense and Rentals for any
Computation Period to (b) Interest Expense plus Rentals for such Computation
----
Period.
Interest Expense means for any period the consolidated interest expense of
----------------
Parent and its Subsidiaries for such period (including, without duplication,
interest paid on the QuIPS Debentures, distributions on (but not redemptions of)
the QuIPS Preferred Securities, imputed interest on Capital Leases and any
interest which is capitalized 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
-10-
<PAGE>
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 Parent 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).
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. References to Letters of Credit
---------------- -------------
include the Existing Letters of Credit.
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, the Collateral Documents and the Parent Guaranty.
Loan Party means each Borrower, each Subsidiary which is a party to any
----------
Loan Document and Parent.
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
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<PAGE>
Parent, 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 Parent,
the Company or any Subsidiary of the Company 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 Parent or any member of the
Controlled Group may have any liability.
Net Worth means the sum of (a) Parent's consolidated stockholders' equity
---------
(including preferred stock accounts) plus (b) to the extent, if any, not
included in such stockholders' equity, the outstanding amount of the QuIPS
Preferred Securities plus (c) the amount of the Pooling Charges.
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 standby Letter of Credit other
------------------------------
than a Financial Letter of Credit.
Note - see Section 3.1.
---- -----------
PBGC means the Pension Benefit Guaranty Corporation and any entity
----
succeeding to any or all of its functions under ERISA.
Parent means United Rentals, Inc., a Delaware corporation.
------
Parent Guaranty means the Restated Parent Guaranty dated as of September
---------------
29, 1998 executed by Parent, substantially in the form of Exhibit L.
---------
Parent Pledge Agreement means the Restated Parent Pledge Agreement dated as
-----------------------
of September 29, 1998 between Parent and the Collateral Agent, substantially in
the form of Exhibit M.
---------
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 Parent 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.
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<PAGE>
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.
--------------
Permitted Holders means (a) the executive managers of the Company as of
-----------------
the Effective Date and their respective estates, their respective spouses and
former spouses, their lineal descendants, the legal representatives of any of
the foregoing, the trustees of any bona fide trusts of which any of the
foregoing are the sole beneficiaries, and any Person of which any of the
foregoing "beneficially owns" (within the meaning of Rule 13d-3 under the
Exchange Act) at least 51% of each class of equity interests of such Person; and
(b) Richard D. Colburn and any of his estate, his spouse or any former spouse,
his lineal descendants, the legal representatives of any of the foregoing, the
trustees of any bona fide trusts of which any of the foregoing and/or one or
more charitable organizations (as defined below) are the sole beneficiaries, any
Person of which any of the foregoing "beneficially owns" (within the meaning of
Rule 13d-3 under the Exchange Act) at least 51% of each class of the equity
interests of such Person and any charitable organization to which any of the
foregoing transfers 20% or more of the outstanding shares of common stock of
Parent. For purposes of the foregoing, a "charitable organization" is an
organization to which a contribution is deductible for income tax purposes under
the Code.
Permitted Senior Secured Debt means (a) any Senior Note, but only if the
-----------------------------
holder thereof has executed and delivered both a Senior Note Purchase Agreement
Amendment and the Intercreditor Agreement on or before the Effective Date; and
(b) any other Debt of the Company which meets each of the following
requirements: (i) it is issued prior to January 31, 1999, (ii) the documentation
therefor contains covenants and defaults which are no more restrictive for
Parent and its Subsidiaries than the covenants and defaults contained in the
Term Loan Agreement, (iii) it matures no earlier than September 30, 2005 and has
amortization of no more than 20% of the original principal amount thereof prior
to July 15, 2005 and (iv) it constitutes "Senior Indebtedness" as defined in
each Subordinated Note Indenture.
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.
Pooling Charges means pooling charges and extraordinary items related to
---------------
acquisitions booked by Parent in the third fiscal quarter of 1998 (including
pooling charges and extraordinary items related to the U.S. Rentals
Acquisition), but not more than $80,000,000.
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
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<PAGE>
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.
QuIPS Debentures means the 6 1/2% convertible subordinated debentures
----------------
issued by Parent to the QuIPS Trust pursuant to the QuIPS Indenture.
QuIPS Guarantees means (i) the Guarantee Agreement dated as of August 5,
----------------
1998 issued by Parent (then known as United Rentals Holdings, Inc.) relating to
the common securities of the QuIPS Trust and (ii) the Guarantee Agreement dated
as of August 5, 1998 between Parent (then known as United Rentals Holdings,
Inc.) and The Bank of New York, as Trustee, relating to the QuIPS Preferred
Securities.
QuIPS Indenture means the Indenture dated as of August 5, 1998 between
---------------
Parent (then known as United Rentals Holdings, Inc.) and The Bank of New York,
as Trustee.
QuIPS Preferred Securities means the 6 1/2% convertible quarterly income
--------------------------
preferred securities issued by the QuIPS Trust pursuant to the QuIPS Purchase
Agreement.
QuIPS Purchase Agreement means the Purchase Agreement dated as of July 30,
------------------------
1998 among the QuIPS Trust, Parent (then known as United Rentals Holdings,
Inc.), the Company (then known as United Rentals, Inc.) and the purchasers named
therein.
QuIPS Trust means United Rentals Trust I, a special purpose Delaware
-----------
business trust established pursuant to the Amended and Restated Trust Agreement
dated as of August 5, 1998 among Parent (then known as United Rentals Holdings,
Inc.), The Bank of New York, as Property Trustee, The Bank of New York
(Delaware), as Delaware Trustee, and the administrative trustees named therein.
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.
Rentals means the aggregate fixed amounts payable by Parent or any
-------
Subsidiary under any lease of (or other agreement conveying the right to use)
any real or personal property by Parent 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.
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<PAGE>
Required Banks means U.S. Banks having Percentages aggregating 51% 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(d).
----------------
Senior Debt means all Funded Debt of Parent and its Subsidiaries other than
-----------
Subordinated Debt.
Senior Note Purchase Agreements means the Note Purchase Agreements, each
-------------------------------
dated as of April 1, 1998, pursuant to which U.S. Rentals issued
U.S.$252,000,000 of Senior Notes.
Senior Note Purchase Agreement Amendment means an amendment to a Senior
----------------------------------------
Note Purchase Agreement which (a) permits the Company to assume the indebtedness
evidenced by the Senior Note issued thereunder, (b) consents to the U.S. Rentals
Acquisition and (c) amends certain other provisions thereof so that, after
giving effect to the transactions contemplated to take place on or before the
Effective Date (including the effectiveness hereof), no "Default" will exist
under and as defined in the applicable Senior Note Purchase Agreement.
Senior Notes means the U.S.$47,000,000 6.71% Series A Senior Notes due
------------
April 28, 2006, the U.S.$165,000,000 6.86% Series B Senior Notes due April 28,
2008 and the U.S.$40,000,000 6.93% Series C Senior Notes due April 28, 2010, in
each case issued by U.S. Rentals pursuant to the Senior Note Purchase
Agreements.
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
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<PAGE>
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 (a) the U.S.$200,000,000 of 9.50% unsecured senior
-----------------
subordinated notes due 2008 issued by the Company (then known as United Rentals,
Inc.) on May 22, 1998 and the unsecured subordinated guarantees thereof provided
for in the applicable Subordinated Note Indenture, (b) the U.S.$205,000,000 of
8.80% unsecured senior subordinated notes due 2008 issued by the Company on
August 12, 1998 and the unsecured subordinated guarantees thereof provided for
in the applicable Subordinated Note Indenture, (c) Seller Subordinated Debt and
(d) any other unsecured Debt of the Company which (i) is owed to Persons other
than officers, employees, directors or Affiliates of the Company, (ii) has no
amortization prior to December 31, 2003 and (iii) has subordination terms
(including subordination terms with respect to guarantees) which are not less
favorable to the Banks than those set forth in the Subordinated Note Indentures
or are otherwise approved by the Required Banks, such approval not to be
unreasonably withheld.
Subordinated Note Indenture means each of (a) the Indenture dated as of May
---------------------------
22, 1998 among the Company (then known as United Rentals, Inc.), various
Subsidiaries of the Company and State Street Bank and Trust Company, as Trustee,
pursuant to which the Company issued U.S.$200,000,000 of Subordinated Debt, and
(b) the Indenture dated as August 12, 1998 among the Company, various
Subsidiaries of the Company and State Street Bank and Trust Company, as Trustee,
pursuant to which the Company issued U.S.$205,000,000 of Subordinated Debt.
Subsidiary means, with respect to any Person, a corporation, limited
----------
liability company, partnership or other entity of which such Person and/or its
other Subsidiaries own, directly or indirectly, more than 50% of the voting
stock, membership interests or similar equity interests. Unless the context
otherwise requires, each reference to Subsidiaries herein shall be a reference
to Subsidiaries of Parent.
Subsidiary Pledge Agreement means each pledge agreement substantially in
---------------------------
the form of Exhibit F 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
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<PAGE>
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 Parent 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.
Term Loan Agreement means the Term Loan Agreement dated as of July 10, 1998
-------------------
among the Company, various financial institutions and BofA, as agent.
Termination Date means the earlier to occur of (a) September 26, 2003, 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.
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 Second Restated U.S. Guaranty dated as of September
-------------
29, 1998 executed by various Subsidiaries of the Company, substantially in the
form of Exhibit C.
---------
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<PAGE>
U.S. Loan - see Section 2.1.1.
--------- -------------
U.S. Rentals means U.S. Rentals, Inc., a Delaware corporation.
------------
U.S. Rentals Acquisition means the acquisition of U.S. Rentals by Parent
------------------------
pursuant to the terms of the USR Merger Agreement.
USR Merger Agreement means the Amended and Restated Agreement and Plan of
--------------------
Merger among U.S. Rentals, Parent and UR Acquisition Corporation dated as of
August 31, 1998.
U.S. Security Agreement means the Second Restated U.S. Security Agreement
-----------------------
dated as of September 29, 1998 among Parent, the Company, various Subsidiaries
of the Company and the Collateral Agent, substantially in the form of Exhibit
-------
D.
U.S. Subsidiaries means any Subsidiary of the Company other than a Foreign
-----------------
Subsidiary.
Vendor Financing Arrangement means any financing arrangement provided by a
----------------------------
Person (other than Parent or any Affiliate thereof) to any purchaser of
equipment sold by the Company or any Subsidiary in the ordinary course of
business, the terms of which provide for recourse against the Company and/or the
applicable Subsidiary in the event of default by the purchaser.
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
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<PAGE>
regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such statute or regulation.
(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
----------------------------
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
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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 Credit shall not at any time exceed the lesser
of the Aggregate Commitment and a Dollar Equivalent amount of U.S.$25,000,000.
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.$5,000,000 and an integral multiple
of U.S.$1,000,000.
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.$5,000,000 and an integral multiple of
U.S.$1,000,000.
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:
----------
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<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.$5,000,000
or a higher integral multiple of U.S.$1,000,000) 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.$5,000,000 or a higher integral
multiple of U.S.$1,000,000) 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, one
Business Day prior to the proposed date of such borrowing, and (c) in the case
of a Eurodollar borrowing, 9:00 A.M., Chicago time, three 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
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<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, one Business Day 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, three 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.
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<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
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<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.
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<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 amount of such Letter of Credit (which shall be in U.S.
Dollars), the expiration date of such Letter of Credit (which shall not be later
than five or, in the case of a Commercial Letter of Credit, 25 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 (or, in the case of an Existing Letter of
Credit, on the Effective Date), 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.
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<PAGE>
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 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)
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<PAGE>
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).
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 U.S. Dollars in accordance with this Section 2.5 in an aggregate amount not
-----------
at any time exceeding the lesser of (a) U.S.$15,000,000 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
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<PAGE>
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 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
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<PAGE>
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 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.
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<PAGE>
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 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
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<PAGE>
(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 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 quarter 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.
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(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 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 applicable 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.
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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.
5.4 Closing Fees. On the Effective Date, the Company shall pay to each
------------
U.S. Bank a closing fee in the amount previously agreed to between the Company
and such Bank.
SECTION 6 REDUCTION, INCREASE OR TERMINATION OF THE AGGREGATE COMMITMENT;
PREPAYMENTS.
6.1 Changes in Aggregate Commitment.
-------------------------------
6.1.1 Reduction or Termination of the Aggregate Commitment. (a) 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.
(b) The amount of the Aggregate Commitment shall be reduced on the last
day of each calendar quarter, beginning September 30, 2001 and continuing
through June 30, 2003, in each case by an amount equal to 2.5% of the sum of
$750,000,000 plus the amount of all increases in the Aggregate Commitment
pursuant to Section 6.1.2.
-------------
No voluntary reduction of the amount of the Aggregate Commitment pursuant
to clause (a) above shall reduce any scheduled reduction to the amount of the
----------
Aggregate Commitment pursuant to this clause (b).
----------
(c) The Company shall reduce the Aggregate Commitment at any time, and in
the amount, required by Section 10.9.
------------
(d) 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.
6.1.2 Optional Increase in Aggregate Commitment. The Company may, from
-----------------------------------------
time to time prior to December 31, 1998, by means of a letter to the U.S. Agent
substantially in the form of Exhibit N, request that the Aggregate Commitment be
---------
increased by (a) increasing the Commitment of one or more U.S. Banks which have
agreed to such increase and/or (b) adding
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<PAGE>
one or more commercial banks or other Persons as a party hereto with a
Commitment in an amount agreed to by any such commercial bank or other Person;
provided that (i) no commercial bank or other Person shall be added as a party
hereto without the written consent of the U.S. Agent Aggregate Commitment
exceed $850,000,000 without the written consent of all Banks. Any increase in
the Aggregate Commitment pursuant to this Section 6.1.2 shall be effective three
-------------
Business Days after the date on which the U.S. Agent has received and accepted
the applicable increase letter in the form of Annex 1 to Exhibit N (in the case
---------
of an increase in the Commitment of an existing U.S. Bank) or assumption letter
in the form of Annex 2 to Exhibit N (in the case of the addition of a commercial
---------
bank or other Person as a new U.S. Bank). The U.S. Agent shall promptly notify
the Company and the U.S. Banks of any increase in the amount of the Aggregate
Commitment pursuant to this Section 6.1.2 and of the Commitment and Percentage
-------------
of each U.S. Bank after giving effect thereto. The Company acknowledges that, in
order to maintain U.S. Loans in accordance with each Bank's Percentage, a
reallocation of the Commitments as a result of a non-pro-rata increase in the
Aggregate Commitment may require prepayment of all or portions of certain U.S.
Loans on the date of such increase (and any such prepayment shall be subject to
the provisions of Section 8.4). The U.S. Agent shall promptly notify all U.S.
-----------
Banks of any increase in the Aggregate Commitment pursuant to this Section
-------
6.1.2.
- -----
6.2 Prepayments
-----------
6.2.1 Mandatory Prepayments. (a) If on any Computation Date: (i)
---------------------
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 (ii) 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.
(b) Concurrently with any reduction of the amount of the Aggregate
Commitment pursuant to Section 6.1(b), the Company shall, or shall cause UR
--------------
Canada to, make a prepayment of Loans (or, after all Loans have been paid,
provide cash collateral for outstanding Letters of Credit) in the amount, if
any, by which the Aggregate Outstandings exceed the Aggregate Commitment as so
reduced.
(c) The Company shall make any prepayment required by Section 10.9.
------------
(d) 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.
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<PAGE>
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 pursuant to Section 6.2.2 shall be in a
-------------
principal amount of at least U.S.$5,000,000 and an integral multiple of
U.S.$1,000,000. Each partial prepayment of Canadian Loans shall be in a
principal amount of at least Cdn.$1,000,000 and an 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.
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<PAGE>
(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 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
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<PAGE>
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 pursuant to Section 8.7 or 15.9, any payment made to
----------- ----
give effect to a non-pro-rata increase in the Aggregate Commitment as described
in the last sentence of Section 6.1.2 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:
(i) pay directly to the relevant authority the full amount required
to be so withheld or deducted;
(ii) 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
(iii) 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.
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<PAGE>
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.
(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
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<PAGE>
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 clause (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. 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
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<PAGE>
(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 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
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<PAGE>
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:
(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
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<PAGE>
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 "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
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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 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, Parent and the Company warrant to the Agents and the Banks (and, with
respect to Sections 9.1 through 9.4, UR Canada warrants with respect to itself)
------------ ---
that:
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9.1 Organization, etc. Each of Parent and 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 other Subsidiary is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization; and each of the Company, Parent 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) 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, any other Loan Party or any other Subsidiary, (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, any other Loan Party or any other Subsidiary 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 other 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 Parent, either Borrower or any other 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 Parent, either Borrower or any Subsidiary to any
Bank pursuant hereto or in connection herewith will be, true and accurate in
every material
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<PAGE>
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 Parent or any Subsidiary are
based on good faith estimates and assumptions believed by Parent or such
Subsidiary 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 Financial Information; No Material Adverse Change.
-------------------------------------------------
(a) The audited consolidated financial statements of the Company and its
Subsidiaries at December 31, 1997 and the unaudited consolidated financial
statements of the Company and the Subsidiaries at June 30, 1998, copies of each
of which have been delivered to each Bank, have been prepared in accordance with
generally accepted accounting principles (subject, in the case of such unaudited
statements, to the absence of footnotes and to normal year-end audit
adjustments) and present fairly the consolidated financial condition of the
Company and its Subsidiaries taken as a whole as at such dates and the results
of their operations for the periods 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; and since the
reorganization whereby the Company became a Subsidiary of Parent on August 5,
1998, there has been no material adverse change in the financial condition,
operations, assets, business, properties or prospects of Parent 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
Parent's knowledge, threatened against Parent 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 Parent nor any Subsidiary has any material contingent
liabilities not listed in 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 Parent 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 Parent 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
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<PAGE>
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. Parent has no Subsidiaries other than the Company, the
------------
QuIPS Trust and the Acquisition Subsidiaries; and 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 Parent of any material liability, fine or penalty. Parent
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.
(b) All contributions (if any) have been made to any Multiemployer Pension
Plan that are required to be made by Parent 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 Parent 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, or 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 Parent 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 Parent 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.
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<PAGE>
9.11 Public Utility Holding Company Act. Neither Parent 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. Neither Parent nor either Borrower is engaged
------------
principally, or as one of its important activities, in the business of
purchasing or carrying Margin Stock or extending credit for the purpose of
purchasing or carrying Margin Stock.
9.13 Taxes. Each of Parent 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
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. Parent and its Subsidiaries conduct in the
---------------------
ordinary course of business a review of the effect of existing Environmental
Laws and existing Environmental Claims on their business, operations and
properties, and as a result thereof Parent 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. Parent 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 Parent
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, Parent reasonably believes that
the "Year 2000 Problem" will not have a Material Adverse Effect.
9.17 Senior Debt. The obligations of the Company hereunder constitute
-----------
"Senior Indebtedness" as such term is defined in each Subordinated Note
Indenture.
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<PAGE>
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, Parent 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 Parent and its Subsidiaries for such Fiscal Year, including therein a
consolidated balance sheet of Parent and its Subsidiaries as of the end of such
Fiscal Year and consolidated statements of earnings and cash flow of Parent and
its Subsidiaries for such Fiscal Year certified without qualification by Ernst &
Young or other independent auditors of recognized standing selected by Parent
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 Parent
and its Subsidiaries as of the end of such Fiscal Year and consolidating
statements of earnings for Parent and its Subsidiaries for such Fiscal Year,
certified by the Chief Financial Officer or the Vice President, Finance of
Parent; and (c) commencing 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, a consolidated balance sheet of Parent and its Subsidiaries as
of the end of such Fiscal Quarter, together with consolidated statements of
earnings and 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 Parent.
10.1.3 Projections. As soon as practicable and in any event within 60
-----------
days after the commencement of each Fiscal Year, financial projections for
Parent and its Subsidiaries for such Fiscal Year prepared in a manner consistent
with the projections delivered by the Company to the Banks prior to the
Effective Date or otherwise in a manner satisfactory to the U.S. Agent.
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
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signed by the Chief Financial Officer or the Vice President, Finance of Parent,
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 Parent or
any Subsidiary filed with the SEC (excluding exhibits thereto, provided that
Parent shall promptly deliver any such exhibit to either Agent or any Bank upon
request therefor); copies of all registration statements of Parent 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 Parent 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 Parent or the Subsidiary affected thereby with respect
thereto:
(a) the occurrence of an Event of Default or an Unmatured Event of
Default;
(b) any litigation, arbitration or governmental investigation or
proceeding not previously disclosed by Parent to the Banks which has been
instituted or, to the knowledge of Parent, is threatened against Parent 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 Parent 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 Parent 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;
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(d) any cancellation (without replacement) or material change in
any insurance maintained by Parent 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 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
Parent by independent auditors in connection with each annual or interim audit
made by such auditors of the books of Parent.
10.1.9 Other Information. From time to time such other information
-----------------
concerning Parent 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 Parent
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 Parent 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 Parent
or any Subsidiary is present), and to examine (and, at the expense of Parent 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 Parent and its Subsidiaries.
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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 Parent 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 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 Maximum Leverage. Not permit the ratio of (i) Funded Debt
----------------
to (ii) Funded Debt plus Net Worth to exceed 0.65 to 1.0 at any time.
----
10.6.2 Minimum Interest Coverage Ratio. 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 1.50 to 1.0
3/31/99 through 12/31/99 1.75 to 1.0
3/31/00 and thereafter 2.00 to 1.0.
10.6.3 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 4.5
to 1.0.
10.6.4 Senior Debt to Tangible Assets. Not permit the ratio of
------------------------------
(i) Senior Debt to (ii) Tangible Assets to exceed 1.0 to 1.0 at any time.
10.6.5 Senior Debt to Cash Flow Ratio. Not permit the ratio of
------------------------------
(i) Senior Debt to (ii) Cash Flow as of the last day of any Fiscal Quarter
to exceed 3.0 to 1.0.
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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, under the other Loan Documents, under the
Term Loan Agreement and under the other "Loan Documents" as defined in the
Term Loan Agreement;
(b) unsecured Debt of the Company (excluding Contingent Payments and
Seller Subordinated Debt);
(c) Debt of the Company or any Subsidiary in respect of Capital Leases
or arising in connection with the acquisition of equipment (including Debt
assumed in connection with an asset purchase permitted by Section 10.11, or
-------------
incurred pursuant to a Capital Lease or in connection with the acquisition
of equipment by a Person before it became a Subsidiary in connection with a
stock purchase permitted by Section 10.11, in each case so long as such
-------------
Debt is not incurred in contemplation of such purchase), 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.$75,000,000;
(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 15% of the consolidated assets of the
Company and its Subsidiaries;
(e) unsecured Debt of the Company to Subsidiaries;
(f) Subordinated Debt; provided that (i) the aggregate principal amount
--------
of all Seller Subordinated Debt at any time outstanding shall not exceed a
Dollar Equivalent amount of U.S.$50,000,000 and (ii) the Company shall not
issue or incur any Debt described in clause (d) of the definition of
----------
Subordinated Debt (x) at any time that an Event of Default or Unmatured
Event of Default exists or would result therefrom and (y) unless the
Company has delivered to the U.S. Agent (which shall promptly deliver a
copy thereof to each U.S. Bank) a certificate in reasonable detail
demonstrating that, after giving effect to such issuance or incurrence,
Parent will be in pro forma compliance with all financial covenants set
forth in this Section 10;
----------
(g) other Debt of the Company or any Subsidiary, not of a type described
in clause (c), outstanding on the date hereof and listed in Schedule
---------- --------
10.7(g);
-------
(h) Contingent Payments, provided that Parent shall not, and shall not
--------
permit any Subsidiary to, incur any obligation to make Contingent Payments
the maximum possible
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<PAGE>
amount of which exceeds a Dollar Equivalent amount of U.S.$50,000,000 in
the aggregate for all Contingent Payments at any time outstanding;
(i) the QuIPS Debentures, the QuIPS Preferred Securities and the QuIPS
Guarantees;
(j) Permitted Senior Secured Debt and guarantees thereof, provided that
--------
the aggregate principal amount of all Permitted Senior Secured Debt shall
not at any time exceed U.S.$252,000,000;
(k) Guarantees by Parent of the obligations of the Company or any
Subsidiary; provided that any such guaranty is subordinated to the
obligations of Parent under the Parent Guaranty at least to the extent set
forth in Exhibit G or otherwise in a manner reasonably satisfactory to the
---------
Required Banks;
(l) unsecured recourse obligations of the Company or any Subsidiary in
respect of Vendor Financing Arrangements; and
(m) Hedging Obligations incurred for purposes of protection from price,
interest rate or currency fluctuations posed by bona fide debt, contract on
purchase order obligations or from changes in the price of Parent's stock.
For purposes of clause (h) above, a Contingent Payment shall be deemed to
----------
be "outstanding" from the time that Parent 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;
-------------
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<PAGE>
(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.$1,000,000 arising in
connection with court 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 arising under the Loan Documents and Liens securing Debt
permitted by clauses (a) and (j) of Section 10.7.
----------- --- ------------
10.9 Asset Sales. Not later than one Business Day prior to the date on
-----------
which the Company would be required to make, or offer to make, or give any
notice of, any prepayment of any Subordinated Debt (other than Seller
Subordinated Debt) as a result of any sale or other disposition of assets, make
a prepayment of the Loans, and reduce the amount of the Aggregate Commitment, by
an amount at least equal to the amount which otherwise would be required to be
applied to prepay such Subordinated Debt (rounded upward, if necessary, to an
integral multiple of $1,000,000).
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, (e) make any payment of principal of or interest on, or
acquire, redeem or otherwise retire, or make any other distribution in respect
of, any of the QuIPS Debentures or the QuIPS Preferred Securities or (f) set
aside funds for any of the foregoing; provided that (i) any Subsidiary of the
--------
Company may declare and pay dividends to the Company or to any other wholly-
owned Subsidiary of the Company; (ii) the Company may declare and pay dividends
to Parent to the extent necessary to enable Parent to pay its taxes and
accounting, legal, payroll, benefits and corporate overhead expenses (including
all SEC and stock exchange fees and expenses) and payables described in Section
-------
10.23; (iii) the QuIPS Trust may make a distribution of Parent's common stock
- -----
pursuant to the terms of the QuIPS Preferred Securities or the QuIPS Debentures;
(iv) so long as no Event of Default or Unmatured Event of Default exists or
would result therefrom, (A) Parent may make payments on the QuIPS Debentures and
permit the QuIPS Trust to make corresponding distributions on the QuIPS
Preferred Securities in accordance with the terms set forth in the QuIPS
Indenture and (B) the Company may declare and pay dividends to
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<PAGE>
Parent in the amount necessary for Parent to make such payments; (v) so long as
no Event of Default or Unmatured Event of Default exists or would result
therefrom, the Company may declare and pay dividends to Parent in the amount
necessary for Parent to consummate any acquisition permitted by Section 10.11
-------------
(provided that Parent shall immediately use the proceeds of such dividend to
make such acquisition) or to make distributions permitted by clause (vi); and
-----------
(vi) 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 made by Parent (or, prior to August 5, 1998, the Company)
since October 1, 1997 does not exceed U.S.$12,000,000, Parent 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 of the Company into the Company or into, with or to any
other wholly-owned Subsidiary of the Company; (b) any such purchase or other
acquisition by the Company or any wholly-owned Subsidiary of the Company of the
assets or stock of any wholly-owned Subsidiary of the Company; (c) the U.S.
