<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 1999
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-14387
United Rentals, Inc.
Commission File No. 1-13663
United Rentals (North America), Inc.
(Exact names of registrants as specified in their charters)
<TABLE>
<S> <C>
Delaware 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)
</TABLE>
(203) 622-3131
(Registrants' telephone number, including area code)
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 August 6, 1999, there were 72,047,671 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 JUNE 30, 1999
INDEX
<TABLE>
<CAPTION>
Page
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<C> <S> <C>
PART I FINANCIAL INFORMATION
Item 1 Unaudited Consolidated Financial Statements
United Rentals, Inc. Consolidated Balance Sheets as of June 30,
1999 and
December 31, 1998 (unaudited).................................. 5
United Rentals, Inc. Consolidated Statements of Operations for
the Six and Three Months Ended June 30, 1999 and 1998
(unaudited).................................................... 6
United Rentals, Inc. Consolidated Statement of Stockholders'
Equity for the Six Months Ended June 30, 1999 (unaudited)...... 7
United Rentals, Inc. Consolidated Statements of Cash Flows for
the Six Months Ended June 30, 1999 and 1998 (unaudited)........ 8
United Rentals (North America), Inc. Consolidated Balance Sheets
as of June 30, 1999
and December 31, 1998 (unaudited).............................. 9
United Rentals (North America), Inc. Consolidated Statements of
Operations for the
Six and Three Months Ended June 30, 1999 and 1998 (unaudited).. 10
United Rentals (North America), Inc. Consolidated Statement of
Stockholder's Equity for the Six Months Ended June 30, 1999
(unaudited).................................................... 11
United Rentals (North America), Inc. Consolidated Statements of
Cash Flows for the
Six Months Ended June 30, 1999 and 1998 (unaudited)............ 12
Notes to Unaudited Consolidated Financial Statements............ 13
Management's Discussion and Analysis of Financial Condition and
Item 2 Results of Operations.......................................... 25
Item 3 Quantitative and Qualitative Disclosures about Market Risk...... 36
PART II OTHER INFORMATION
Item 1 Legal Proceedings............................................... 36
Item 2 Changes in Securities and Use of Proceeds....................... 36
Item 4 Submission of Matters to a Vote of Security Holders............. 37
Item 6 Exhibits and Reports on Form 8-K................................ 37
Signatures...................................................... 39
</TABLE>
<PAGE>
Certain of the statements contained in this Report are forward looking in
nature. Such statements can be identified by the use of forward-looking
terminology such as "believes," "expects," "may," "will," "should," or
"anticipates" or the negative thereof or comparable terminology, or by
discussions of strategy. You are cautioned that our business and operations
are subject to a variety of risks and uncertainties and, consequently, our
actual results may materially differ from those projected by any forward-
looking statements. Certain of these factors are discussed in Item 2 of Part I
of this Report under the caption "--Factors that May Influence Future Results
and Accuracy of Forward-Looking Statements." We make no commitment to revise
or update any forward-looking statements in order to reflect events or
circumstances after the date any such statement is made.
UNITED RENTALS
United Rentals is the largest equipment rental company in North America with
637 branch locations in 43 states, six Canadian provinces and Mexico. We offer
for rent over 600 different types of equipment on a daily, weekly or monthly
basis and serve customers that include construction industry participants,
industrial companies and homeowners. We also sell used rental equipment, act
as a dealer for many types of new equipment, and sell related merchandise and
parts. In the past year, we have served over one million customers.
We have one of the most comprehensive and newest equipment rental fleets in
the industry. The types of rental equipment that we offer include a broad
range of light to heavy construction and industrial equipment, such as
backhoes, aerial lifts, skid-steer loaders, forklifts, compressors, pumps and
generators, as well as a variety of smaller tools and equipment. Our equipment
fleet has an original purchase price of approximately $2.5 billion and a
weighted average age of approximately 25 months (based on original purchase
price).
We began operations in October 1997 and have grown through a combination of
internal growth, acquisitions and the opening of new rental locations. We have
an ongoing acquisition program and have completed 153 acquisitions through
July 27, 1999, including our merger with U.S. Rentals, Inc. ("U.S. Rentals")
in September 1998. 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.
COMPETITIVE ADVANTAGES
We believe that we benefit from the following competitive advantages:
Full Range of Rental Equipment. We have the largest and most comprehensive
equipment rental fleet in the industry, which enables us to:
. attract customers by providing the benefit of "one-stop" shopping;
. serve a diverse customer base, which reduces our dependence on any
particular customer or group of customers;
. serve large customers that require assurance that substantial quantities
of different types of equipment will be available as required on a
continuing basis;
. minimize lost sales due to equipment being unavailable; and
. serve attractive specialty equipment rental markets, such as trench
shoring, traffic safety and portable tanks.
Operating Efficiencies. We generally group our branches into clusters of 10
to 30 locations that are in the same area. Our management information system
enables each branch to track equipment at any other branch and to access all
available equipment within a cluster. We believe that our cluster strategy
produces significant operating efficiencies by enabling us to:
. market the equipment within a cluster through multiple branches, rather
than a single branch, which increases our equipment utilization rate;
. cross-market the equipment specialties of different branches within each
cluster, which increases revenues without increasing marketing expenses;
1
<PAGE>
. reduce costs by centralizing common functions such as payroll, credit
and collection, and certain equipment delivery into 22 regional service
centers; and
. consolidate overlapping operations to better serve our customers.
In the second quarter of 1999, approximately 8.5% of our rental revenue was
attributable to equipment sharing among branches.
Significant Purchasing Power. We have significant purchasing power because
of our volume purchases. As a result, we can generally buy new equipment and
related merchandise and parts at prices that are significantly lower than
prices paid by smaller companies. We can also buy many other products and
services--such as insurance, telephone and fuel--at attractive rates.
Information Technology Systems. We have modern information technology
systems which facilitate decision-making and enable us to respond to changing
market conditions. These systems provide management with a wide range of
operating and financial data, including reports on inventory, receivables,
customers, vendors, fleet utilization and price and sales trends. These
systems are designed to enable branch personnel to search for needed equipment
throughout a geographic region, determine its closest location and arrange for
delivery to a customer's work site. These systems include software developed
by our Wynne Systems subsidiary, which is the leading provider of proprietary
software for use by equipment rental companies in managing and operating
multiple branch locations. We have an in-house staff of specialists that
supports our information technology systems and extends the systems to new
locations.
Customer Diversity. Our customer base is highly diversified and ranges from
Fortune 100 companies to small contractors and homeowners. We estimate that
our top ten customers accounted for approximately 4% of our revenues during
1998 (on a pro forma basis as if the acquisitions that we completed in 1998
and 1999 had been completed at the beginning of 1998).
Geographic Diversity. We have branches in 43 states, six Canadian provinces
and Mexico. We believe that our geographic diversity should reduce the impact
that fluctuations in regional economic conditions have on our overall
financial performance. Our geographic diversity and large network of branch
locations also give us the ability to serve national accounts and access used
equipment re-sale markets across the country.
Experienced Senior Management. Our senior management combines executives who
have extensive operating experience in the equipment rental industry with
executives who have proven track records in other industries. Our senior
management includes former officers of United Waste Systems, Inc., which was a
publicly-traded solid waste management company that successfully executed a
growth strategy combining a disciplined acquisition program, the integration
and optimization of acquired facilities, and internal growth. Our senior
management also includes former executives of U.S. Rentals who have extensive
experience in the equipment rental industry.
Strong and Motivated Branch Management. Each of our branches has a full-time
branch manager who is supervised by one of our 50 district managers and eight
regional vice presidents. We believe that our branch and district managers,
who average over 20 years of experience in the equipment rental industry, are
among the most knowledgeable and experienced in the industry. We encourage
entrepreneurship at the branch level by giving branch managers a high degree
of autonomy relating to day-to-day operations. For example, each branch
manager is empowered to make decisions--within budgetary guidelines--
concerning staffing, pricing and equipment purchasing. We also promote
entrepreneurship at the branch level, as well as equipment sharing among
branches, through our profit sharing program which directly ties the
compensation of branch personnel to their branch's financial performance and
equipment utilization rates. We balance the autonomy that we grant branch
managers with systems through which senior management closely tracks branch
performance. We also share information across branches so that each branch can
measure its operating performance relative to other branches and benefit from
the best practices developed throughout our organization.
2
<PAGE>
Professional Acquisition Team. Our 25-person acquisition team is engaged in
identifying and evaluating acquisition candidates and executing our
acquisition program. The core of this group consists of seasoned acquisition
professionals--most of whom were members of the acquisition team at United
Waste Systems, where they completed over 200 acquisitions. The team also
includes former owners of businesses that we acquired, who have extensive
industry experience and contacts with potential acquisition candidates.
GROWTH STRATEGY
Our plan for future growth includes the following key elements:
Continue Strong Internal Growth. We are seeking to sustain our strong
internal growth by:
. increasing the cross-marketing of our equipment specialties at different
locations;
. increasing our advertising and marketing--which become increasingly
cost-effective as we grow because the benefits are spread over a larger
number of branches;
. expanding our national accounts program--which dedicates a portion of
our sales force to establishing and expanding relationships with large
customers that have a national or multi-regional presence;
. increasing our rentals to industrial companies by developing a
comprehensive marketing program specifically aimed at this sector; and
. expanding and modernizing our equipment fleet.
Execute Disciplined Acquisition Program. We intend to continue our
disciplined acquisition program. We generally seek to acquire multiple
locations within the regions that we enter, with the goal of creating clusters
of locations that can share various resources, including equipment, marketing
resources, back office functions and certain equipment delivery. We are
seeking to acquire companies of varying sizes, including relatively large
companies to serve as platforms for new regional clusters and smaller
companies to complement existing or anticipated locations. In considering
whether to buy a company, we evaluate a number of factors, including purchase
price, anticipated impact on earnings, 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.
Open New Rental Locations. Because most of the businesses that we acquired
grew through developing start-up rental locations, many of our managers have
substantial experience in this area. We intend to leverage this experience by
selectively opening new rental locations in attractive markets where there are
no suitable acquisition targets available or where the economics of a start-up
location are more attractive than buying an existing business.
Increase Cost Savings. We work to reduce costs by efficiently integrating
new and existing operations, eliminating duplicative costs, centralizing
common functions, consolidating locations that serve the same areas, and using
our purchasing power to negotiate discounts from suppliers.
Continue to Emphasize Management Systems and Controls. We intend to further
strengthen our management systems and controls, which currently include:
. an audit group that is responsible for ensuring that we have adequate
financial, operating, and management information controls throughout our
organization;
. a team of regional and district controllers that monitors each branch
for compliance with financial and accounting procedures established at
corporate headquarters; and
. a risk management and safety department that is responsible for: (1)
developing and implementing safety programs and procedures, (2)
developing our customer and employee training programs and (3)
investigating and managing any claims that may be asserted against us.
3
<PAGE>
INDUSTRY BACKGROUND
Industry Size and Growth
We estimate that the U.S. equipment rental industry 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 25.2% from 1993 through 1998 (based upon
revenues, reported by the Rental Equipment Register, an industry trade
publication). In addition to reflecting general economic growth, we believe
that the growth in the equipment rental industry reflects the following
trends:
Recognition of Advantages of Renting. Equipment users are increasingly
recognizing the many advantages that equipment rental may offer compared
with ownership. They recognize that by renting they can:
. avoid the large capital investment required for equipment purchases;
. reduce storage and maintenance costs;
. supplement owned equipment thereby increasing the range and number
of jobs that can be worked on;
. access a broad selection of equipment and select the equipment best
suited for each particular job;
. obtain equipment as needed and minimize the costs associated with
idle equipment; and
. access the latest technology without investing in new equipment.
These advantages frequently allow equipment users to reduce their overall
costs by renting rather than buying equipment.
Increase in Rentals by Contractors. 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 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.
Although growth in the equipment rental industry has to date been largely
driven by the increase in rentals by the construction industry, we believe
that other equipment users may increasingly contribute to future industry
growth. For example, many industrial companies require equipment for
operating, repairing, maintaining and upgrading their facilities, and renting
this equipment will often be more cost-effective than purchasing because
typically this equipment is not used full-time. We believe that the cost and
other advantages of renting, together with the general trend toward the
corporate outsourcing of non-core competencies, may increasingly lead
industrial companies to rent equipment. We also believe that these same
considerations may lead other equipment users--such as municipalities,
government agencies and utilities--to increasingly rent equipment. Because the
penetration of these markets by the equipment rental industry is very low in
comparison to its penetration of the construction market, we believe there is
significant potential for additional growth in these markets.
Industry Fragmentation
The equipment rental industry is highly fragmented. It consists of a small
number of multi-location regional or national operators and a large number of
relatively small, independent businesses that serve discrete local markets.
This fragmentation is reflected in the following data:
. in 1998, there were only 12 equipment rental companies that had
equipment rental revenues in excess of $100 million and approximately
100 equipment rental companies that had equipment rental revenues
between $5 million and $100 million (based upon rental revenues for 1998
as provided by the Rental Equipment Register, an industry trade
publication);
. we estimate that there are more than 20,000 companies with annual
equipment rental revenues of less than $5 million; and
. we estimate that the 100 largest equipment rental companies combined
have less than a 25% share of the market.
We believe that the fragmented nature of the industry presents substantial
consolidation and growth opportunities for companies with access to capital
and the ability to implement a disciplined acquisition program. We also
believe that our management team's extensive experience in acquiring and
effectively integrating acquisition targets should enable us to capitalize on
these opportunities.
4
<PAGE>
UNITED RENTALS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
---------------- ------------------
(In thousands, except share data)
<S> <C> <C>
ASSETS
Cash and cash equivalents................ $ 19,828 $ 20,410
Accounts receivable, net of allowance for
doubtful accounts of $44,781 in 1999 and
$41,201 in 1998......................... 355,592 233,282
Inventory................................ 149,267 70,994
Prepaid expenses and other assets........ 114,357 59,395
Rental equipment, net.................... 1,626,494 1,143,006
Property and equipment, net.............. 244,677 185,511
Intangible assets, net of accumulated
amortization of $30,249 in 1999 and
$14,520 in 1998......................... 1,381,739 922,065
---------------- ----------------
$ 3,891,954 $ 2,634,663
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable....................... $ 249,221 $ 121,940
Debt................................... 1,947,876 1,314,574
Deferred income taxes.................. 63,674 43,560
Accrued expenses and other
liabilities........................... 189,441 128,359
---------------- ----------------
Total liabilities.................... 2,450,212 1,608,433
Commitments and contingencies
Company-obligated mandatorily redeemable
convertible preferred securities of
a subsidiary trust...................... 300,000 300,000
Stockholders' equity:
Preferred stock--$.01 par value,
5,000,000 shares authorized:..........