Rentals Acquisition in accordance with the terms of the USR Merger Agreement;
(d) any such purchase or other acquisition (including pursuant to a merger) by
Parent, an Acquisition Subsidiary, the Company or any wholly-owned Subsidiary of
the Company 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, no Event of Default or Unmatured Event of Default shall have
occurred and be continuing; (3) the board of directors of such Person has not
announced that it will oppose such acquisition and has not commenced any
litigation which alleges that such acquisition violates or will violate any
requirement of law or any contractual obligation of such Person; (4) in the case
of any such purchase or other acquisition by Parent (or any Acquisition
Subsidiary), Parent immediately contributes the acquired stock or assets (or
such Acquisition Subsidiary) to the Company; and (5) either (i) the aggregate
consideration to be paid by Parent and its Subsidiaries (including any Debt
assumed or issued in connection therewith, the amount thereof to be calculated
in accordance with GAAP, but excluding any capital stock of or other equity
interest in Parent which is part of such consideration) in connection with such
purchase or other acquisition (or any series of related acquisitions) is less
than a Dollar Equivalent amount of U.S.$150,000,000 or (ii) (x) Parent is in pro
forma compliance with all the financial ratios and restrictions set forth in
Section 10.6 and (y) the Required Banks have consented to such purchase or
- ------------
acquisition; and (e) sales and
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<PAGE>
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 Parent and its
Subsidiaries as of the last day of the preceding Fiscal Year.
10.12 Modification of Documents. Not permit the Certificate or Articles
-------------------------
of Incorporation, By-Laws or other organizational documents of Parent or any
Subsidiary, or any Subordinated Note Indenture or any other document evidencing
or setting forth the terms applicable to any Subordinated Debt, 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. Not permit either Borrower to use the proceeds of
---------------
the Loans, and the Letters of Credit, for any purpose other than to refinance
existing indebtedness of the Company and U.S. Rentals, to finance the working
capital needs of Parent, the Company and the Company's Subsidiaries, for
acquisitions permitted by Section 10.11, to refinance Debt of Persons acquired
-------------
pursuant to 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 in any manner which would
violate Regulation U, T or X of the FRB.
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 Parent by
execution of the Parent Guaranty and 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 (provided that the QuIPS Trust shall have no obligation to execute the
U.S. Guaranty), (ii) the obligations of Parent under the Parent Guaranty are
secured by substantially all of the assets of Parent, (iii) the obligations of
each U.S. Subsidiary (other than the QuIPS Trust) under the U.S. Guaranty are
secured by substantially all of the assets (other than real property) of such
U.S. Subsidiary, (iv) 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 (v) 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 Parent or any Subsidiary of any of
its obligations hereunder or under any other Loan Document or (b) would prohibit
Parent, the Company or any Subsidiary of the Company from granting to the
Collateral Agent or either Agent, 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 of the Company identified in Schedule 9.8;
------------
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<PAGE>
(b) equity Investments in Subsidiaries of the Company 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 of the Company or by any of the Subsidiaries of the Company
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;
(h) Investments by Parent in the Company and, subject to the provisions
of Section 10.11, in Acquisition Subsidiaries;
-------------
(i) other Investments by Parent permitted by Section 10.23; and
-------------
(j) Cash Equivalent Investments;
provided 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 15% of the consolidated assets
of Parent and its Subsidiaries.
10.22 Location of Assets. Not permit at any time more than 15% of the
------------------
consolidated assets of Parent and its Subsidiaries to be owned by Foreign
Subsidiaries.
10.23 Activities of Parent. Not engage in any business other than
--------------------
ownership of the Company, Acquisition Subsidiaries and the QuIPS Trust and
activities reasonably related thereto (including the incurrence of Debt
permitted by Section 10.7, the incurrence of unsecured trade obligations in
------------
respect of goods to be delivered and services to be performed for the benefit
of,
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<PAGE>
and unsecured lease obligations incurred for the benefit of, Subsidiaries and
the incurrence of payroll and benefit expenses). Without limiting the foregoing,
Parent will not (a) incur any Debt other than the QuIPS Debentures, the QuIPS
Preferred Securities, the Parent Guaranty, the QuIPS Guarantees, Debt permitted
by Section 10.7 and guarantees of the obligations of the Company or any other
------------
Subsidiary (provided that any such guaranty is subordinated to the obligations
of Parent under the Parent Guaranty at least to the extent set forth in Exhibit
-------
G or otherwise in a manner reasonably satisfactory to the Required Banks), (b)
- -
make any Investments other than (i) Investments in the Company, (ii) Investments
in Acquisition Subsidiaries and (iii) Investments in the QuIPS Trust existing on
the date hereof, (c) grant any Liens on any of its assets (other than pursuant
to the U.S. Security Agreement) or (d) permit any amendment to or modification
of the QuIPS Debentures, the QuIPS Preferred Securities, either QuIPS Guarantee
or the QuIPS Indenture which, in any such case, is adverse to the interests of
the Banks.
SECTION 11 EFFECTIVENESS; CONDITIONS OF LENDING, ETC.
11.1 Effectiveness. This Agreement shall become effective and the
-------------
Existing Letters of Credit shall be deemed issued 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, (b) evidence, reasonably satisfactory to the U.S. Agent that (i)
- ------------
the U.S. Rentals Acquisition has been consummated in accordance with the terms
of the USR Merger Agreement, (ii) each of the Existing U.S. Rentals Agreement
and the Existing Agreement has been (or on the Effective Date will be)
terminated and all obligations (other than (x) contingent obligations in respect
of Existing Letters of Credit and (y) contingent indemnity obligations) of U.S.
Rentals under the Existing U.S. Rentals Agreement and of the Company and UR
Canada under the Existing Agreement have been (or on the Effective Date will be)
paid in full, (iii) except for any Senior Note held by a financial institution
which has executed and delivered a Senior Note Purchase Agreement Amendment
which has become effective, all indebtedness under the Senior Notes has been (or
on the Effective Date will be) paid in full and (c) 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 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 or the sole shareholder 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; certified copies of
resolutions of the Board of Directors or the sole shareholder 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; and
certified copies of resolutions of
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the Board of Directors of Parent authorizing or ratifying the execution,
delivery and performance by Parent of this Agreement and the other Loan
Documents to which Parent 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 Parent, 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 Parent, the Company, UR Canada and each
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. The U.S. Guaranty executed by each U.S. Subsidiary as
----------
of the Effective Date; a Canadian Guaranty executed by each Canadian Subsidiary
as of the Effective Date; and the Parent Guaranty executed by Parent.
11.1.6 Security Agreements. The U.S. Security Agreement executed by
-------------------
Parent, the Company and each Subsidiary as of the Effective Date, a Canadian
Security Agreement executed by each Canadian Subsidiary 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, the Parent 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.
11.1.8 Opinions of Counsel for the Company. The opinions of (a) Weil,
-----------------------------------
Gotshal & Manges LLP, special counsel to the Company, (b) Oscar D. Folger,
counsel to the Company and (c) Macleod Dixon, counsel to UR Canada.
11.1.9 Intercreditor Agreement. An Intercreditor Agreement, substantially
-----------------------
in the form of Exhibit K, executed by all holders of the Senior Notes (other
---------
than the holder of any Senior Note which is being repaid on the Effective Date),
BofA, as U.S. Agent, BofA, as agent for the lenders under the Term Loan
Agreement, and BofA, as Collateral Agent.
11.1.10 Other. Such other documents as either Agent or any Bank may
-----
reasonably request.
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<PAGE>
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 Parent, 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 Parent 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 Parent, threatened against Parent 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;
(c) no Event of Default or Unmatured Event of Default shall have
then occurred and be continuing, and neither Parent 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;
and
(d) the Loans included in such borrowing or the obligations of
the Company in respect of such Letter of Credit shall constitute "Senior
Indebtedness" as such term is defined in each Subordinated Note Indenture.
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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
----------------------------
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 Parent or any Subsidiary (excluding Holdbacks) in an
aggregate amount (for all such Debt so affected) exceeding a Dollar Equivalent
amount of U.S.$15,000,000 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 Parent or any Subsidiary in
an aggregate amount (for all Holdbacks so affected) exceeding a Dollar
Equivalent amount of U.S.$15,000,000, 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 Parent or the applicable
Subsidiary in good faith and by appropriate proceedings and appropriate reserves
have been set aside in respect of such amount.
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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, Parent 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 Parent 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. Parent 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 Parent or any Subsidiary applies
for, consents to, or acquiesces in the appointment of a trustee, receiver or
other custodian for Parent 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 Parent 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 the Company or UR Canada), is commenced in respect
of Parent or any Subsidiary, and if such case or proceeding is not commenced by
Parent or such Subsidiary, an order for relief is entered, it is consented to or
acquiesced in by Parent or such Subsidiary, or it remains for 60 days
undismissed; or Parent 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
------------------------------------------------
Parent 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 Parent or 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 Parent or 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 Parent or 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.
12.1.7 Pension Plans. (i) Institution of any steps by Parent or any other
-------------
Person to terminate a Pension Plan if as a result of such termination Parent
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.$15,000,000; (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
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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 Parent and the Controlled Group have incurred on the date of such
withdrawal) exceeds U.S.$15,000,000.
12.1.8 Judgments. Final judgments which exceed an aggregate Dollar
---------
Equivalent amount of U.S.$15,000,000 shall be rendered against Parent 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 Parent, the Company
or any Subsidiary, Parent, 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 Parent,
the Company or any Subsidiary (or any Person by, through or on behalf of Parent,
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 Exchange Act, but excluding Permitted
Holders) shall acquire beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 30% or more of the outstanding shares of
common stock of Parent; (b) during any 24-month period, individuals who at the
beginning of such period constituted Parent's Board of Directors (together with
any new directors whose election by Parent's Board of Directors or whose
nomination for election by Parent'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 Parent; (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 Parent at least equal in seniority to their present offices, as set
out in such Schedule 12.1.11, 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); (d) any "Change of Control" shall occur under, and as defined
in, either Subordinated Note Indenture or any document evidencing or governing
any Permitted Senior Secured Debt; or (e) the Company shall cease to be a
direct, wholly-owned Subsidiary of Parent.
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12.1.12 Invalidity of Parent Guaranty, etc. The Parent Guaranty shall
----------------------------------
cease to be in full force and effect, Parent shall fail (subject to any
applicable grace period) to comply with or to perform any provision of the
Parent Guaranty, or Parent (or any Person by, through or on behalf of Parent)
shall contest in any manner the validity, binding nature or enforceability of
the Parent Guaranty.
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 authorize the U.S. Agent, Collateral Agent and the Canadian
Agent to hold, for and on behalf of the Banks, security in the assets and
properties of the Borrowers and their Subsidiaries securing the obligations of
the Borrowers and their Subsidiaries under 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 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
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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 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
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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
the reasonable fees and charges of counsel 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 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
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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 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)
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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 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
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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.
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.
- -------------
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13.12 Documentation Agents; Co-Agent. None of the Banks identified on
------------------------------
the facing page or the signature pages of this Agreement as a "Documentation
Agent" or 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 "Documentation Agent" or 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;
(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;
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(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.
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.
-74-
<PAGE>
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 (except as provided in Section 6.1.2) without the consent of such Bank. No
-------------
amendment, modification, waiver or consent shall (i) extend or increase (except
as provided in Section 6.1.2) 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 of Parent under the Parent Guaranty 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.
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
-75-
<PAGE>
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 Parent notifies
--------
the U.S. Agent that Parent 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 Parent that the
Required Banks wish to amend Section 10 for such purpose), then Parent'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
Parent 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 (including the allocable
costs of internal legal services and all disbursements of internal counsel) 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 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
Parent'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.
-76-
<PAGE>
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 consent of the Company or the
-------- -------
U.S. Agent shall be required for an assignment to an affiliate of the assigning
Bank or to an existing Bank; (b) no assignment and delegation (including an
assignment described in clause (a)) 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 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); (c) 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
-77-
<PAGE>
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 (d) 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 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.
- ------
-78-
<PAGE>
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 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
-79-
<PAGE>
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.
(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
-80-
<PAGE>
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.
15.16 Authorization of Intercreditor Agreement. Each Bank hereby
----------------------------------------
authorizes the U.S. Agent and BofA, in its capacity as Collateral Agent, to
execute and deliver an Intercreditor Agreement substantially in the form of
Exhibit K.
- ---------
15.17 Waiver Under Existing Agreement. The Banks which are parties to
-------------------------------
the Existing Agreement (and which constitute "Required Banks" under and as
defined in the Existing
-81-
<PAGE>
Agreement) hereby waive any notice requirement set forth in Section 6.1 of the
-----------
Existing Agreement for termination of the "Aggregate Commitment" thereunder and
agree that the "Aggregate Commitment" under the Existing Agreement shall be
reduced to zero upon the effectiveness hereof.
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<PAGE>
Delivered at Chicago, Illinois, as of the day and year first above written.
UNITED RENTALS (NORTH AMERICA), INC.
By______________________________
Chief Financial Officer
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___________________________
S-1
<PAGE>
THE BANK OF NEW YORK, as a U.S. Bank
By______________________________
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___________________________
S-2
<PAGE>
NATIONAL CITY BANK, as a U.S. Bank
By______________________________
Title___________________________
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___________________________
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___________________________
CIBC INC., as a U.S. Bank
By______________________________
Title___________________________
LASALLE NATIONAL BANK, as a U.S. Bank
By______________________________
Title___________________________
CITICORP DEL-LEASE, INC., as a U.S. Bank
By______________________________
Title___________________________
ERSTE BANK DER OESTERREICHISCHEN
SPARKASSEN AG-NEW YORK, as a U.S. Bank
By______________________________
Title___________________________
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch, as a U.S. Bank
By______________________________
Title___________________________
S-4
<PAGE>
CITY NATIONAL 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___________________________
THE BANK OF NOVA SCOTIA, as a Canadian
Bank
By______________________________
Title___________________________
DEUTSCHE BANK CANADA, as a Canadian Bank
By______________________________
Title___________________________
S-5
<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, Non-Financial Letters of Credit and
Commercial 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 0.3750% 0.3750% 0.3750% 0.3750% 0.3000%
- --------------------------------------------------------------------------------
Fixed Rate Margin* 1.6250% 1.3750% 1.1250% 1.0000% 0.9500%
- --------------------------------------------------------------------------------
Floating Rate Margin
0 0 0 0 0
- --------------------------------------------------------------------------------
Rate for
Non-Financial LC Fee 0.6250% 0.5000% 0.3750% 0.3125% 0.3250%
- --------------------------------------------------------------------------------
Rate for
Financial LC Fee* 1.6250% 1.3750% 1.1250% 1.0000% 0.9500%
- --------------------------------------------------------------------------------
Rate for
Commercial LC Fee 0.6250% 0.5000% 0.3750% 0.3125% 0.3250%
================================================================================
</TABLE>
Level I applies when the Funded Debt to Cash Flow Ratio is equal to or
-------
greater than 4.0 to 1.0.
Level II applies when the Funded Debt to Cash Flow Ratio is equal to
--------
or greater than 3.5 to 1.0 but less than 4.0 to 1.0.
Level V applies when the Funded Debt to Cash Flow Ratio is less than
-------
2.5 to 1.0.
Initially, the Rate for Facility Fee, the Fixed Rate Margin, the
Floating Rate Margin, the Rate for Non-Financial LC Fee, the Rate for Financial
LC Fee and the Rate for Commercial LC Fee shall be 0.375%, 1.375%, 0, 0.500%,
1.375% and 0.500%, respectively. The applicable
<PAGE>
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.
* The Fixed Rate Margin and the Rate for Financial LC Fee for each of
Level I through Level V shall be reduced by (i) 0.125% so long as the
credit rating of the Company's senior unsecured non-credit-enhanced
Debt (or an indicative rating for such Debt) is at least Ba2 by
Moody's Investors Service, Inc. and BB+ by Standard & Poor's Ratings
Group and (ii) an additional 0.125% so long as such credit rating is
at least Ba1 by Moody's Investors Service, Inc. and BB+ by Standard &
Poor's Ratings Group. The Company agrees to notify the U.S. Agent
(which shall promptly notify each of the U.S. Banks) in writing within
3 Business Days of any change in a credit rating which causes a change
in the Fixed Rate Margin and the Rate for Financial LC Fee pursuant to
the preceding sentence. Any change in the Fixed Rate Margin and the
Rate for Financial LC Fee pursuant to this paragraph shall be
effective on the third Business Day after the change in the Company's
credit rating which causes any such change in the Fixed Rate Margin
and the Rate for Financial LC Fee.
-2-
<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 U.S. 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 U.S. Loan evidenced hereby from the date of such U.S. Loan until
such U.S. 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 September 29, 1998 (as
amended or otherwise modified from time to time, the "Credit Agreement") among
----------------
the undersigned, United Rentals, Inc., United Rentals of Canada, Inc., various
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 (NORTH AMERICA), INC.
By:____________________________
Name Printed:__________________
Title:_________________________
2
<PAGE>
Schedule Attached to Note dated September 29, 1998 of UNITED RENTALS (NORTH
AMERICA), INC. payable to the order of ___________________________________.
DATE AND AMOUNT DATE AND AMOUNT UNPAID PRINCIPAL NOTATION MADE
OF LOAN OF REPAYMENT BALANCE BY:
3
<PAGE>
EXHIBIT A-2
FORM OF NOTE (Canadian)
September 29, 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 Canadian 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 Canadian Loan evidenced hereby from the date of such Canadian
Loan until such Canadian 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 Credit Agreement dated as of September 29, 1998 (as
amended or otherwise modified from time to time, the "Credit Agreement") among
----------------
the undersigned, United Rentals (North America), Inc., United Rentals, Inc.,
various 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:_________________________
2
<PAGE>
Schedule Attached to Note dated September 29, 1998 of UNITED RENTALS OF CANADA,
INC. payable to the order of _____________________________.
DATE AND AMOUNT DATE AND AMOUNT UNPAID PRINCIPAL NOTATION MADE
OF LOAN OF REPAYMENT BALANCE BY:
3
<PAGE>
EXHIBIT B
UNITED RENTALS (NORTH AMERICA), 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 Credit Agreement dated as of
September 29, 1998 (as amended or otherwise modified from time to time, the
"Credit Agreement") among United Rentals (North America), Inc. (the "Company"),
---------------- -------
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. 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 Maximum Leverage
- -----------------------
Funded Debt __________(x)
Funded Debt
plus Net Worth __________(y)
- ----
Ratio of (x) to (y) ____ to ____
Maximum allowed 0.65 to 1.0
10.6.2 Minimum Interest Coverage
- --------------------------------
Consolidated Net Income U.S.$___________
Plus: Interest Expense U.S.$___________
taxes U.S.$___________
Rentals U.S.$___________
Earnings before interest and taxes U.S.$________(x)
Interest Expense plus Rentals __________(y)
Ratio of (x) to (y) ____ to ____
Minimum Required ____ to ____
<PAGE>
10.6.3 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 4.5 to 1.0
10.6.4 Senior Debt to Tangible
- ------------------------------
Assets Ratio
- ------------
Senior Debt U.S.$_______ (x)
Tangible Assets U.S.$_______ (y)
Ratio of (x) to (y) ____ to ____
Maximum allowed 1.0 to 1.0
10.6.5 Senior Debt to Cash
- --------------------------
Flow Ratio
- ----------
Senior 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 3.0 to 1.0
10.7(c) Equipment Debt
- ----------------------
Total Equipment Debt (not to exceed U.S.$_________
U.S.$75,000,000)
2
<PAGE>
10.7(d) Foreign Subsidiary Debt
- -------------------------------
15% of consolidated assets of the U.S.$_______ (x)
[Company] and its Subsidiaries
Total Debt of Foreign Subsidiaries
owed to the Company (not to exceed
(x)) U.S.$_________
10.21 Investments in Foreign
- ----------------------------
Subsidiaries
- ------------
15% of consolidated assets of U.S.$_______ (x)
[Parent] and its Subsidiaries
Total Investments by the Company in U.S.$_________
Foreign Subsidiaries plus Canadian
Loans (not to exceed (x))
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 (NORTH AMERICA), INC.
By__________________________________
Title_______________________________
3
<PAGE>
EXHIBIT C
SECOND RESTATED U.S. GUARANTY
THIS SECOND RESTATED U.S. GUARANTY dated as of September 29, 1998 is
executed in favor of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
("BofA"), individually and as Agent (as defined below), and the other Benefited
- ------
Parties (as defined in the Intercreditor Agreement referred to below).
W I T N E S E T H:
- - - - - - - - - -
WHEREAS, United Rentals (North America), Inc. (the "Company"), United
-------
Rentals, Inc. ("Parent"), United Rentals of Canada, Inc., various financial
------
institutions (the "Banks"), Bank of America Canada, as Canadian Agent, and BofA,
-----
as U.S. Agent (in such capacity, the "U.S. Agent") have entered into the Credit
----------
Agreement dated as of September 29, 1998 (as amended, restated or otherwise
modified from time to time, the "Credit Agreement");
----------------
WHEREAS, the Company, various financial institutions (the "Term Lenders")
------------
and BofA, as Agent (in such capacity, the "Term Agent"), have entered into the
----------
Term Loan Agreement dated as of July 10, 1998 (as amended, restated or otherwise
modified from time to time, the "Term Loan Agreement");
-------------------
WHEREAS, the Company may assume or incur additional Permitted Senior
Secured Debt (as defined in the Intercreditor Agreement referred to below);
WHEREAS, certain creditors of the Company have entered into an
Intercreditor Agreement dated the date hereof (as amended, restated or otherwise
modified from time to time, the "Intercreditor Agreement") pursuant to which the
-----------------------
Company, Parent, various subsidiaries of the Company, the U.S. Agent, the Term
Agent, various other Benefited Parties and BofA, as collateral agent (in such
capacity, together with any successor in such capacity, the "Agent"), have
-----
agreed that (i) the Credit Obligations (as defined in the Intercreditor
Agreement), the Term Obligations (as defined in the Intercreditor Agreement),
the Permitted Senior Secured Debt Obligations (as defined in the Intercreditor
Agreement) and the Hedging Obligations (as defined in the Intercreditor
Agreement) shall be secured and guaranteed pari passu and (ii) BofA shall act as
collateral agent for the holders of the Benefited Obligations (as defined in the
Intercreditor Agreement);
WHEREAS, the operations of each of the undersigned are integrated with
those of the Company to such an extent that the
<PAGE>
financial strength and flexibility of the Company have a direct impact on each
of the undersigned; 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, the making
of loans pursuant to the Term Loan Agreement and the financing extended under
any Permitted Senior Secured Debt Agreement (as defined in the Intercreditor
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 Intercreditor 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 Benefited Obligations, in each case howsoever
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due, in each case as
the same may be amended, modified, extended or renewed from time to 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 other
Benefited Party in enforcing this Guaranty against such undersigned).
Each of the undersigned agrees that upon the occurrence of any Event of
Default (as defined in the Credit Agreement) under Section 12.1.4 of the Credit
Agreement or any Event of Default (as defined in the Term Loan Agreement) under
Section 12.1.4 of the Term Loan Agreement or any "Event of Default" (or the
equivalent thereof as defined in any Permitted Senior Secured Debt Agreement)
under any substantially similar section of any Permitted Senior Secured Debt
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 Benefited Parties forthwith the full amount which would be
payable hereunder by such undersigned if all Liabilities were then due and
payable.
2
<PAGE>
To secure all obligations of each of the undersigned hereunder, the Agent
and each other Benefited Party 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 other Benefited Parties may elect, in accordance
with the Intercreditor 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 other Benefited Party 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 other Benefited Party or any agent or
bailee for the Agent or such other Benefited Party.
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 (as defined in the Credit Agreement) have terminated and
all Liabilities have been paid in full (subject to reinstatement as provided in
the immediately following paragraph).
The undersigned further agree that if at any time all or any part of any
payment theretofore applied by the Agent or any other Benefited Party to any of
the Liabilities is or must be rescinded or returned by the Agent or such other
Benefited Party 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
other Benefited Party, and (notwithstanding anything herein to the contrary)
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
other Benefited Party had not been made.
The Agent or any other Benefited Party 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
3
<PAGE>
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 other Benefited Party
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.
Any amounts received by the Agent or any other Benefited Party from
whatever source on account of the Liabilities may be applied by it toward the
payment of the Liabilities in accordance with the Intercreditor Agreement, if
then in effect; 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 other Benefited Party until such
time as this Guaranty shall have been discontinued as to all of the undersigned
and the Agent and the other Benefited Parties 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 other Benefited Party 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 other Benefited Party 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 the other Benefited Parties 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
4
<PAGE>
the Agent or the other Benefited Parties or the obligations of the undersigned
under this Guaranty.
The Agent and any other Benefited Party 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 Liabilities, be entitled to the benefits of this Guaranty
to the same extent as if such assignee or transferee were a Benefited Party.
No delay on the part of the Agent or any other Benefited Party 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 other Benefited Party of any right or
remedy shall preclude any 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 other Benefited Party 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 Majority Benefited Parties).
No action of the Agent or any other Benefited Party permitted hereunder shall in
any way affect or impair the rights of the Agent or any other Benefited Party 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 other Benefited Party arising under or in connection with any Financing
Agreement, 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 Intercreditor 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 Benefited Parties. All
payments by the undersigned pursuant to this Guaranty shall be made to the Agent
for application as set forth in the Intercreditor Agreement or if there is no
Agent, to the Benefited Parties 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
5
<PAGE>
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 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 Second Restated 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 FINANCING AGREEMENT, 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. 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
6
<PAGE>
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 BENEFITED PARTIES 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 FINANCING AGREEMENTS.
EACH OF THE UNDERSIGNED, AND (BY ACCEPTING THE BENEFITS HEREOF) EACH OF THE
AGENT AND EACH OTHER BENEFITED PARTY, 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 FINANCING AGREEMENT 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.
7
<PAGE>
IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered as
of the day and year first above written.
A&A TOOL RENTALS AND SALES, INC.
ACCESS RENTALS, INC.
BNR EQUIPMENT INC.
CORAN ENTERPRISES INCORPORATED
UNITED EQUIPMENT RENTALS OF HOUSTON, INC.
MERCER EQUIPMENT COMPANY
MISSION VALLEY RENTALS, INC.
NEVADA HIGH REACH EQUIPMENT, INC.
UNITED RENTALS OF SOUTHERN
CALIFORNIA, INC.
RENTALS UNLIMITED, INCORPORATED
UNITED RENTALS OF COLORADO, INC.
HIGH REACH, INC.
VALLEY RENTALS, INC.
PALMER EQUIPMENT COMPANY
UNITED RENTALS OF UTAH, INC.
MISCO RENTS, INC.
UNITED RENTALS OF MID-ATLANTIC, INC.
UNITED RENTALS OF NEW YORK, INC.
UNITED RENTALS OF NEW ENGLAND, INC.
YANKEE EQUIPMENT CORPORATION
GRAND VALLEY EQUIPMENT COMPANY, INC.
ADCO EQUIPMENT, INC.
ADCO EQUIPMENT SUPPLY, INC.
KUBOTA OF GRAND RAPIDS, INC.
DEALERS SERVICE CO.
MADISON EQUIPMENT SALES AND RENTAL, INC.
BEAR ASSOCIATES, INC.
UNITED RENTALS OF NEW JERSEY, INC.
UNITED RENTS, ET. AL., INC.
ANDERSON OREGON RENTAL, INC.
ANDERSON WASHINGTON RENTAL, INC.
ARROW EQUIPMENT COMPANY
GREY FOX EQUIPMENT, INC.
HIGH REACH CO., INC.
INDEPENDENT SCISSOR LIFTS, INC.
8
<PAGE>
INDEPENDENT SCISSOR LIFTS
SOUTHWEST, INC.
LIFT SYSTEMS, INC.
McCLINCH, INC.
McCLINCH LEASING CORPORATION
McCLINCH EQUIPMENT CORPORATION
McCLINCH CRANE SERVICES, INC.
McCLINCH EQUIPMENT SERVICES, INC.
MID-MOUNTAIN MACHINERY, INC.
PAUL E. CARLSON, INC.
PHOENIX RENTAL CORPORATION
POWERS RENTALS & SALES, INC.
RENTAL TOOLS & EQUIPMENT CO.
INTERNATIONAL, INC.
ROSS EQUIPMENT CORPORATION RYLAN, INC.
SPACE MAKER SYSTEMS OF VA., INC.
UNITED RENTALS OF KENTUCKY, INC.
By:_____________________________
Name: Michael Nolan
Title: Vice President and
Secretary
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ADDITIONAL SIGNATURE PAGE to the Second Restated U.S. Guaranty dated
as of September 29, 1998 issued by various U.S. Subsidiaries of United
Rentals (North America), Inc. (the "Company").