Series A perpetual convertible
preferred stock--$300,000 liquidation
preference, 300,000 shares issued and
outstanding in 1999.................. 3
Common stock--$.01 par value,
500,000,000 shares authorized in 1999
and 1998, 71,580,118 in 1999 and
68,427,999 in 1998 shares issued and
outstanding........................... 716 684
Additional paid-in capital............. 1,062,404 689,018
Retained earnings...................... 78,920 36,809
Accumulated other comprehensive
income................................ (301) (281)
---------------- ----------------
Total stockholders' equity........... 1,141,742 726,230
---------------- ----------------
$ 3,891,954 $ 2,634,663
================ ================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
UNITED RENTALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
----------------- -------------------
1999 1998 1999 1998
-------- -------- --------- ---------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Revenues:
Equipment rentals.................... $643,302 $309,683 $ 354,917 $ 183,072
Sales of rental equipment............ 87,194 43,223 51,251 27,175
Sales of new equipment, merchandise
and other revenues.................. 165,475 72,282 97,494 43,800
-------- -------- --------- ---------
Total revenues........................ 895,971 425,188 503,662 254,047
Cost of revenues:
Cost of equipment rentals, excluding
depreciation........................ 279,146 143,934 153,327 80,738
Depreciation of rental equipment..... 124,067 67,017 64,954 37,737
Cost of rental equipment sales....... 49,919 22,559 29,077 14,545
Cost of new equipment and merchandise
sales and other operating costs..... 124,784 56,345 72,240 33,605
-------- -------- --------- ---------
Total cost of revenues................ 577,916 289,855 319,598 166,625
-------- -------- --------- ---------
Gross profit.......................... 318,055 135,333 184,064 87,422
Selling, general and administrative
expenses............................. 149,861 68,351 84,601 42,197
Non-rental depreciation .............. 10,791 9,351 5,598 4,868
Amortization.......................... 15,729 3,141 8,752 2,128
-------- -------- --------- ---------
Operating income...................... 141,674 54,490 85,113 38,229
Interest expense...................... 51,306 15,245 26,933 9,458
Preferred dividends of a subsidiary
trust................................ 9,750 4,875
Other (income) expense, net........... 9,224 (4,232) 9,430 (3,436)
-------- -------- --------- ---------
Income before provision for income
taxes................................ 71,394 43,477 43,875 32,207
Provision for income taxes............ 29,283 16,458 17,989 11,892
-------- -------- --------- ---------
Net income............................ $ 42,111 $ 27,019 $ 25,886 $ 20,315
======== ======== ========= =========
Basic earnings per share.............. $ 0.60 $ 0.43 $ 0.36 $ 0.31
======== ======== ========= =========
Diluted earnings per share............ $ 0.46 $ 0.39 $ 0.28 $ 0.28
======== ======== ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
UNITED RENTALS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Series A
Perpetual Convertible
Preferred Stock Common Stock
--------------------- -----------------
Accumulated
Additional Other
Number Number Paid-in Retained Comprehensive Comprehensive
of Shares Amount of Shares Amount Capital Earnings Income Income
------------ --------- ---------- ------ ---------- -------- ------------- -------------
(In thousands, except share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1998................... 68,427,999 $684 $ 689,018 $36,809 $(281)
Comprehensive income:
Net income............. 42,111 $42,111
Other comprehensive
income:
Foreign currency
translation
adjustments........... (20) (20)
-------
Comprehensive income.... $42,091
=======
Issuance of Series A
perpetual convertible
preferred stock........ 300,000 $ 3 286,997
Issuance of common
stock.................. 2,279,319 23 65,175
Exercise of common stock
options................ 872,800 9 21,214
------------ -------- ---------- ---- ---------- ------- -----
Balance, June 30, 1999.. 300,000 $ 3 71,580,118 $716 $1,062,404 $78,920 $(301)
============ ======== ========== ==== ========== ======= =====
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE>
UNITED RENTALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------
1999 1998
---------- ---------
(In thousands)
<S> <C> <C>
Cash Flows From Operating Activities:
Net income............................................. $ 42,111 $ 27,019
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization......................... 150,587 79,509
Amortization of original issue discount and deferred
financing fees....................................... 1,894
Gain on sale of rental equipment...................... (37,275) (20,664)
Gain on sale of business.............................. (3,644)
Deferred income taxes................................. 18,808 8,279
Changes in operating assets and liabilities:
Accounts receivable................................... (62,203) (21,254)
Inventory............................................. (37,858) (3,040)
Prepaid expenses and other assets..................... (47,143) (3,090)
Accounts payable...................................... 97,856 27,862
Accrued expenses and other liabilities................ 46,720 (2,519)
---------- ---------
Net cash provided by operating activities......... 173,497 88,458
Cash Flows From Investing Activities:
Purchases of rental equipment.......................... (390,693) (259,158)
Purchases of property and equipment.................... (52,805) (36,574)
Proceeds from sale of rental equipment................. 87,194 43,223
In-process acquisition costs........................... (1,644) (3,495)
Payments of contingent purchase price.................. (1,118) (2,255)
Purchases of other companies........................... (587,561) (378,878)
---------- ---------
Net cash used in investing activities............. (946,627) (637,137)
Cash Flows From Financing Activities:
Proceeds from the issuance of common stock, net of
issuance costs........................................ 65,198 206,555
Proceeds from the issuance of Series A Preferred, net
of issuance costs..................................... 287,000
Proceeds from debt..................................... 1,284,166 890,463
Payments of debt....................................... (876,660) (583,584)
Payment of debt financing costs........................ (4,657) (8,115)
Proceeds from the exercise of common stock options..... 17,501 521
Distribution to stockholders........................... (1,244)
---------- ---------
Net cash provided by financing activities......... 772,548 504,596
---------- ---------
Net decrease in cash and cash equivalents.............. (582) (44,083)
Cash and cash equivalents at beginning of period....... 20,410 72,411
---------- ---------
Cash and cash equivalents at end of period............. $ 19,828 $ 28,328
========== =========
Supplemental disclosure of cash flow information:
Cash paid for interest................................. $ 39,605 $ 8,184
Cash paid for income taxes............................. $ 11,461 $ 9,126
Supplemental disclosure of non-cash investing and
financing activities:
The Company acquired the net assets and assumed certain
liabilities of other companies as follows:
Assets, net of cash acquired.......................... $ 869,523 $ 691,069
Liabilities assumed................................... (272,567) (264,656)
Less:
Amounts paid in common stock and warrants........... (47,535)
Amounts paid through issuance of debt............... (9,395)
---------- ---------
Net cash paid..................................... $ 587,561 $ 378,878
========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
8
<PAGE>
UNITED RENTALS (NORTH AMERICA), INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
---------- ------------
(In thousands, except
share data)
<S> <C> <C>
ASSETS
Cash and cash equivalents............................ $ 37,309 $ 20,410
Accounts receivable, net of allowance for doubtful
accounts of $44,781 in 1999 and $41,201 in 1998..... 355,592 233,282
Inventory............................................ 149,267 70,994
Prepaid expenses and other assets.................... 89,275 43,176
Rental equipment, net................................ 1,626,494 1,143,006
Property and equipment, net.......................... 206,506 170,537
Intangible assets, net of accumulated amortization of
$30,249 in 1999 and $14,520 in 1998................. 1,381,739 922,065
---------- ----------
$3,846,182 $2,603,470
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Accounts payable................................... $ 215,148 $ 108,426
Debt............................................... 1,947,876 1,314,574
Deferred income taxes.............................. 63,674 43,560
Accrued expenses and other liabilities............. 189,114 115,558
---------- ----------
Total liabilities................................ 2,415,812 1,582,118
Commitments and contingencies
Stockholder's equity:
Common stock--$0.01 par value, 3,000 shares
authorized, 1,000 shares issued and outstanding...
Additional paid-in capital......................... 1,354,044 984,345
Retained earnings.................................. 76,627 37,288
Accumulated other comprehensive income............. (301) (281)
---------- ----------
Total stockholder's equity....................... 1,430,370 1,021,352
---------- ----------
$3,846,182 $2,603,470
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
9
<PAGE>
UNITED RENTALS (NORTH AMERICA), INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
---------------- -------------------
1999 1998 1999 1998
-------- -------- --------- ---------
(In thousands)
<S> <C> <C> <C> <C>
Revenues:
Equipment rentals.................... $643,302 $309,683 $ 354,917 $ 183,072
Sales of rental equipment............ 87,194 43,223 51,251 27,175
Sales of new equipment, merchandise
and other revenues.................. 165,475 72,282 97,494 43,800
-------- -------- --------- ---------
Total revenues........................ 895,971 425,188 503,662 254,047
Cost of revenues:
Cost of equipment rentals, excluding
depreciation........................ 279,146 143,934 153,327 80,738
Depreciation of rental equipment..... 124,067 67,017 64,954 37,737
Cost of rental equipment sales....... 49,919 22,559 29,077 14,545
Cost of new equipment and merchandise
sales and other operating costs..... 124,784 56,345 72,240 33,605
-------- -------- --------- ---------
Total cost of revenues................ 577,916 289,855 319,598 166,625
-------- -------- --------- ---------
Gross profit.......................... 318,055 135,333 184,064 87,422
Selling, general and administrative
expenses............................. 149,861 68,351 84,601 42,197
Non-rental depreciation............... 9,128 9,351 4,459 4,868
Amortization.......................... 15,729 3,141 8,752 2,128
-------- -------- --------- ---------
Operating income...................... 143,337 54,490 86,252 38,229
Interest expense...................... 51,306 15,245 26,933 9,458
Other (income) expense, net........... 8,982 (4,232) 9,328 (3,436)
-------- -------- --------- ---------
Income before provision for income
taxes................................ 83,049 43,477 49,991 32,207
Provision for income taxes............ 33,960 16,458 20,451 11,892
-------- -------- --------- ---------
Net income............................ $ 49,089 $ 27,019 $ 29,540 $ 20,315
======== ======== ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
10
<PAGE>
UNITED RENTALS (NORTH AMERICA), INC.
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Common Stock
---------------- Additional Accumulated
Number Paid-In Retained Comprehensive Other Comprehensive
of Shares Amount Capital Earnings Income Income
--------- ------ ---------- -------- ------------- -------------------
(In thousands, except share data)
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1998................... 1,000 $ 984,345 $37,288 $(281)
Comprehensive income:
Net income............. 49,089 $49,089
Other comprehensive
income:
Foreign currency
translation
adjustments.......... (20) (20)
-------
Comprehensive income.... $49,069
=======
Contributed capital from
parent................. 369,699
Dividend distribution to
parent................. (9,750)
----- --- ---------- ------- -----
Balance, June 30, 1999.. 1,000 $1,354,044 $76,627 $(301)
===== === ========== ======= =====
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
11
<PAGE>
UNITED RENTALS (NORTH AMERICA), INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June
30,
----------------------
1999 1998
---------- ----------
(In thousands)
<S> <C> <C>
Cash Flows From Operating Activities:
Net income............................................ $ 49,089 $ 27,019
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization........................ 148,924 79,509
Amortization of original issue discount and deferred
financing fees...................................... 1,894
Gain on sale of rental equipment..................... (37,275) (20,664)
Gain on sale of business............................. (3,644)
Deferred income taxes................................ 18,808 8,279
Changes in operating assets and liabilities:
Accounts receivable.................................. (62,203) (21,254)
Inventory............................................ (37,858) (3,040)
Prepaid expenses and other assets.................... (38,280) (3,090)
Accounts payable..................................... 77,297 27,862
Accrued expenses and other liabilities............... 55,472 (2,519)
---------- ----------
Net cash provided by operating activities.......... 175,868 88,458
Cash Flows From Investing Activities:
Purchases of rental equipment......................... (390,693) (259,158)
Purchases of property and equipment................... (27,945) (36,574)
Proceeds from sale of rental equipment................ 87,194 43,223
In-process acquisition costs.......................... (1,644) (3,495)
Payments of contingent purchase price................. (1,118) (2,255)
Purchases of other companies.......................... (587,561) (378,878)
---------- ----------
Net cash used in investing activities.............. (921,767) (637,137)
Cash Flows From Financing Activities:
Proceeds from debt.................................... 1,284,166 890,463
Payments of debt...................................... (876,660) (583,584)
Payment of debt financing costs....................... (4,657) (8,115)
Capital contributions by parent....................... 369,699 207,076
Dividend distributions to parent...................... (9,750) (1,244)
---------- ----------
Net cash provided by financing activities.......... 762,798 504,596
---------- ----------
Net increase (decrease) in cash and cash equivalents.. 16,899 (44,083)
Cash and cash equivalents at beginning of period...... 20,410 72,411
---------- ----------
Cash and cash equivalents at end of period............ $ 37,309 $ 28,328
========== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest................................ $ 39,605 $ 8,184
Cash paid for income taxes............................ $ 11,461 $ 9,126
Supplemental disclosure of non-cash investing and
financing activities:
The Company acquired the net assets and assumed
certain liabilities of other companies as follows:
Assets, net of cash acquired......................... $ 869,523 $ 691,069
Liabilities assumed.................................. (272,567) (264,656)
Less:
Amounts paid in common stock and warrants.......... (47,535)
Amounts paid through issuance of debt.............. (9,395)
---------- ----------
Net cash paid.................................... $ 587,561 $ 378,878
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
12
<PAGE>
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
General
United Rentals, Inc., is principally a holding company ("Holdings") and
conducts its operations primarily 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. Prior to such
reorganization, the name of URI was United Rentals, Inc. References herein to
"United Rentals" or 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. 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 statement of operations for the six and three
month periods ended June 30, 1998 and statement of cash flows for the six
month period ended June 30, 1998, 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
present fairly the results of the interim periods presented. Interim financial
statements do not require all disclosures normally presented in year-end
financial statements, and, accordingly, certain disclosures have been omitted.
Results of operations for the six and three month periods ended June 30, 1999
are not necessarily indicative of the results that may be expected for the
year ending December 31, 1999. 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, 1998.
Impact of Recently Issued Accounting Standards
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("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 is required to
adopt SFAS No. 133 beginning January 1, 2001. 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.
2.Acquisitions
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 statement of
operations for the six and three month periods ended June 30, 1998 and
statement of cash flows for the six month period ended June 30, 1998 were
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.
This 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 but have been combined beginning July 1,
1998.
13
<PAGE>
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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 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 statement of operations for the six and three month periods ended
June 30, 1998 and statement of cash flows for the six month period ended June
30, 1998 were restated to include the accounts of U.S. Rentals.
Acquisitions Accounted for as Purchases
During the six months ended June 30, 1999, the Company completed 57
acquisitions 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.
The aggregate initial consideration paid by the Company for such
acquisitions that were accounted for as purchases was $579.4 million and
consisted of approximately $570.0 million in cash and $9.4 million in seller
notes. In addition, the Company repaid or assumed outstanding indebtedness of
the companies acquired in such acquisitions in the aggregate amount of $221.2
million. The Company also agreed in connection with three of such acquisitions
to pay additional amounts to the former owners based upon specified future
revenues and/or new store openings. Such amounts are limited to a specified
maximum amount which varies from $100,000 to $200,000, with the average being
$133,000.
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 six months ended June 30, 1999 and 1998
as though (i) each acquisition summarized above which was consummated during
the six months ended June 30, 1999, was made on January 1, 1999, in the case
of the results for the six months ended June 30, 1999, and (ii) each
acquisition which was consummated during the period January 1, 1998 to June
30, 1999 as described above and in Note 3 to the Notes to Consolidated
Financial Statements included in the Company's 1998 Annual Report on Form 10-K
was made on January 1, 1998 in the case of the results for the six months
ended June 30, 1998 (in thousands, except per share data):
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------
1999 1998
---------- --------
<S> <C> <C>
Revenues.............................................. $1,090,959 $937,008
Net income............................................ 44,566 28,753
Basic earnings per share.............................. $ 0.63 $ 0.45
Diluted earnings per share............................ $ 0.48 $ 0.41
</TABLE>
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.
14
<PAGE>
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
3. Revolving Credit Facility
URI obtained a 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 $772.5 million on a revolving basis and permits a Canadian
subsidiary of URI 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 $772.5 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 $694.4
million at June 30, 1999.
4.Senior Subordinated Notes
On March 23, 1999, URI issued $250 million aggregate principal amount of 9%
Senior Subordinated Notes which are due April 1, 2009. URI used approximately
$102.0 million of the net proceeds from the sale of such notes to repay all of
the then outstanding indebtedness under the Credit Facility and used the
balance of such net proceeds from this offering for acquisitions, capital
expenditures and general corporate purposes.
5. Series A Perpetual Convertible Preferred Stock
On January 7, 1999, Holdings sold 300,000 shares of its Series A Perpetual
Convertible Preferred Stock ("Series A Preferred"). The net proceeds from the
sale of the Series A Preferred were approximately $287.0 million. Holdings
contributed such net proceeds to URI and URI used such net proceeds to repay
all of the then outstanding indebtedness under the Credit Facility. The Series
A Preferred is convertible into 12,000,000 shares of Holdings common stock at
$25 per share based upon the liquidation preference of $1,000 per share of
Series A Preferred, subject to adjustment.
6. Series B Perpetual Convertible Preferred Stock
On June 28, 1999, Holdings signed a definitive agreement to sell 100,000
shares of its Series B Perpetual Convertible Preferred Stock ("Series B
Preferred"). The closing of this transaction is subject to the satisfaction of
certain closing conditions. The net proceeds from the sale of the Series B
Preferred is expected to be approximately $96.0 million. The shares of Series
B Preferred to be issued in this transaction will be convertible into
3,333,334 shares of Holding's common stock at $30 per share based upon a
liquidation preference of $1,000 per share of Series B Preferred, subject to
adjustment.
7. Common Stock
On March 9, 1999, Holdings completed a public offering of 2,290,000 shares
of common stock. The net proceeds to the Company from this offering were
approximately $64.8 million (after deducting underwriting discounts and
offering expenses). Holdings contributed such net proceeds to URI and URI used
such net proceeds to repay outstanding indebtedness under the Credit Facility.
15
<PAGE>
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
8. 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>
Three Months
Six Months Ended
Ended June 30, June 30,
--------------- ---------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Numerator:
Net income............................. $42,111 $27,019 $25,886 $20,315
======= ======= ======= =======
Denominator:
Denominator for basic earnings per
share weighted-average shares......... 70,304 62,321 71,570 66,061
Effect of dilutive securities:
Employee stock options............... 5,296 2,021 4,511 5,976
Warrants............................. 4,325 4,219 4,211 1,706
Series A Preferred................... 12,000 12,000
------- ------- ------- -------
Denominator for diluted earnings per
share--adjusted weighted-average
shares................................ 91,925 68,561 92,292 73,743
======= ======= ======= =======
Basic earnings per share................. $ 0.60 $ 0.43 $ 0.36 $ 0.31
======= ======= ======= =======
Diluted earnings per share............... $ 0.46 $ 0.39 $ 0.28 $ 0.28
======= ======= ======= =======
</TABLE>
16
<PAGE>
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
9. 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). All expenses incurred by URI have been charged by URI to its
guarantor and non guarantor subsidiaries. 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 June
30, 1999 and December 31, 1998 and for the six and three months ended June 30,
1999 and 1998, are presented. The condensed consolidating financial
information of URI and its subsidiaries are as follows:
CONDENSED CONSOLIDATING BALANCE SHEET
<TABLE>
<CAPTION>
June 30, 1999
----------------------------------------------------------------
Non-
Guarantor Guarantor Consolidated
URI Subsidiaries Subsidiaries Eliminations Total
---------- ------------ ------------ ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equiva-
lents.................. $ 7,710 $ 25,429 $ 4,170 $ 37,309
Accounts receivable,
net.................... 332,684 22,908 355,592
Intercompany receivable
(payable).............. 1,344,359 (1,192,904) (151,455)
Inventory............... 137,926 11,341 149,267
Prepaid expenses and
other assets........... 32,707 48,292 8,276 89,275
Rental equipment, net... 1,542,711 83,783 1,626,494
Property and equipment,
net.................... 199,785 6,721 206,506
Investment in subsidiar-
ies.................... 2,021,220 $(2,021,220)
Intangible assets, net.. 1,285,957 95,782 $1,381,739
---------- ----------- --------- ----------- ----------
$3,405,996 $ 2,379,880 $ 81,526 $(2,021,220) $3,846,182
========== =========== ========= =========== ==========
LIABILITIES AND STOCK-
HOLDER'S EQUITY
Liabilities:
Accounts payable....... $ 192,226 $ 22,922 $ 215,148
Debt................... $1,906,126 38,147 3,603 1,947,876
Deferred income tax-
es.................... 62,883 791 63,674
Accrued expenses and
other liabilities..... 88,622 96,661 3,831 189,114
---------- ----------- --------- ----------- ----------
Total liabilities.... 1,994,748 389,917 31,147 2,415,812
Commitments and contin-
gencies
Stockholder's equity:
Common stock............
Additional paid-in capi-
tal.................... 1,334,621 1,908,910 45,356 (1,934,843) 1,354,044
Retained earnings....... 76,627 81,053 5,324 (86,377) 76,627
Accumulated other com-
prehensive income...... (301) (301)
---------- ----------- --------- ----------- ----------
Total stockholder's
equity.............. 1,411,248 1,989,963 50,379 (2,021,220) 1,430,370
---------- ----------- --------- ----------- ----------
$3,405,996 $ 2,379,880 $ 81,526 $(2,021,220) $3,846,182
========== =========== ========= =========== ==========
</TABLE>
17
<PAGE>
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CONDENSED CONSOLIDATING BALANCE SHEET
<TABLE>
<CAPTION>
December 31, 1998
---------------------------------------------------------------
Non-
Guarantor Guarantor Consolidated
URI Subsidiaries Subsidiaries Eliminations Total
---------- ------------ ------------ ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Assets
Cash and cash equiva-
lents.................. $ 1,774 $ 16,257 $ 2,379 $ 20,410
Accounts receivable,
net.................... 218,285 14,997 233,282
Intercompany receivable
(payable).............. 898,641 (820,958) (77,683)
Inventory............... 65,401 5,593 70,994
Prepaid expenses and
other assets........... 30,963 10,816 1,397 43,176
Rental equipment, net... 1,099,539 43,467 1,143,006
Property and equipment,
net.................... 165,803 4,734 170,537
Investment in subsidiar-
ies.................... 1,390,706 $(1,390,706)
Intangible assets, net.. 29 867,061 54,975 922,065
---------- ---------- ------- ----------- ----------
$2,322,113 $1,622,204 $49,859 $(1,390,706) $2,603,470
========== ========== ======= =========== ==========
Liabilities And Stock-
holder's Equity
Liabilities:
Accounts payable....... $ 3,250 $ 98,680 $ 6,496 $ 108,426
Debt................... 1,286,118 23,976 4,480 1,314,574
Deferred income tax-
es.................... 43,560 43,560
Accrued expenses and
other liabilities..... 30,535 82,112 2,911 115,558
---------- ---------- ------- ----------- ----------
Total liabilities.... 1,319,903 248,328 13,887 1,582,118
Commitments and contin-
gencies
Stockholder's equity:
Common stock...........
Additional paid-in
capital................ 964,922 1,338,576 34,265 $(1,353,418) 984,345
Retained earnings...... 37,288 35,300 1,988 (37,288) 37,288
Accumulated other com-
prehensive income...... (281) (281)
---------- ---------- ------- ----------- ----------
Total stockholder's
equity.............. 1,002,210 1,373,876 35,972 (1,390,706) 1,021,352
---------- ---------- ------- ----------- ----------
$2,322,113 $1,622,204 $49,859 $(1,390,706) $2,603,470
========== ========== ======= =========== ==========
</TABLE>
18
<PAGE>
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months Ended June 30, 1999
------------------------------------------------------------
Non-
Guarantor Guarantor Consolidated
URI Subsidiaries Subsidiaries Eliminations Total
--- ------------ ------------ ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals..... $608,996 $ 34,306 $643,302
Sales of rental equip-
ment................. 80,587 6,607 87,194
Sales of new equip-
ment, merchandise and
other revenues....... 151,564 13,911 165,475
-------- -------- -------- -------- --------
Total revenues.......... 841,147 54,824 895,971
Cost of revenues:
Cost of equipment
rentals, excluding
depreciation......... 261,940 17,206 279,146
Depreciation of rental
equipment............ 117,854 6,213 124,067
Cost of rental equip-
ment sales........... 45,995 3,924 49,919
Cost of new equipment
and merchandise sales
and other operating
costs................ 114,069 10,715 124,784
-------- -------- -------- -------- --------
Total cost of revenues.. 539,858 38,058 577,916
-------- -------- -------- -------- --------
Gross profit............ 301,289 16,766 318,055
Selling, general and ad-
ministrative
expenses............... 140,476 9,385 149,861
Non-rental depreciation
and amortization....... 23,358 1,499 24,857
-------- -------- -------- -------- --------
Operating income........ 137,455 5,882 143,337
Interest expense........ 51,153 153 51,306
Other (income) expense,
net.................... 9,407 (425) 8,982
-------- -------- -------- -------- --------
Income before provision
for income taxes ...... 76,895 6,154 83,049
Provision for income
taxes.................. 31,142 2,818 33,960
-------- -------- -------- -------- --------
Income before equity in
net earnings
of subsidiaries........ 45,753 3,336 $(49,089)
Equity in net earnings
of subsidiaries........ $ 49,089 49,089
-------- -------- -------- -------- --------
Net income.............. $ 49,089 $ 45,753 $ 3,336 $(49,089) $ 49,089
======== ======== ======== ======== ========
</TABLE>
19
<PAGE>
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months Ended June 30, 1998
-----------------------------------------------------------
Non-
Guarantor Guarantor Consolidated
URI Subsidiaries Subsidiaries Eliminations Total
--- ------------ ------------ ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals..... $301,965 $7,718 $309,683
Sales of rental equip-
ment................. 41,602 1,621 43,223
Sales of new equip-
ment, merchandise and
other revenues....... 67,060 5,222 72,282
------- -------- ------ -------- --------
Total revenues.......... 410,627 14,561 425,188
Cost of revenues:
Cost of equipment
rentals, excluding
depreciation......... 140,695 3,239 143,934
Depreciation of rental
equipment............ 65,767 1,250 67,017
Cost of rental equip-
ment sales........... 21,521 1,038 22,559
Cost of new equipment
and merchandise sales
and other operating
costs................ 51,778 4,567 56,345
------- -------- ------ -------- --------
Total cost of revenues.. 279,761 10,094 289,855
------- -------- ------ -------- --------
Gross profit............ 130,866 4,467 135,333
Selling, general and ad-
ministrative
expenses............... 66,372 1,979 68,351
Non-rental depreciation
and amortization....... 12,241 251 12,492
------- -------- ------ -------- --------
Operating income........ 52,253 2,237 54,490
Interest expense........ 15,149 96 15,245
Other (income) expense,
net.................... (4,212) (20) (4,232)
------- -------- ------ -------- --------
Income before provision
for
income taxes .......... 41,316 2,161 43,477
Provision for income
taxes.................. 15,477 981 16,458
------- -------- ------ -------- --------
Income before equity in
net earnings of subsid-
iaries................. 25,839 1,180 $(27,019)
Equity in net earnings
of subsidiaries........ $27,019 27,019
------- -------- ------ -------- --------
Net income.............. $27,019 $ 25,839 $1,180 $(27,019) $ 27,019
======= ======== ====== ======== ========
</TABLE>
20
<PAGE>
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended June 30, 1999
------------------------------------------------------------
Non-
Guarantor Guarantor Consolidated
URI Subsidiaries Subsidiaries Eliminations Total
--- ------------ ------------ ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals..... $333,959 $ 20,958 $354,917
Sales of rental equip-
ment................. 47,323 3,928 51,251
Sales of new equip-
ment, merchandise and
other revenues....... 88,719 8,775 97,494
-------- -------- -------- --------- --------
Total revenues.......... 470,001 33,661 503,662
Cost of revenues:
Cost of equipment
rentals, excluding