The undersigned is executing a counterpart hereof for
purposes of becoming a party hereto:
[ ]
By:____________________________
Name:__________________________
Title:_________________________
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SCHEDULE I
TO GUARANTY
ADDRESSES
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<PAGE>
EXHIBIT D
SECOND RESTATED U.S. SECURITY AGREEMENT
THIS SECOND RESTATED U.S. SECURITY AGREEMENT (this "Agreement") dated
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as of September 29, 1998 is among UNITED RENTALS (NORTH AMERICA), INC. (the
"Company"), UNITED RENTALS, INC. ("Parent"), each subsidiary of the Company
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listed on the signature pages hereof, each other person or entity which from
time to time becomes a party hereto (collectively, including the Company and
Parent, the "Debtors" and individually each a "Debtor") and BANK OF AMERICA
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NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"), in its capacity as Agent (as
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defined below) for the Benefited Parties (as defined in the Intercreditor
Agreement referred to below).
W I T N E S E T H:
- - - - - - - - - -
WHEREAS, the Company, Parent, United Rentals of Canada, Inc., various
financial institutions (the "Banks"), Bank of America Canada, as Canadian Agent,
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and BofA, as U.S. Agent (in such capacity, the "U.S. Agent"), have entered into
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the Credit Agreement dated as of September 29, 1998 (as amended, restated or
otherwise modified from time to time, the "Credit Agreement");
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WHEREAS, the Company, various financial institutions (the "Term
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Lenders") and BofA, as Agent (in such capacity, the "Term Agent"), have entered
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into the Term Loan Agreement dated as of July 10, 1998 (as amended, restated or
otherwise modified from time to time, the "Term Loan Agreement");
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WHEREAS, the Company may assume or incur additional Permitted Senior
Secured Debt (as defined in the Intercreditor Agreement);
WHEREAS, certain creditors of the Company have entered into an
Intercreditor Agreement dated the date hereof (as amended, restated or otherwise
modified from time to time, the "Intercreditor Agreement") pursuant to which the
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Company, Parent, various subsidiaries of the Company, the U.S. Agent, the Term
Agent, various other Benefited Parties and BofA, as collateral agent, have
agreed that (i) the Credit Obligations (as defined in the Intercreditor
Agreement), the Term Obligations (as defined in the Intercreditor Agreement),
the Permitted Senior Secured Debt Obligations (as defined in the Intercreditor
Agreement) and the Hedging Obligations (as defined in the Intercreditor
Agreement) shall be secured pari passu and (ii) BofA shall act as collateral
agent for the holders of the Benefited Obligations (as defined in the
Intercreditor Agreement);
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WHEREAS, each of the Debtors other than the Company and Parent has executed
and delivered a counterpart of the U.S. Guaranty (as defined in the
Intercreditor Agreement);
WHEREAS, Parent has executed and delivered the Parent Guaranty (as defined
in the Intercreditor Agreement); and
WHEREAS, the obligations of the Company in respect of the Benefited
Obligations, the obligations of Parent under the Parent Guaranty and each
Security Document and the obligations of each other Debtor under the U.S.
Guaranty and each Security Document 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,
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Commodity Account, Commodity Contract, Chattel Paper, Deposit Account, Document,
- ----------------- ------------------ ------------- --------------- --------
Equipment, Fixture, Goods, Inventory, Investment Property, Instrument, Security,
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Security Entitlement, Securities Account and Uncertificated Security shall have
- -------------------- ------------------ -----------------------
the respective meanings assigned to such terms in the Uniform Commercial Code
(as defined below), (b) capitalized terms used but not defined herein have the
meanings assigned to such terms in the Intercreditor Agreement and (c) 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
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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
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Debtor to payment for goods sold or leased or for services rendered.
Agent means BofA in its capacity as "Collateral Agent" under and as defined
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in the Intercreditor Agreement, together with any successor thereto in such
capacity.
Agreement - see the introductory paragraph.
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Assignee Deposit Account - see Section 4.
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Banks - see the recitals.
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Benefited Parties - see the introductory paragraph.
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BofA - see the introductory paragraph.
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Business Day means any day on which BofA is open for commercial banking
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business in Chicago, New York and San Francisco.
Collateral means, with respect to any Debtor, all property and rights of
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such Debtor in which a security interest is granted hereunder.
Company - see the introductory paragraph.
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Computer Hardware and Software means, with respect to any Debtor, (i) all
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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
terminals, printers, features, computer elements, card readers, tape drives,
hard and soft disk drives, cables, electrical supply hardware, generators, power
equalizers, accessories and 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
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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
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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.
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Debtor - see the introductory paragraph.
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Default means the occurrence of any of the following events: (i) with
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respect to the Credit Agreement, (x) any Unmatured Event of Default with respect
to the Company under Section 12.1.4 thereof or (y) any Event of Default, (ii)
with respect to the Term Loan Agreement, (x) any Unmatured Event of Default with
respect to the Company under Section 12.1.4 thereof or (y) any
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Event of Default, (iii) any Event of Default under any Permitted Secured Debt
Agreement or (iv) any warranty of any Debtor herein is untrue or misleading in
any material respect and, as a result thereof, the Agent's security interest for
the benefit of the Benefited Parties 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.
Event of Default means, with respect to each of the Credit Agreement, the
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Term Loan Agreement and any Permitted Senior Secured Debt Agreement, an "Event
of Default" as defined in such agreement.
General Intangibles means, with respect to any Debtor, all of such Debtor's
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"general intangibles" as defined in the Uniform Commercial Code and, in any
event, includes (without limitation) 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.
Intellectual Property means all past, present and future: trade secrets and
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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.
Intercreditor Agreement - see the recitals.
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Liabilities means (a) as to the Company, all Benefited Obligations, (b) as
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to Parent, all obligations of Parent under the Parent Guaranty or any Security
Document and (c) with respect to each Debtor other than the Company and Parent,
all obligations of such Debtor under the U.S. Guaranty or any Security Document.
Non-Tangible Collateral means, with respect to any Debtor, collectively,
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such Debtor's Accounts Receivable, Contract Rights and General Intangibles.
Parent - see the introductory paragraph.
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Permitted Liens - see Section 3.
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Permitted Senior Secured Debt - see the recitals.
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Permitted Senior Secured Debt Obligations - see the recitals.
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Term Agent - see the recitals.
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Term Lenders - see the recitals.
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Term Loan Agreement - see the recitals.
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Trademark - see Section 3.
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Uniform Commercial Code means the Uniform Commercial Code as in effect in
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the State of Illinois on the date of this Agreement; provided, however, as used
in Section 8 hereof "Uniform Commercial Code" shall mean the Uniform Commercial
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Code as in effect from time to time in the applicable jurisdiction.
Unmatured Event of Default means, with respect to each of the Credit
--------------------------
Agreement, the Term Loan Agreement or any Permitted Senior Secured Debt
Agreement, an "Unmatured Event of Default" (or any equivalent term) as defined
in such agreement.
U.S. Agent - see the recitals.
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2. Grant of Security Interest. As security for the payment of all
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Liabilities, each Debtor hereby assigns to the Agent for the benefit of the
Benefited Parties, and grants to the Agent for the benefit of the Benefited
Parties a continuing security interest in, the following, whether now or
hereafter existing or acquired:
All of such Debtor's:
(i) Accounts Receivable;
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(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;
(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 Security 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,
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products, offspring, rents, issues, profits and returns of and from any of
the foregoing.
3. Warranties. Each Debtor warrants that: (i) no financing statement
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(other than any which may have been filed on behalf of the Agent for the benefit
of the Benefited Parties) covering any of the Collateral is on file in any
public office, other than financing statements perfecting liens and claims
expressly permitted by the Credit Agreement, the Term Loan Agreement and any
Permitted Senior Secured Debt Agreement ("Permitted Liens"); (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 Permitted Liens, with
full power and authority to execute and deliver 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 other
Benefited Party and all other written information heretofore or hereafter
furnished by such Debtor to the Agent or any other Benefited Party in connection
with the Credit Agreement, the Term Loan Agreement, any Permitted Senior Secured
Debt Agreement or any Hedging Obligations is and 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
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(and such Debtor has not maintained its chief executive office and principal
place of business at any other location at any time after February 1, 1998); (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 hereto, such
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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 hereto, during the five years preceding the date hereof such Debtor
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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
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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
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any material judgment, order or decree, which is binding upon such 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 Parent 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
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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 Term Loan
Agreement and any Permitted Senior Secured Debt 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 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
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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 for the
benefit of the Benefited Parties 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 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
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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
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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 Parent and its Subsidiaries taken as a whole, and such
notice shall specify the amount of such loss or depreciation.
6. Agreements of the Debtors. Each Debtor (a) will, upon request of
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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
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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
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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, the Term Loan Agreement and any Permitted Senior Secured Debt
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 for the benefit of the Benefited
Parties; (h) will 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 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
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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.
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
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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
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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
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care in the custody and preservation of any of the
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Collateral in its possession if it takes such action for that purpose as any
applicable Debtor requests 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 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
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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 other
Benefited Party 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 any 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
other Benefited Party to any of the Liabilities is or must be rescinded or
returned by the Agent or such other Benefited Party 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 rescinded or returned, be deemed to have
continued in existence, notwithstanding such application by the Agent or such
other Benefited Party, 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 other Benefited Party had not been made.
13
<PAGE>
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 FINANCING AGREEMENT, 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. 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,
14
<PAGE>
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 FINANCING AGREEMENTS.
EACH OF EACH DEBTOR, THE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF) EACH
OTHER BENEFITED PARTY 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
FINANCING AGREEMENT 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.
15
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first above written.
UNITED RENTALS (NORTH AMERICA), INC.
By:______________________________
Title: Chief Financial Officer
UNITED RENTALS, INC.
By:______________________________
Title:___________________________
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Collateral Agent for the
Benefited Parties
By:______________________________
Title: Agency Officer
16
<PAGE>
A&A TOOL RENTALS AND SALES, INC.
ACCESS RENTALS, INC.
BNR EQUIPMENT INC.
CORAN ENTERPRISES INCORPORATED
UNITED EQUIPMENT RENTALS OF
HOUSTON, INC.
MERCER EQUIPMENT COMPANY
MISSION VALLEY RENTALS, INC.
NEVADA HIGH REACH EQUIPMENT,
INC.
UNITED RENTALS OF SOUTHERN
CALIFORNIA, INC.
RENTALS UNLIMITED, INCORPORATED
UNITED RENTALS OF COLORADO, INC.
HIGH REACH, INC.
VALLEY RENTALS, INC.
PALMER EQUIPMENT COMPANY
UNITED RENTALS OF UTAH, INC.
MISCO RENTS, INC.
UNITED RENTALS OF MID-ATLANTIC,
INC.
UNITED RENTALS OF NEW YORK, INC.
UNITED RENTALS OF NEW ENGLAND, INC.
YANKEE EQUIPMENT CORPORATION
GRAND VALLEY EQUIPMENT COMPANY, INC.
ADCO EQUIPMENT, INC.
ADCO EQUIPMENT SUPPLY, INC.
KUBOTA OF GRAND RAPIDS, INC.
DEALERS SERVICE CO.
MADISON EQUIPMENT SALES AND RENTAL, INC.
BEAR ASSOCIATES, INC.
UNITED RENTALS OF NEW JERSEY,
INC.
UNITED RENTS, ET. AL., INC.
ANDERSON OREGON RENTAL, INC.
ANDERSON WASHINGTON RENTAL, INC.
ARROW EQUIPMENT COMPANY
GREY FOX EQUIPMENT, INC.
HIGH REACH CO., INC.
INDEPENDENT SCISSOR LIFTS, INC.
INDEPENDENT SCISSOR LIFTS
SOUTHWEST, INC.
LIFT SYSTEMS, INC.
McCLINCH, INC.
McCLINCH LEASING CORPORATION
McCLINCH EQUIPMENT CORPORATION
McCLINCH CRANE SERVICES, INC.
17
<PAGE>
McCLINCH EQUIPMENT SERVICES,
INC.
MID-MOUNTAIN MACHINERY, INC.
PAUL E. CARLSON, INC.
PHOENIX RENTAL CORPORATION
POWERS RENTALS & SALES, INC.
RENTAL TOOLS & EQUIPMENT CO.
INTERNATIONAL, INC.
ROSS EQUIPMENT CORPORATION
RYLAN, INC.
SPACE MAKER SYSTEMS OF VA., INC.
UNITED RENTALS OF KENTUCKY, INC.
By:_____________________________
Name: Michael Nolan
Title: Vice President and
Secretary
18
<PAGE>
ADDITIONAL SIGNATURE PAGE to the Second Restated
U.S. Security Agreement dated as of September 29,
1998 among United Rentals (North America), Inc.
(the "Company"), United Rentals, Inc., Bank of
America National Trust and Savings Association,
as Collateral Agent, and various U.S.
Subsidiaries of the Company.
The undersigned is executing a counterpart hereof
for purposes of becoming a party hereto:
[ ]
By:________________________________
Name:______________________________
Title:_____________________________
19
<PAGE>
SCHEDULE I
TO SECURITY AGREEMENT
CHIEF EXECUTIVE OFFICES
-----------------------
<PAGE>
SCHEDULE II
TO SECURITY AGREEMENT
ADDRESSES OF OTHER LOCATIONS
----------------------------
<PAGE>
SCHEDULE III
TO SECURITY AGREEMENT
TRADENAMES
----------
<PAGE>
SCHEDULE IV
TO SECURITY AGREEMENT
LIST OF INTELLECTUAL PROPERTY
-----------------------------
<PAGE>
EXHIBIT E
SECOND RESTATED COMPANY PLEDGE AGREEMENT
THIS SECOND RESTATED COMPANY PLEDGE AGREEMENT (this "Agreement") dated as
---------
of September 29, 1998 is between UNITED RENTALS (NORTH AMERICA), INC., a
Delaware corporation (the "Company"), and BANK OF AMERICA NATIONAL TRUST AND
-------
SAVINGS ASSOCIATION ("BofA"), as Agent (as defined below) for the Benefited
----
Parties (as defined in the Intercreditor Agreement referred to below).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company, United Rentals, Inc. ("Parent"), United Rentals of
------
Canada, Inc., various financial institutions (the "Banks"), Bank of America
-----
Canada, as Canadian Agent, and BofA, as U.S. Agent (in such capacity, the "U.S.
----
Agent"), have entered into the Credit Agreement dated as of September 29, 1998
- -----
(as amended, restated or otherwise modified from time to time, the "Credit
------
Agreement");
- ---------
WHEREAS, the Company, various financial institutions (the "Term Lenders")
------------
and BofA, as Agent (in such capacity, the "Term Agent"), have entered into the
Term Loan Agreement dated as of July 10, 1998 (as amended, restated or otherwise
modified from time to time, the "Term Loan Agreement");
-------------------
WHEREAS, the Company may assume or incur additional Permitted Senior
Secured Debt (as defined in the Intercreditor Agreement referred to below);
WHEREAS, certain creditors of the Company have entered into an
Intercreditor Agreement dated the date hereof (as amended, restated or otherwise
modified from time to time, the "Intercreditor Agreement") pursuant to which the
-----------------------
Company, Parent, various subsidiaries of the Company, the U.S. Agent, the Term
Agent, various other Benefited Parties and BofA, as collateral agent, have
agreed that (i) the Credit Obligations (as defined in the Intercreditor
Agreement), the Term Obligations (as defined in the Intercreditor Agreement),
the Permitted Senior Secured Debt Obligations (as defined in the Intercreditor
Agreement) and the Hedging Obligations (as defined in the Intercreditor
Agreement) shall be secured pari passu and (ii) BofA shall act as collateral
agent for the holders of the Benefited Obligations (as defined in the
Intercreditor Agreement); and
<PAGE>
WHEREAS, the obligations of the Company in respect of the Benefited
Obligations 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) capitalized terms used but not
-----------
defined herein have the meanings assigned to such terms in the Intercreditor
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 means BofA in its capacity as "Collateral Agent" under and as
-----
defined in the Intercreditor Agreement, together with any successor thereto
in such capacity.
Agreement - see the introductory paragraph.
---------
Banks - see the recitals.
-----
Benefited Parties - see the introductory paragraph.
-----------------
BofA - see the introductory paragraph.
----
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) with
-------
respect to the Credit Agreement, (x) any Unmatured Event of Default with
respect to the Company under Section 12.1.4 thereof or (y) any Event of
Default, or (ii) with respect to the Term Loan Agreement, (x) any Unmatured
Event of Default with respect to the Company under Section 12.1.4 thereof
or (y) any Event of Default, (iii) any Event of Default under any Permitted
Senior Secured Debt Agreement or (iv) any warranty of the Company herein is
untrue or misleading in any material respect and, as a result thereof, the
Agent's security interest for the benefit of the Benefited Parties in any
material portion of the Collateral is not perfected or the Agent's rights
and remedies with respect to any material portion of the Collateral is
materially impaired or otherwise materially adversely affected.
2
<PAGE>
Event of Default means, with respect to each of the Credit Agreement,
----------------
the Term Loan Agreement and any Permitted Senior Secured Debt Agreement, an
"Event of Default" as defined in such agreement.
Intercreditor Agreement - see the recitals.
-----------------------
Issuer means the issuer of any of the shares of stock or other
------
securities representing all or any of the Collateral.
Liabilities means all Benefited Obligations.
-----------
Parent - see the recitals.
------
Permitted Senior Secured Debt - see the recitals.
-----------------------------
Permitted Senior Secured Debt Obligations - see the recitals.
-----------------------------------------
Term Agent - see the recitals.
----------
Term Lenders - see the recitals.
------------
Term Loan Agreement - see the recitals.
-------------------
Unmatured Event of Default means, with respect to each of the Credit
--------------------------
Agreement, the Term Loan Agreement and any Permitted Senior Secured Debt
Agreement, an "Unmatured Event of Default" (or any equivalent term) as
defined in such agreement.
U.S. Agent - see the recitals.
----------
2. Pledge. As security for the payment of all Liabilities, the Company
------
hereby pledges to the Agent for the benefit of the Benefited Parties, and grants
to the Agent for the benefit of the Benefited Parties 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
----------
3
<PAGE>
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;
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 undated 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 for the benefit of the Benefited
Parties.
3. Warranties; Further Assurances. The Company warrants to the Agent for
------------------------------
the benefit of each Benefited Party 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 for the benefit of the
Benefited Parties; (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.
4
<PAGE>
So long as any of the Liabilities shall be outstanding or any commitment
shall exist on the part of any Benefited Party with respect to the creation of
any Liabilities, the Company (i) shall not, except as permitted by the Credit
Agreement, the Term Loan Agreement and any Permitted Senior Secured Debt
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 other Benefited Party such information concerning the
Collateral as the Agent or such other Benefited Party may from time to time
reasonably request, and will permit the Agent or any other Benefited Party or
any designee of the Agent or any other Benefited Party, 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 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
5
<PAGE>
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,
the Term Loan Agreement and any Permitted Senior Secured Debt 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 undated stock or 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
6
<PAGE>
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, 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
7
<PAGE>
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 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 other Benefited Parties 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 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 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 FINANCING AGREEMENT, 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 FINANCING AGREEMENTS.
EACH OF THE COMPANY, THE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF) EACH
OTHER BENEFITED PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE
9
<PAGE>
OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER FINANCING AGREEMENT 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 Agreement has been duly executed and delivered as
of the day and year first written above.
UNITED RENTALS (NORTH AMERICA),
INC.
Address:
Four Greenwich Office Park By:_____________________________
Greenwich, CT 06830 Chief Financial Officer
Attention: Chief Financial
Officer
Facsimile: 203-622-6080
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Collateral Agent
Address:
231 South LaSalle Street By:_________________________
Chicago, Illinois 60697 Title:______________________
Attention: Service Industries
Group
Facsimile: (312) 828-1974
10
<PAGE>
EXHIBIT F
FORM OF SUBSIDIARY PLEDGE AGREEMENT
THIS SUBSIDIARY PLEDGE AGREEMENT (this "Agreement") dated as of
---------
_______, 19__ is between ____________________, a ________ corporation (the
"Pledgor"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"),
- -------- ----
as Agent (as defined below) for the Benefited Parties (as defined in the
Intercreditor Agreement referred to below).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, United Rentals (North America), Inc. (the "Company"), United
-------
Rentals, Inc. ("Parent"), United Rentals of Canada, Inc., various financial
------
institutions (the "Banks"), Bank of America Canada, as Canadian Agent, and BofA,
-----
as U.S. Agent (in such capacity, the "U.S. Agent"), have entered into the Credit
----------
Agreement dated as of September 29, 1998 (as amended, restated or otherwise
modified from time to time, the "Credit Agreement");
----------------
WHEREAS, the Company, various financial institutions (the "Term
----
Lenders") and BofA, as Agent (in such capacity, the "Term Agent"), have entered
- -------
into the Term Loan Agreement dated as of July 10, 1998 (as amended, restated or
otherwise modified from time to time, the "Term Loan Agreement");
-------------------
WHEREAS, the Company may assume or incur additional Permitted Senior
Secured Debt (as defined in the Intercreditor Agreement referred to below);
WHEREAS, certain creditors of the Company have entered into an
Intercreditor Agreement dated the date hereof (as amended, restated or otherwise
modified from time to time, the "Intercreditor Agreement") pursuant to which the
-----------------------
Company, Parent, various subsidiaries of the Company, the U.S. Agent, the Term
Agent, various other Benefited Parties and BofA, as collateral agent, have
agreed that (i) the Credit Obligations (as defined in the Intercreditor
Agreement), the Term Obligations (as defined in the Intercreditor Agreement),
the Permitted Senior Secured Debt Obligations (as defined in the Intercreditor
Agreement) and the Hedging Obligations (as defined in the Intercreditor
Agreement) shall be secured pari passu and (ii) BofA shall act as collateral
agent for the holders of the Benefited Obligations (as defined in the
Intercreditor Agreement);
1
<PAGE>
WHEREAS, the Pledgor has executed and delivered a guaranty (the "U.S.
----
Guaranty") of the obligations of the Company in respect of the Benefited
- --------
Obligations; and
WHEREAS, the obligations of the Pledgor under the U.S. Guaranty and
the other Financing Agreements 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) capitalized terms used but not
-----------
defined herein have the meanings assigned to such terms in the Intercreditor
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 means BofA in its capacity as "Collateral Agent" under and
-----
as defined in the Intercreditor Agreement, together with any successor
thereto in such capacity.
Agreement - see the introductory paragraph.
---------
Banks - see the recitals.
-----
Benefited Parties - see the introductory paragraph.
-----------------
BofA - see the introductory paragraph.
----
Collateral - see Section 2.
---------- ---------
Company - see the recitals.
-------
Credit Agreement - see the recitals.
----------------
Default means the occurrence of any of the following events: (i)
-------
with respect to the Credit Agreement, (x) any Unmatured Event of Default
with respect to the Company under Section 12.1.4 thereof or (y) any Event
of Default, or (ii) with respect to the Term Loan Agreement, (x) any
Unmatured Event of Default with respect to the Company under Section 12.1.4
thereof or (y) any Event of Default, (iii) any Event of Default under any
Permitted Senior Secured Debt Agreement or (iv) any warranty of the Pledgor
herein is untrue or misleading in any material respect and, as a result
thereof, the Agent's security interest for the benefit of the Benefited
Parties in any material portion of the Collateral is not perfected or the
Agent's rights and
2
<PAGE>
remedies with respect to any material portion of the Collateral is
materially impaired or otherwise materially adversely affected.
Event of Default means, with respect to each of the Credit Agreement,
----------------
the Term Loan Agreement and any Permitted Senior Secured Debt Agreement, an
"Event of Default" as defined in such agreement.
Intercreditor Agreement - see the recitals.
-----------------------
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 Pledgor under or in
-----------
connection with the U.S. Guaranty and any other Financing Agreement to
which the Pledgor is a party.
Permitted Senior Secured Debt - see the recitals.
-----------------------------
Permitted Senior Secured Debt Obligations - see the recitals.
-----------------------------------------
Pledgor - see the introductory paragraph.
-------
Term Agent - see the recitals.
----------
Term Lenders - see the recitals.
------------
Term Loan Agreement - see the recitals.
-------------------
Unmatured Event of Default means, with respect to each of the Credit
--------------------------
Agreement, the Term Loan Agreement and any Permitted Senior Secured Debt
Agreement, an "Unmatured Event of Default" (or any equivalent term) as
defined in such agreement.
U.S. Agent - see the recitals.
----------
U.S. Guaranty - see the recitals.
-------------
2. Pledge. As security for the payment of all Liabilities, the Pledgor
------
hereby pledges to the Agent for the benefit of the Benefited Parties, and grants
to the Agent for the benefit of the Benefited Parties 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
3
<PAGE>
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 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 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 Agent, promptly upon receipt and in
due form for transfer (i.e., endorsed in blank or accompanied by undated stock
or bond powers executed in blank), any Collateral (other than dividends which
the Pledgor 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 Agent, such
Collateral shall be held by the Pledgor separate and apart from its other
property and in express trust for the Agent for the benefit of the Benefited
Parties.
3. Warranties; Further Assurances. The Pledgor warrants to the Agent for
------------------------------
the benefit of each Benefited Party 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
4
<PAGE>
perfected security interest in the Collateral in favor of the Agent for the
benefit of the Benefited Parties; (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.
So long as any of the Liabilities shall be outstanding or any commitment
shall exist on the part of any Benefited Party with respect to the creation of
any Liabilities, the Pledgor (i) shall not, except as permitted by the Credit
Agreement, the Term Loan Agreement and any Permitted Senior Secured Debt
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 other Benefited Party such information concerning the
Collateral as the Agent or such other Benefited Party may from time to time
reasonably request, and will permit the Agent or any other Benefited Party or
any designee of the Agent or any other Benefited Party, 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 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
5
<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
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 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
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 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,
the Term Loan Agreement and any Permitted Senior Secured Debt 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
6
<PAGE>
Collateral hereunder and, if received by the Pledgor, shall be forthwith
delivered to the Agent in due form for transfer (i.e., endorsed in blank or
accompanied by undated stock or 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 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 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 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 Pledgor 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 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 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
7
<PAGE>
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 Pledgor 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 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 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. 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 Pledgor 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 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 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
8
<PAGE>
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 Pledgor and all rights, powers and remedies of the
Agent and the other Benefited Parties 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 Pledgor and the Agent and their
respective successors and assigns, and shall inure to the benefit of the Pledgor
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 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 FINANCING AGREEMENT, 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 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
9
<PAGE>
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 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 FINANCING AGREEMENTS.
EACH OF THE PLEDGOR, THE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF) EACH
OTHER BENEFITED PARTY 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
FINANCING AGREEMENT 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.
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:____________________________
________________________ Title:_________________________
Attention:__________________
Facsimile:__________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Collateral
Agent
Address:
231 South LaSalle Street By:______________________________
Chicago, Illinois 60697 Title:______________________
Attention: Service Industries Group
Facsimile: (312) 828-1974
11
<PAGE>
SCHEDULE I
TO
SUBSIDIARY PLEDGE AGREEMENT
STOCK
-----
<TABLE>
<CAPTION>
Pledged Shares
No. of as of % of Total Total Shares of
Certificate Pledged Shares Issued Issuer
Issuer No. Shares and Outstanding Outstanding
- -------- ----------- ------- ---------------- ---------------
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------
</TABLE>
<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 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
___________________
* Or debentures or other designation as may be appropriate.
<PAGE>
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 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
<PAGE>
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 Credit Agreement, dated as of September 29, 1998
among the Company, 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
(as amended, restated, amended 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.
<PAGE>
EXHIBIT H
FORM OF
ASSIGNMENT AGREEMENT
Reference is made to Section 15.9.1 of the Credit Agreement dated as of
September 29, 1998 (as amended or otherwise modified, the "Credit Agreement"),
----------------
among United Rentals (North America), Inc., 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, without recourse,
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. 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
_____________________
** 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>
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 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
<PAGE>
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.
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:___________________
<PAGE>
Title:__________________________
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 (NORTH AMERICA), INC.