depreciation......... 143,310 10,017 153,327
Depreciation of rental
equipment............ 61,514 3,440 64,954
Cost of rental equip-
ment sales........... 26,466 2,611 29,077
Cost of new equipment
and merchandise sales
and other operating
costs................ 65,200 7,040 72,240
-------- -------- -------- --------- --------
Total cost of revenues.. 296,490 23,108 319,598
-------- -------- -------- --------- --------
Gross profit............ 173,511 10,553 184,064
Selling, general and ad-
ministrative
expenses............... 79,093 5,508 84,601
Non-rental depreciation
and amortization....... 12,355 856 13,211
-------- -------- -------- --------- --------
Operating income........ 82,063 4,189 86,252
Interest expense........ 26,875 58 26,933
Other (income) expense,
net.................... 9,548 (220) 9,328
-------- -------- -------- --------- --------
Income before provision
for income taxes ...... 45,640 4,351 49,991
Provision for income
taxes.................. 18,484 1,967 20,451
-------- -------- -------- --------- --------
Income before equity in
net earnings
of subsidiaries........ 27,156 2,384 $ (29,540)
Equity in net earnings
of subsidiaries........ $ 29,540 29,540
-------- -------- -------- --------- --------
Net income.............. $ 29,540 $ 27,156 $ 2,384 $ (29,540) $ 29,540
======== ======== ======== ========= ========
</TABLE>
21
<PAGE>
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended June 30, 1998
-----------------------------------------------------------
Non-
Guarantor Guarantor Consolidated
URI Subsidiaries Subsidiaries Eliminations Total
--- ------------ ------------ ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals..... $177,260 $5,452 $183,072
Sales of rental equip-
ment................. 26,068 1,107 27,175
Sales of new equip-
ment, merchandise and
other revenues....... 40,107 3,693 43,800
------- -------- ------ -------- --------
Total revenues.......... 243,795 10,252 254,047
Cost of revenues:
Cost of equipment
rentals, excluding
depreciation......... 78,875 1,863 80,738
Depreciation of rental
equipment............ 37,066 671 37,737
Cost of rental equip-
ment sales........... 13,915 630 14,545
Cost of new equipment
and merchandise sales
and other operating
costs................ 30,366 3,239 33,605
------- -------- ------ -------- --------
Total cost of revenues.. 160,222 6,403 166,625
------- -------- ------ -------- --------
Gross profit............ 83,573 3,849 87,422
Selling, general and ad-
ministrative
expenses............... 40,904 1,293 42,197
Non-rental depreciation
and amortization....... 6,822 174 6,996
------- -------- ------ -------- --------
Operating income........ 35,847 2,382 38,229
Interest expense........ 9,408 50 9,458
Other (income) expense,
net.................... (3,417) (19) (3,436)
------- -------- ------ -------- --------
Income before provision
for
income taxes .......... 29,856 2,351 32,207
Provision for income
taxes.................. 10,834 1,058 11,892
------- -------- ------ -------- --------
Income before equity in
net earnings of
subsidiaries........... 19,022 1,293 $(20,315)
Equity in net earnings
of subsidiaries........ $20,315 20,315
------- -------- ------ -------- --------
Net income.............. $20,315 $ 19,022 $1,293 $(20,315) $ 20,315
======= ======== ====== ======== ========
</TABLE>
22
<PAGE>
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CONDENSED CONSOLIDATING CASH FLOW INFORMATION
<TABLE>
<CAPTION>
For the Six Months Ended June 30, 1999
-----------------------------------------------------------------
Guarantor Non-guarantor
URI Subsidiaries Subsidiaries Eliminations Consolidated
---------- ------------- ------------- ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Net cash provided by
(used in) operating
activities............. $ (169,301) $ 305,759 $39,410 $ 175,868
Cash flows from
investing activities:
Purchase of rental
equipment............. (349,243) (41,450) (390,693)
Purchase of property
and equipment......... (26,287) (1,658) (27,945)
Proceeds from sales of
rental equipment...... 80,587 6,607 87,194
In-process acquisition
costs................. (1,644) (1,644)
Payment of contingent
purchase price........ (1,118) (1,118)
Purchase of other
companies............. (587,561) (587,561)
---------- --------- -------- ------ ----------
Net cash used in
investing
activities.......... (587,561) (296,587) (37,619) (921,767)
Cash flows from
financing activities:
Proceeds from debt..... 1,284,166 1,284,166
Payments of debt....... (876,660) (876,660)
Payment of debt
financing costs....... (4,657) (4,657)
Capital contribution
by parent............. 369,699 369,699
Dividend distribution
to parent............. (9,750) (9,750)
---------- --------- -------- ------ ----------
Net cash provided by
financing
activities.......... 762,798 762,798
Net increase in cash
and cash
equivalents........... 5,936 9,172 1,791 16,899
Cash and cash
equivalents at
beginning of period... 1,774 16,257 2,379 20,410
---------- --------- -------- ------ ----------
Cash and cash
equivalents at end of
period................ $ 7,710 $ 25,429 $ 4,170 $ 37,309
========== ========= ======== ====== ==========
Supplemental disclosure
of cash flow
information:
Cash paid during the
period:
Interest............. $ 21,099 $ 18,353 $ 153 $ 39,605
Income taxes......... $ 10,139 $ 1,322 $ 11,461
Supplemental disclosure
of non-cash investing
and financing
activities:
The Company acquired the
net assets and assumed
certain liabilities of
other companies as
follows:
Assets, net of cash
acquired.............. $ 869,523 $ 869,523
Liabilities assumed.... (272,567) (272,567)
Less:
Amounts paid through
issuance of debt.... (9,395) (9,395)
---------- --------- -------- ------ ----------
Net cash paid...... $ 587,561 $ 587,561
========== ========= ======== ====== ==========
</TABLE>
23
<PAGE>
UNITED RENTALS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CONDENSED CONSOLIDATING CASH FLOW INFORMATION
<TABLE>
<CAPTION>
For the Six Months Ended June 30, 1998
----------------------------------------------------------------
Guarantor Non-guarantor
URI Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------- ------------- ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Net cash provided by
(used in) operating
activities............. $ (37,512) $ 123,388 $ 2,582 $ 88,458
Cash flows from
investing activities:
Purchase of rental
equipment............. (255,307) (3,851) (259,158)
Purchase of property
and equipment......... (35,042) (1,532) (36,574)
Proceeds from sales of
rental equipment...... 41,602 1,621 43,223
In-process acquisition
costs................. (3,495) (3,495)
Payments of contingent
purchase price........ (1,055) (1,200) (2,255)
Purchase of other
companies............. (369,534) (9,344) (378,878)
--------- --------- ------- ------- ---------
Net cash used in
investing
activities.......... (369,534) (262,641) (4,962) (637,137)
Cash flows from
financing activities:
Proceeds from debt..... 613,796 266,687 9,980 890,463
Payments of debt....... (467,399) (108,585) (7,600) (583,584)
Payment of debt
financing costs....... (8,115) (8,115)
Capital contribution
by parent............. 207,076 207,076
Dividend distribution
to parent............. (1,244) (1,244)
--------- --------- ------- ------- ---------
Net cash provided by
financing
activities.......... 345,358 156,858 2,380 504,596
Net increase
(decrease) in cash
and cash
equivalents........... (61,688) 17,605 (44,083)
Cash and cash
equivalents at
beginning of period... 68,608 3,803 72,411
--------- --------- ------- ------- ---------
Cash and cash
equivalents at end of
period................ $ 6,920 $ 21,408 $ 28,328
========= ========= ======= ======= =========
Supplemental disclosure
of cash flow
information:
Cash paid during the
period:
Interest............. $ 5,641 $ 2,476 $ 67 $ 8,184
Income taxes......... $ 7,434 $ 1,692 $ 9,126
Supplemental disclosure
of non-cash investing
and financing
activities:
The Company acquired the
net assets and assumed
certain liabilities of
other companies as
follows:
Assets, net of cash
acquired.............. $ 681,725 $ 9,344 $ 691,069
Liabilities assumed.... (264,656) (264,656)
Less:
Amounts paid in
common stock and
warrants............ (47,535) (47,535)
--------- --------- ------- ------- ---------
Net cash paid...... $ 369,534 $ 9,344 $ 378,878
========= ========= ======= ======= =========
</TABLE>
10. Subsequent Events
Completed Acquisitions
Subsequent to June 30, 1999 (through July 27, 1999), the Company completed
the acquisitions of six equipment rental companies. The aggregate
consideration paid by the Company for these acquisitions was $17.0 million in
cash. In addition, the Company repaid or assumed outstanding indebtedness of
the companies acquired in such acquisitions in the aggregate amount of $2.7
million. The Company funded the consideration for these acquisitions with
borrowings under the Company's Credit Facility.
Series B Perpetual Convertible Preferred Stock
On July 16, 1999, Holdings signed a definitive agreement to sell an
aggregate of 50,000 additional shares of its Series B Preferred. The closing
of this transaction is subject to certain closing conditions. The net proceeds
from the sale of the Series B Preferred to be issued in this transaction is
expected to be approximately $48.0
24
<PAGE>
million. The Series B Preferred to be issued in this transaction will be
convertible into 1,666,667 shares of Holdings common stock at $30.00 per share
based upon a liquidation preference of $1,000 per share of Series B Preferred,
subject to adjustment.
Term Loan
In July and August 1999, URI obtained, in aggregate, a $450 million term
loan from a group of financial institutions (the "Term Loan C"). The Term Loan
C matures in July 2006. URI used the net proceeds from the Term Loan C to
repay a portion of the outstanding indebtedness under the Credit Facility.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion reviews the Company's operations for the six and
three months ended June 30, 1999 and 1998 and should be read in conjunction
with the Unaudited Consolidated Financial Statements and related Notes thereto
of the Company included herein and the Consolidated Financial Statements and
related Notes thereto included in the Company's 1998 Annual Report on Form 10-
K.
Introduction
The Company commenced equipment rental operations in October 1997 and has
completed 153 acquisitions (through July 27, 1999), including a merger with
U.S. Rentals (the "U.S. Rentals Merger") which was completed in September
1998.
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
two of the companies acquired in such transactions (but were not restated for
one that was not material, which has been combined with the Company effective
July 1, 1998). See Note 2 to the Notes to the Unaudited Consolidated Financial
Statements of the Company included elsewhere herein. The other 150
acquisitions completed by the Company 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 1999 and 1998 were impacted by acquisitions that were accounted for as
purchases, the Company believes that the results of its operations for such
periods are not directly comparable.
United Rentals, Inc. ("Holdings") is principally a holding company and
primarily conducts its operations through its wholly owned subsidiary, United
Rentals (North America), Inc. ("URI"), and subsidiaries of URI.
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 expenses primarily include sales
commissions, advertising and marketing expenses, management salaries, and
clerical and administrative overhead.
25
<PAGE>
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 non-compete agreements and 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
Six Months Ended June 30, 1999 and 1998
Revenues. Total revenues for the six months ended June 30, 1999 were $896.0
million, representing an increase of 110.7% over total revenues of $425.2
million for the six months ended June 30, 1998. The Company's revenues in the
first six months of 1999 and 1998 were attributable to: (i) equipment rental
($643.3 million, or 71.8% of revenues, in the first six months of 1999
compared to $309.7 million, or 72.8% of revenues, in the first six months of
1998), (ii) sales of rental equipment ($87.2 million, or 9.7% of revenues, in
the first six months of 1999 compared to $43.2 million, or 10.2% of revenues,
in the first six months of 1998) and (iii) sales of new equipment, merchandise
and other revenues ($165.5 million, or 18.5% of revenues, in the first six
months of 1999 compared to $72.3 million, or 17.0% of revenues, in the first
six months of 1998).
The 110.7% increase in total revenues in the first six months of 1999
reflected (i) increased revenues at locations open more than one year (which
accounted for approximately 23.8 percentage points) and (ii) new rental
locations acquired through acquisitions and the opening of start-up locations
(which accounted for approximately 86.9 percentage points). The increase in
revenues at locations open more than one year primarily reflected (a) an
increase in the volume of rental transactions, (b) an expansion of the product
lines offered by the Company for sale, (c) an increase in the sale of related
merchandise and parts which was driven by the increase in equipment rental and
sales transactions and (d) an increase in the sale of used equipment in order
to maintain the quality of the Company's rental fleet.
Gross Profit. Gross profit increased to $318.1 million in the first six
months of 1999 from $135.3 million in the first six months of 1998. This
increase in gross profit was primarily attributable to the increase in
revenues described above. The Company's gross profit margin by source of
revenue in the first six months of 1999 and 1998 was: (i) equipment rental
(37.3% in the first six months of 1999 and 31.9% in the first six months of
1998), (ii) sales of rental equipment (42.7% in the first six months of 1999
and 47.8% in the first six months of 1998) and (iii) sales of new equipment,
merchandise and other revenues (24.6% in the first six months of 1999 and
22.0% in the first six months of 1998). The increase in the gross profit
margin from rental revenues in the first six months of 1999 was primarily
attributable to greater equipment utilization rates and to economies of scale.
The decrease in the gross profit margin from the sales of rental equipment in
the first six months of 1999 primarily reflected a shift in mix towards more
late-model used equipment, which generally generates lower gross profit
margins than somewhat older equipment. The increase in the gross profit margin
from sales of new equipment, merchandise and other revenue in the first six
months of 1999 primarily reflected the benefits of greater purchasing power
and a shift in the sales mix to higher margin items.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SG&A") were $149.9 million, or 16.7% of total
revenues, during the first six months of 1999 and $68.4 million, or 16.1% of
total revenues, during the first six months of 1998. The increase in SG&A as a
percentage of revenues in the first six months of 1999 principally reflected
an $8.3 million charge primarily due to professional fees incurred in
connection with the Company's terminated tender offer and consent and proxy
solicitation for Rental Service Corporation, ("RSC"), which offset certain
economies of scale related to the increase in revenues described above.
Non-rental Depreciation. Non-rental depreciation was $10.8 million, or 1.2%
of total revenues, in the first six months of 1999 and $9.4 million, or 2.2%
of total revenues, in the first six months of 1998. Non-rental depreciation
primarily consists of depreciation expense attributable to equipment not
offered for rent and to rental
26
<PAGE>
facility locations. The decrease in non-rental depreciation as a percentage of
sales in 1999 primarily reflected economies of scale related to the increase
in revenues described above.