By:_____________________________
Name Printed:___________________
Title:__________________________
<PAGE>
EXHIBIT I
FORM OF CANADIAN GUARANTEE
Guarantee dated [.] 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 credit agreement dated as of September 29, 1998, among United
Rentals (North America), Inc., 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 (North America), 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 (North America), 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 (North America), 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;
<PAGE>
-3-
(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
(h) any other circumstances which might otherwise constitute a defence
available to, or a discharge of, the Guarantor, the Borrower, United Rentals
(North America), 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 (North America),
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 (North America), 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, United Rentals, Inc. and each of
their Subsidiaries 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 2.5, until
<PAGE>
-4-
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.
(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 (North America), Inc., 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 (North America), Inc. or any
other Person, (iii) release, compound or vary the liability of the Borrower,
United Rentals (North America), 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 (North America),
<PAGE>
-5-
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 (North America), 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 (North America), Inc.
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
<PAGE>
-6-
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.
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
<PAGE>
-7-
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
(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
<PAGE>
-8-
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
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.
<PAGE>
-9-
SECTION 3.2. DEFINED TERMS. Capitalized terms used in this guarantee
and not otherwise defined have the meanings specified in the Credit Agreement.
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>
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SCHEDULE "A"
GUARANTOR SECURITY
<PAGE>
EXHIBIT J
FORM OF CANADIAN SECURITY AGREEMENT
Security agreement dated as of [.], 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 credit agreement dated as of September 29, 1998, among United
Rentals (North America), Inc., 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
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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
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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 (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.
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;
(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;
<PAGE>
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(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 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,
<PAGE>
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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 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
<PAGE>
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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 3
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);
(e) each other location where the Obligor maintains a place of business is set
forth on Schedule II hereto;
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(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 bylaws 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
(1) 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:
(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
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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;
(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;
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(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.
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.
<PAGE>
-12-
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.
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.
<PAGE>
-13-
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
================================================================================
INTERCREDITOR AGREEMENT
among
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as U.S. Agent,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Term Agent,
VARIOUS OTHER SENIOR SECURED CREDITORS OF
UNITED RENTALS (NORTH AMERICA), INC.
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Collateral Agent
Dated as of September 29, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Preamble............................................................. 1
R E C I T A L S...................................................... 1
SECTION 1. DEFINED TERMS......................................... 2
SECTION 2. APPOINTMENT OF COLLATERAL AGENT....................... 9
SECTION 3. DECISIONS RELATING TO ADMINISTRATION AND EXERCISE
OF REMEDIES VESTED IN THE MAJORITY BENEFITED
PARTIES............................................... 10
SECTION 4. APPLICATION OF PROCEEDS............................... 12
SECTION 5. PREFERENTIAL PAYMENTS AND SPECIAL TRUST ACCOUNT....... 13
SECTION 6. INFORMATION........................................... 14
SECTION 7. ADDITIONAL BENEFITED PARTIES.......................... 15
SECTION 8. DISCLAIMERS, INDEMNITY, ETC........................... 16
SECTION 9. INVALIDATED PAYMENTS.................................. 20
SECTION 10. MISCELLANEOUS......................................... 20
</TABLE>
ACKNOWLEDGMENT OF AND CONSENT AND AGREEMENT TO INTERCREDITOR AGREEMENT
EXHIBITS - FORMS OF ACKNOWLEDGMENTS
<PAGE>
INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT (as amended or otherwise modified from time to
time, this "Agreement") dated as of September 29, 1998 is among BANK OF AMERICA
---------
NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"), as U.S. Agent for the Banks (as
----
defined below) under the Credit Agreement referred to below (in such capacity,
together with its successors and assigns in such capacity, the "U.S. Agent"),
----------
BofA, as Agent for the Term Lenders (as defined below) under the Term Loan
Agreement referred to below (in such capacity, together with its successors and
assigns in such capacity, the "Term Agent"), various other Benefited Parties (as
----------
defined below) and BofA, as Collateral Agent (as defined below).
R E C I T A L S
WHEREAS, United Rentals (North America), Inc. (the "Company"), United
-------
Rentals, Inc. ("Parent"), United Rentals of Canada, Inc., various financial
------
institutions (the "Existing Banks" and, together with any Successor Banks (as
--------------
defined below) and the successors or assigns of any of the foregoing, the
"Banks"), Bank of America Canada, as Canadian Agent, and the U.S. Agent have
-----
entered into the Credit Agreement dated as of September 29, 1998 (as amended,
restated or otherwise modified from time to time, the "Existing Credit
---------------
Agreement" and, together with any Successor Credit Agreement (as defined below),
the "Credit Agreement");
----------------
WHEREAS, the Company, various financial institutions (the "Existing Term
-------------
Lenders" and, together with any Successor Term Lenders (as defined below) and
- -------
the successors or assigns of any of the foregoing, the "Term Lenders") and the
------------
Term Agent have entered into the Term Loan Agreement dated as of July 10, 1998
(as amended, restated or otherwise modified from time to time, the "Existing
--------
Term Loan Agreement" and, together with any Successor Term Loan Agreement (as
- -------------------
defined below), the "Term Loan Agreement");
-------------------
WHEREAS, the Company may assume or incur additional Permitted Senior
Secured Debt (as defined below);
WHEREAS, all obligations of the Company under the Existing Credit
Agreement, under the Existing Term Loan Agreement, under any Permitted Senior
Secured Debt and in respect of the Hedging Obligations (as defined below) have
been (or upon the assumption or incurrence thereof will be) guaranteed by (i)
all U.S. Subsidiaries (as defined below) pursuant to the U.S. Guaranty (as
defined below) and (ii) Parent pursuant to the Parent Guaranty (as defined
below).
<PAGE>
WHEREAS, all obligations of the Company under the Existing Credit
Agreement, under the Existing Term Loan Agreement, in respect of any Permitted
Senior Secured Debt and in respect of the Hedging Obligations, all obligations
of each U.S. Subsidiary under the U.S. Guaranty and all obligations of Parent
under the Parent Guaranty are (or upon the assumption or incurrence thereof will
be) secured pursuant to the Security Documents (as defined below);
WHEREAS, the U.S. Agent, the Existing Banks, the Term Agent and the
Existing Term Lenders have agreed that the Credit Obligations (as defined
below), the Term Obligations (as defined below), the Permitted Senior Secured
Debt Obligations (as defined below) and the Hedging Obligations shall be secured
pari passu pursuant to the Security Documents and shall be guaranteed pari passu
pursuant to the U.S. Guaranty and the Parent Guaranty; the Benefited Parties (as
defined below) desire that BofA act as the collateral agent (in such capacity,
together with its successors and assigns in such capacity, the "Collateral
----------
Agent") on behalf of all Benefited Parties regarding the Collateral (as defined
below), the U.S. Guaranty and the Parent Guaranty, all as more fully provided
herein; and the parties hereto have entered into this Agreement to, among other
things, further define the rights, duties, authority and responsibilities of the
Collateral Agent and the relationship between the Benefited Parties regarding
their pari passu interests in the Collateral, the U.S. Guaranty and the Parent
Guaranty;
WHEREAS, it is contemplated that the Existing Banks or other financial
institutions (the "Successor Banks") may enter into one or more agreements with
---------------
the Company extending the maturity of or refinancing all or any portion of the
Credit Obligations;
WHEREAS, it is contemplated that the Existing Term Lenders or other
financial institutions (the "Successor Term Lenders") may enter into one or more
----------------------
agreements with the Company extending the maturity of or refinancing all or any
portion of the Term Obligations; and
WHEREAS, it is contemplated that the Permitted Creditors (as defined below)
or other financial institutions (the "Successor Permitted Creditors") may enter
-----------------------------
into one or more agreements with the Company extending the maturity of or
refinancing all or any portion of the Permitted Senior Secured Debt Obligations;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties hereto agree as follows:
2
<PAGE>
SECTION 1. DEFINED TERMS.
As used in this Agreement, and unless the context requires a different
meaning, the following terms have the respective meanings indicated below, all
such definitions to be equally applicable to the singular and plural forms of
the terms defined:
Affected Benefited Party - see Section 9.
------------------------ ---------
Affiliate means, as to any Person, any other Person (i) directly or
---------
indirectly controlling, controlled by, or under common control with such Person,
(ii) in the case of Parent, which beneficially owns or holds securities
representing 5% or more of the combined voting power of the Voting Stock of
Parent or any Subsidiary of Parent, (iii) in the case of Parent, of which
securities representing 5% or more of the combined voting power of the Voting
Stock (or in the case of a Person which is not a corporation, 5% or more of the
equity interest) are beneficially owned or held by Parent or a Subsidiary, or
(iv) in the case of Parent, any officer or director of Parent or any Subsidiary.
For the purposes of this definition, "control" (including with correlative
meanings the terms "controlling," "controlled by" and "under common control
with"), as applied to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.
Agreement - see the Preamble.
--------- --------
Bankruptcy Proceeding means, with respect to any Person, a general
---------------------
assignment by such Person for the benefit of its creditors, or the institution
by or against such Person of any proceeding seeking relief as debtor, or seeking
to adjudicate such Person as bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment or composition of such Person or its debts under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors, or
seeking appointment of a receiver, trustee, custodian or other similar official
for such Person or for any substantial part of its property.
Banks - see the recitals.
----- --------
Benefited Obligations means (a) all Credit Obligations, (b) all Term
---------------------
Obligations, (c) all Hedging Obligations, (d) all Permitted Senior Secured Debt
Obligations and (e) all other amounts payable by any Grantor under this
Agreement, the U.S. Guaranty, the Parent Guaranty and any Security Document
(including, without limitation, the reasonable fees and expenses of the
Collateral Agent).
3
<PAGE>
Benefited Parties means the holders, from time to time, of the Benefited
-----------------
Obligations.
BofA - see the Preamble.
---- --------
Collateral means all property of the Grantors in which a Lien has been
----------
granted pursuant to the Security Documents.
Collateral Agent - see the recitals.
---------------- --------
Company - see the recitals.
------- --------
Company Pledge Agreement means the Second Restated Company Pledge Agreement
------------------------
dated as of September 29, 1998 between the Company and the Collateral Agent, as
amended, restated or otherwise modified from time to time.
Credit Agreement - see the recitals.
---------------- --------
Credit Document means any "Loan Document" as defined in the Credit
---------------
Agreement.
Credit Obligations means all obligations of every nature of the Company or
------------------
any other Grantor from time to time to the U.S. Agent, the Canadian Agent (as
defined in the Credit Agreement) or any Bank under the Credit Agreement or any
other Credit Document and shall specifically include all letter of credit fees
under Section 5.2 of the Existing Credit Agreement.
Enforcement means the commencement of a Bankruptcy Proceeding by or against
-----------
any Grantor or the commencement of any enforcement, collection (including
judicial or non-judicial foreclosure) or similar proceeding with respect to any
Collateral, the U.S. Guaranty or the Parent Guaranty and, with respect to each
of the U.S. Guaranty and the Parent Guaranty, shall include any demand for
payment thereunder.
Event of Default means an "Event of Default" or a "Default" or the
----------------
equivalent thereof as defined in any Financing Agreement.
Existing Banks - see the recitals.
-------------- --------
Existing Credit Agreement - see the recitals.
------------------------- --------
Existing Fees and Charges means any fees, indemnities or other expenses the
-------------------------
payment of which is required by the Existing Credit Agreement or the Existing
Term Loan Agreement or by any Permitted Senior Secured Debt Agreement as in
effect on the date of the assumption or issuance by the Company of the
applicable Permitted Senior Secured Debt; provided that "Existing Fees and
--------
Charges" shall not include letter of credit fees under Section
4
<PAGE>
5.2 of the Existing Credit Agreement (or any comparable provision of any
Successor Credit Agreement).
Existing Term Lenders - see the recitals.
--------------------- --------
Existing Term Loan Agreement - see the recitals.
---------------------------- --------
Financing Agreements means this Agreement, the Credit Documents, the Term
--------------------
Loan Documents, the Permitted Senior Secured Debt Documents and any other
instrument, document or agreement entered into in connection with any Benefited
Obligation.
Grantor means the Company, Parent, each U.S. Subsidiary and any other
-------
Person who grants any Collateral to the Collateral Agent under any Security
Document or who guarantees any Benefited Obligations.
Group means each of (a) the Banks, (b) the Term Lenders and (c) any group
-----
of Permitted Creditors holding Permitted Senior Secured Debt assumed or incurred
by the Company on the same day pursuant to the same Permitted Senior Secured
Debt Agreement (or substantially identical Permitted Senior Secured Debt
Agreements).
Hedging Obligations means all obligations of the Company to any Benefited
-------------------
Party under or in connection with any Hedging Transaction.
Hedging Transaction means each interest rate swap transaction, basis swap
-------------------
transaction, forward rate transaction, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, currency swap transaction,
equity swap transaction or other similar transaction (including any option with
respect to any such transaction and any combination of any of the foregoing)
entered into by the Company from time to time with any Benefited Party or any
Affiliate thereof; provided that such transaction is entered into for purposes
--------
of protection from price, interest rate or currency fluctuations posed by bona
fide debt, contract or purchase order obligations or from changes in the price
of Parent's stock.
Letter of Credit means a letter of credit issued pursuant to the Credit
----------------
Agreement.
Lien means, with respect to any Person, any interest granted by such Person
----
in any real or personal property 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.
5
<PAGE>
Majority Benefited Parties means (a) the Required Banks, (b) the Required
--------------------------
Term Lenders and (c) the Required Permitted Creditors for each other Group (if
any), in each case voting as a class, provided that if at any time (I) the
--------
aggregate principal amount of all outstanding indebtedness under the Credit
Agreement plus the Maximum Available Amount of all Letters of Credit plus, at
all times when a commitment to extend financing exists under the Credit
Agreement and the Banks do not have the right to immediately terminate such
commitment, the amount of all unused commitments under the Credit Agreement or
--
(II) the aggregate principal amount of all outstanding indebtedness under the
Term Loan Agreement or (III) the aggregate principal amount of all outstanding
--
indebtedness of any other Group represents, in any such case, less than 10% of
the sum of the amounts referred to in clauses (I), (II) and (III) above, then
----------- ---- -----
any Group which represents less than 10% of the sum of such amounts shall not
vote as a class and "Majority Benefited Parties" shall mean (A) each Group which
--------------------------
does vote as a class and (B) if any Group is not voting as a class, Benefited
---
Parties, considered as a single class, holding a majority of the sum of the
amounts referred to in clauses (I), (II) and (III) above.
----------- ---- -----
Maximum Available Amount means, with respect to any Letter of Credit, as of
------------------------
any date of determination, the maximum amount that may be drawn under such
Letter of Credit (whether or not the beneficiary thereof shall have presented,
or shall be entitled at such time to present, the drafts or other documents
required to draw under such Letter of Credit).
New Fees and Charges means (i) any fees, indemnities or other expenses the
--------------------
payment of which is not required by the Existing Credit Agreement or the
Existing Term Loan Agreement or by any Permitted Senior Secured Debt Agreement
as in effect on the date of the assumption or issuance by the Company of the
applicable Permitted Senior Secured Debt and (ii) any increase in the amount of
such fees, indemnities or other expenses over the amount of Existing Fees and
Charges.
Notice of Special Default - see subsection 5(a).
------------------------- ---------------
Parent - see the recitals.
------ ----------------
Parent Guaranty means the Restated Parent Guaranty dated as of September
---------------
29, 1998 issued by Parent, as amended, restated or otherwise modified from time
to time.
Parent Pledge Agreement means the Restated Parent Pledge Agreement dated as
-----------------------
of September 29, 1998 between Parent and the Collateral Agent, as amended,
restated or otherwise modified from time to time.
6
<PAGE>
Permitted Creditor means each holder of Permitted Senior Secured Debt.
------------------
Permitted Senior Secured Debt has the meaning set forth in the Credit
-----------------------------
Agreement and the Term Loan Agreement as in effect on the date hereof without
giving effect to any amendment thereto except to the extent that such amendment
is effective under both such Agreements.
Permitted Senior Secured Debt Agreement means any agreement evidencing or
---------------------------------------
setting forth the terms of any Permitted Senior Secured Debt.
Permitted Senior Secured Debt Documents means each Permitted Senior Secured
---------------------------------------
Debt Agreement, the U.S. Guaranty, the Parent Guaranty and each Security
Document.
Permitted Senior Secured Debt Obligations means all obligations of every
-----------------------------------------
nature of the Company or any other Grantor from time to time to any Permitted
Creditor under any Permitted Senior Secured Debt Agreement or any other
Permitted Senior Secured Debt Document.
Person means any individual, corporation, limited liability company,
------
partnership, trust or other entity.
Preferential Payment means any payment or Proceeds from any Grantor or any
--------------------
other source with respect to the Benefited Obligations (including from the
exercise of any set-off) which is:
(i) received by a Benefited Party within 90 days prior to the
commencement of a Bankruptcy Proceeding with respect to the Company, or the
acceleration of the principal of any Credit Obligations, Term Obligations or
Permitted Senior Secured Debt Obligations, and which payment reduces (on a
permanent basis through the date of commencement of such Bankruptcy Proceeding)
the amount of the Benefited Obligations owed to such Benefited Party below the
amount owed to such Benefited Party as of the 90th day prior to such occurrence,
or
(ii) received by a Benefited Party (A) within 90 days prior to the
occurrence of any Event of Default (other than an Event of Default arising as a
result of the commencement of a Bankruptcy Proceeding with respect to the
Company) which has not been waived or cured within 45 days after the occurrence
thereof and which payment reduces (on a permanent basis through the date of such
Event of Default) the amount of the Benefited Obligations owed to such Benefited
Party below the amount owed to such Benefited Party as of the 90th day prior to
the occurrence of such Event of
7
<PAGE>
Default or (B) within 45 days after the occurrence of such Event of Default, or
(iii) received by a Benefited Party after the occurrence of a Special
Event of Default except as provided in subsection 5(b).
---------------
Proceeds means (i) with respect to Collateral, "proceeds" as such term is
--------
defined in Article 9 of the Uniform Commercial Code as in effect in the State of
Illinois on the date of this Agreement and, in any event, includes (a) any and
all proceeds of any collection, sale or other disposition of the Collateral, (b)
any and all amounts from time to time paid or payable under or in connection
with any of the Collateral, and (c) any amount collected by any Benefited Party
by way of set-off, deduction or counterclaim; (ii) with respect to the U.S.
Guaranty, all amounts paid by any U.S. Subsidiary to the Collateral Agent under
the U.S. Guaranty; and (iii) with respect to the Parent Guaranty, all amounts
paid by Parent to the Collateral Agent under the Parent Guaranty.
Repayment Event - see Section 9.
--------------- ---------
Required Banks means "Required Banks" as defined in the Credit Agreement.
--------------
Required Permitted Creditors means, with respect to any Group of Permitted
----------------------------
Creditors, the percentage of such Permitted Creditors required to amend or waive
a covenant under the applicable Permitted Senior Secured Debt Agreement (or, if
applicable, Agreements).
Required Term Lenders means "Required Lenders" as defined in the Term Loan
---------------------
Agreement.
Security Agreement means the Second Restated Security Agreement dated as of
------------------
September 29, 1998 among the Grantors and the Collateral Agent, as amended,
restated or otherwise modified from time to time.
Security Documents means the Security Agreement, the Parent Pledge
------------------
Agreement, the Company Pledge Agreement, each Subsidiary Pledge Agreement and
any other instrument or document pursuant to which any Grantor grants security
to the Collateral Agent or any Benefited Party to secure any Benefited
Obligation.
Senior Debt means debt for borrowed money, excluding Credit Obligations,
-----------
Term Loan Obligations and Permitted Senior Secured Debt Obligations, which is
not subordinated in right of payment to any other obligation of the Company.
8
<PAGE>
Special Event of Default means (i) the commencement of a Bankruptcy
------------------------
Proceeding with respect to the Company, (ii) any other Event of Default which
has not been waived or cured within 45 days after the occurrence thereof, or
(iii) the acceleration of the principal amount of any Benefited Obligation.
Special Trust Account means an interest bearing trust account maintained by
---------------------
the Collateral Agent for the purpose of receiving and holding Preferential
Payments.
Subsidiary means, with respect to any Person, a corporation, limited
----------
liability company, partnership or other entity of which such Person and/or its
other Subsidiaries own, directly or indirectly, more than 50% of the voting
stock, membership interests or similar equity interests. Unless the context
otherwise requires, each reference to a Subsidiary herein shall be a reference
to a Subsidiary of Parent.
Subsidiary Pledge Agreement means any pledge agreement between a Subsidiary
---------------------------
of Parent and the Collateral Agent substantially in the form of Exhibit F to the
Existing Credit Agreement (as in effect on the date hereof), in each case as
amended, restated or otherwise modified from time to time.
Successor Banks - see the recitals.
--------------- --------
Successor Credit Agreement means any replacement, refinancing or
--------------------------
restructuring of the Existing Credit Agreement and such term shall include any
additional Senior Debt permitted to be incurred under a Successor Credit
Agreement pursuant to Section 7; provided that each Bank thereunder or the agent
--------- --------
acting on behalf of all such Banks has executed an acknowledgment to this
Agreement in the form attached hereto as Exhibit A.
---------
Successor Permitted Creditors - see the recitals.
----------------------------- --------
Successor Permitted Senior Secured Debt Agreement means any replacement,
-------------------------------------------------
refinancing or restructuring of any Permitted Senior Secured Debt Agreement and
such term shall include any additional Senior Debt permitted to be incurred
under a Successor Senior Secured Debt Agreement pursuant to Section 7; provided
---------
that each Permitted Creditor thereunder or any agent acting on behalf of all
such Permitted Creditors has executed an acknowledgment to this Agreement in the
form attached hereto as Exhibit C.
---------
Successor Term Lenders - see the recitals.
---------------------- --------
Successor Term Loan Agreement means any replacement, refinancing or
-----------------------------
restructuring of the Existing Term Loan Agreement and such term shall include
any additional Senior Debt permitted to be incurred under a Successor Term Loan
Agreement pursuant to
9
<PAGE>
Section 7; provided that each Term Lender thereunder or the agent acting on
- ---------
behalf of all such Term Lenders has executed an acknowledgment to this Agreement
in the form attached hereto as Exhibit B.
---------
Term Agent - see the Preamble.
---------- --------
Term Lenders - see the recitals.
------------ --------
Term Loan Agreement - see the recitals.
------------------- --------
Term Loan Document means any "Loan Document" as defined in the Term Loan
------------------
Agreement.
Term Obligations means all obligations of every nature of the Company or
----------------
any other Grantor from time to time to the Term Agent or any Term Lender under
the Term Loan Agreement and any other Term Loan Document.
U.S. Agent - see the Preamble.
---------- --------
U.S. Guaranty means the Second Restated Guaranty made in favor of the
-------------
Collateral Agent and the Benefited Parties by the U.S. Subsidiaries dated as of
September 29, 1998, as amended, restated or otherwise modified from time to
time.
U.S. Subsidiary means each Subsidiary of the Company, excluding any
--------------- ---------
Subsidiary which is organized under the laws of a jurisdiction other than, and
which is conducting the majority of its business outside of, the United States
or any state thereof.
Voting Stock means, as to any corporation, capital stock of any class
------------
having power under ordinary circumstances to vote for the election of members of
the board of directors of such corporation, or persons performing similar
functions (whether or not at the time stock of any class shall have or might
have special voting powers or rights by reason of the happening of any
contingency).
SECTION 2. APPOINTMENT OF COLLATERAL AGENT.
Each of the Banks (by its consent to the execution and delivery by the U.S.
Agent of this Agreement) and each of the Term Lenders (by its consent to the
execution and delivery by the Term Agent of this Agreement) and each other
Benefited Party (by executing an acknowledgment in the form of one of the
Exhibits hereto or by accepting the benefits hereof) hereby (a) designates and
appoints BofA to serve as the Collateral Agent under this Agreement, the
Security Documents, the U.S. Guaranty and the Parent Guaranty and (b) authorizes
the Collateral Agent to act as agent for the Benefited Parties for the purposes
of enforcing the
10
<PAGE>
Benefited Parties' rights in respect of the Collateral, the U.S. Guaranty and
the Parent Guaranty and the obligations of the Grantors under the Security
Documents and the U.S. Guaranty and the Parent Guaranty, together with such
other powers as are reasonably incidental thereto.
SECTION 3. DECISIONS RELATING TO ADMINISTRATION AND EXERCISE OF REMEDIES
VESTED IN THE MAJORITY BENEFITED PARTIES.
(a) Except as set forth in subsection 3(f), the Collateral Agent agrees
---------------
that it will not release Liens or Collateral or any Grantor from the U.S.
Guaranty or the Parent Guaranty or commence Enforcement without the direction of
the Majority Benefited Parties (and, in the case of a release of any Person from
the U.S. Guaranty or the Parent Guaranty or of all or substantially all of the
collateral granted under the Security Documents, all Banks, all Term Lenders and
all Permitted Creditors). The Collateral Agent agrees to administer the
Security Documents, the U.S. Guaranty, the Parent Guaranty and the Collateral
and to make such demands and give such notices under the Security Documents, the
U.S. Guaranty and the Parent Guaranty as the Majority Benefited Parties may
request, and to take such action to enforce the Security Documents, the U.S.
Guaranty and the Parent Guaranty and to realize upon, collect and dispose of the
Collateral or any portion thereof and to make demands for payment under the U.S.
Guaranty and the Parent Guaranty as may be directed by the Majority Benefited
Parties. The Collateral Agent shall not be required to take any action that is
in the opinion of counsel to the Collateral Agent contrary to law or to the
terms of this Agreement, any Security Document, the U.S. Guaranty, the Parent
Guaranty or any other Financing Agreement or that would in the opinion of such
counsel subject the Collateral Agent or any of its officers, employees, agents
or directors to any liability, and the Collateral Agent shall not be required to
take any action under this Agreement, any Security Document, the U.S. Guaranty
or the Parent Guaranty unless and until the Collateral Agent shall be
indemnified to its reasonable satisfaction by one or more of the Benefited
Parties against any and all loss, cost, expense or liability in connection
therewith.
(b) Each Benefited Party agrees that the Collateral Agent shall act as the
Majority Benefited Parties may request (regardless of whether any individual
Benefited Party agrees, disagrees or abstains with respect to such request),
that the Collateral Agent shall have no liability for acting in accordance with
such request (provided such action does not conflict with the express terms of
this Agreement, the Security Documents, the U.S. Guaranty or the Parent
Guaranty) and that no Benefited Party which is a member of the Majority
Benefited Parties making any such request shall have any liability to any other
Benefited
11
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Party for such request. The Collateral Agent shall give prompt notice to each
Bank, each Term Lender and each Permitted Creditor of any action taken pursuant
to the instructions of the Majority Benefited Parties to enforce any Security
Document, the U.S. Guaranty or the Parent Guaranty; provided that the failure to
--------
give any such notice shall not impair the right of the Collateral Agent to take
any such action or the validity of any action so taken.
(c) The Collateral Agent may at any time request directions from the
Majority Benefited Parties as to any course of action or other matter relating
hereto or relating to any Security Document, the U.S. Guaranty or the Parent
Guaranty. Except as otherwise provided in this Agreement, directions given by
the Majority Benefited Parties to the Collateral Agent hereunder shall be
binding on all Benefited Parties for all purposes.
(d) Nothing contained in this Agreement shall affect the right (if any) of
any Benefited Party to give the Company or any other Grantor notice of any
default or to accelerate or make demand for payment of its Benefited Obligations
under the applicable Financing Agreement; provided that each Benefited Party
--------
agrees not to take any action to enforce any term or provision of any Security
Document or to enforce any of its rights in respect of the Collateral except
through the Collateral Agent in accordance with this Agreement.
(e) The Collateral Agent shall not be deemed to have actual or
constructive knowledge or notice of the occurrence of any Event of Default until
it has received written notice thereof from the Company or a Benefited Party
stating that it is a "Notice of Default." Any Benefited Party which has actual
knowledge of an Event of Default shall deliver to the Collateral Agent a written
statement describing such Event of Default (provided that failure to do so shall
--------
not constitute a waiver of such Event of Default by any Benefited Party). Upon
receipt of a notice from the Company or a Benefited Party of the occurrence of
an Event of Default, the Collateral Agent shall promptly (and in any event no
later than three business days after receipt of such notice in the manner
provided in subsection 10(a)) give notice of such Event of Default to all Banks,
-----------------
Term Lenders and Permitted Creditors.