Amortization. Amortization was $15.7 million, or 1.8% of total revenues,
during the first six months of 1999, and $3.1 million, or 0.7% of total
revenues, during the first six months of 1998. The increase in amortization in
1999 primarily reflected the amortization of goodwill attributable to the
acquisitions completed subsequent to June 30, 1998.
Interest Expense. Interest expense increased to $51.3 million in the first
six months of 1999 from $15.2 million in the first six months of 1998. This
increase primarily reflected the fact that the Company's indebtedness
significantly increased in 1999, principally to fund acquisitions.
Preferred Dividends of a Subsidiary Trust. During the first six months of
1999, preferred dividends of a subsidiary trust of Holdings were $9.8 million.
These dividends relate to preferred securities issued in August 1998 by such
subsidiary trust.
Other (Income) Expense. Other expense was $9.2 million in the first six
months of 1999 compared with $4.2 million in other income in the first six
months of 1998. The increase in other expense in the first six months of 1999
primarily reflected a $10.0 million charge that was principally due to
commitment fees incurred in connection with a $2.0 billion financing
commitment that was cancelled upon the termination of the Company's tender
offer for RSC.
Income Taxes. Income taxes increased to $29.3 million, or an effective rate
of 41.0%, in the first six months of 1999 from $16.5 million, or an effective
rate of 37.9%, in the first six months of 1998. The lower effective tax rate
in the first six months of 1998 primarily reflected the fact that a business
that the Company acquired in 1998 in a transaction that was accounted for as a
pooling-of-interests was taxed as a Subchapter S Corporation for federal and
state tax purposes prior to being acquired.
Three Months Ended June 30, 1999 and 1998
Revenues. Total revenues for the three months ended June 30, 1999 were
$503.7 million, representing an increase of 98.3% over total revenues of
$254.0 million for the three months ended June 30, 1998. The Company's
revenues in the three months ended June 30, 1999 and 1998 were attributable
to: (i) equipment rental ($354.9 million, or 70.5% of revenues, in the three
months ended June 30, 1999 compared to $183.1 million, or 72.1% of revenues,
in the three months ended June 30, 1998), (ii) sales of rental equipment
($51.3 million, or 10.2% of revenues, in the three months ended June 30, 1999
compared to $27.2 million, or 10.7% of revenues, in the three months ended
June 30, 1998) and (iii) sales of new equipment, merchandise and other
revenues ($97.5 million, or 19.3% of revenues, in the three months ended June
30, 1999 compared to $43.8 million, or 17.2% of revenues, in the three months
ended June 30, 1998).
The 98.3% increase in total revenues in the three months ended June 30, 1999
reflected (i) increased revenues at locations open more than one year (which
accounted for approximately 22.2 percentage points) and (ii) new rental
locations acquired through acquisitions and the opening of start-up locations
(which accounted for approximately 76.1 percentage points). The increase in
revenues at locations open more than one year primarily reflected (a) an
increase in the volume of rental transactions, (b) an expansion of the product
lines offered by the Company for sale, (c) an increase in the sale of related
merchandise and parts which was driven by the increase in equipment rental and
sales transactions and (d) an increase in the sale of used equipment in order
to maintain the quality of the Company's rental fleet.
Gross Profit. Gross profit increased to $184.1 million in the three months
ended June 30, 1999 from $87.4 million in the three months ended June 30,
1998. This increase in gross profit was primarily attributable to the
27
<PAGE>
increase in revenues described above. The Company's gross profit margin by
source of revenue in the three months ended June 30, 1999 and 1998 was: (i)
equipment rental (38.5% in the three months ended June 30, 1999 and 35.3% in
the three months ended June 30, 1998), (ii) sales of rental equipment (43.3%
in the three months ended June 30, 1999 and 46.5% in the three months ended
June 30, 1998) and (iii) sales of new equipment, merchandise and other
revenues (25.9% in the three months ended June 30, 1999 and 23.3% in the three
months ended June 30, 1998). The increase in the gross profit margin from
rental revenues in the three months ended June 30, 1999 was primarily
attributable to greater equipment utilization rates and to economies of scale.
The decrease in the gross profit margin from the sales of rental equipment in
the three months ended June 30, 1999 primarily reflected a shift in mix
towards more late-model used equipment, which generally generates lower gross
profit margins than somewhat older equipment. The increase in the gross profit
margin from sales of new equipment, merchandise and other revenue in the three
months ended June 30, 1999 primarily reflected the benefits of greater
purchasing power and a shift in the sales mix to higher margin items.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SG&A") were $84.6 million, or 16.8% of total
revenues, during the three months ended June 30, 1999 and $42.2 million, or
16.6% of total revenues, during the three months ended June 30, 1998. The
increase in SG&A as a percentage of revenues in the three months ended June
30, 1999, principally reflected an $8.3 million charge primarily due to
professional fees incurred in connection with the Company's terminated tender
offer and consent and proxy solicitation for RSC, which offset certain
economies of scale related to the increase in revenues.
Non-rental Depreciation. Non-rental depreciation was $5.6 million, or 1.1%
of total revenues, in the three months ended June 30, 1999 and $4.9 million,
or 1.9% of total revenues, in the three months ended June 30, 1998. Non-rental
depreciation primarily consists of depreciation expense attributable to
equipment not offered for rent and to rental facility locations. The decrease
in non-rental depreciation as a percentage of sales in 1999 primarily
reflected economies of scale related to the increase in revenues described
above.
Amortization. Amortization was $8.8 million, or 1.7% of total revenues,
during the three months ended June 30, 1999, and $2.1 million, or 0.8% of
total revenues, during the three months ended June 30, 1998. The increase in
amortization in 1999 primarily reflected the amortization of goodwill
attributable to the acquisitions completed subsequent to June 30, 1998.
Interest Expense. Interest expense increased to $26.9 million in the three
months ended June 30, 1999 from $9.5 million in the three months ended June
30, 1998. This increase primarily reflected the fact that the Company's
indebtedness significantly increased in 1999, principally to fund
acquisitions.
Preferred Dividends of a Subsidiary Trust. During the three months ended
June 30, 1999, preferred dividends of a subsidiary trust of Holdings were $4.9
million. These dividends relate to preferred securities issued in August 1998
by such subsidiary trust.
Other (Income) Expense. Other expense was $9.4 million in the three months
ended June 30, 1999 compared with $3.4 million in other income in the three
months ended June 30, 1998. The increase in other expense in the three months
ended June 30, 1999, primarily reflected a $10.0 million charge principally
due to commitment fees incurred in connection with a $2.0 billion financing
commitment that was cancelled upon the termination of the Company's tender
offer for RSC.
Income Taxes. Income taxes increased to $18.0 million, or an effective rate
of 41.0%, in the three months ended June 30, 1999 from $11.9 million, or an
effective rate of 36.9%, in the three months ended June 30, 1998. The lower
effective tax rate in the three months ended June 30, 1998 primarily reflected
the fact that a business that the Company acquired in 1998 in a transaction
that was accounted for as a pooling-of-interests was taxed as a Subchapter S
Corporation for federal and state tax purposes prior to being acquired.
28
<PAGE>
Liquidity and Capital Resources
Recent Financings
Set forth below is certain information concerning certain financing
transactions entered into by the Company during 1999.
Series A Perpetual Convertible Preferred Stock. In January 1999, Holdings
sold 300,000 shares of its Series A Perpetual Convertible Preferred Stock
("Series A Preferred") to Apollo Investment Fund IV, L.P. and Apollo Overseas
Partners IV, L.P. (collectively "Apollo"). The net proceeds from the sale of
the Series A Preferred were approximately $287.0 million (after deducting
issuance fees and expenses).
Common Stock. In March 1999, Holdings completed a public offering of
2,290,000 shares of its common stock. The net proceeds to the Company from
this offering were approximately $64.8 million (after deducting underwriting
discounts and offering expenses).
9% Senior Subordinated Notes. In March 1999, URI sold $250 million aggregate
principal amount of 9% Senior Subordinated Notes Due 2009 ("9% Notes") for
aggregate consideration of $245.0 million (after deducting the initial
purchaser's discount and offering expenses). The 9% Notes are unsecured. URI
may, at its option, redeem the 9% Notes on or after April 1, 2004 at specified
redemption prices which range from 104.50% in 2004 to 100.00% in 2007 and
thereafter. In addition, on or prior to April 1, 2002, URI may, at its option,
use the proceeds of a public equity offering by Holdings to redeem up to 35%
of the outstanding 9% Notes, at a redemption price of 109.00%. The indenture
governing the 9% Notes contains certain restrictive covenants, including (i)
limitations on additional indebtedness, (ii) limitations on restricted
payments, (iii) limitations on liens, (iv) limitations on dividends and other
payment restrictions, (v) limitations on preferred stock of certain
subsidiaries, (vi) limitations on transactions with affiliates, (vii)
limitations on the disposition of proceeds of asset sales and (viii)
limitations on the ability of the Company to consolidate, merge or sell all or
substantially all of its assets.
Series B Perpetual Convertible Preferred Stock. The Company has entered into
(i) a definitive agreement with Apollo which provides for the Company to sell
to Apollo 100,000 shares of the Company's Series B Perpetual Convertible
Preferred Stock ("Series B Preferred") and (ii) a definitive agreement with
Chase Equity Associates, L.P. ("Chase") which provides for the Company to sell
to Chase 50,000 shares of Series B Preferred. The closing of each of these
transactions is subject to the satisfaction of certain closing conditions. The
Company expects that it will receive net proceeds of $96 million from the
transaction with Apollo and $48 million from the transaction with Chase. Each
share of Series B Preferred will be convertible into 33 1/3 shares of the
Company's Common Stock (representing a conversion price of $30 per share based
on the liquidation preference of $30 per share of Series B Preferred), subject
to adjustment.
Term Loan. In July and August 1999, URI obtained in aggregate, a $450
million term loan from a group of financial institutions (the "Term Loan C").
The Term Loan C matures in June 2006. URI used the net proceeds from the Term
Loan C to repay a portion of the outstanding indebtedness under the Company's
revolving credit facility (the "Credit Facility"). Prior to maturity,
quarterly installments of principal in the amount of $1,125,000 are due on the
last day of each calendar quarter, commencing September 30, 2000. The amount
due at maturity is $424,125,000. The Term Loan C accrues 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 referenced rate) plus a
margin of 0.625% per annum, or (b) the Eurodollar Rate (which for borrowings
by URI is equal to Bank of America's reserve adjusted eurodollar rate) plus a
margin of 2.50% per annum. If at any time an event of default exists, the
interest rate applicable to URI's existing term loan and the Term Loan C will
increase by 2% per annum. The Term Loan C is secured pari passu with the
Credit Facility and URI's existing term loan, and the agreement governing the
Term Loan C contains restrictive covenants substantially similar to those
provided by the Credit Facility and URI's existing term loan.
29
<PAGE>
Sources and Uses of Cash
During the first six months of 1999, the Company (i) generated cash from
operations of approximately $173.5 million, (ii) generated cash from the sale
of rental equipment of approximately $87.2 million, (iii) received net
proceeds of $287.0 million from the sale of the Series A Preferred, (iv)
received net proceeds of $65.2 million from the issuance of common stock and
(v) received net proceeds of $245.0 million from the sale of the 9% Notes. The
Company used cash during this period principally to (i) pay consideration for
acquisitions (approximately $587.6 million), (ii) purchase rental equipment
(approximately $390.7 million) and (iii) purchase other property and equipment
(approximately $52.8 million).
Certain Balance Sheet Changes
The acquisitions and the equipment purchases made by the Company in the
first six months of 1999 (and the financing of such acquisitions and
purchases) were the principal reasons for the increase in the following items
at June 30, 1999 compared with December 31, 1998: accounts receivable,
inventory, prepaid expenses and other assets, rental equipment, property and
equipment, intangible assets, accounts payable, debt and accrued expenses and
other liabilities. The financing transactions completed by the Company during
the first six months of 1999 were the principal reasons for (i) the decrease
in cash and the increase in debt at June 30, 1999, compared with December 31,
1998 and (ii) the increase in additional paid-in capital at June 30, 1999,
compared with December 31, 1998.
Certain Information Concerning the Company's Credit Facility
URI has a revolving credit facility (the "Credit Facility") that enables URI
to borrow up to $772.5 million on a revolving basis and permits a Canadian
subsidiary of URI to directly borrow up to $40.0 million under the Credit
Facility (provided that the aggregate borrowings of URI and the Canadian
subsidiary do not exceed $772.5 million). The Credit Facility terminates on
September 26, 2003, at which time all outstanding indebtedness is due. As of
August 12, 1999, there was $458.0 million of indebtedness outstanding under
the Credit Facility (not including undrawn outstanding letters of credit in
the amount of $3.8 million).
Cash Requirements Related to Operations
The Company's principal existing sources of cash are (i) borrowings
available under the Credit Facility ($310.7 million available as of August 12,
1999), (ii) cash generated from operations and (iii) the net proceeds that the
Company expects to receive from the sale of its Series B Preferred as
described above.
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 its
existing sources of cash described above.
The Company estimates that equipment expenditures over the next 12 months
will be approximately $550.0 million for the existing operations of the
Company. These expenditures are comprised of approximately $310.0 million of
expenditures to maintain the average age of the Company's rental fleet and
$240.0 million of discretionary expenditures to increase the size of the
Company's rental fleet. The Company expects that it will fund such
expenditures from a combination of approximately $200.0 million of proceeds
expected to be generated from the sale of used equipment, cash generated from
operations and, if required, borrowings available under the Credit Facility.
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.
30
<PAGE>
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. To the extent that the
Company's existing sources of cash described above are not sufficient to fund
such future acquisitions, the Company will require additional financing 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.
Based upon the terms of the Company's currently outstanding indebtedness,
the Company is scheduled to repay approximately $14.3 million during 1999.
Relationship Between Holdings and URI
Holdings is principally a holding company and primarily conducts its
operations through its wholly owned subsidiary URI and subsidiaries of URI.
Holdings provides certain services to URI in connection with its operations.