(f) The Collateral Agent may (and shall at the request of any Grantor),
without the approval of any other Benefited Party, (x) release any Collateral
under any Security Document which is permitted to be sold or disposed of or
otherwise released pursuant to the Credit Agreement, the Term Loan Agreement and
any applicable Permitted Senior Secured Note Agreement and execute and deliver
such releases as may be necessary to terminate of record the Collateral Agent's
security interest (for the benefit
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<PAGE>
of the Benefited Parties) in such Collateral and (y) release any Grantor from
its obligations under the U.S. Guaranty which is permitted to be released
pursuant to the Credit Agreement, the Term Loan Agreement and any applicable
Permitted Senior Secured Debt Agreement. In determining whether any such release
is permitted, the Collateral Agent may rely upon instructions from the Required
Banks (as to whether any such release is permitted under the Credit Agreement),
from the Required Term Lenders (as to whether any such release is permitted
under the Term Loan Agreement) and the Required Permitted Creditors under each
Permitted Senior Secured Debt Agreement or group of related Permitted Senior
Secured Debt Agreements (as to whether any such release is permitted under the
applicable Agreement or Agreements). In addition, the Collateral Agent may
release all Collateral upon receipt of (i) written notice from the U.S. Agent
that all Credit Obligations have been paid in full (other than contingent
obligations (A) in respect of Letters of Credit which have been cash
collateralized or otherwise provided for to the satisfaction of the Issuing Bank
(as defined in the Credit Agreement) and (B) arising under provisions of the
Credit Agreement which by their terms survive termination thereof) and all
commitments to create Credit Obligations have been terminated, (ii) written
notice from the Term Agent that all Term Obligations have been paid in full
(other than any Term Obligations arising under provisions of the Term Loan
Agreement which by their terms survive termination thereof), (iii) written
notice from each holder of Hedging Obligations that such Hedging Obligations
have been paid in full or otherwise provided for to the satisfaction of such
holder (it being understood that if the Collateral Agent notifies the Banks, the
Term Lenders and the Permitted Creditors that it intends to release the
Collateral pursuant to this sentence, the Collateral Agent may conclusively
presume that there are no Hedging Obligations other than those of which the
Collateral Agent receives notice not later than the later of five business days
after notice is sent by the Collateral Agent of such intended release and the
business day before the date on which such release occurs), (iv) written notice
from each Permitted Creditor that all Permitted Senior Secured Debt Obligations
owed to such Permitted Creditor have been paid in full (other than any Permitted
Senior Secured Debt Obligations arising under provisions of any Permitted Senior
Secured Debt Document which by their terms survive termination thereof) and (v)
payment of all other Benefited Obligations owed to the Collateral Agent or of
which the Collateral Agent has received written notice.
SECTION 4. APPLICATION OF PROCEEDS.
(a) Any and all Proceeds received by the Collateral Agent in connection
with an Enforcement and any Preferential Payments required to be paid to all
Benefited Parties in accordance with
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the provisions of Section 5 shall be applied promptly by the Collateral Agent,
---------
as follows:
FIRST: To the payment of the reasonable costs and expenses of such
sale, collection or other realization, including fees and expenses of
counsel, and all reasonable expenses, liabilities and advances made or
incurred by the Collateral Agent in connection therewith, and all other
amounts due to the Collateral Agent in its capacity as such;
SECOND: To the ratable payment of the Benefited Obligations then due
and owing to the Benefited Parties (other than Existing Fees and Charges
and New Fees and Charges); provided that with respect to Benefited
--------
Obligations consisting of the undrawn amounts of outstanding Letters of
Credit, payment shall be made to the Collateral Agent, to be retained as
Collateral, for the ratable portion of Benefited Obligations consisting of
such undrawn amounts of outstanding Letters of Credit (it being understood
-------------------
that (i) if any such Letter of Credit is drawn upon, the Collateral Agent
shall pay to the Bank that issued such Letter of Credit the ratable portion
of the amount of cash held as Collateral therefor pursuant to this clause
which is allocable to the amount drawn upon such Letter of Credit and (ii)
if and to the extent that any such Letter of Credit shall expire or
terminate, the amount of cash held as Collateral therefor pursuant to this
clause shall be applied in accordance with this subsection 4(a)),
---------------
calculated in accordance with the provisions of subsection 4(b);
---------------
THIRD: To the ratable payment of the Existing Fees and Charges owed
to the Benefited Parties;
FOURTH: To the ratable payment of the New Fees and Charges owed to
the Benefited Parties; and
FIFTH: After payment in full of all Benefited Obligations, to the
payment to or upon the order of the applicable Grantor, or to whomsoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such Proceeds.
Until such Proceeds are so applied, the Collateral Agent shall hold such
Proceeds in its custody in accordance with its regular procedures for handling
deposited funds.
(b) Payment shall be based upon the proportion which the amount of the
Benefited Obligations of each Benefited Party in the applicable paragraph (FIRST
-----
through FOURTH) of subsection
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14
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4(a) bears to the total amount of all Benefited Obligations of all Benefited
- ----
Parties described in such paragraph.
(c) The amount of Hedging Obligations owed to any Benefited Party shall be
equal to the amount of the Company's obligations then due and payable (including
early termination payments) in respect of all Hedging Transactions with such
Benefited Party and all interest, fees and expenses with respect thereto, after
giving effect to any netting of payments to which the Company is entitled with
respect to such Hedging Transaction vis-a-vis such Benefited Party.
(d) Payments by the Collateral Agent in respect of (i) the Credit
Obligations shall be made to the U.S. Agent for distribution to the Banks in
accordance with the Credit Agreement, (ii) the Term Loan Obligations shall be
made to the Term Agent for distribution to the Term Lenders in accordance with
the Term Loan Agreement, (iii) the Permitted Senior Secured Debt Obligations
shall be made as directed in writing by the Permitted Creditors to whom such
Permitted Senior Secured Debt Obligations are owed or, if applicable, to the
agent for such Permitted Creditors and (iv) the Hedging Obligations shall be
made to the Benefited Party entitled thereto.
SECTION 5. PREFERENTIAL PAYMENTS AND SPECIAL TRUST ACCOUNT; SHARING.
(a) The Collateral Agent shall give each Benefited Party a written notice
(a "Notice of Special Default") promptly, but no later than three business days,
-------------------------
after being notified in writing by a Benefited Party that a Special Event of
Default has occurred. After the receipt of such Notice of Special Default, all
Preferential Payments other than those payments received pursuant to subsection
----------
5(b) shall be deposited into the Special Trust Account. Each Benefited Party
- ----
agrees that no Event of Default shall occur for failure to pay any Benefited
Party as a result of payments so made on a timely basis to the Collateral Agent.
(b) If (i) such Special Event of Default is waived by the Required Banks
and/or the Required Term Lenders and/or the Required Permitted Creditors under
each applicable Permitted Senior Secured Debt Agreement or group of related
Permitted Senior Secured Debt Agreements, as the case may be, and if no other
Event of Default has occurred and is continuing, (ii) such Special Event of
Default is cured by any amendment of the Credit Agreement and/or the Term Loan
Agreement and/or the applicable Permitted Senior Secured Debt Agreements, as the
case may be, and if no other Event of Default has occurred and is continuing or
(iii) no Benefited Obligations have been accelerated and the Majority Benefited
Parties have not instructed the Collateral
15
<PAGE>
Agent to commence Enforcement prior to the 90th day following such Special Event
of Default, the Collateral Agent thereupon shall return all amounts, together
with their pro rata share of interest earned thereon, held in the Special Trust
Account representing payment of any Benefited Obligations to the Benefited Party
initially entitled thereto, and no payments thereafter received by a Benefited
Party shall constitute a Preferential Payment by reason of such cured or waived
Special Event of Default. No payment returned to a Benefited Party for which
such Benefited Party has been obligated to make a deposit into the Special Trust
Account shall thereafter ever be characterized as a Preferential Payment. If the
Special Event of Default is an Event of Default under the terms of more than one
of the Credit Agreement, the Term Loan Agreement and the Permitted Senior
Secured Debt Agreements, the Collateral Agent shall not return any payments to
the Benefited Parties pursuant to clause (i) above unless each of the Required
----------
Banks, the Required Term Lenders and the Required Permitted Creditors under each
applicable Permitted Senior Secured Debt Agreement or group of related Permitted
Senior Secured Debt Agreements, in each case as applicable, have all waived such
Special Event of Default.
(c) Each Benefited Party agrees that upon the occurrence of a Special Event
of Default it shall (i) promptly notify the Collateral Agent of the receipt of
any Preferential Payment, (ii) hold the amount thereof in trust for the
Benefited Parties and act as agent of the Benefited Parties during the time any
such amounts are held by it and (iii) deliver to the Collateral Agent such
amounts for deposit into the Special Trust Account.
(d) If (i) an Event of Default has occurred and has not been waived or
cured within 90 days after the occurrence thereof, (ii) the Benefited
Obligations have been accelerated or (iii) the Majority Benefited Parties have
instructed the Collateral Agent to commence Enforcement, then all funds,
together with interest earned thereon, held in the Special Trust Account and all
subsequent Preferential Payments shall be applied in accordance with the
provisions of subsection 4(a).
---------------
(e) If at any time any Benefited Party shall have received any payment or
distribution (whether voluntary, involuntary, through the exercise of any right
of set-off or otherwise) in excess of the payments or distributions such
Benefited Party would have received through the operation of subsection 4(a),
---------------
such Benefited Party shall hold such excess payment or distribution in trust for
the benefit of the other Benefited Parties and shall promptly pay over such
excess payment or distribution in the form received to the Collateral Agent for
distribution to the Benefited Parties pursuant to subsection 4(a).
---------------
Notwithstanding any contrary provision herein or any termination of this
Agreement, this subsection 5(e) shall survive
---------------
16
<PAGE>
until the Benefited Obligations are paid in full or such earlier time as all
Benefited Parties (or their representatives) have agreed in writing to terminate
this subsection 5(e).
---------------
(f) If any Benefited Party makes any payment to the Collateral Agent for
the benefit of the other Benefited Parties pursuant to subsection 5(e), each
---------------
other Benefited Party shall, upon the request of the Benefited Party that made
such payment (which request must be made to all other Benefited Parties),
transfer to the Benefited Party that made such payment a portion of such other
Benefited Party's claim against the Company equal to the amount such other
Benefited Party received from the Collateral Agent as a result of such payment.
SECTION 6. INFORMATION.
If the Collateral Agent proceeds to enforce any Security Document, the U.S.
Guaranty or the Parent Guaranty or to collect, sell, otherwise dispose of or
take any other action with respect to any of such agreements or the Collateral
or any portion thereof or proposes to take any other action pursuant to or
contemplated by this Agreement, the Benefited Parties agree as follows:
(a) The U.S. Agent shall promptly from time to time, upon the written
request of the Collateral Agent, (i) notify the Collateral Agent of the
outstanding Credit Obligations as at such date as the Collateral Agent may
specify and (ii) notify the Collateral Agent of any payment received by the U.S.
Agent to be applied to satisfy Credit Obligations. The U.S. Agent shall certify
as to such amounts and the Collateral Agent shall be entitled to rely
conclusively upon such certification.
(b) The Term Agent shall promptly from time to time, upon the written
request of the Collateral Agent, (i) notify the Collateral Agent of the
outstanding Term Loan Obligations as at such date as the Collateral Agent may
specify and (ii) notify the Collateral Agent of any payment received by the Term
Agent to be applied to satisfy Term Loan Obligations. The Term Agent shall
certify as to such amounts and the Collateral Agent shall be entitled to rely
conclusively upon such certification.
(c) Each Permitted Creditor (or, if applicable, the agent under any
Permitted Senior Secured Debt Agreement on behalf of all Permitted Creditors
thereunder) shall promptly from time to time, upon the written request of the
Collateral Agent, (i) notify the Collateral Agent of the outstanding Permitted
Senior Secured Debt Obligations owed to such Permitted Creditor (or, if
applicable, all Permitted Creditors under the applicable Permitted Senior
Secured Debt Agreement) as at such date as the Collateral Agent may specify,
(ii) notify the Collateral Agent of
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<PAGE>
the amount that would be payable as a "Make Whole Amount" or similar amount
under the applicable Permitted Senior Secured Debt Agreement if such "Make Whole
Amount" were payable as of the date of such request and (iii) notify the
Collateral Agent of any payment received thereafter by such Permitted Creditor
(or such agent) to be applied to satisfy Permitted Senior Secured Debt
Obligations owing to such Permitted Creditor (or, if applicable, the Permitted
Creditors for which such Person acts as agent). Each Permitted Creditor (or the
agent therefor) shall certify as to such amounts and the Collateral Agent shall
be entitled to rely conclusively upon such certification.
(d) Each Benefited Party which is a party to a Hedging Transaction shall
(i) within 30 days after the commencement of any Enforcement, notify the
Collateral Agent of the existence of such Hedging Obligations (and, if the
Collateral Agent does not receive any such notice within such 30-day period, the
Collateral Agent may conclusively presume that such Hedging Obligations do not
exist (and make distributions pursuant hereto accordingly) until such notice is
received), (ii) promptly from time to time, upon the written request of the
Collateral Agent, notify the Collateral Agent of the notional amount under such
Hedging Transaction and the amount payable upon early termination of such
Hedging Transaction at the date of termination thereof and (iii) notify the
Collateral Agent of any payment received by such Benefited Party to be applied
to amounts due upon early termination of such Hedging Transaction. Such
Benefited Party shall certify as to such amounts and the Collateral Agent shall
be entitled to rely conclusively upon such certification.
SECTION 7. ADDITIONAL BENEFITED PARTIES.
If (a) it is permitted to do so by the terms of the Credit Agreement, the
Term Loan Agreement and the Permitted Senior Secured Debt Agreements and (b) no
Event of Default, or event which, with the giving of notice or the lapse of
time, or both, would become an Event of Default, exists or would result
therefrom, then the Company may enter into one or more Successor Credit
Agreements, Successor Term Loan Agreements or Successor Permitted Senior Secured
Debt Agreements and, pursuant thereto, incur additional Senior Debt. The Senior
Debt outstanding under such Successor Credit Agreements, Successor Term Loan
Agreements or Successor Permitted Senior Secured Debt Agreements, as the case
may be, shall be secured by the Collateral as provided herein and in the
Security Documents and shall be guaranteed pursuant to the U.S. Guaranty and the
Parent Guaranty as provided herein and in the U.S. Guaranty and the Parent
Guaranty, respectively; provided that, at the time the Company enters into any
--------
such Successor Credit Agreement, Successor Term Loan Agreement or Successor
Permitted Senior Secured Debt Agreement, each Successor Bank which is a party to
such Successor Credit Agreement, or the agent on behalf of all such Successor
Banks,
18
<PAGE>
each Successor Term Lender which is a party to such Successor Term Loan
Agreement or the agent on behalf of all such Successor Term Lenders, and each
Successor Permitted Creditor party to such Successor Permitted Senior Secured
Debt Agreement, or the agent on behalf of all such Successor Permitted
Creditors, as the case may be, shall sign an acknowledgment in the form of
Exhibit A, B or C, respectively, attached to this Agreement, by which each such
- ---------- - -
Successor Bank, Successor Term Lender or Successor Permitted Creditor, as the
case may be, agrees to be bound by the terms of this Agreement, and by a signed
acknowledgment thereof executed by the Company and each other Grantor shall be
delivered to the Collateral Agent.
SECTION 8. DISCLAIMERS, INDEMNITY, ETC.
(a) The Collateral Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the Security Documents. The
Collateral Agent shall not by reason of this Agreement, the Security Documents,
the U.S. Guaranty or the Parent Guaranty be a trustee for any Benefited Party or
have any other fiduciary obligation to any Benefited Party (including any
obligation under the Trust Indenture Act of 1939, as amended). The Collateral
Agent shall not be responsible to any Benefited Party for any recitals,
statements, representations or warranties contained in any Financing Agreement
or in any certificate or other document referred to or provided for in, or
received by any of them under, any Financing Agreement, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of any
Financing Agreement or any other document referred to or provided for therein or
any Lien under any of the Security Documents or the U.S. Guaranty or the Parent
Guaranty or the perfection or priority of any such Lien or for any failure by
the Company, any other Grantor, any Benefited Party or any other Person to
perform any of its respective obligations under any Financing Agreement. Without
limiting the foregoing, the Collateral Agent shall not be required to take any
action under any Security Document, the U.S. Guaranty or the Parent Guaranty,
including, without limitation, any action to perfect any security interest
granted in the Collateral pursuant to the Security Documents, or to administer
any Collateral unless instructed to do so by the Majority Benefited Parties.
The Collateral Agent may employ agents and attorneys-in-fact and shall not be
responsible, except as to money or securities received by it or its authorized
agents, for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. Neither the Collateral Agent nor any of
its directors, officers, employees or agents shall be liable or responsible for
any action taken or omitted to be taken by it or them hereunder or in connection
herewith, except for the gross negligence or willful misconduct of such Person.
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<PAGE>
(b) The Collateral Agent shall be entitled to rely upon any certification,
notice or other communication (including any thereof by telephone, telex,
facsimile, telegram or cable) believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons, and
upon advice and statements of independent legal counsel, independent accountants
and other experts selected by the Collateral Agent. As to any matters not
expressly provided for by this Agreement, the Collateral Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder in
accordance with instructions signed by the Majority Benefited Parties, and such
instructions of the Majority Benefited Parties, and any action taken or failure
to act pursuant thereto, shall be binding on all Benefited Parties.
(c) The Benefited Parties agree that they will indemnify the Collateral
Agent, in its capacity as the Collateral Agent, ratably in accordance with the
amount of the Benefited Obligations held by such Benefited Parties at the time
such claim arises, to the extent the Collateral Agent is not reimbursed by the
Grantors under the Security Documents, the U.S. Guaranty or the Parent Guaranty
or reimbursed out of any Proceeds pursuant to clause FIRST of subsection 4(a),
---------------
for any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by or asserted against the
Collateral Agent in any way relating to or arising out of this Agreement or any
of the Security Documents or the U.S. Guaranty or the Parent Guaranty or the
enforcement of any of the terms of any thereof, including fees and expenses of
counsel (including the allocated cost of internal counsel); provided that no
--------
such Benefited Party shall be liable for any such payment to the extent the
obligation to make such payment is found in a final judgment by a court of
competent jurisdiction to have arisen solely from the Collateral Agent's gross
negligence or willful misconduct. The obligations of the Benefited Parties under
this subsection 8(c) shall survive the payment in full of the Benefited
---------------
Obligations and the termination of this Agreement; provided that no Benefited
--------
Party shall be liable for any such payment to the extent that the action or
inaction giving rise to the obligation to make such payment arose more than one
year after the Benefited Obligations of such Benefited Party have been paid in
full.
(d) Except for action expressly required of the Collateral Agent hereunder,
the Collateral Agent shall, notwithstanding subsection 8(c), in all cases be
---------------
fully justified in failing or refusing to act hereunder unless it shall be
further indemnified to its reasonable satisfaction by the Benefited Parties
against any and all liability and expense that may be incurred by it by reason
of taking or continuing to take any such action.
20
<PAGE>
(e) The Collateral Agent may deem and treat the payee of any promissory
note or other evidence of indebtedness or obligation relating to any Benefited
Obligation as the owner thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof, signed by such payee and
in form reasonably satisfactory to the Collateral Agent, shall have been filed
with the Collateral Agent. Any request, authority or consent of any Person who
at the time of making such request or giving such authority or consent is the
holder of any such note or other evidence of indebtedness or obligation shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
note or other evidence of indebtedness or obligation and of any note or notes or
other evidences of indebtedness or obligation issued in exchange therefor.
(f) Except as expressly provided herein, in the Security Documents, in the
U.S. Guaranty and in the Parent Guaranty, the Collateral Agent shall have no
duty to take any affirmative steps with respect to the administration or
collection of amounts payable in respect of the Security Documents or the U.S.
Guaranty or the Parent Guaranty or the Collateral. The Collateral Agent shall
incur no liability (except to the extent the actions or omissions of the
Collateral Agent in connection therewith constitute gross negligence or willful
misconduct) as a result of any sale of any Collateral, whether at any public or
private sale.
(g) The Collateral Agent may resign at any time by giving at least 30 days'
notice thereof to the Company, the U.S. Agent, the Banks, the Term Agent, the
Term Lenders and, if applicable, the Permitted Creditors (such resignation to
take effect upon the acceptance by a successor Collateral Agent of any
appointment as the Collateral Agent hereunder) and the Collateral Agent may be
removed as the Collateral Agent at any time by any of (1) the Required Banks,
(2) the Required Term Lenders or (3) Permitted Creditors holding (or
representing) more than 51% of the outstanding principal amount outstanding
under any Permitted Senior Secured Debt Agreement or group of related Permitted
Senior Secured Debt Agreements. In the event of any such resignation or removal
of the Collateral Agent, the Majority Benefited Parties shall thereupon have the
right (subject, so long as no Event of Default exists, to the consent of the
Company, which shall not be unreasonably withheld or delayed) to appoint a
successor Collateral Agent. If no successor Collateral Agent shall have been so
appointed by the Majority Benefited Parties and shall have accepted such
appointment within 30 days after the notice of the intent of the Collateral
Agent to resign or the removal of the Collateral Agent, then the retiring
Collateral Agent may, on behalf of the Benefited Parties, appoint a successor
Collateral Agent. Any successor Collateral Agent appointed pursuant to this
clause shall be a commercial bank or other financial institution organized under
the laws of the
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United States of America or any state thereof having (1) a combined capital and
surplus of at least $500,000,000 and (2) a rating upon its long-term senior
unsecured indebtedness of "A-2" or better by Moody's Investors Service, Inc. or
"A" or better by Standard & Poor's Ratings Group. Upon the acceptance by a
successor Collateral Agent of any appointment as the Collateral Agent hereunder,
such successor Collateral Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring or removed
Collateral Agent, and the retiring or removed Collateral Agent shall thereupon
be discharged from its duties and obligations hereunder. If no successor
Collateral Agent has accepted appointment as Collateral Agent hereunder by the
date which is 30 days after a retiring Collateral Agent's notice of resignation,
such retiring Collateral Agent's notice of resignation shall nevertheless become
effective and the Benefited Parties shall perform all of the duties of the
Collateral Agent until such time, if any, as the Majority Benefited Parties
appoint a successor Collateral Agent. After any retiring Collateral Agent's
resignation or removal hereunder, the provisions of Sections 3 and 8 shall
---------- -
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was Collateral Agent.
(h) In no event shall the Collateral Agent or any other Benefited Party be
liable or responsible for any funds or investments of funds held by the Company
or any of its Affiliates.
(i) With respect to its share of the Benefited Obligations, BofA and its
Affiliates shall have and may exercise the same rights and powers hereunder as,
and shall be subject to the same obligations and liabilities as and to the
extent set forth herein for, any other Benefited Party, all as if BofA were not
the Collateral Agent. The terms "Benefited Parties", "Banks", "Required Banks",
"Term Lenders", "Required Term Lenders" (and, if applicable, "Permitted
Creditor") or any similar terms shall, unless the context clearly otherwise
indicates, include BofA or any Affiliate of BofA in its individual capacity as a
Benefited Party, Bank, one of the Required Banks, Term Lender or one of the
Required Term Lenders (or, if applicable, one of the Permitted Creditors), as
applicable. BofA and its Affiliates may lend money to, and generally engage in
any kind of business with, any Grantor as if BofA were not acting as the
Collateral Agent and without any duty to account therefor to the Benefited
Parties. Without limiting the foregoing, each Benefited Party acknowledges that
(i) BofA is a Bank and the U.S. Agent under the Existing Credit Agreement, the
Term Agent and a Term Lender under the Existing Term Loan Agreement and the
Collateral Agent under the Security Documents and the U.S. Guaranty and the
Parent Guaranty and (ii) BofA and its Affiliates may continue to engage in any
credit decision with respect to the Credit Agreement, the Term
22
<PAGE>
Loan Agreement or any Hedging Transaction under which BofA or an Affiliate
thereof is a counterparty, in each case without any duty to account therefor to
the other Benefited Parties by reason of its appointment as the Collateral
Agent.
(j) Each party hereto acknowledges that it has, independently and without
reliance upon the Collateral Agent or any other Benefited Party and based upon
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Financing
Agreements to which it is a party. Each party hereto also acknowledges that it
will, independently and without reliance upon the Collateral Agent or any other
Benefited Party and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Financing Agreements to which it is a party.
(k) If, with respect to any proposed action to be taken by it, the
Collateral Agent shall determine in good faith that the provisions of this
Agreement relating to the functions or discretionary powers of the Collateral
Agent are or may be ambiguous or inconsistent, the Collateral Agent shall notify
the Banks, the Term Lenders and the Permitted Creditors identifying the proposed
action and the provisions it considers to be ambiguous or inconsistent, and may
decline either to perform such function or responsibility or to exercise such
discretionary power unless it has received the written confirmation of the
Majority Benefited Parties that the Majority Benefited Parties concur that the
action proposed to be taken by the Collateral Agent is consistent with the terms
of this Agreement or is otherwise appropriate. The Collateral Agent shall be
fully protected in acting or refraining from acting upon the confirmation of the
Majority Benefited Parties in this respect, and such confirmation shall be
binding upon all Benefited Parties, subject to subsection 10(b).
----------------
(l) Each of the Company, Parent and each other Grantor, by its consent
hereto, agrees to pay to the Collateral Agent, from time to time upon demand,
all reasonable fees, costs and expenses of the Collateral Agent (including,
without limitation, the reasonable fees and disbursements of such counsel and
such special counsel as the Collateral Agent elects to retain and the allocated
cost of internal legal services and all disbursements of internal counsel) (a)
arising in connection with the enforcement of any of the provisions of this
Agreement or the other Financing Agreements, (b) incurred or required to be
advanced in connection with the administration of the Collateral, the sale or
other disposition of the Collateral, the enforcement of the U.S. Guaranty, the
enforcement of the Parent Guaranty and the preservation, protection or defense
of the Collateral Agent's rights under this Agreement and the other Financing
Agreements
23
<PAGE>
and in and to the Collateral, or (c) incurred by the Collateral Agent in
connection with the resignation of the Collateral Agent pursuant to subsection
----------
8(g). The obligations of the Company, Parent and each other Grantor under this
- ----
subsection 8(l) shall survive the termination of the other provisions of this
- ---------------
Agreement.
SECTION 9. INVALIDATED PAYMENTS.
If the Collateral Agent or any other Benefited Party receives any amount
pursuant to this Agreement that is subsequently required to be returned or
repaid by the Collateral Agent or such other Benefited Party to the Company,
Parent, any other Grantor or any Affiliate thereof or their respective
representatives or successors in interest, whether by court order, settlement or
otherwise (a "Repayment Event"), then
---------------
(x) if the Repayment Event results in the Collateral Agent being
required to return or repay any amount distributed by it to the other
Benefited Parties under this Agreement, each Benefited Party to which such
amount was distributed shall, forthwith upon its receipt of a notice
thereof from the Collateral Agent, pay the Collateral Agent an amount equal
to its ratable share (based on the amount distributed to such Benefited
Party) of the amount required to be returned or repaid relating to such
Repayment Event,
(y) if the Repayment Event results in any Benefited Party being
required to return or repay any amount received by it for its own account
under this Agreement to the Company, Parent, any other Grantor or any
Affiliate thereof or their respective representatives or successors in
interest (any such Benefited Party, an "Affected Benefited Party"), each
------------------------
other Benefited Party shall, forthwith upon its receipt of a notice thereof
from the Affected Benefited Party, pay the Collateral Agent an amount for
distribution to such Affected Benefited Party such that, after giving
effect to such payment and distribution, all Benefited Parties shall have
received such proportion of the Proceeds as they would have received had
the original payment which gave rise to such Repayment Event not occurred,
and
(z) in either case, the Collateral Agent shall thereafter apply
Proceeds received in a manner consistent with the terms of this Agreement
such that all Benefited Parties receive such proportion of the Proceeds as
they would have received had the original payment which gave rise to such
Repayment Event not occurred;
it being understood that if any Benefited Party shall fail to promptly pay any
- -------------------
such amount to the Collateral Agent, the
24
<PAGE>
Collateral Agent may deduct such amount from any amount payable thereafter to
such Benefited Party under this Agreement.