These services principally include: (i) senior management services, (ii)
finance related services and support, (iii) information technology systems and
support and (iv) acquisition related services. In addition, Holdings leases
certain equipment and real property that are made available for use by URI and
its subsidiaries. URI has made, and expects to continue to make, certain
payments to Holdings in respect of the services provided by Holdings to the
Company. The expenses relating to URI's payments to Holdings are reflected on
URI's financial statements as selling, general and administrative expenses. In
addition, although not legally obligated to do so, URI has in the past, and
expects that it will in the future, make distributions to Holdings to, among
other things, enable Holdings to pay dividends on certain preferred securities
(the "Trust Preferred Securities") that were issued by a subsidiary trust of
Holdings in August 1998.
The Trust Preferred Securities are the obligation of a subsidiary trust of
Holdings and are not the obligation of URI. As a result, the dividends payable
on these securities are reflected as an expense on the consolidated financial
statements of Holdings, but are not reflected as an expense on the
consolidated financial statements of URI. This is the principal reason why the
net income reported on the consolidated financial statements of URI is higher
than the net income reported on the consolidated financial statements of
Holdings.
Year 2000 Compliance
The Company has been informed by its software vendors that the Company's
recently installed information technology systems are 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 systems are 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
Company's customers or suppliers, the general economy or on the ability of
businesses generally to receive essential services (such as
telecommunications, banking services, etc.). Any such problem could have a
material adverse effect on the Company's business and financial condition. The
Company is unable at this time to assess the possible impact on its business
of year 2000 problems involving any third party.
Fluctuations in Operating Results
The Company expects that its revenues and operating results may fluctuate
from quarter to quarter or over the longer term 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 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; changes in demand for the
Company's equipment or the prices therefor due to changes in economic
conditions, competition or other factors.
31
<PAGE>
The Company is continually involved in the investigation and evaluation of
potential acquisitions. In accordance with generally accepted accounting
principles, the Company capitalizes certain direct out-of-pocket expenditures
(such as legal and accounting fees) relating to potential or pending
acquisitions. Indirect acquisition costs, such as executive salaries, general
corporate overhead, public affairs and other corporate services, are expensed
as incurred. The Company's policy is to charge against earnings any
capitalized expenditures relating to any potential or pending acquisition that
the Company determines will not be consummated. There can be no assurance that
the Company in future periods will not be required to incur a charge against
earnings in accordance with such policy, which charge, depending upon the
magnitude thereof, could adversely affect the Company's results of operations.
The Company will be required to incur significant start-up expenses in
connection with establishing each start-up location. Such expenses may
include, among others, pre-opening expenses related to setting up the
facility, and expenses in connection with training employees, installing
information systems and marketing. The Company expects that, in general,
start-up locations will initially operate at a loss or at less than normalized
profit levels. Consequently, the opening of a start-up location may negatively
impact the Company's margins until the location achieves normalized
profitability.
There may be a lag between the time that the Company purchases new equipment
and begins to incur the related depreciation and interest expenses and the
time that the equipment begins to generate revenues at normalized rates. As a
result, the purchase of new equipment, particularly equipment purchased in
connection with expanding and diversifying the Company's rental equipment, may
periodically reduce margins.
General Economic Conditions and Inflation
The Company's operating results may be adversely affected by (i) changes in
general economic conditions, including changes in construction and industrial
activity, or increases in interest rates, or (ii) adverse weather conditions
that may temporarily decrease construction and industrial activity in a
particular geographic area. Although the Company cannot accurately anticipate
the effect of inflation on its operations, the Company believes that inflation
has not had, and is not likely in the foreseeable future to have, a material
impact on its results of operations.
Recently Issued Accounting Standards
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("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, 2001. 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.
Factors that May Influence Future Results and Accuracy of Forward-Looking
Statements
Sensitivity to Changes in Construction and Industrial Activities
Our equipment is principally used in connection with construction and
industrial activities. Consequently, a downturn in construction or industrial
activity may lead to a decrease in demand for our equipment, which could
adversely affect our business. We have identified below certain of the factors
which may cause such a downturn, either temporarily or long-term:
.a general slow-down of the economy;
.an increase in interest rates; or
.adverse weather conditions which may temporarily affect a particular
region.
32
<PAGE>
Acquired Companies not Historically Operated as a Combined Business
The businesses that we acquired have been in existence an average of 29
years and some have been in existence for more than 50 years. However, these
businesses were not historically managed or operated as a single business.
Although we believe that we can successfully manage and operate the acquired
businesses as a single business, we cannot be certain of this.
Limited Operating History
We commenced equipment rental operations in October 1997 and have grown
through a combination of internal growth and the acquisition of 153 companies
(through July 27, 1999), including a merger in September 1998 with U.S.
Rentals. Due to the relatively recent commencement of our operations, we have
only a limited history upon which you can base an assessment of our business
and prospects.
Risks Relating to Growth Strategy
Key elements of our growth strategy are to continue to expand through a
combination of internal growth, a disciplined acquisition program and the
opening of new rental locations. We have identified below some of the risks
relating to our growth strategy:
Availability of Acquisition Targets and Sites for Start-Up Locations. We may
encounter substantial competition in our efforts to acquire additional rental
companies and sites for start-up locations. Such competition could have the
effect of increasing the prices that we will have to pay in order to acquire
such businesses and sites. We cannot guarantee that any additional businesses
or sites that we may wish to acquire will be available to us on terms that are
acceptable to us.
Need to Integrate New Operations. Our ability to realize the expected
benefits from completed and future acquisitions depends, in large part, on our
ability to integrate new operations with our existing operations in a timely
and effective manner. Accordingly, we devote substantial efforts to the
integration of new operations. We cannot, however, guarantee that these
efforts will always be successful. In addition, under certain circumstances,
these efforts could adversely affect our existing operations.
Debt Covenants. Certain of the agreements governing our outstanding
indebtedness provide that we may not make acquisitions unless certain
financial conditions are satisfied or the consent of the lenders is obtained.
Our ability to grow through acquisitions may be constrained as a result of
these provisions.
Certain Risks Related to Start-Up Locations. We expect that start-up
locations may initially have a negative impact on our results of operations
and margins for a number of reasons, including that (1) we will incur
significant start-up expenses in connection with establishing each start-up
location and (2) it will generally take some time following the commencement
of operations for a start-up location to become profitable. Although we
believe that start-ups can generate long-term growth, we cannot guarantee that
any start-up location will become profitable within any specific time period,
if at all.
Dependence on Additional Capital to Finance Growth
We will require substantial capital in order to execute our growth strategy.
We will require capital for, among other purposes, completing acquisitions,
establishing new rental locations, and acquiring rental equipment. If the cash
that we generate from our business, together with cash that we may borrow
under our credit facility, is not sufficient to fund our capital requirements,
we will require additional debt and/or equity financing. We cannot, however,
be certain that any additional financing will be available or, if available,
will be available on terms that are satisfactory to us. If we are unable to
obtain sufficient additional capital in the future, our ability to implement
our growth strategy could be limited.
33
<PAGE>
Possible Undiscovered Liabilities of Acquired Companies
Prior to making an acquisition, we seek to assess the liabilities of the
target company that we will become responsible for as a result of the
acquisition. Nevertheless, we may fail to discover certain of such
liabilities. We seek to reduce our risk relating to these possible hidden
liabilities by generally obtaining the agreement of the seller to idemnify and
reimburse us in the event that we discover any material hidden liabilities.
However, this type of agreement, if obtained, may not fully protect us against
hidden liabilities because (1) the seller's obligation to reimburse us is
generally limited in duration and/or amount and (2) the seller may not have
sufficient financial resources to reimburse us. Furthermore, when we acquire a
public company (such as when we acquired U.S. Rentals) we generally do not
obtain this type of agreement.
Dependence on Management
We are highly dependent upon our senior management team. Consequently, our
business could be adversely affected in the event that we lose the services of
any member of senior management. Furthermore, if we lose the services of
certain members of senior management, it is an event of default under the
agreements governing our credit facility and certain of our other
indebtedness, unless we appoint replacement officers satisfactory to the
lenders within 30 days. We do not maintain "key man" life insurance with
respect to members of senior management.
Competition
The equipment rental industry is highly fragmented and competitive. Our
competitors primarily include small, independent businesses with one or two
rental locations; regional competitors which operate in one or more states;
public companies or divisions of public companies; and equipment vendors and
dealers who both sell and rent equipment directly to customers. We may in the
future encounter increased competition from our existing competitors or from
new companies. In addition, certain equipment manufacturers may commence (or
increase their existing efforts relating to) renting and selling equipment
directly to our customers.
Fluctuations of Operating Results
We expect that our revenues and operating results may fluctuate from quarter
to quarter or over the longer term due to a number of factors, including:
. seasonal rental patterns of our customers--with rental activity tending
to be lower in the winter;
. changes in general economic conditions in our markets, including changes
in construction and industrial activities;
. the timing of acquisitions, new location openings, and related
expenditures;
. the effect of the integration of acquired businesses and start-up
locations;
. if we determine that a potential acquisition will not be consummated,
the need to charge against earnings any expenditures relating to such
transaction (such as financing commitment fees, merger and acquisition
advisory fees and professional fees) previously capitalized;
. the timing of expenditures for new equipment and the disposition of used
equipment; and
. changes in demand for our equipment or the prices therefor due to
changes in economic conditions, competition or other factors.
Liability and Insurance
We are exposed to various possible claims relating to our business. These
include claims relating to (1) personal injury or death caused by equipment
rented or sold by us, (2) motor vehicle accidents involving our delivery and
service personnel and (3) employment related claims. We carry a broad range of
insurance for the
34
<PAGE>
protection of our assets and operations. However, such insurance may not fully
protect us for a number of reasons, including:
. our coverage is subject to a deductible of $0.5 million and limited to a
maximum of $97 million per occurrence;
. we do not maintain coverage for environmental liability, since we
believe that the cost for such coverage is high relative to the benefit
that it provides; and
. 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 our insurance.
We cannot be certain that insurance will continue to be available to us on
economically reasonable terms, if at all.
Environmental and Safety Regulations
There are numerous federal, state and local laws and regulations governing
environmental protection and occupational health and safety matters. These
include laws and regulations that govern wastewater discharges, the use,
treatment, storage and disposal of solid and hazardous wastes and materials,
air quality and the remediation of contamination associated with the release
of hazardous substances. Under these laws, an owner or lessee of real estate
may be liable for, among other things, (1) the costs of removal or remediation
of hazardous or toxic substances located on, in, or emanating from, the real
estate, as well as related costs of investigation and property damage and
substantial penalties, and (2) environmental contamination at facilities where
its waste is or has been disposed. These laws often impose liability whether
or not the owner or lessee knew of the presence of the hazardous or toxic
substances and whether or not the owner or lessee was responsible for these
substances. Our activities that are or may be affected by these laws include
our use of hazardous materials to clean and maintain equipment and our
disposal of solid and hazardous waste and wastewater from equipment washing.
We also dispense petroleum products from underground and above-ground storage
tanks located at certain rental locations, and at times we must remove or
upgrade tanks to comply with applicable laws. Furthermore, we have acquired or
lease certain locations which have or may have been contaminated by leakage
from underground tanks or other sources and are in the process of assessing
the nature of the required remediation. Based on the conditions currently
known to us, we believe that any unreserved environmental remediation and
compliance costs required with respect to those conditions will not have a
material adverse effect on our business. However, we cannot be certain that we
will not identify adverse environmental conditions that are not currently
known to us, that all potential releases from underground storage tanks
removed in the past have been identified, or that environmental and safety
requirements will not become more stringent or be interpreted and applied more
stringently in the future. If we are required to incur environmental
compliance or remediation costs that are not currently anticipated by us, our
business could be adversely affected depending on the magnitude of the cost.
Risks Related to International Operations
Our operations outside the United States are subject to risks normally
associated with international operations. These include the need to convert
currencies, which could result in a gain or loss depending on fluctuations in
exchange rates, and the need to comply with foreign laws.
Dependence on Information Technology Systems
Our ability to monitor and control our operations depends to a large extent
on the proper functioning of our recently-installed information technology
systems. Any disruption in these systems or the failure of these systems to
operate as expected could, depending on the magnitude and duration of the
problem, adversely affect our business and our ability to implement our growth
strategy.
Year 2000 Issues
Our software vendors have informed us that our recently-installed
information technology systems are year 2000 compliant. We have, therefore,
not developed any contingency plans relating to year 2000 issues and have
35
<PAGE>
not budgeted any funds for year 2000 issues. Although we believe that our
systems are year 2000 compliant, unanticipated year 2000 problems may arise
which, depending on the nature and magnitude of the problem, could adversely
affect our business. Furthermore, year 2000 problems involving third parties
may have a negative impact on our customers or suppliers, the general economy
or on the ability of businesses generally to receive essential services (such
as telecommunications, banking services, etc.). Any such problem could
adversely affect our business. We are unable at this time to assess the
possible impact on our business of year 2000 problems involving any third
party.
Restrictive Covenants
The agreements governing our existing long-term indebtedness contain, and
future agreements governing our long-term indebtedness may also contain,
certain restrictive financial and operating covenants which affect, and in
many respects significantly limit or prohibit, among other things, our ability
to incur indebtedness, make prepayments of certain indebtedness, make
investments, create liens, make acquisitions, sell assets and engage in
mergers and consolidations. These covenants may significantly limit our
operating and financial flexibility.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Market risks relating to changes in interest rates and foreign currency
exchanges rates were reported in Item 7A of the Company's Annual Report on
Form 10-K for the year ended December 31, 1998. There has been no material
change in these market risks since the end of the fiscal year 1998.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Termination of Litigation Relating to Tender Offer
On April 5, 1999, the Company, through its wholly owned subsidiary, UR
Acquisition Corporation ("UR Acquisition"), commenced a tender offer to
purchase all outstanding shares of common stock of Rental Service Corporation
("RSC"). On June 28, 1999, the Company terminated this tender offer. In
connection with the tender offer, the Company became a party to three separate
actions in Delaware, Connecticut and Florida (as previously reported in the
Company's Report on Form 10-Q for the quarterly period ended March 31, 1999).
Each of these actions has been dismissed and the Company is no longer involved
in any litigation concerning the tender offer.
General Litigation
The Company and its subsidiaries are parties to various litigation matters,
in most cases involving ordinary and routine claims incidental to the business
of the Company. The ultimate legal and financial liability of the Company with
respect to such pending litigation cannot be estimated with certainty but the
Company believes, based on its examination of such matters, that such ultimate
liability will not have a material effect on the business or financial
condition of the Company.