SECTION 10. MISCELLANEOUS.
(a) All notices and other communications provided for herein shall be in
writing and may be sent by overnight air courier, facsimile communication or
United States mail and shall be deemed to have been given when delivered by
overnight air courier, upon receipt of facsimile communication or four business
days after deposit in the United States mail, registered or certified, with
postage prepaid and properly addressed. For the purposes hereof, the address of
each party hereto (until notice of a change thereof is delivered as provided in
this subsection 10(a)) shall be set forth under such party's name on the
----------------
signature pages (including acknowledgments) hereof.
(b) This Agreement may be amended, modified or waived only by an instrument
or instruments in writing signed by the U.S. Agent (acting on behalf of the
Banks), the Term Agent (acting on behalf of the Term Lenders), all Permitted
Creditors (or any applicable agent on behalf of any group thereof) and the
Collateral Agent.
(c) This Agreement shall be binding upon and inure to the benefit of the
Collateral Agent and each other Benefited Party and their respective successors
and assigns. If the holder of any Benefited Obligations shall transfer such
Benefited Obligations, it shall promptly so advise the Collateral Agent. Each
transferee of any Benefited Obligations shall take such Benefited Obligations
subject to the provisions of this Agreement and to any request made, waiver or
consent given or other action taken or authorized hereunder by each previous
holder of such Benefited Obligations prior to the receipt by the Collateral
Agent of written notice of such transfer; and, except as expressly otherwise
provided in such notice, the Collateral Agent shall be entitled to assume
conclusively that the transferee named in such notice shall thereafter be vested
with all rights and powers as a Benefited Party under this Agreement (and the
Collateral Agent may conclusively assume that no Benefited Obligations have been
subject to any transfer other than transfers of which the Collateral Agent has
received such a notice). Upon the written request of any Benefited Party, the
Collateral Agent will provide such Benefited Party with copies of any written
notices of transfer received pursuant hereto.
(d) This Agreement shall continue to be effective among the Benefited
Parties even though a case or proceeding under any bankruptcy or insolvency law
or any proceeding in the nature of a receivership, whether or not under any
insolvency law, shall be instituted with respect to the Company, Parent or any
other Grantor or any portion of the property or assets of the Company,
25
<PAGE>
Parent or any other Grantor, and all actions taken by the Benefited Parties with
regard to such proceeding shall be by the Majority Benefited Parties; provided,
--------
however, that nothing herein shall be interpreted to preclude any Benefited
- -------
Party from filing a proof of claim with respect to its Benefited Obligations or
from casting its vote, or abstaining from voting, for or against confirmation of
a plan of reorganization in a case of bankruptcy, insolvency or similar law in
its sole discretion.
(e) Each party hereto agrees to do such further acts and things and to
execute and deliver such additional agreements, powers and instruments as the
Collateral Agent or any other Benefited Party may reasonably request to carry
into effect the terms, provisions and purposes of this Agreement or to better
assure and confirm unto the Collateral Agent or such other Benefited Party its
respective rights, powers and remedies hereunder.
(f) This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and any of
the parties hereto may execute this Agreement by signing any such counterpart. A
facsimile of the signature of any party on any counterpart shall be effective as
the signature of the party executing such counterpart for purposes of
effectiveness of this Agreement.
(g) This Agreement shall become effective immediately upon execution by the
Collateral Agent, the U.S. Agent (acting on behalf of the Banks), the Term Agent
(acting on behalf of the Term Lenders) and any applicable then-existing
Permitted Creditors and shall continue in full force and effect until 91 days
following the date upon which all Benefited Obligations are irrevocably paid in
full and all commitments under the Credit Agreement have been terminated.
(h) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE.
(i) Headings of sections of this Agreement have been included herein for
convenience only and should not be considered in interpreting this Agreement.
(j) Nothing in this Agreement, expressed or implied, is intended or shall
be construed to confer upon or give to any Person other than the Benefited
Parties any right, remedy or claim under or by reason of this Agreement or any
covenant, condition or stipulation herein contained.
(k) If any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining
26
<PAGE>
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
(l) Each of the Company, Parent and each other Grantor agrees to promptly
deliver to the Collateral Agent any amendment, modification or supplement to any
Financing Agreement.
(m) EACH OF THE BANKS (BY ITS CONSENT TO THE EXECUTION AND DELIVERY BY THE
U.S. AGENT OF THIS AGREEMENT) AND EACH OF THE TERM LENDERS (BY ITS CONSENT OT
THE EXECUTION AND DELIVERY BY THE TERM AGENT OF THIS AGREEMENT) AND EACH OTHER
BENEFITED PARTY (BY EXECUTING AN ACKNOWLEDGMENT IN THE FORM OF ONE OF THE
EXHIBITS HERETO OR BY ACCEPTING THE BENEFITS HEREOF) WAIVES ANY RIGHT TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT OR ANY OTHER FINANCING AGREEMENT AND ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR THEREWITH, AND AGREES THAT ANY ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
27
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Collateral Agent
By: __________________________________________________
Title: _______________________________________________
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 U.S. Agent
By: __________________________________________________
Title: _______________________________________________
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 Term Agent
By: __________________________________________________
Title: _______________________________________________
Agency Management Services
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Jay McKeown
Telephone: 312/828-7299
Facsimile: 312/974-9102
28
<PAGE>
ACKNOWLEDGMENT OF AND CONSENT AND AGREEMENT
TO INTERCREDITOR AGREEMENT
The undersigned, the Company, Parent and the other Grantors described in
the Intercreditor Agreement set forth above, acknowledge and to the extent
required consent to the terms and conditions thereof. Each of the undersigned
hereby acknowledges and agrees to perform its obligations under subsections 8(l)
and 10(l) of the Intercreditor Agreement and acknowledges and agrees that it is
not a third-party beneficiary of, and has no rights under, the Intercreditor
Agreement (except as otherwise provided in subsection 8(g) thereof).
IN WITNESS WHEREOF, each of the undersigned has caused this Acknowledgment
of and Consent and Agreement to Intercreditor Agreement to be executed by its
duly authorized officer as of September 29, 1998
UNITED RENTALS (NORTH AMERICA), INC.
By: ____________________________________
Title: ________________________________________
UNITED RENTALS, INC.
By: ____________________________________
Title: ________________________________________
<PAGE>
A&A TOOL RENTALS AND SALES, INC.
ACCESS RENTALS, INC.
BNR EQUIPMENT INC.
CORAN ENTERPRISES INCORPORATED
UNITED EQUIPMENT RENTALS OF
HOUSTON, INC.
MERCER EQUIPMENT COMPANY
MISSION VALLEY RENTALS, INC.
NEVADA HIGH REACH EQUIPMENT,
INC.
UNITED RENTALS OF SOUTHERN
CALIFORNIA, INC.
RENTALS UNLIMITED, INCORPORATED
UNITED RENTALS OF COLORADO, INC.
HIGH REACH, INC.
VALLEY RENTALS, INC.
PALMER EQUIPMENT COMPANY
UNITED RENTALS OF UTAH, INC.
MISCO RENTS, INC.
UNITED RENTALS OF MID-ATLANTIC,
INC.
UNITED RENTALS OF NEW YORK, INC.
UNITED RENTALS OF NEW ENGLAND,INC.
YANKEE EQUIPMENT CORPORATION
GRAND VALLEY EQUIPMENT COMPANY, INC.
ADCO EQUIPMENT, INC.
ADCO EQUIPMENT SUPPLY, INC.
KUBOTA OF GRAND RAPIDS, INC.
DEALERS SERVICE CO.
MADISON EQUIPMENT SALES AND RENTAL, INC.
BEAR ASSOCIATES, INC.
UNITED RENTALS OF NEW JERSEY,
INC.
UNITED RENTS, ET. AL., INC.
ANDERSON OREGON RENTAL, INC.
ANDERSON WASHINGTON RENTAL, INC.
ARROW EQUIPMENT COMPANY
GREY FOX EQUIPMENT, INC.
HIGH REACH CO., INC.
INDEPENDENT SCISSOR LIFTS, INC.
INDEPENDENT SCISSOR LIFTS
SOUTHWEST, INC.
LIFT SYSTEMS, INC.
McCLINCH, INC.
McCLINCH LEASING CORPORATION
McCLINCH EQUIPMENT CORPORATION
McCLINCH CRANE SERVICES, INC.
McCLINCH EQUIPMENT SERVICES,
INC.
MID-MOUNTAIN MACHINERY, INC.
-2-
<PAGE>
PAUL E. CARLSON, INC.
PHOENIX RENTAL CORPORATION
POWERS RENTALS & SALES, INC.
RENTAL TOOLS & EQUIPMENT CO.
INTERNATIONAL, INC.
ROSS EQUIPMENT CORPORATION
RYLAN, INC.
SPACE MAKER SYSTEMS OF VA., INC.
UNITED RENTALS OF KENTUCKY, INC.
By: ________________________________________
Name: Michael Nolan
Title: Vice President and
Secretary
-3-
<PAGE>
EXHIBIT A
ACKNOWLEDGMENT
Date: ____________, _______
To: Bank of America National Trust
and Savings Association, as Collateral Agent
Reference is made to the Intercreditor Agreement dated as of September 29,
1998 (as amended, restated or otherwise modified from time to time, the
"Intercreditor Agreement"; capitalized terms not otherwise defined herein have
-----------------------
the respective meanings set forth in the Intercreditor Agreement), among Bank of
America National Trust and Savings Association ("BofA"), as U.S. Agent, BofA, as
----
Term Agent, any other applicable senior secured creditors of United Rentals
(North America), Inc. and BofA, as Collateral Agent.
By executing and delivering this Acknowledgment, the undersigned [agent on
behalf of the Successor Banks which are parties to a Successor Credit Agreement]
[Successor Bank which is a party to a Successor Credit Agreement] hereby agrees
[, on its behalf and on behalf of such Successor Banks,] to be bound by all the
terms and provisions of the Intercreditor Agreement. The address set out under
the signature of the undersigned below shall constitute its address for the
purposes of subsection 10(a) of the Intercreditor Agreement until changed in
accordance therewith.
This Acknowledgment shall be construed in accordance with and governed by
the laws of the State of Illinois applicable to contracts made and to be
performed entirely within such State.
[NAME] [, as Agent]
By________________________,
Name:
Title:
[address]
____________________________
____________________________
-1-
<PAGE>
EXHIBIT B
ACKNOWLEDGMENT
Date: ____________, _______
To: Bank of America National Trust
and Savings Association, as Collateral Agent
Reference is made to the Intercreditor Agreement dated as of September 29,
1998 (as amended, restated or otherwise modified from time to time, the
"Intercreditor Agreement"; capitalized terms not otherwise defined herein have
-----------------------
the respective meanings set forth in the Intercreditor Agreement), among Bank of
America National Trust and Savings Association ("BofA"), as U.S. Agent, BofA, as
----
Term Agent, any other applicable senior secured creditors of United Rentals
(North America), Inc. and BofA, as Collateral Agent.
By executing and delivering this Acknowledgment, the undersigned [agent on
behalf of the Successor Term Lenders which are parties to a Successor Term Loan
Agreement] [Successor Term Lender which is a party to a Successor Term Loan
Agreement] hereby agrees [, on its behalf and on behalf of such Successor Term
Lenders,] to be bound by all the terms and provisions of the Intercreditor
Agreement. The address set out under the signature of the undersigned below
shall constitute its address for the purposes of subsection 10(a) of the
Intercreditor Agreement until changed in accordance therewith.
This Acknowledgment shall be construed in accordance with and governed by
the laws of the State of Illinois applicable to contracts made and to be
performed entirely within such State.
[NAME] [, as Agent]
By________________________,
Name:
Title:
[address]
____________________________
____________________________
-1-
<PAGE>
EXHIBIT C
ACKNOWLEDGMENT
Date: ____________, _______
To: Bank of America National Trust
and Savings Association, as Collateral Agent
Reference is made to the Intercreditor Agreement dated as of September 29,
1998 (as amended, restated or otherwise modified from time to time, the
"Intercreditor Agreement"; capitalized terms not otherwise defined herein have
-----------------------
the respective meanings set forth in the Intercreditor Agreement), among Bank of
America National Trust and Savings Association ("BofA"), as U.S. Agent, BofA, as
----
Term Agent, various other senior secured creditors of United Rentals (North
America), Inc. and BofA, as Collateral Agent.
By executing and delivering this Acknowledgment, the undersigned [agent on
behalf of the Successor Permitted Creditors which are parties to a Successor
Permitted Senior Secured Debt Agreement] [Successor Permitted Creditor which is
a party to a Successor Permitted Senior Secured Debt Agreement] hereby agrees [,
on its behalf and on behalf of such Successor Permitted Creditors,] to be bound
by all the terms and provisions of the Intercreditor Agreement. The address set
out under the signature of the undersigned below shall constitute its address
for the purposes of subsection 10(a) of the Intercreditor Agreement until
changed in accordance therewith.
This Acknowledgment shall be construed in accordance with and governed by
the laws of the State of Illinois applicable to contracts made and to be
performed entirely within such State.
[NAME] [, as Agent]
By________________________,
Name:
Title:
[address]
____________________________
____________________________
-1-
<PAGE>
EXHIBIT L
RESTATED PARENT GUARANTY
THIS RESTATED PARENT GUARANTY dated as of September 29, 1998 is
executed in favor of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
("BofA"), individually and as Agent (as defined below), and the other Benefited
----
Parties (as defined in the Intercreditor Agreement referred to below).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, United Rentals (North America), Inc. (the "Company"), United
-------
Rentals, Inc., United Rentals of Canada, Inc., various financial institutions
(the "Banks"), Bank of America Canada, as Canadian Agent, and BofA, as U.S.
-----
Agent (in such capacity, the "U.S. Agent"), have entered into the Credit
----------
Agreement dated as of September 29, 1998 (as amended, restated or otherwise
modified from time to time, the "Credit Agreement");
----------------
WHEREAS, the Company, various financial institutions (the "Term
----
Lenders") and BofA, as Agent (in such capacity, the "Term Agent"), have entered
- ------- ----------
into the Term Loan Agreement dated as of July 10, 1998 (as amended, restated or
otherwise modified from time to time, the "Term Loan Agreement");
-------------------
WHEREAS, the Company may assume or incur additional Permitted Senior
Secured Debt (as defined in the Intercreditor Agreement referred to below);
WHEREAS, certain creditors of the Company have entered into an
Intercreditor Agreement dated as of the date hereof (as amended, restated or
otherwise modified from time to time, the "Intercreditor Agreement") pursuant to
-----------------------
which the Company, the undersigned, various subsidiaries of the Company, the
U.S. Agent, the Term Agent, various other Benefited Parties and BofA, as
collateral agent (in such capacity, together with any successor in such
capacity, the "Agent"), have agreed that (i) the Credit Obligations (as defined
-----
in the Intercreditor Agreement), the Term Obligations (as defined in the
Intercreditor Agreement), the Permitted Senior Secured Debt Obligations (as
defined in the Intercreditor Agreement) and the Hedging Obligations (as defined
in the Intercreditor Agreement) shall be secured and guaranteed pari passu and
(ii) BofA shall act as collateral agent for the holders of the Benefited
Obligations (as defined in the Intercreditor Agreement);
WHEREAS, the Company is a wholly-owned subsidiary of the undersigned
and the undersigned has agreed to guaranty the Liabilities (as defined below) as
hereinafter set forth;
<PAGE>
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, 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 Intercreditor Agreement.
2. Guaranty. The undersigned hereby 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
Benefited Obligations, in each case howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due, in each case as the same may be amended, modified,
extended or renewed from time to time (all such obligations being herein
collectively called the "Liabilities").
The undersigned agrees that upon the occurrence of any Event of
Default (as defined in the Credit Agreement) under Section 12.1.4 of the Credit
Agreement or any Event of Default (as defined in the Term Loan Agreement) under
Section 12.1.4 of the Term Loan Agreement or any "Event of Default" (or the
equivalent thereof as defined in any Permitted Senior Secured Debt Agreement)
under any substantially similar section of any Permitted Senior Secured Debt
Agreement, and if such event shall occur at a time when any of the Liabilities
may not then be due and payable, the undersigned will pay to the Agent for the
account of the Benefited Parties forthwith the full amount which would be
payable hereunder by the undersigned if all Liabilities were then due and
payable.
To secure all obligations of the undersigned hereunder, the Agent and
each other Benefited Party 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 the undersigned hereunder,
appropriate and apply toward the payment of such amount, in such order of
application as the Agent or the other Benefited Parties may elect (in accordance
with the Intercreditor Agreement, if then in effect)), any and all balances,
credits, deposits, accounts or moneys of or in the name of the undersigned now
or hereafter with the Agent or such other Benefited Party and any and all
property of every kind or description of or in the name of the undersigned now
or hereafter, for any reason or purpose whatsoever, in the possession or control
of, or in transit to, the Agent or such other Benefited Party or any agent or
bailee for the Agent or such other Benefited Party.
This Guaranty shall in all respects be a continuing, irrevocable,
absolute and unconditional guaranty of payment and
2
<PAGE>
performance and not only collectibility, and shall remain in full force and
effect (notwithstanding, without limitation, that at any time or from time to
time no Liabilities are outstanding or any other circumstance) until all
Commitments (as defined in the Credit Agreement) have terminated and all
Liabilities have been paid in full (subject to reinstatement as provided in the
immediately following paragraph).
The undersigned further agrees that if at any time all or any part of
any payment theretofore applied by the Agent or any other Benefited Party to any
of the Liabilities is or must be rescinded or returned by the Agent or such
other Benefited Party for any reason whatsoever (including, without limitation,
the insolvency, bankruptcy or reorganization of the Company or any other
Grantor), 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
other Benefited Party, and (notwithstanding anything herein to the contrary)
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
other Benefited Party had not been made.
The Agent or any other Benefited Party may, from time to time, at its
sole discretion and without notice to the undersigned, 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 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 for payment of any of the Liabilities when
due, whether or not the Agent or such other Benefited Party shall have resorted
to any property securing any of the Liabilities or any obligation hereunder or
shall have proceeded against any other Grantor or any other obligor primarily or
secondarily obligated with respect to any of the Liabilities.
3
<PAGE>
Any amounts received by the Agent or any other Benefited Party from
whatever source on account of the Liabilities may be applied by it toward the
payment of the Liabilities in accordance with the Intercreditor Agreement, if
then in effect; and, notwithstanding any payments made by or for the account of
the undersigned pursuant to this Guaranty, the undersigned shall not be
subrogated to any rights of the Agent or any other Benefited Party until such
time as this Guaranty shall have been discontinued and the Agent and the other
Benefited Parties shall have received payment of the full amount of all
Liabilities.
The undersigned hereby expressly waives: (a) notice of the acceptance
by the Agent or any other Benefited Party 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.
The undersigned further agrees to pay all expenses (including
reasonable attorneys' fees and legal expenses) paid or incurred by the Agent or
any other Benefited Party in endeavoring to collect the Liabilities, or any part
thereof, and in enforcing this Guaranty against the undersigned.
The creation or existence from time to time of additional Liabilities
to the Agent or the other Benefited Parties or any of them is hereby authorized,
without notice to the undersigned, and shall in no way affect or impair the
rights of the Agent or the other Benefited Parties or the obligations of the
undersigned under this Guaranty.
The Agent and any other Benefited Party may from time to time, without
notice to the undersigned, 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 Liabilities, be entitled to the benefits of this Guaranty to
the same extent as if such assignee or transferee were a Benefited Party.
No delay on the part of the Agent or any other Benefited Party 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 other Benefited Party of any right or
remedy shall preclude any other or further exercise thereof or the exercise of
any
4
<PAGE>
other right or remedy; nor shall any modification or waiver of any provision of
this Guaranty be binding upon the Agent or any other Benefited Party 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 Majority Benefited Parties).
No action of the Agent or any other Benefited Party permitted hereunder shall in
any way affect or impair the rights of the Agent or any other Benefited Party 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 other Benefited Party arising under or in connection with any Financing
Agreement, 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.
This Guaranty has been delivered to the Agent and the Agent has been
authorized to enforce this Guaranty on behalf of itself and each of the other
Benefited Parties. All payments by the undersigned pursuant to this Guaranty
shall be made to the Agent for application as set forth in the Intercreditor
Agreement or, if there is no Agent, to the Benefited Parties 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, any other
Grantor or the undersigned is either a partnership or a corporation, all
references herein to the Company, such other Grantor and the undersigned,
respectively, shall be deemed to include any successor or successors, whether
immediate or remote, to such partnership or corporation.
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 is secured pursuant to a Second Restated Security
Agreement and a Restated Parent Pledge Agreement, each dated as of even date
herewith (in each case 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).
5
<PAGE>
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS GUARANTY OR ANY OTHER FINANCING AGREEMENT, 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 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. 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 BENEFITED PARTIES AS ITS ADDRESS FOR NOTICES HEREUNDER) OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. 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
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, THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES
SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY AND THE OTHER
FINANCING AGREEMENTS.
THE UNDERSIGNED, AND (BY ACCEPTING THE BENEFITS HEREOF) EACH OF THE
AGENT AND EACH OTHER BENEFITED PARTY, 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 FINANCING AGREEMENT 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.
6
<PAGE>
IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered
as of the day and year first above written.
UNITED RENTALS, INC.
By:_____________________________
Name:
Title:
7
<PAGE>
SCHEDULE I
TO GUARANTY
ADDRESS
-------
Four Greenwich Office Park
Greenwich, CT 06830
Attention: Chief Financial Officer
Facsimile: 203-622-6080
<PAGE>
EXHIBIT M
RESTATED PARENT PLEDGE AGREEMENT
THIS RESTATED PARENT PLEDGE AGREEMENT (this "Agreement") dated as of
---------
September 29, 1998 is between UNITED RENTALS, INC., a Delaware corporation (the
"Pledgor"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"),
------- ----
as Agent (as defined below) for the Benefited Parties (as defined in the
Intercreditor Agreement referred to below).
W I T N E S E T H:
- - - - - - - - - -
WHEREAS, United Rentals (North America), Inc. (the "Company"), the Pledgor,
-------
United Rentals of Canada, Inc., various financial institutions (the "Banks"),
-----
Bank of America Canada, as Canadian Agent, and BofA, as U.S. Agent (in such
capacity, the "U.S. Agent"), have entered into the Credit Agreement dated as of
----------
September 29, 1998 (as amended, restated or otherwise modified from time to
time, the "Credit Agreement");
----------------
WHEREAS, the Company, various financial institutions (the "Term Lenders")
------------
and BofA, as Agent (in such capacity, the "Term Agent"), have entered into the
----------
Term Loan Agreement dated as of July 10, 1998 (as amended, restated or otherwise
modified from time to time, the "Term Loan Agreement");
-------------------
WHEREAS, the Company may assume or incur additional Permitted Senior
Secured Debt (as defined in the Intercreditor Agreement referred to below);
WHEREAS, certain creditors of the Company have entered into an
Intercreditor Agreement dated as of the date hereof (as amended, restated or
otherwise modified from time to time, the "Intercreditor Agreement") pursuant to
-----------------------
which the Company, the Pledgor, various subsidiaries of the Company, the U.S.
Agent, the Term Agent, various other Benefited Parties and BofA, as collateral
agent, have agreed that (i) the Credit Obligations (as defined in the
Intercreditor Agreement), the Term Obligations (as defined in the Intercreditor
Agreement), the Permitted Senior Secured Debt Obligations (as defined in the
Intercreditor Agreement) and the Hedging Obligations (as defined in the
Intercreditor Agreement) shall be secured pari passu and (ii) BofA shall act as
collateral agent for the holders of the Benefited Obligations (as defined in the
Intercreditor Agreement);
WHEREAS, the Company is a wholly-owned subsidiary of the Pledgor and the
Pledgor has executed and delivered a guaranty (the "Guaranty") of the Benefited
--------
Obligations; and
<PAGE>
WHEREAS, the obligations of the Pledgor 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) capitalized terms used but not
-----------
defined herein have the meanings assigned to such terms in the Intercreditor
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 means BofA in its capacity as "Collateral Agent" under and as
-----
defined in the Intercreditor Agreement, together with any successor thereto
in such capacity.
Agreement - see the introductory paragraph.
---------
Banks - see the recitals.
-----
Benefited Parties - see the introductory paragraph.
-----------------
BofA - see the introductory paragraph.
----
Collateral - see Section 2.
---------- ---------
Company - see the recitals.
-------
Credit Agreement - see the recitals.
----------------
Default means the occurrence of any of the following events: (i) with
-------
respect to the Credit Agreement, (x) any Unmatured Event of Default with
respect to the Company under Section 12.1.4 thereof or (y) any Event of
Default, or (ii) with respect to the Term Loan Agreement, (x) any Unmatured
Event of Default with respect to the Company under Section 12.1.4 thereof
or (y) any Event of Default, (iii) any Event of Default under any Permitted
Senior Secured Debt Agreement or (iv) any warranty of the Pledgor herein is
untrue or misleading in any material respect and, as a result thereof, the
Agent's security interest for the benefit of the Benefited Parties in any
material portion of the Collateral is not perfected or the Agent's rights
and remedies with respect to any material portion of the Collateral is
materially impaired or otherwise materially adversely affected.
Event of Default means, with respect to each of the Credit Agreement,
----------------
the Term Loan Agreement and any Permitted Senior Secured Debt Agreement, an
"Event of Default" as defined in such agreement.
2
<PAGE>
Guaranty - see the recitals.
--------
Intercreditor Agreement - see the recitals.
-----------------------
Issuer means the issuer of any of the shares of stock or other
------
securities representing all or any of the Collateral.
Liabilities means all Benefited Obligations.
-----------
Permitted Senior Secured Debt - see the recitals.
-----------------------------
Permitted Senior Secured Debt Obligations - see the recitals.
-----------------------------------------
Pledgor - see the introductory paragraph.
-------
Term Agent - see the recitals.
----------
Term Lenders - see the recitals.
------------
Term Loan Agreement - see the recitals.
-------------------
Unmatured Event of Default means, with respect to each of the Credit
--------------------------
Agreement, the Term Loan Agreement and any Permitted Senior Secured Debt
Agreement, an "Unmatured Event of Default" (or the equivalent thereof) as
defined in such agreement.
U.S. Agent - see the recitals.
----------
2. Pledge. As security for the payment of all Liabilities, the Pledgor
------
hereby pledges to the Agent for the benefit of the Benefited Parties, and grants
to the Agent for the benefit of the Benefited Parties 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 all cash, securities, dividends, rights and other property
3
<PAGE>
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 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 Agent, promptly upon receipt and in
due form for transfer (i.e., endorsed in blank or accompanied by undated stock
or bond powers executed in blank), any Collateral (other than dividends which
the Pledgor 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 Agent, such
Collateral shall be held by the Pledgor separate and apart from its other
property and in express trust for the Agent for the benefit of the Benefited
Parties.
3. Warranties; Further Assurances. The Pledgor warrants to the Agent for
------------------------------
the benefit of each Benefited Party 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 Agent for the benefit of the
Benefited Parties; (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.
So long as any of the Liabilities shall be outstanding or any commitment
shall exist on the part of any Benefited Party with respect to the creation of
any Liabilities, the Pledgor (i)
4
<PAGE>
shall not, except 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 other Benefited Party such information concerning
the Collateral as the Agent or such other Benefited Party may from time to time
reasonably request, and will permit the Agent or any other Benefited Party or
any designee of the Agent or any other Benefited Party, 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 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
Pledgor, 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 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 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
<PAGE>
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 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,
the Term Loan Agreement and any Permitted Senior Secured Debt 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 Pledgor, shall be forthwith
delivered to the Agent in due form for transfer (i.e., endorsed in blank or
accompanied by undated stock or 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 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 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
6
<PAGE>
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 Pledgor 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 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 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 Pledgor 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 Pledgor agrees that such
7
<PAGE>
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 Pledgor 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 Pledgor 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 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 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 Pledgor and all rights, powers and remedies of the
Agent and the other Benefited Parties 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 Pledgor and the Agent and their
respective successors and assigns, and shall
8
<PAGE>
inure to the benefit of the Pledgor 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 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 FINANCING AGREEMENT, 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 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 UNDER ITS SIGNATURE HERETO, 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 FINANCING
AGREEMENTS.
EACH OF THE PLEDGOR, THE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF) EACH
OTHER BENEFITED PARTY 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
FINANCING AGREEMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
9
<PAGE>
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.
10
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as
of the day and year first written above.
UNITED RENTALS, INC.
By:_____________________________
Chief Financial Officer
Address:
Four Greenwich Office Park
Greenwich, CT 06830
Attention: Chief Financial
Officer
Facsimile: 203-622-6080
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Collateral Agent
By:__________________________
Title:_______________________
Address:
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Service Industries
Group
Facsimile: (312) 828-1974
11
<PAGE>
SCHEDULE I
TO
PARENT PLEDGE AGREEMENT
STOCK
-----
<TABLE>
<CAPTION>
Pledged Shares
No. of as of % of Total Total Shares of
Certificate Pledged Shares Issued Issuer
Issuer No. Shares and Outstanding Outstanding
- ------ ----------- ------- ----------------- ---------------
<S> <C> <C> <C> <C>
United Rentals (North America), Inc. 2 1,000 100% 1,000
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT N
FORM OF
REQUEST FOR INCREASE IN AGGREGATE COMMITMENT
___________________________, 1998
Bank of America National Trust and
Savings Association, as U.S.
Agent under the Credit Agreement
referred to below
231 South LaSalle Street
Chicago, Illinois 60697
Attn: Jay McKeown
Ladies/Gentlemen:
Please refer to the Credit Agreement dated as of September 29, 1998 (as
amended or otherwise modified from time to time, the "Credit Agreement") among
----------------
United Rentals (North America), Inc. (the "Company"), 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. Capitalized terms used but not defined herein have
the respective meanings set forth in the Credit Agreement.
In accordance with Section 6.1.2 of the Credit Agreement, the Company
hereby requests an increase in the Aggregate Commitment from U.S.$__________ to
U.S.$__________. Such increase shall be made by [increasing the Commitment of
____________ from U.S.$________ to U.S.$________] [adding _____________ as a
U.S. Bank under the Credit Agreement with a Commitment of U.S.$____________] as
set forth in the letter attached hereto. Such increase shall be effective three
Business Days after the date that the U.S. Agent accepts the letter attached
hereto or such other date as is agreed among the Company, the U.S. Agent and the
[increasing] [new] U.S. Bank.
Very truly yours,
UNITED RENTALS (NORTH AMERICA), INC.
By:____________________________
Title:_________________________
<PAGE>
ANNEX I TO EXHIBIT N
[Date]
Bank of America National Trust
and Savings Association,
as U.S. Agent
231 South LaSalle Street
Chicago, Illinois 60697
Attn: Jay McKeown
Ladies/Gentlemen:
Please refer to the letter dated ________, 1998 from United Rentals (North
America), Inc. (the "Company") requesting an increase in the Aggregate
-------
Commitment from U.S.$__________ to U.S.$__________ pursuant to Section 6.1.2 of
the Credit Agreement dated as of September 29, 1998 (the "Credit Agreement")
----------------
among the Company, United Rentals, Inc., United Rentals of Canada, Inc., various
financial institutions (including the undersigned U.S. Bank), 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 defined herein have
the respective meanings set forth in the Credit Agreement.
The undersigned hereby confirms that it has agreed to increase its
Commitment under the Credit Agreement from U.S.$__________ to U.S.$__________
effective on the date which is three Business Days after the acceptance hereof
by the U.S. Agent or on such other date as may be agreed among the Company, the
U.S. Agent and the undersigned.
Very truly yours,
[NAME OF INCREASING U.S. BANK]
By:_________________________
Title:______________________
Accepted as of
_________, ____
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as U.S. Agent
By:___________________________
Title:________________________
<PAGE>
ANNEX II TO EXHIBIT N
[Date]
Bank of America National Trust
and Savings Association,
as U.S. Agent
231 South LaSalle Street
Chicago, Illinois 60697
Attn: Jay McKeown
Ladies/Gentlemen:
Please refer to the letter dated ________, 1998 from United Rentals (North
America), Inc. (the "Company") requesting an increase in the Aggregate
-------
Commitment from U.S.$__________ to U.S.$__________ pursuant to Section 6.1.2 of
the Credit Agreement dated as of September ___, 1998 (the "Credit Agreement")
----------------
among the Company, 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. Capitalized
terms used but not defined herein have the respective meanings set forth in the
Credit Agreement.
The undersigned hereby confirms that it has agreed to become a U.S. Bank
under the Credit Agreement with a commitment of U.S.$__________ effective on the
date which is three Business Days after the acceptance hereof, and consent
hereto, by the U.S. Agent or on such other date as may be agreed among the
Company, the U.S. Agent and the undersigned.
The undersigned (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements delivered by Parent pursuant to the Credit
Agreement, and such other documents and information as it has deemed appropriate
to make its own credit and legal analysis and decision to become a U.S. Bank
under the Credit Agreement; and (b) agrees that it will, independently and
without reliance upon the U.S. Agent, the Canadian Agent or any other Bank and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit and legal decisions in taking or not
taking action under the Credit Agreement.
The undersigned represents and warrants that (i) it is duly organized and
existing and it has full power and authority to take, and has taken, all action
necessary to execute and deliver this letter and to become a U.S. Bank under the
Credit Agreement; and (ii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
<PAGE>
for its due execution and delivery of this letter and the performance of its
obligations as a U.S. Bank under the Credit Agreement.
The undersigned agrees to execute and deliver such other instruments, and
take such other actions, as the U.S. Agent may reasonably request in connection
with the transactions contemplated by this letter.
The following administrative details apply to the undersigned:
(A) Notice Address:
Legal name: __________________________
Address: _______________________________
_______________________________
_______________________________
Attention: _____________________________
Telephone: (___) _______________________
Facsimile: (___) ______________________
(B) Payment Instructions:
Account No.: ___________________________
At: ___________________________
___________________________
___________________________
Reference: ___________________________
Attention: ___________________________
The undersigned acknowledges and agrees that, on the date on which the
undersigned becomes a U.S. Bank under the Credit Agreement as set forth in the
second paragraph hereof, the undersigned will be bound by the terms of the
Credit Agreement as fully and to the same extent as if the undersigned were an
original U.S. Bank under the Credit Agreement.
Very truly yours,
[NAME OF NEW U.S. BANK]
By:_________________________
Title:______________________
Accepted and consented to as of
_________, 1998
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as U.S. Agent
By:___________________________________
<PAGE>
FIRST AMENDMENT TO TERM LOAN AGREEMENT
--------------------------------------
THIS FIRST AMENDMENT TO TERM LOAN AGREEMENT dated as of September 29, 1998
(this "Amendment") amends the Term Loan Agreement dated as of July 10, 1998 (the
"Term Loan Agreement") among United Rentals (North America), Inc. (formerly
known as United Rentals, Inc., the "Company"), various financial institutions
and Bank of America National Trust and Savings Association, as Agent (the
"Agent"). Terms defined in the Term Loan Agreement are, unless otherwise
defined herein or the context otherwise requires, used herein as defined
therein.
WHEREAS, the parties hereto desire to amend the Term Loan Agreement as set
forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1 Amendments. Effective on (and subject to the occurrence of) the
----------
Amendment Effective Date (as defined below), the Term Loan Agreement shall be
amended in accordance with Sections 1.1 through 1.13 below.
------------ ----
1.1 Amendment to Preamble. The preamble to the Term Loan Agreement is
---------------------
amended by adding the following immediately after the phrase "a Delaware
corporation" therein: "("Parent"), United Rentals (North America), Inc., a
------
Delaware corporation".
1.2 Amendment to Section 1.1. Section 1.1 is amended in its entirety to
------------------------
read as set forth on Schedule I hereto.
----------
1.3 Amendment to Section 9.17. Section 9.17 is amended by deleting the
-------------------------
words "the Senior Subordinated Indenture" therein and substituting the words
"each Subordinated Note Indenture" therefor.
1.4 Amendment to Section 10. Section 10 is amended in its entirety to
-----------------------
read as set forth on Schedule II hereto.
-----------
1.5 Amendment to Section 12.1.2. Section 12.1.2 is amended by (i)
---------------------------
deleting the amount "U.S.$5,000,000" therein and substituting the amount
"U.S.$15,000,000" therefor, (ii) deleting the amount "U.S.$10,000,000" therein
and substituting the amount "U.S.$15,000,000" therefor and (iii) deleting each
reference to "the Company" therein and substituting the word "Parent" therefor.
1.6 Amendment to Section 12.1.4. Section 12.1.4 is amended by adding the
---------------------------
words "an order for relief is entered," immediately before the words "it is
consented to or acquiesced in by Parent or such Subsidiary" therein.
<PAGE>
1.7 Amendment to Sections 12.1.7 and 12.1.8. Each of Section 12.1.7 and
---------------------------------------
12.1.8 is amended by deleting the amount "U.S.$5,000,000" therein and
substituting the amount "U.S.$15,000,000" therefor.
1.8 Amendment to Section 12.1.10. Section 12.1.10 is amended by adding
----------------------------
the reference "Parent," immediately before each of the references to "the
Company" therein.
1.9 Amendment to Section 12.1.11. Section 12.1.11 is amended by (i)
----------------------------
deleting the words "the executive managers of the Company as of the Closing
Date" therein and substituting the words "Permitted Holders" therefor, (ii)
deleting the reference to "25%" therein and substituting "30%" therefor and
(iii) deleting the reference to "the Senior Subordinated Indenture" therein and
substituting the words "either Subordinated Note Indenture or any document
evidencing or governing any Permitted Senior Secured Debt" therefor.
1.10 Addition of Parent as a Party. Parent is added as a party to the
-----------------------------
Term Loan Agreement and shall have all duties and responsibilities of the
"Parent" thereunder.
1.11 Amendment of Schedules 9.6, 9.8 and 9.15. Schedules 9.6, 9.8 and
----------------------------------------
9.15 to the Term Loan Agreement are amended in their entirety by substituting
Schedules 9.6, 9.8 and 9.15 hereto therefor.
- ------------------ ----
1.12 Amendment of Exhibits C, D, E, F and I. Exhibits C, D, E, F and I to
--------------------------------------
the Term Loan Agreement are amended in their entirety by substituting Exhibits
--------
C, D, E, F and I hereto therefor, respectively.
- ---------- -
1.13 Addition of Exhibits K and L. Exhibits K and L hereto are added to
---------------------------- ---------- -
the Term Loan Agreement as Exhibits K and L thereto, respectively.
SECTION 2 Authorization of Intercreditor Agreement. The Required Lenders
----------------------------------------
hereby authorize the Agent and BofA, in its capacity as Collateral Agent (in
such capacity, the "Collateral Agent"), to execute and deliver an Intercreditor
Agreement substantially in the form of Exhibit I.
---------
SECTION 3 Representations and Warranties. Parent and the Company
------------------------------
represent and warrant to the Agent and the Lenders that (a) each of the
representations and warranties made by Parent in Section 9 of the Term Loan
Agreement, as amended hereby (as so amended, the "Amended Agreement"), is true
and correct as of the date hereof, with the same effect as if made on such date,
(b) the execution and delivery hereof by Parent and the Company, and the
performance by Parent and the Company of their respective obligations under the
Amended Agreement and each other Loan Document to which such entity is a party,
(i) are within the powers of Parent and the Company, (ii) have been duly
authorized by all necessary corporate action on the part of Parent and the
Company, (iii) have received all necessary governmental approvals and (iv) do
not and will not contravene or conflict with (A) any provision of law or the
certificate of incorporation or by-laws or other
2
<PAGE>
organizational documents of Parent or the Company or (B) any agreement,
judgment, injunction, order, decree or other instrument binding upon Parent, the
Company or any of the Subsidiaries of the Company, (c) the Amended Agreement and
each other Loan Document to which Parent or the Company is a party is the legal,
valid and binding obligation of Parent and the Company (as applicable),
enforceable against Parent and the Company (as applicable) in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency or
other similar laws of general application affecting the enforcement of
creditors' rights or by general principles of equity limiting the availability
of equitable remedies, (d) no Event of Default or Unmatured Event of Default has
occurred or is continuing and (e) the obligations of the Company under the
Amended Agreement constitute "Senior Indebtedness" as such term is defined in
each Subordinated Note Indenture.
SECTION 4 Effectiveness. The amendments set forth in Section 1 above
------------- ---------
shall become effective on the date (the "Amendment Effective Date") when the
Agent shall have received (a) for the account of each Lender which delivers to
the Agent an executed signature page hereto not later than 5:00 p.m. (Chicago
time) on September 25, 1998, the amendment fee in the amount previously agreed
to between the Company and such Lender and all amounts which are then due and
payable (to the extent billed) pursuant to Section 5.3, (b) evidence, reasonably
-----------
satisfactory to the Agent that (i) the U.S. Rentals Acquisition (as defined in
the Amended Agreement) has been consummated in accordance with the terms of the
USR Merger Agreement (as defined in the Amended Agreement), (ii) each of the
Existing U.S. Rentals Agreement (as defined in the Amended Agreement) and the
Credit Agreement (as defined in the Term Loan Agreement prior to giving effect
hereto) has been (or on the Amendment Effective Date will be) terminated and all
obligations (other than contingent indemnity obligations) of U.S. Rentals (as
defined in the Amended Agreement) under the Existing U.S. Rentals Agreement (as
defined in the Amended Agreement) and of the Company and United Rentals of
Canada, Inc. under the Credit Agreement (as defined in the Term Loan Agreement
prior to giving effect hereto) have been (or on the Amendment Effective Date
will be) paid in full, (iii) except for any Senior Note (as defined in the
Amended Agreement) held by a financial institution which has executed and
delivered a Senior Note Purchase Agreement Amendment (as defined in the Amended
Agreement) which has become effective, all indebtedness under the Senior Notes
has been (or on the Amendment Effective Date will be) paid in full and (iv) the
Credit Agreement (as defined in the Amended Agreement) has become effective and
(c) all of the following, in form and substance satisfactory to the Agent:
(i) Counterparts hereof executed by the Company, Parent, the Required
Lenders and the Agent.
(ii) Certified copies of resolutions of the Board of Directors of the
Company authorizing or ratifying the execution and delivery by the Company of
this Amendment and the performance by the Company of its obligations under the
Amended Agreement; and certified copies of resolutions of the Board of Directors
of Parent authorizing or ratifying the execution and delivery by Parent of this
Amendment and the performance by Parent of its obligations under the Amended
Agreement.
3
<PAGE>
(iii) A certificate of the Secretary or an Assistant Secretary of each of
Parent and the Company certifying the names of the officer or officers of such
entity authorized to sign this Amendment, together with a sample of the true
signature of each such officer.
(iv) A Second Restated U.S. Guaranty, substantially in the form of
Exhibit C, executed by each U.S. Subsidiary of the Company.
- ----------
(v) A Second Restated U.S. Security Agreement, substantially in the
form of Exhibit D, executed by Parent, the Company, each U.S. Subsidiary of the
---------
Company and the Collateral Agent.
(vi) A Second Restated Company Pledge Agreement, substantially in the
form of Exhibit E, executed by the Company and the Collateral Agent.
---------
(vii) A Restated Parent Guaranty, substantially in the form of Exhibit K,
---------
executed by Parent.
(viii) A Restated Parent Pledge Agreement, substantially in the form of
Exhibit L, executed by Parent and the Collateral Agent.
- ---------
(ix) The opinions of (a) Weil, Gotshal & Manges LLP, special counsel to
the Company, and (b) Oscar D. Folger, counsel to the Company.
(x) An Intercreditor Agreement, substantially in the form of Exhibit I,
---------
executed by all holders of the Senior Notes (other than the holder of any Senior
Note which is being repaid on the Amendment Effective Date), BofA, as Agent,
BofA, as U.S. Agent for the banks under the Credit Agreement, and BofA, as
Collateral Agent.
SECTION 5 Miscellaneous.
-------------
5.1 Continuing Effectiveness, etc. As herein amended, the Term Loan
------------------------------
Agreement shall remain in full force and effect and is hereby ratified and
confirmed in all respects. After the Amendment Effective Date, all references
in the Term Loan Agreement and the other Loan Documents to the "Term Loan
Agreement" or similar terms shall refer to the Amended Agreement.
5.2 Counterparts. This Amendment may be executed in any number of
------------
counterparts and by the different parties 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.
5.3 Expenses. The Company agrees to pay all reasonable expenses of the
--------
Agent, including reasonable fees and charges of counsel for the Agent, in
connection with the preparation, execution and delivery of this Amendment.
4
<PAGE>
5.4 Governing Law. This Amendment shall be construed in accordance with
-------------
and governed by the substantive laws of the State of Illinois applicable to
contracts made and to be performed entirely within such State.
5.5 Successors and Assigns. This Amendment shall be binding upon Parent,
----------------------
the Company, the Lenders and the Agent and their respective successors and
assigns, and shall inure to the benefit of Parent, the Company, the Lenders and
the Agent and the respective successors and assigns of the Lenders and the
Agent.
Delivered at Chicago, Illinois, as of the day and year first above written.
UNITED RENTALS (NORTH AMERICA), INC.
By_______________________________________
Title____________________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By_______________________________________
Title____________________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By_______________________________________
Title____________________________________
ALLSTATE INSURANCE COMPANY
By_______________________________________
Title____________________________________
By_______________________________________
Title____________________________________
S-1
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY
By______________________________________
Title___________________________________
By______________________________________
Title___________________________________
BANKBOSTON, N.A.
By______________________________________
Title___________________________________
THE BANK OF NEW YORK
By______________________________________
Title___________________________________
THE BANK OF NOVA SCOTIA
By______________________________________
Title___________________________________
COMERICA BANK
By______________________________________
Title___________________________________
CREDIT LYONNAIS NEW YORK BRANCH
By______________________________________
Title___________________________________
S-2
<PAGE>
CYPRESSTREE INVESTMENT MANAGEMENT
COMPANY, INC.
As: Attorney-in-Fact and on behalf of First
Allmerica
Financial Life Insurance Company as Portfolio
Manager
By___________________________________________
Title________________________________________
CYPRESSTREE INVESTMENT FUND, LLC
By: CypressTree Investment Management Company,
Inc., its Managing Member
By___________________________________________
Title________________________________________
KZH CYPRESSTREE-1 LLC
By___________________________________________
Title________________________________________
CYPRESSTREE BOSTON PARTNERS
By___________________________________________
Title________________________________________
DEUTSCHE BANK AG, New York Branch and/or
Cayman Islands Branch
By___________________________________________
Title________________________________________
THE FIRST NATIONAL BANK OF MARYLAND
S-3
<PAGE>
By________________________________________
Title_____________________________________
KZH CNC LLC
By________________________________________
Title_____________________________________
KZH ING-2 LLC
By________________________________________
Title_____________________________________
MERRILL LYNCH SENIOR
FLOATING RATE FUND, INC.
By________________________________________
Title_____________________________________
METROPOLITAN LIFE INSURANCE COMPANY
By________________________________________
Title_____________________________________
MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST
By________________________________________
Title_____________________________________
THE TRAVELERS INSURANCE COMPANY
S-4
<PAGE>
By________________________________________
Title_____________________________________
CANADIAN IMPERIAL BANK OF COMMERCE
By________________________________________
Title_____________________________________
SENIOR DEBT PORTFOLIO
By: Boston Management and Research, as
Investment Advisor
By________________________________________
Title_____________________________________
OXFORD STRATEGIC INCOME FUND
By: Eaton Vance Management, as Investment
Advisor
By________________________________________
Title_____________________________________
TORONTO DOMINION (TEXAS), INC.
By________________________________________
Title_____________________________________
United Rentals, Inc. hereby agrees to become
a party to the Amended Agreement.
UNITED RENTALS, INC.
S-5
<PAGE>
By_______________________________________
Title____________________________________
S-6
<PAGE>
Schedule I
----------
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):
Acquisition Subsidiary means a Subsidiary of Parent organized solely for
----------------------
the purpose of acquiring the stock or assets of a Person as permitted by Section
10.11.
Affected Lender means any Lender that has given notice to the Company
---------------
(which has not been rescinded) of (i) any obligation of the Company to pay any
amount pursuant to Section 7.5 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.
Agent means BofA in its capacity as agent for the Lenders hereunder and any
-----
successor thereto in such capacity.
Agent-Related Persons means the 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.
Agreement - see the Preamble.
--------- --------
Arranger means BancAmerica Securities, Inc., a Delaware corporation.
--------
Assignment Agreement- see Section 14.9.1.
-------------------- --------------
Base Rate means at any time the greater of (a) the Federal Funds Rate plus
---------
0.5% and (b) the Reference Rate.
Base Rate Tranche means any Tranche which bears interest at or by reference
-----------------
to the Base Rate.
BofA - see the Preamble.
---- --------
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 a Business
Day which relates to a Eurodollar Tranche, on which dealings are carried on in
the applicable offshore U.S. Dollar interbank market.
<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" under and as defined in the Credit
Agreement or a Lender or its holding company for such a "Bank" or a Lender (any
such Person a "Permitted Bank")) 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 Permitted 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 Permitted
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 Permitted Bank (or other
commercial banking institution) thereunder and (e) investments in short-term
asset management accounts offered by any Permitted Bank for the purpose of
investing in loans to any corporation (other than Parent or an Affiliate of
Parent), state or municipality, in each case organized under the laws of any
state of the United States or of the District of Columbia.
Cash Flow means, as of the last day of any Fiscal Quarter, Consolidated Net
---------
Income for the period of four Fiscal Quarters ending on such day plus, to the
----
extent deducted in determining such Consolidated Net Income, Interest Expense,
income tax expense, depreciation and amortization for such period, all
calculated on a pro forma basis in accordance with Article 11 of Regulation S-X
--- -----
of the SEC.
Closing Date means the date the Loans are made hereunder.
------------
Code means the Internal Revenue Code of 1986.
----
Collateral Agent means BofA in its capacity as Collateral Agent under the
----------------
Intercreditor Agreement and any successor thereto in such capacity.
Collateral Documents means the Company Pledge Agreement, each Subsidiary
--------------------
Pledge Agreement, the Parent Pledge Agreement, the U.S. Security Agreement, and
any other agreement
2
<PAGE>
pursuant to which the Company, Parent or any Subsidiary grants a Lien on
collateral to the Collateral Agent.
Company - see the Preamble.
------- --------
Company Pledge Agreement means the Second Restated Company Pledge Agreement
------------------------
dated as of September 29, 1998 between the Company and the Collateral Agent
substantially in the form of Exhibit E.
---------
Computation Period means each of the following periods: (i) the period of
------------------
two Fiscal Quarters ended June 30, 1998; (ii) the period of three Fiscal
Quarters ending September 30, 1998; and (iii) 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 Parent and its Subsidiaries
-----------------------
for any period, the net income (or loss) of Parent and its Subsidiaries for such
period, excluding any extraordinary gains during such period and any Pooling
---------
Charges booked 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 Parent or any Subsidiary
in connection with the purchase of any asset or business, where the
obligation of Parent 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 Parent 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 Parent 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 Parent 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
3
<PAGE>
which, together with Parent, are treated as a single employer under Section 414
of the Code or Section 4001 of ERISA.
Credit Agreement means the Credit Agreement dated as of September 29, 1998
----------------
among the Company, Parent, UR Canada, various financial institutions, Bank of
America Canada, as Canadian Agent, and BofA, as U.S. Agent.
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, (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, (f) all Hedging Obligations of such Person and (g) all Suretyship
Liabilities of such Person.
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 any other currency, the equivalent amount in U.S. Dollars as
determined by the Agent at such time on the basis of the Spot Rate for the
purchase of U.S. Dollars with such currency.
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 Tranche means any Tranche which bears interest at a rate
------------------
determined by reference to the Eurodollar Rate.
Eurodollar Office means, with respect to any Lender, the office or offices
-----------------
of such Lender which shall be making or maintaining a Eurodollar Tranche of such
Lender hereunder or such office
4
<PAGE>
or offices through which the Agent determines the Eurodollar Rate. A Eurodollar
Office of any Lender may be, at the option of such Lender, either a domestic or
foreign office.
Eurodollar Rate means, with respect to any Eurodollar Tranche for any
---------------
Interest Period, the rate of interest per annum (rounded upward, if necessary,
to the next 1/16th of 1%) determined by the Agent as follows:
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 determined by the Agent to be the
----
arithmetic mean of the rates of interest per annum notified to the
Agent by each Reference Lender as the rate of interest at which
deposits in U.S. Dollars in immediately available funds are offered by
the Eurodollar Office of such Reference Lender 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 such Reference Lender for such
Interest Period.
Event of Default means any of the events described in Section 12.1.
---------------- ------------
Exchange Act means the Securities Exchange Act of 1934.
------------
Existing U.S. Rentals Agreement means the Credit Agreement dated as of
-------------------------------
February 26, 1997 among U.S. Rentals, various financial institutions and BofA,
as Administrative Agent.
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 Agent of the rates for the last transaction
in overnight Federal funds arranged prior
5
<PAGE>
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 Agent.
Fiscal Quarter means a fiscal quarter of a Fiscal Year.
--------------
Fiscal Year means the fiscal year of Parent 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 Margin - see Schedule 1.1(B).
----------------- ---------------
Floating Rate Margin - see Schedule 1.1(B).
-------------------- ---------------
Foreign Subsidiary means each Subsidiary of Parent 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.
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 Parent 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 Parent
or any Subsidiary), (ii) Hedging Obligations, (iii) Debt of the Company to
Subsidiaries and Debt of Subsidiaries to the Company or to other Subsidiaries
and (iv) Debt (including guaranties thereof) in respect of the QuIPS Debentures
and the QuIPS Preferred Securities.
Funded Debt to Cash Flow Ratio means, as of the last day of any Fiscal
------------------------------
Quarter, the ratio of (i) Funded Debt as of such day to (ii) Cash Flow as of
such day.
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 means a group of Tranches of the same Type and, in the case of
-----
Eurodollar Tranches, which have the same Interest Period.
6
<PAGE>
Hedging Obligations means, with respect to any Person, all liabilities of
-------------------
such Person under interest rate, currency, commodity and equity 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, commodity prices or equity prices.
Holdback means an unsecured, non-interest-bearing obligation of Parent 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 Parent 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 Parent or any Subsidiary; provided that no provision of any
Environmental Law shall be an Immaterial Law if the Agent has notified the
Company that the Required Lenders have determined in good faith that such
provision is material.
Intercreditor Agreement means the Intercreditor Agreement dated as of
-----------------------
September 29, 1998 among BofA, as Agent, BofA, as U.S. Agent for the banks under
the Credit Agreement, BofA, as Collateral Agent, and the holders of the
Permitted Senior Secured Debt (or an agent therefor), substantially in the form
of Exhibit I.
---------
Interest Coverage Ratio means the ratio of (a) Consolidated Net Income
-----------------------
before deducting Interest Expense, income tax expense and Rentals for any
Computation Period to (b) Interest Expense plus Rentals for such Computation
----
Period.
Interest Expense means for any period the consolidated interest expense of
----------------
Parent and its Subsidiaries for such period (including, without duplication,
interest paid on the QuIPS Debentures, distributions on (but not redemptions of)
the QuIPS Preferred Securities, imputed interest on Capital Leases and any
interest which is capitalized but excluding amortization of deferred financing
costs).