Item 2. Changes in Securities and Use of Proceeds
Sale of Unregistered Securities
Set forth below is certain information concerning sales by the Company of
unregistered securities during the second quarter of 1999. 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.
1. In April 1999, the Company issued 1,584 shares of common stock to an
executive officer pursuant to an employment agreement.
2. In May 1999, the Company issued, in connection with one acquisition,
convertible notes in the aggregate principal amount of $5,000,000 which
provide for a weighted average conversion price of $35.68 per share.
3. In May 1999, the Company issued, in connection with two acquisitions,
300,000 warrants which provide for a weighted average exercise price of
$30.42 per share.
36
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders was held on June 3, 1999. The
holders of 65,262,231 common shares and 300,000 Series A Perpetual Convertible
Preferred Shares were present either in person or by proxy. There were no
broker non-votes at the meeting. The following three matters were voted on and
approved at such meeting.
1. The election of three members to the Board of Directors by the holders
of the Company's common stock.
<TABLE>
<CAPTION>
For Withheld
---------- --------
<S> <C> <C> <C>
Wayland R. Hicks............................... 64,557,932 704,299
John S. McKinney............................... 64,557,962 704,269
Gerald Tsai, Jr. .............................. 64,557,674 704,557
2. The election of two members to the Board of Directors by the holders of
the Company's Series A Perpetual Convertible Preferred Stock.
<CAPTION>
For Withheld
---------- --------
<S> <C> <C> <C>
Leon D. Black.................................. 300,000 0
Michael S. Gross............................... 300,000 0
3. The ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending December 31,
1999.
<CAPTION>
For Abstain Against
---------- -------- -------
<S> <C> <C> <C>
64,959,340 78,050 224,841
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
<C> <S>
(a) Exhibits:
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
3(a) 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. Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998).
3(b) Certificate of Amendment to the United Rentals, Inc. Certificate of
Incorporation dated September 29, 1998 (incorporated by reference to
Exhibit 4.2 to the United Rentals, Inc. Registration Statement on Form
S-3, No. 333-70151).
3(c) By-laws of United Rentals, Inc., in effect as of the date hereof
(incorporated by reference to exhibit 3.2 of United Rentals, Inc.
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998).
3(d) Form of Certificate of Designation for Series A Perpetual Convertible
Preferred Stock (incorporated by reference to Exhibit 4(k) to the
United Rentals, Inc. Amendment No. 1 on Form S-3 to Registration
Statement on Form S-1, No. 333-64463).
3(e) Amended and Restated Certificate of Incorporation of United Rentals
(North America), Inc., in effect as of the date hereof (incorporated
by reference to Exhibit 3.3 of the United Rentals (North America),
Inc. Quarterly Report on Form 10-Q for the quarter ended June 30,
1998).
3(f) By-laws of United Rentals (North America), Inc., in effect as of the
date hereof (incorporated by reference to Exhibit 3.4 of the United
Rentals (North America), Inc. Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998).
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
10(a) Commitment letter dated April 4, 1999 between United Rentals (North
America), Inc. and Goldman Sachs Credit Partners L.P. (incorporated by
reference to exhibit (b)(1) of United Rentals, Inc. Schedule 14D-1
dated April 5, 1999).
10(b) Preferred Stock Purchase Agreement, Series B Perpetual Convertible
Preferred Stock dated June 28, 1999 between United Rentals, Inc.,
Apollo Investment Fund IV, L.P. and Apollo Overseas Partners IV, L.P.,
including form of Certificate of Designation for Series B Perpetual
Convertible Preferred Stock and form of Amended and Restated
Registration Rights Agreement (incorporated by reference to exhibits
C, B and D of United Rentals, Inc. Proxy Statement on Schedule 14A
dated July 22, 1999).
10(c)* Preferred Stock Purchase Agreement, Series B Perpetual Convertible
Preferred Stock dated July 16, 1999 between United Rentals, Inc. and
Chase Equity Associates, L.P.
10(d)* Term Loan Agreement dated as of July 15, 1999 among United Rentals,
Inc., United Rentals (North America), Inc., various financial
institutions, Goldman Sachs Credit Partners L.P., as Syndication Agent
and Bank of America National Trust and Savings Association, as
Administrative Agent.
10(e)* First Amendment dated as of August 12, 1999, to Term Loan Agreement
dated as of July 15, 1999 among United Rentals, Inc., United Rentals
(North America), Inc., various financial institutions, Goldman Sachs
Credit Partners L.P., as syndication Agent and Bank of America
National Trust and Savings Association, as administrative Agent.
10(f)* Second Amendment dated as of July 14, 1999, to Term Loan Agreement
dated as of July 10, 1998 among United Rentals, Inc., United Rentals
(North America), Inc., various financial institutions and Bank of
America National Trust and Savings Association, as Agent.
10(g)* Second Amendment dated as of July 14, 1999, to Credit Agreement dated
as of September 29, 1998, between United Rentals, Inc., United Rentals
(North America), Inc., various financial institutions, Bank of America
Canada, as Canadian agent, and Bank of America National Trust and
Savings Association, as U.S. Agent.
27* Financial Data Schedule
27.1* Financial Data Schedule
</TABLE>
- --------
*Filed herewith.
(b)Reports on Form 8-K: none
38
<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: August 12, 1999 /s/ Michael J. Nolan
By: _________________________________
Michael J. Nolan
Chief Financial Officer
(Principal Financial Officer)
Dated: August 12, 1999 /s/ Peter R. Borzilleri
By: _________________________________
Peter R. Borzilleri
Vice President, Corporate
Controller
(Chief Accounting Officer)
United Rentals (North America), Inc.
Dated: August 12, 1999 /s/ Michael J. Nolan
By: _________________________________
Michael J. Nolan
Chief Financial Officer
(Principal Financial Officer)
Dated: August 12, 1999 /s/ Peter R. Borzilleri
By: _________________________________
Peter R. Borzilleri
Vice President, Corporate
Controller
(Chief Accounting Officer)
39
<PAGE>
EXHIBIT 10(c)
UNITED RENTALS, INC.
SERIES B PERPETUAL CONVERTIBLE PREFERRED STOCK,
$.01 Par Value
PREFERRED STOCK PURCHASE AGREEMENT
July 16, 1999
<PAGE>
United Rentals, Inc.
Four Greenwich Office Park,
Greenwich, CT 06830
July 16, 1999
To the Purchasers listed on the signature page
Dear Sirs:
United Rentals, Inc., a Delaware corporation (the "Company"), agrees
with the entities who are signing this Agreement as Purchasers (together, the
"Purchasers") as follows:
1. Authorization of Stock. The Company will authorize the issue and
sale of 500,000 shares of its Series B Perpetual Convertible Preferred Stock,
$.01 par value, to be designated as its "Series B Perpetual Convertible
Preferred Stock" (the "Stock"), of which 450,000 shares are designated as Class
B-1 Convertible Preferred Stock (the "B-1 Preferred Stock") and 50,000 shares
are designated as Class B-2 Convertible Preferred Stock (the "B-2 Preferred
Stock"). The relative rights, preferences and limitations of the Stock,
including, without limitation, the right to convert Shares into shares of the
Company's common stock, par value $.01 per share (the "Common Stock"), will be
as set forth in the form of the Certificate of Designation of the Stock of the
Company attached as Exhibit A hereto (the "Certificate of Designation").
Certain capitalized terms used in this Agreement are defined in Section 9;
references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a
Schedule or an Exhibit attached to this Agreement and references to a "section"
are, unless otherwise specified, to one of the sections of this Agreement.
2. Sale and Purchase of Stock. The Company will issue and sell to
the Purchasers and, subject to the terms and conditions of this Agreement, the
Purchasers will purchase from the Company, at the Closing provided for in
section 3, 5252 shares of B-1 Preferred Stock and 44,748 shares of B-2 Preferred
Stock (collectively, the "Shares") at a purchase price of $1,000 per share.
3. Closing; Payment of Purchase Price. The sale of the Shares to be
purchased by the Purchasers shall take place at the offices of O'Sullivan Graev
&
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Karabell, LLP at 10:00 a.m., New York City time, at a closing (the "Closing")
on the later of (a) the first Business Day after the conditions to closing set
forth in Section 4 (other than those to be satisfied at the Closing, which shall
be satisfied or waived at the Closing) have been satisfied or waived by the
party entitled to waive such condition) or (b) the first to occur of (i) the
163rd day after the date of this Agreement, (ii) the 10/th/ Business Day after
the Company gives notice to Purchasers that the Company's Debt to Total
Capitalization Ratio first equals or exceeds 0.6 , and (iii) the 10/th/ Business
Day after the Company gives notice to Purchasers that the volume-weighted
average of the closing price of the Company's Common Stock on the New York Stock
Exchange for the preceding 20 trading days shall have exceeded $30.00 per share,
or on such other Business Day thereafter or prior to such date as may be agreed
upon by the Company and the Purchasers. The Company's Debt to Total
Capitalization Ratio shall mean an amount determined by dividing (A) the sum of
the Company's and its subsidiaries' funded debt, consisting of notes, capital
leases, debentures (other than those issued to subsidiaries) and bank debt, less
cash and cash equivalents, by (B) the total capitalization (funded debt,
preferred stock of a subsidiary trust and stockholders' equity, less cash and
cash equivalents) of the Company and its subsidiaries, all as set forth on a
month end consolidated balance sheet of the Company prepared in accordance with
generally accepted accounting principles.
The names in which the Company will register the shares of the Stock to be
purchased at the Closing are as set forth in Exhibit 1. At the Closing, the
Company will deliver to the Purchasers the Shares to be purchased by the
Purchasers in the form of such number of certificates representing such Shares
as the Purchasers may reasonably request, dated the date of the Closing and
registered in the names aforesaid, and the Purchasers jointly and severally
shall deliver to the Company or its order immediately available funds in the
amount of the purchase price for such Shares. If at the Closing the Company
shall fail to tender to the Purchasers the Shares to be purchased by the
Purchasers, as provided above in this Section 3, or any of the conditions
specified in Section 4 shall not have been fulfilled to the Purchasers'
reasonable satisfaction, the Purchasers shall, at their election, be relieved of
all further obligations under this Agreement, without thereby waiving any other
rights the Purchasers may have by reason of such failure or such nonfulfillment.
If at the Closing, Purchasers shall fail to tender to the Company the purchase
price for the Shares, as provided above in this Section 3, other than on account
of any of the conditions specified in section 4 not having been fulfilled to the
Purchasers' satisfaction or on account of the breach by the Company of any of
its obligations under this Agreement, the Company shall, at its election, be
relieved of all further obligations under this Agreement, without thereby
waiving any other rights the Company may have by reason of such failure.
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4. Conditions to Closing. The Purchasers' obligation to purchase
and pay for the Shares to be sold to the Purchasers at the Closing is subject to
the fulfillment to their reasonable satisfaction, prior to or concurrently with
the Closing, of the following conditions:
4.1. Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be in all material
respects correct when made and at the time of the Closing, except as affected by
the consummation of the transactions contemplated by this Agreement.
4.2. Performance; No Default. The Company shall have performed and
complied in all material respects with all agreements and conditions contained
in this Agreement required to be performed or complied with by it prior to or at
the Closing.
4.3. Compliance Certificates. The Company shall have delivered to the
Purchasers an Officers' Certificate, dated the date of the Closing, certifying
that the conditions specified in sections 4.1 and 4.2 have been fulfilled.
4.4. Opinion of Counsel. The Purchasers shall have received the
favorable opinions, dated the date of the Closing and reasonably satisfactory in
substance and form to the Purchasers from Weil, Gotshal & Manges, counsel for
the Company and , if necessary, local counsel for the Company, substantially in
the form set forth in Exhibits B and C and covering such other matters incident
to the transactions contemplated by this Agreement as the Purchasers or their
counsel may reasonably request.
4.5. Certificate of Designation. The Certificate of Designation shall
have been duly filed under the laws of the State of Delaware, and the Restated
Certificate of Incorporation of the Company, as amended by the Certificate of
Designation, shall be in full force and effect, and shall not have been
otherwise amended or modified.
4.6. Registration Rights Agreement. The Purchasers shall have
received a fully executed counterpart of the Registration Rights Agreement
substantially in the form set out in Exhibit D (the "Registration Rights
Agreement"), such agreement shall be in full force and effect and no term or
condition thereof shall have been amended, modified or waived.
4.7. No Actions Pending. There shall be no suit, action,
investigation, inquiry or other proceeding by any Governmental Authority or any
other Person or any other legal or administrative proceeding pending or to the
knowledge of
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the Company threatened which questions the validity or legality of the
transactions contemplated by this Agreement, or seeks damages in connection
therewith.
4.8. Compliance with Securities Laws. The offering and sale by the
Company, at or prior to the Closing, of the Shares pursuant to this Agreement
shall have been made in compliance with all applicable requirements of federal
and state securities laws and the Purchasers shall have received evidence
thereof in form and substance reasonably satisfactory to the Purchasers.
4.9. Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory to the Purchasers and their counsel, and the Purchasers and their
counsel shall have received all such counterpart originals or certified or other
copies of such documents as the Purchasers or their counsel may reasonably
request.
4.10. Reservation of Common Stock. The shares of Common Stock
initially issuable upon conversion of the Stock shall have been duly authorized
and reserved for issuance upon conversion of the Stock.
4.11. Payment of Fees and Expenses. The Company shall have paid the
Purchasers on or before the Closing (a) a fee equal to 1% of the purchase price
of the Stock and (b) the costs and expenses provided for in Section 10 hereof,
provided that the Purchasers shall have provided to the Company a statement of
its estimated costs and expenses at least one Business Day prior to the
Closing.
4.12. HSR Act. Any waiting period (and any extension thereof) under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, applicable
to this Agreement and the transactions contemplated hereby shall have expired or
been terminated.
5. Representations and Warranties. Except as disclosed in Exhibit
E, the Company represents and warrants that:
5.1. Organization, Standing, etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into and perform all of its obligations under this Agreement
and each of the Collateral Agreements to which it is a party, to issue and sell
the Shares to be issued and sold at the Closing and to carry out the
transactions contemplated hereby or thereby.