Interest Period means, as to any Eurodollar Tranche, the period commencing
---------------
on the date such Tranche is borrowed or continued as, or converted into, a
Eurodollar Tranche and ending on the date one, two, three or six months
thereafter as selected by the Company pursuant to Section 2.2 or 2.3, as the
----------- ---
case may be; 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 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;
7
<PAGE>
(ii) any Interest Period 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) the Company may not select any Interest Period which would
extend beyond any date on which an installment of the Notes is
scheduled to be paid pursuant to Section 3 if, after giving effect to
---------
such selection, the aggregate principal amount of all Eurodollar
Tranches having Interest Periods ending after such date would exceed
the aggregate principal amount of the Notes scheduled to be
outstanding after payment of such installment.
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 Parent 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).
Lender - see the Preamble.
------ --------
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 - see Section 2.1.
---- -----------
Loan Documents means this Agreement, the Notes, the U.S. Guaranty, the
--------------
Collateral Documents and the Parent Guaranty.
Loan Party means the Company, each Subsidiary of the Company which is a
----------
party to any Loan Document and Parent.
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 Parent 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
8
<PAGE>
enforceability against Parent, the Company or any Subsidiary of the Company 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 Parent or any member of the
Controlled Group may have any liability.
Net Worth means the sum of (a) Parent's consolidated stockholders' equity
---------
(including preferred stock accounts) plus (b) to the extent, if any, not
included in such stockholders' equity, the outstanding amount of the QuIPS
Preferred Securities plus (c) the amount of the Pooling Charges.
Note - see Section 3.
---- ----------
Parent - see the Preamble.
------ --------
Parent Guaranty means the Restated Parent Guaranty dated as of September
---------------
29, 1998 executed by Parent, substantially in the form of Exhibit K.
---------
Parent Pledge Agreement means the Restated Parent Pledge Agreement dated as
-----------------------
of September 29, 1998 between Parent and the Collateral Agent, substantially in
the form of Exhibit L.
---------
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 Parent 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 Lender, the percentage specified
----------
opposite such Lender's name on Schedule 1.1(A), reduced (or increased) by
---------------
assignments pursuant to Section 14.9.1.
--------------
Permitted Holders means (a) the executive managers of the Company as of the
-----------------
Closing Date and their respective estates, their respective spouses and former
spouses, their lineal descendants, the legal representatives of any of the
foregoing, the trustees of any bona fide trusts of which any of the foregoing
are the sole beneficiaries, and any Person of which any of the foregoing
"beneficially owns" (within the meaning of Rule 13d-3 under the Exchange Act) at
least 51% of each class of equity interests of such Person; and (b) Richard D.
Colburn and any of his estate, his spouse or any former spouse, his lineal
descendants, the legal representatives of any of the foregoing, the trustees
9
<PAGE>
of any bona fide trusts of which any of the foregoing and/or one or more
charitable organizations (as defined below) are the sole beneficiaries, any
Person of which any of the foregoing "beneficially owns" (within the meaning of
Rule 13d-3 under the Exchange Act) at least 51% of each class of the equity
interests of such Person and any charitable organization to which any of the
foregoing transfers 20% or more of the outstanding shares of common stock of
Parent. For purposes of the foregoing, a "charitable organization" is an
organization to which a contribution is deductible for income tax purposes under
the Code.
Permitted Senior Secured Debt means (a) any Senior Note, but only if the
-----------------------------
holder thereof has executed and delivered both a Senior Note Purchase Agreement
Amendment and the Intercreditor Agreement on or before the effective date of the
First Amendment to this Agreement; and (b) any other Debt of the Company which
meets each of the following requirements: (i) it is issued prior to January 31,
1999, (ii) the documentation therefor contains covenants and defaults which are
no more restrictive for Parent and its Subsidiaries than the covenants and
defaults contained in this Agreement, (iii) it matures no earlier than September
30, 2005 and has amortization of no more than 20% of the original principal
amount thereof prior to July 15, 2005 and (iv) it constitutes "Senior
Indebtedness" as defined in each Subordinated Note Indenture.
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.
Pooling Charges means pooling charges and extraordinary items related to
---------------
acquisitions booked by Parent in the third fiscal quarter of 1998 (including
pooling charges and extraordinary items related to the U.S. Rentals
Acquisition), but not more than $80,000,000.
QuIPS Debentures means the 6 1/2% convertible subordinated debentures
----------------
issued by Parent to the QuIPS Trust pursuant to the QuIPS Indenture.
QuIPS Guarantees means (i) the Guarantee Agreement dated as of August 5,
----------------
1998 issued by Parent (then known as United Rentals Holdings, Inc.) relating to
the common securities of the QuIPS Trust and (ii) the Guarantee Agreement dated
as of August 5, 1998 between Parent (then known as United Rentals Holdings,
Inc.) and The Bank of New York, as Trustee, relating to the QuIPS Preferred
Securities.
QuIPS Indenture means the Indenture dated as of August 5, 1998 between
---------------
Parent (then known as United Rentals Holdings, Inc.) and The Bank of New York,
as Trustee.
QuIPS Preferred Securities means the 6 1/2% convertible quarterly income
--------------------------
preferred securities issued by the QuIPS Trust pursuant to the QuIPS Purchase
Agreement.
10
<PAGE>
QuIPS Purchase Agreement means the Purchase Agreement dated as of July 30,
------------------------
1998 among the QuIPS Trust, Parent (then known as United Rentals Holdings,
Inc.), the Company (then known as United Rentals, Inc.) and the purchasers named
therein.
QuIPS Trust means United Rentals Trust I, a special purpose Delaware
-----------
business trust established pursuant to the Amended and Restated Trust Agreement
dated as of August 5, 1998 among Parent (then known as United Rentals Holdings,
Inc.), The Bank of New York, as Property Trustee, The Bank of New York
(Delaware), as Delaware Trustee, and the administrative trustees named therein.
Reference Lenders means BofA and any other Lender designated by the Company
-----------------
and the Agent (which shall promptly notify each Lender of such designation) as a
"Reference Lender".
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.
Related Fund means, with respect to any Lender which is a fund that invests
------------
in bank loans, any other fund that invests in bank loans and is managed by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor.
Rentals means the aggregate fixed amounts payable by Parent or any
-------
Subsidiary under any lease of (or other agreement conveying the right to use)
any real or personal property by Parent 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.
Required Lenders means Lenders having Percentages aggregating 51% or more.
----------------
Restructuring means a transaction effected to create a holding company of
-------------
the Company, pursuant to which the Company becomes a direct wholly-owned
Subsidiary of such holding company, and as a result of which the holders of
capital stock of such holding company are, upon consummation of such
transaction, substantially the same as the holders of the common stock of the
Company immediately prior to such transaction.
SEC means the Securities and Exchange Commission.
---
Seller Subordinated Debt means unsecured indebtedness of the Company that:
------------------------
11
<PAGE>
(a) is subordinated, substantially upon the terms set forth in
Exhibit G or other terms that are more favorable to the Agent and the
---------
Lenders, 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); and
(b) represents all or part of the purchase price payable by the
Company in connection with a transaction described in Section 10.11(d).
----------------
Senior Debt means all Funded Debt of Parent and its Subsidiaries other than
-----------
Subordinated Debt.
Senior Note Purchase Agreements means the Note Purchase Agreements, each
-------------------------------
dated as of April 1, 1998, pursuant to which U.S. Rentals issued
U.S.$252,000,000 of Senior Notes.
Senior Note Purchase Agreement Amendment means an amendment to a Senior
----------------------------------------
Note Purchase Agreement which (a) permits the Company to assume the indebtedness
evidenced by the Senior Note issued thereunder, (b) consents to the U.S. Rentals
Acquisition and (c) amends certain other provisions thereof so that, after
giving effect to the transactions contemplated to take place on or before the
effective date of the First Amendment to this Agreement, no "Default" will exist
under and as defined in the applicable Senior Note Purchase Agreement.
Senior Notes means the U.S.$47,000,000 6.71% Series A Senior Notes due
------------
April 28, 2006, the U.S.$165,000,000 6.86% Series B Senior Notes due April 28,
2008 and the U.S.$40,000,000 6.93% Series C Senior Notes due April 28, 2010, in
each case issued by U.S. Rentals pursuant to the Senior Note Purchase
Agreements.
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.
Subordinated Debt means (a) the U.S.$200,000,000 of 9.50% unsecured senior
-----------------
subordinated notes due 2008 issued by the Company (then known as United Rentals,
Inc.) on May 22, 1998 and the unsecured subordinated guarantees thereof provided
for in the applicable Subordinated Note Indenture, (b) the U.S.$205,000,000 of
8.80% unsecured senior subordinated notes due 2008 issued by the Company on
August 12, 1998 and the unsecured subordinated guarantees thereof provided for
in the applicable Subordinated Note Indenture, (c) Seller Subordinated Debt and
(d) any other unsecured Debt of the Company which (i) is owed to Persons other
than officers, employees, directors or Affiliates of the Company, (ii) has no
amortization prior to December 31, 2005 and (iii) has subordination terms
(including subordination terms with respect to guarantees) which are not less
favorable to the Lenders than those set forth in the Subordinated Note
Indentures or are otherwise approved by the Required Lenders, such approval not
to be unreasonably withheld.
12
<PAGE>
Subordinated Note Indenture means each of (a) the Indenture dated as of May
---------------------------
22, 1998 among the Company (then known as United Rentals, Inc.), various
Subsidiaries of the Company and State Street Bank and Trust Company, as Trustee,
pursuant to which the Company issued U.S.$200,000,000 of Subordinated Debt, and
(b) the Indenture dated as August 12, 1998 among the Company, various
Subsidiaries of the Company and State Street Bank and Trust Company, as Trustee,
pursuant to which the Company issued U.S.$205,000,000 of Subordinated Debt.
Subsidiary means, with respect to any Person, a corporation, limited
----------
liability company, partnership or other entity of which such Person and/or its
other Subsidiaries own, directly or indirectly, more than 50% of the voting
stock, membership interests or similar equity interests. Unless the context
otherwise requires, each reference to Subsidiaries herein shall be a reference
to Subsidiaries of Parent.
Subsidiary Pledge Agreement means each pledge agreement substantially in
---------------------------
the form of Exhibit F 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.
Tangible Assets means at any time all assets of Parent 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.
Tranche refers to a portion of a Loan bearing interest at a particular
-------
interest rate and, in the case of a portion bearing interest based on the
Eurodollar Rate, having a particular Interest Period.
Type of Tranche refers to the interest rate basis for a Tranche. The
---------------
"Types" of Tranches are Base Rate Tranches and Eurodollar Tranches.
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.
UR Canada means United Rentals of Canada, Inc., an Ontario corporation.
---------
13
<PAGE>
U.S. Dollar and the sign "U.S.$" mean lawful money of the United States of
----------- -----
America.
U.S. Guaranty means the Second Restated U.S. Guaranty dated as of September
-------------
29, 1998 executed by various Subsidiaries of the Company substantially in the
form of Exhibit C.
---------
U.S. Rentals means U.S. Rentals, Inc., a Delaware corporation.
------------
U.S. Rentals Acquisition means the acquisition of U.S. Rentals by Parent
------------------------
pursuant to the terms of the USR Merger Agreement.
USR Merger Agreement means the Amended and Restated Agreement and Plan of
--------------------
Merger among U.S. Rentals, Parent and UR Acquisition Corporation dated as of
August 31, 1998.
U.S. Security Agreement means the Second Restated U.S. Security Agreement
-----------------------
dated as of September 29, 1998 among Parent, the Company, various Subsidiaries
of the Company and the Collateral Agent substantially in the form of Exhibit D.
---------
U.S. Subsidiary means any Subsidiary of the Company other than a Foreign
---------------
Subsidiary.
Vendor Financing Arrangement means any financing arrangement provided by a
----------------------------
Person (other than Parent or any Affiliate thereof) to any purchaser of
equipment sold by the Company or any Subsidiary in the ordinary course of
business, the terms of which provide for recourse against the Company and/or the
applicable Subsidiary in the event of default by the purchaser.
Welfare Plan means a "welfare plan", as such term is defined in Section
------------
3(1) of ERISA.
14
<PAGE>
Schedule II
-----------
SECTION 10 COVENANTS.
Until all obligations of the Company hereunder or in connection herewith
are paid in full, Parent agrees that, unless at any time the Required Lenders
shall otherwise expressly consent in writing, it will:
10.1 Reports, Certificates and Other Information. Furnish to the Agent
--------------------------------------------
and each Lender:
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 Parent and its Subsidiaries for such Fiscal Year, including therein a
consolidated balance sheet of Parent and its Subsidiaries as of the end of such
Fiscal Year and consolidated statements of earnings and cash flow of Parent and
its Subsidiaries for such Fiscal Year certified without qualification by Ernst &
Young or other independent auditors of recognized standing selected by Parent
and reasonably acceptable to the Required Lenders, 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 Parent
and its Subsidiaries as of the end of such Fiscal Year and consolidating
statements of earnings for Parent and its Subsidiaries for such Fiscal Year,
certified by the Chief Financial Officer or the Vice President, Finance of
Parent; and (c) commencing 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, a consolidated balance sheet of Parent and its
Subsidiaries as of the end of such Fiscal Quarter, together with consolidated
statements of earnings and 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 Parent.
10.1.3 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 Parent, 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.
<PAGE>
10.1.4 Reports to SEC and to Shareholders. Promptly upon the filing
----------------------------------
or sending thereof, copies of all regular, periodic or special reports of Parent
or any Subsidiary filed with the SEC (excluding exhibits thereto, provided that
Parent shall promptly deliver any such exhibit to the Agent or any Lender upon
request therefor); copies of all registration statements of Parent 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 Parent or any Subsidiary.
10.1.5 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 Parent or the Subsidiary affected thereby with
respect thereto:
(a) the occurrence of an Event of Default or an Unmatured Event of
Default;
(b) any litigation, arbitration or governmental investigation or
proceeding not previously disclosed by Parent to the Lenders which has been
instituted or, to the knowledge of Parent, is threatened against Parent 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 Parent 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 Parent 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 Parent 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
2
<PAGE>
(f) any setoff, claims (including Environmental Claims),
withholdings or other defenses to which any of the collateral granted under
any Collateral Document, or the Lenders' rights with respect to any such
collateral, are subject.
10.1.6 Subsidiaries. Promptly upon any change in the list of its
------------
Subsidiaries, a written report of such change.
10.1.7 Management Reports. Promptly upon the request of the Agent or any
------------------
Lender, copies of all detailed financial and management reports submitted to
Parent by independent auditors in connection with each annual or interim audit
made by such auditors of the books of Parent.
10.1.8 Projections. As soon as practicable and in any event within 60
-----------
days after the commencement of each Fiscal Year, financial projections for
Parent and its Subsidiaries for such Fiscal Year prepared in a manner consistent
with those projections delivered by the Company to the Lenders prior to the
Closing Date or otherwise in a manner satisfactory to the Agent.
10.1.9 Other Information. From time to time such other information
-----------------
concerning Parent and its Subsidiaries as any Lender or the 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 Lender or the Agent or
any representative thereof to inspect the properties and operations of Parent
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 Lender or the 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 Parent hereby authorizes such
independent auditors to discuss such financial matters with any Lender or the
Agent or any representative thereof whether or not any representative of Parent
or any Subsidiary is present), and to examine (and, at the expense of Parent 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 the
Agent or any Lender, furnish to the Agent or such Lender a certificate setting
forth in reasonable detail the nature and extent of all insurance maintained by
Parent 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
3
<PAGE>
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 Parent 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 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 Maximum Leverage. Not permit the ratio of (i) Funded Debt to (ii)
----------------
Funded Debt plus Net Worth to exceed 0.65 to 1.0 at any time.
----
10.6.2 Minimum Interest Coverage Ratio. 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
------------- --------------
6/30/98 through 12/31/98 1.50 to 1.0
3/31/99 through 12/31/99 1.75 to 1.0
3/31/00 and thereafter 2.00 to 1.0.
10.6.3 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 4.5 to 1.0.
10.6.4 Senior Debt to Tangible Assets. Not permit the ratio of (i)
------------------------------
Senior Debt to (ii) Tangible Assets to exceed 1.0 to 1.0 at any time.
10.6.5 Senior Debt to Cash Flow Ratio. Not permit the ratio of (i)
------------------------------
Senior Debt to (ii) Cash Flow as of the last day of any Fiscal Quarter to exceed
3.0 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, under the other Loan Documents, under the
Credit Agreement and under the other "Loan Documents" as defined in the
Credit Agreement;
4
<PAGE>
(b) unsecured Debt of the Company (excluding Contingent Payments and Seller
Subordinated Debt);
(c) Debt of the Company or any Subsidiary in respect of Capital Leases or
arising in connection with the acquisition of equipment (including Debt
assumed in connection with an asset purchase permitted by Section 10.11, or
-------------
incurred pursuant to a Capital Lease or in connection with the acquisition
of equipment by a Person before it became a Subsidiary in connection with a
stock purchase permitted by Section 10.11, in each case so long as such
-------------
Debt is not incurred in contemplation of such purchase), 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.$75,000,000;
(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 15% of the consolidated assets of the Company and
its Subsidiaries;
(e) unsecured Debt of the Company to Subsidiaries;
(f) Subordinated Debt; provided that (i) the aggregate principal amount of
--------
all Seller Subordinated Debt at any time outstanding shall not exceed a
Dollar Equivalent amount of U.S.$50,000,000 and (ii) the Company shall not
issue or incur any Debt described in clause (d) of the definition of
----------
Subordinated Debt (x) at any time that an Event of Default or Unmatured
Event of Default exists or would result therefrom and (y) unless the
Company has delivered to the Agent (which shall promptly deliver a copy
thereof to each Lender) a certificate in reasonable detail demonstrating
that, after giving effect to such issuance or incurrence, Parent will be in
pro forma compliance with all financial covenants set forth in this Section
-------
10;
--
(g) other Debt of the Company or any Subsidiary, not of a type described in
clause (c), outstanding on the date hereof and listed in Schedule 10.7(g);
---------- ----------------
(h) Contingent Payments, provided that Parent 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.$50,000,000 in the aggregate for all Contingent Payments at any time
outstanding;
(i) the QuIPS Debentures, the QuIPS Preferred Securities and the QuIPS
Guarantees;
(j) Permitted Senior Secured Debt and guarantees thereof, provided that the
--------
aggregate principal amount of all Permitted Senior Secured Debt shall not
at any time exceed
U.S.$252,000,000;
5
<PAGE>
(k) Guarantees by Parent of the obligations of the Company or any
Subsidiary; provided that any such guaranty is subordinated to the
obligations of Parent under the Parent Guaranty at least to the extent set
forth in Exhibit G or otherwise in a manner reasonably satisfactory to the
---------
Required Lenders;
(l) unsecured recourse obligations of the Company or any Subsidiary in
respect of Vendor Financing Arrangements; and
(m) Hedging Obligations incurred for purposes of protection from price,
interest rate or currency fluctuations posed by bona fide debt, contract or
purchase order obligations or from changes in the price of Parent's stock.
For purposes of clause (h) above, a Contingent Payment shall be deemed to
----------
be "outstanding" from the time that Parent 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.$1,000,000 arising in
connection with court proceedings, provided the execution or other
enforcement of such Liens is effectively stayed
6
<PAGE>
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 the Collateral Agent arising under the Loan Documents
and Liens securing Debt permitted by clauses (a) and (j) of Section 10.7.
------------------- ------------
10.9 Asset Sales. Not make, or permit any Subsidiary to make, any sale
-----------
or other disposition of assets which would require the Company to make, or offer
to make, or give any notice of, any prepayment of Subordinated Debt (other than
Seller Subordinated Debt).
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, (e) make any payment of principal of or interest on, or
acquire, redeem or otherwise retire, or make any other distribution in respect
of, any of the QuIPS Debentures or the QuIPS Preferred Securities or (f) set
aside funds for any of the foregoing; provided that (i) any Subsidiary of the
--------
Company may declare and pay dividends to the Company or to any other wholly-
owned Subsidiary of the Company; (ii) the Company may declare and pay dividends
to Parent to the extent necessary to enable Parent to pay its taxes and
accounting, legal, payroll, benefits and corporate overhead expenses (including
all SEC and stock exchange fees and expenses) and payables described in Section
-------
10.23; (iii) the QuIPS Trust may make a distribution of Parent's common stock
- -----
pursuant to the terms of the QuIPS Preferred Securities or the QuIPS Debentures;
(iv) so long as no Event of Default or Unmatured Event of Default exists or
would result therefrom, (A) Parent may make payments on the QuIPS Debentures and
permit the QuIPS Trust to make corresponding distributions on the QuIPS
Preferred Securities in accordance with the terms set forth in the QuIPS
Indenture and (B) the Company may declare and pay dividends to Parent in the
amount necessary for Parent to make such payments; (v) so long as no Event of
Default or Unmatured Event of Default exists or would result therefrom, the
Company may declare and pay dividends to Parent in the amount necessary for
Parent to consummate any acquisition permitted by Section 10.11 (provided that
-------------
Parent shall immediately use the proceeds of such dividend to make such
acquisition) or to make distributions permitted by clause (vi); and (vi) 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 made by Parent (or, prior to August 5, 1998, the Company)
since October 1, 1997 does not exceed U.S.$12,000,000, Parent 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.
7
<PAGE>
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 of the Company into the Company or into, with or to any
other wholly-owned Subsidiary of the Company; (b) any such purchase or other
acquisition by the Company or any wholly-owned Subsidiary of the Company of the
assets or stock of any wholly-owned Subsidiary of the Company; (c) the U.S.
Rentals Acquisition in accordance with the terms of the USR Merger Agreement;
(d) any such purchase or other acquisition (including pursuant to a merger) by
Parent, an Acquisition Subsidiary, the Company or any wholly-owned Subsidiary of
the Company 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, no Event of Default or Unmatured Event of Default shall have
occurred and be continuing; (3) the board of directors of such Person has not
announced that it will oppose such acquisition and has not commenced any
litigation which alleges that such acquisition violates or will violate any
requirement of law or any contractual obligation of such Person; and (4) in the
case of any such purchase or other acquisition by Parent or any Acquisition
Subsidiary, Parent immediately contributes the acquired stock or assets to the
Company; and (e) 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 Parent and its Subsidiaries as of the last day of the
preceding Fiscal Year.
10.12 Modification of Certain Documents. Not permit the Certificate or
---------------------------------
Articles of Incorporation, By-Laws or other organizational documents of Parent
or any Subsidiary, or any Subordinated Note Indenture or any other document
evidencing or setting forth the terms applicable to any Subordinated Debt, to be
amended or modified in any way which might reasonably be expected to materially
adversely affect the interests of the Lenders.
10.13 Use of Proceeds. Use the proceeds of the Loans solely to finance
---------------
the Company's working capital, for acquisitions permitted by Section 10.11, for
-------------
capital expenditures and for other general corporate purposes (including
repayment of existing Debt); 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 the Agent or the Required Lenders 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
8
<PAGE>
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 Parent by execution
of the Parent Guaranty and 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 (provided that the QuIPS Trust shall have no obligation to execute the
U.S. Guaranty), (ii) the obligations of Parent under the Parent Guaranty are
secured by substantially all of the assets of Parent and (iii) the obligations
of each U.S. Subsidiary (other than the QuIPS Trust) under the U.S. Guaranty are
secured by substantially all of the assets (other than real property) of such
U.S. Subsidiary. In addition, upon the occurrence of any Event of Default or
Unmatured Event of Default and the request of Lenders having Percentages
aggregating 80% or more, the 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 the performance by Parent or any Subsidiary of any of its
obligations hereunder or under any other Loan Document or (b) would prohibit
Parent, the Company or any Subsidiary of the Company from granting to the
Collateral Agent, for the benefit of the Lenders, a Lien on any of its assets.
9
<PAGE>
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 Closing Date in wholly-owned
Subsidiaries of the Company identified in Schedule 9.8;
------------
(b) equity Investments in Subsidiaries of the Company acquired after the
Closing 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 of the Company or by any of the Subsidiaries of the Company 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;
(h) Investments by Parent in the Company and, subject to the provisions
of Section 10.11, in Acquisition Subsidiaries;
-------------
(i) other Investments by Parent permitted by Section 10.23; and
-------------
(j) Cash Equivalent Investments;
provided 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
- --- --- --- --- ---
10
<PAGE>
duplication, the aggregate amount of all "Canadian Loans" under and as defined
in the Credit Agreement shall not at any time exceed 15% of the consolidated
assets of Parent and its Subsidiaries.
10.22 Location of Assets. Not permit at any time more than 15% of the
------------------
consolidated assets of Parent and its Subsidiaries to be owned by Foreign
Subsidiaries.
10.23 Activities of Parent. Not engage in any business other than
--------------------
ownership of the Company, Acquisition Subsidiaries and the QuIPS Trust and
activities reasonably related thereto (including the incurrence of Debt
permitted by Section 10.7, the incurrence of unsecured trade obligations in
------------
respect of goods to be delivered to and services to be performed for the benefit
of, and unsecured lease obligations incurred for the benefit of, Subsidiaries
and the incurrence of payroll and benefit expenses). Without limiting the
foregoing, Parent will not (a) incur any Debt other than the QuIPS Debentures,
the QuIPS Preferred Securities, the Parent Guaranty, the QuIPS Guarantees, Debt
permitted by Section 10.7 and guarantees of the obligations of the Company or
------------
any other Subsidiary (provided that any such guaranty is subordinated to the
obligations of Parent under the Parent Guaranty at least to the extent set forth
in Exhibit G or otherwise in a manner reasonably satisfactory to the Required
---------
Lenders), (b) make any Investments other than (i) Investments in the Company,
(ii) Investments in Acquisition Subsidiaries and (iii) Investments in the QuIPS
Trust existing on the date hereof, (c) grant any Liens on any of its assets
(other than pursuant to the U.S. Security Agreement) or (d) permit any amendment
to or modification of the QuIPS Debentures, the QuIPS Preferred Securities or
the QuIPS Indenture which, in any such case, is adverse to the interests of the
Lenders.
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001067701
<NAME> UNITED RENTALS INC /DE
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 21,793
<SECURITIES> 0
<RECEIVABLES> 262,025
<ALLOWANCES> 29,577
<INVENTORY> 74,895
<CURRENT-ASSETS> 0
<PP&E> 1,788,805
<DEPRECIATION> 428,668
<TOTAL-ASSETS> 2,531,683
<CURRENT-LIABILITIES> 0
<BONDS> 1,235,508
0
0
<COMMON> 334
<OTHER-SE> 1,001,870
<TOTAL-LIABILITY-AND-EQUITY> 2,531,683
<SALES> 804,262
<TOTAL-REVENUES> 804,262
<CGS> 530,212
<TOTAL-COSTS> 194,672
<OTHER-EXPENSES> (4,524)
<LOSS-PROVISION> 10,827
<INTEREST-EXPENSE> 39,170
<INCOME-PRETAX> 44,732
<INCOME-TAX> 26,450
<INCOME-CONTINUING> 18,282
<DISCONTINUED> 0
<EXTRAORDINARY> 21,337
<CHANGES> 0
<NET-INCOME> (3,055)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001047166
<NAME> UNITED RENTALS NORTH AMERICA INC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 21,795
<SECURITIES> 0
<RECEIVABLES> 262,025
<ALLOWANCES> 29,577
<INVENTORY> 74,895
<CURRENT-ASSETS> 0
<PP&E> 1,800,813
<DEPRECIATION> 428,743
<TOTAL-ASSETS> 2,557,002
<CURRENT-LIABILITIES> 0
<BONDS> 1,235,508
300,000
0
<COMMON> 684
<OTHER-SE> 707,354
<TOTAL-LIABILITY-AND-EQUITY> 2,557,002
<SALES> 804,262
<TOTAL-REVENUES> 804,262
<CGS> 530,212
<TOTAL-COSTS> 197,651
<OTHER-EXPENSES> (4,524)
<LOSS-PROVISION> 10,827
<INTEREST-EXPENSE> 39,170
<INCOME-PRETAX> 41,153
<INCOME-TAX> 25,229
<INCOME-CONTINUING> 16,524
<DISCONTINUED> 0
<EXTRAORDINARY> 21,337
<CHANGES> 0
<NET-INCOME> (4,813)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