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5.2. Subsidiaries. Exhibit E correctly lists as to each Subsidiary of
the Company on the date of this Agreement (a) its name, (b) the jurisdiction of
its incorporation and (c) the percentage of its issued and outstanding shares
owned by the Company or by another Subsidiary of the Company (specifying such
other Subsidiary), as the case may be. Each Subsidiary of the Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to own and operate its properties and to carry on its business as
now conducted and as proposed to be conducted. All the outstanding shares of
capital stock of each Subsidiary of the Company are validly issued, fully paid
and nonassessable, and all such shares indicated in Exhibit E as owned by the
Company or by a Subsidiary of the Company are so owned beneficially and of
record by the Company or by such Subsidiary, as the case may be, free and clear
of any Lien except as indicated in Exhibit E.
5.3. Qualification. Each of the Company and its Subsidiaries is duly
qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction (other than the jurisdiction of its incorporation)
in which the nature of its activities or the character of the properties it owns
or leases makes such qualification necessary and in which the failure so to
qualify would have a Material Adverse Effect. A "Material Adverse Effect" shall
mean any effect that is materially adverse to the properties, business, results
of operations or financial condition of the Company and its Subsidiaries taken
as a whole.
5.4. Business; Financial Statements. The Company has delivered to the
Purchasers complete and correct copies of the audited consolidated balance
sheets of the Company and its Subsidiaries as of December 31, 1998 and December
31, 1997, and the related audited supplemental consolidated statements of
operations, stockholders' equity and cash flows of the Company and its
Subsidiaries for the years ended December 31, 1998, 1997 and 1996. Such audited
financial statements are hereinafter referred to as the "Financial Statements."
The Financial Statements are accompanied by the report of Ernst & Young LLP,
which state that the Financial Statements have been prepared in accordance with
GAAP consistently applied throughout the periods involved (except as otherwise
specified therein) and present fairly the financial position of the corporations
to which they relate as of the respective dates specified and the results of
their operations and changes in financial position for the respective periods
specified, and that the audit by such accountants of the Financial Statements
has been made in accordance with generally accepted auditing standards. The
Company has also delivered to the Purchasers complete and correct copies of the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
March 31, 1999, and the related unaudited consolidated statement of operations,
stockholders' equity and cash flows of the Company and its Subsidiaries for the
three month period ended on such date. Such unaudited financial statements are
hereinafter referred to as the "Unaudited Statements." The Unaudited Statements
have been
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prepared in accordance with GAAP consistently applied throughout the periods
involved (except as otherwise specified therein) and present fairly the
financial position of the Company and its Subsidiaries as of the respective
dates specified, and the results of their operations and changes in cash flows
for the respective periods specified. As of the date of this Agreement, the
Purchasers are not aware that this representation is incorrect in any material
respect.
5.5. Changes, etc. Since March 31, 1999, neither the Company nor any
of the Subsidiaries has sustained any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree which would be material to the Company and the Subsidiaries taken as a
whole, otherwise than as reserved for as disclosed in the Company's financials
statements; and there has not been any change in the capital stock of the
Company or increase in the long-term debt (other than accretion or scheduled
repayments thereof) of the Company and the Subsidiaries taken as a whole, or any
material adverse change which has had a Material Adverse Effect, in each case
otherwise than as set forth on Exhibit E.
5.6. Capital Stock and Related Matters. At the time of the Closing
and after giving effect to the transactions contemplated by this Agreement, the
authorized capital stock of the Company will consist of (a) 500,000,000 shares
of Common Stock, of which approximately 71,500,000 shares will be outstanding,
(b) 300,000 shares of Series A Perpetual Convertible Preferred Stock, of which
300,000 shares are outstanding, (c) 450,000 shares of B-1 Preferred Stock, of
which 105,252 shares will be outstanding, (d) 50,000 shares of B-2 Preferred
Stock, of which 44, 748 shares will be outstanding and (e) 4,200,000 shares of
Preferred Stock, undesignated as to terms, none of which are outstanding. The
Company is obligated to issue Common Stock on conversion of debentures held by
United Rentals Trust I, a business trust organized under Delaware law. The
Common Stock and the Stock are hereinafter collectively referred to as "Capital
Stock". All of the outstanding shares of Capital Stock are, and at the Closing
will be, validly issued and outstanding, fully paid and non-assessable. Except
as set forth above and on Exhibit E, the Company has no outstanding stock or
securities convertible into or exchangeable for any shares of its Capital Stock,
or any outstanding rights (either preemptive or other) to subscribe for or to
purchase, or any outstanding options for the purchase of, or any agreements
providing for the issuance (contingent or otherwise) of, or any outstanding
calls, commitments or claims of any character relating to, any Capital Stock or
any stock or securities convertible into or exchangeable for any Capital Stock
of the Company. Except as set forth on Exhibit E, the Company is not subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its Capital Stock or any convertible securities, rights or
options of the type described in the preceding sentence. Neither the Company nor
any of its Subsidiaries is a party to, or has knowledge of, any agreement
(except as set forth on Exhibit E) restricting the
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<PAGE>
transfer of any shares of the Company's Capital Stock which would affect the
transferability of the Common Stock issuable upon conversion of the Stock.
5.7. Tax Returns and Payments. The Company and each of the
Subsidiaries have filed all necessary federal, state, local and foreign income,
payroll, franchise and other tax returns (after giving effect to extensions) and
have paid all taxes shown as due thereon (except where the failure to so file or
pay would not, singly or in the aggregate, have a Material Adverse Effect), and
there is no tax deficiency that has been, or to the knowledge of the Company is
likely to be, asserted against the Company, any of the Subsidiaries or any of
their properties or assets that would result in a Material Adverse Effect,
except for taxes that are being contested in good faith by appropriate
proceedings and with respect to which the Company has established adequate
reserves in accordance with United States generally accepted accounting
principles.
5.8. Indebtedness of the Company. Exhibit F correctly describes all
secured and unsecured Indebtedness of the Company and its Subsidiaries (other
than intercompany items) outstanding, or for which the Company or one of its
Subsidiaries has commitments, which is individually in excess of $5,000,000
("Significant Indebtedness") (excluding operating leases), on the date of this
Agreement. The secured and unsecured Indebtedness of the Company and its
Subsidiaries (other than intercompany items, and other than Significant
Indebtedness) outstanding, or for which the Company or one of its Subsidiaries
has commitments does not in the aggregate exceed $2,000,000,000 on the date of
this agreement. Neither the Company nor any of its Subsidiaries is in default
with respect to any Indebtedness or any instrument or agreement relating
thereto, except for such defaults as would not, either in any case or in the
aggregate, have a Material Adverse Effect.
5.9. Title to Properties; Liens. The Company and each of the
Subsidiaries have good and marketable title to all real property (other than
property which is leased) material to the conduct of the business of the Company
and the Subsidiaries, taken as a whole, and good and marketable title to all
personal property (other than property which is leased) material to the conduct
of the business of the Company and the Subsidiaries, taken as a whole, in each
case free and clear of all liens, encumbrances and defects except such as are
described on Exhibit E or such as do not in the aggregate have a Material
Adverse Effect; and any real property and buildings held under lease by the
Company and the Subsidiaries, material to the conduct of the business of the
Company and the Subsidiaries, taken as a whole, are held by them under valid,
subsisting and enforceable leases with such exceptions as are described on
Exhibit E and except for such other exceptions as do not have a Material Adverse
Effect.
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5.10. Litigation, etc. There is no action, proceeding or
investigation pending or (to the knowledge of the Company) threatened (or any
basis therefor known to the Company) which questions the validity of this
Agreement, the Shares or any action taken or to be taken pursuant to this
Agreement, the Shares or the Collateral Agreements. Other than as set forth on
Exhibit E, there are no legal or governmental proceedings pending to which the
Company or any of the Subsidiaries is a party or of which any property of the
Company or the Subsidiaries is the subject, which if determined adversely to the
Company or any of the Subsidiaries, would individually or in the aggregate have
a Material Adverse Effect; and, to the Company's knowledge, no such proceedings
which would in the aggregate have a Material Adverse Effect are threatened or
contemplated by governmental authorities or threatened by others.
5.11. Compliance with Other Instruments, etc. Neither the Company
nor any of its Subsidiaries is in violation of any term of its certificate or
articles of incorporation or by-laws, and neither the Company nor any of its
Subsidiaries is in violation of any term of any agreement or instrument to which
it is a party or by which it is bound or any term of any applicable law,
ordinance, rule or regulation of any Governmental Authority or any term of any
applicable order, judgment or decree of any court, arbitrator or Governmental
Authority, the consequences of which violation could reasonably be expected to
have a Material Adverse Effect. The compliance by the Company with all of the
provisions of this Agreement and the Registration Rights Agreement, the
execution, delivery and performance by the Company of this Agreement and the
Registration Rights Agreement, the issuance by the Company of the Common Stock
upon the conversion of the Shares, and the compliance with the terms of the
Certificate of Designation will not conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement (provided the consent of
the Company's lending banks must be obtained before the Company makes an offer
to purchase under Section 5 of the Certificate of Designation) or other
agreement or instrument to which the Company or any of the Subsidiaries is a
party or by which the Company or any of the Subsidiaries is bound or to which
any of the property or assets of the Company or any of the Subsidiaries is
subject, or constitute a Repayment Event thereunder, nor will such actions
result in any violation of the provisions of the certificate of incorporation or
bylaws of the Company or any of the Subsidiaries or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries or any of their
properties except in each case as would not, individually or in the aggregate
have a Material Adverse Effect. Except as set forth on Exhibit E, the
execution, delivery and performance by the Company of this Agreement and the
transactions contemplated hereby will not subject the Company to or accelerate
any obligation to make payments to any Person.
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5.12. Governmental Consents, etc. Except as required under the HSR
Act, no consent, approval or authorization of, or declaration or filing with,
any Governmental Authority on the part of the Company is required for the valid
execution and delivery of this Agreement, the valid offer, issue, sale and
delivery of the Shares pursuant to this Agreement or the valid issue and
delivery of shares of Common Stock issuable upon conversion of the Stock.
Except for (a) the requirements of the HSR Act and applicable state securities
or blue sky laws, and (b) consents, approvals, filings or notices that will be
given or made at or prior to the time of the Closing, neither the Company nor
any of its Subsidiaries is required to obtain any consent, approval or
authorization of, or to make any declaration or filing with, any Governmental
Authority as a condition to the valid execution, delivery or performance of any
of the Collateral Agreements or the consummation of the transactions
contemplated thereby.
5.13. Offering of Securities. Neither the Company nor any Person
acting on its behalf has offered the Stock or any similar securities of the
Company to, or solicited any offers to buy any thereof from, or otherwise
approached or negotiated with respect thereto with, any Person or Persons other
than the Purchasers in such manner as would subject the offering, issuance or
sale of any of the Stock to the provisions of Section 5 of the Securities Act.
Neither the Company nor any Person acting on behalf of the Company has taken or
will take any action which would subject the offering, issuance or sale of any
of the Stock to the provisions of Section 5 of the Securities Act.
5.14. Certain Fees. Except for the fee payable by the Company to
Goldman Sachs & Co., the amount of which will be disclosed to the Purchasers in
writing prior to the Closing, no broker's or finder's fees or commissions will
be payable by the Company with respect to the transactions contemplated by this
Agreement and the Collateral Agreements, and the Company hereby indemnifies the
Purchasers against and agrees that it will hold the Purchasers harmless from any
claim, demand or liability for broker's or finder's fees alleged to have been
incurred at the instance of the Company or any Person acting on behalf of or at
the request of the Company or any agent of the Company in connection with any of
the transactions contemplated by this Agreement and the Collateral Agreements,
and from any expenses, including reasonable legal fees, arising in connection
with any such claim, demand or liability.
5.15. Investment Company Act. The Company is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
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5.16. Disclosure. None of this Agreement, the Financial Statements,
the Annual Report on Form 10K for the year ended December 31, 1998, any document
filed by the Company with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 (the "Exchange Act") since the Annual Report on
Form 10K for the year ended December 31, 1998, or the Unaudited Statements,
contains (in each case, as of its date) any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they are
made, not misleading.
5.17. Enforceability. This Agreement and the Registration Rights
Agreement have been duly authorized and when validly executed and delivered by
the Company (assuming the due authorization, execution and delivery thereof by
the other parties thereto) will constitute the valid and binding obligations of
the Company, enforceable in accordance with their respective terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws relating to or affecting enforcement of
creditors' rights generally, or by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
5.18. Integration. Neither the Company nor any affiliate (as such
term is defined in Rule 501(b) under the Securities Act) has, directly or
through any agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as defined in the Securities Act) which
is or will be integrated with the sale of the Shares, in a manner that would
require the registration of the Securities under the Securities Act.
5.19. Manipulation. Prior to the date hereof, neither the Company
nor any of its affiliates has taken any action which is designed to or which has
constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the Company in
connection with the sale of the Shares.
5.20. Acquired Companies. To the best knowledge of the Company, the
representations and warranties made by each of the Acquired Companies (as
defined in Section 9) and the selling stockholders in the respective agreements
pursuant to which the Company or another Subsidiary acquired the Acquired
Companies did not as of the respective dates thereof contain any inaccuracies
that would, singly or in the aggregate, have a Material Adverse Effect.
5.21. Intellectual Property. The Company and the Subsidiaries own or
possess, or can acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or
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procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
business now operated by them, and neither the Company nor any of the
Subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company or any of
the Subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly
or in the aggregate, would result in a Material Adverse Effect.
5.22. Government Licenses. The Company and the Subsidiaries possess
such permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them, except where the failure to so possess such
Government Licenses would not, singly or in the aggregate, have a Material
Adverse Effect; the Company and the Subsidiaries are in compliance with the
terms and conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have, singly or
in the aggregate, a Material Adverse Effect; and neither the Company nor any of
the Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect.
5.23. Environmental Laws. Except as described on Exhibit E or except
as would not, singly or in the aggregate, result in a Material Adverse Effect:
(a) neither the Company nor any of the Subsidiaries is in violation of any
federal, state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent,
decree or judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened release
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (b) neither the Company nor any of the Subsidiaries is
lacking any permits, authorizations and approvals required under any applicable
Environmental Laws or are in violation of the requirements of such Environmental
Laws, (c) there are no pending or, to the best
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knowledge of the Company, threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of noncompliance
or violation, investigation or proceedings relating to any Environmental Law
against the Company or any of the Subsidiaries and (d) to the knowledge of the
Company there are no events or circumstances that might reasonably be expected
to form the basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against or
affecting the Company or any of the Subsidiaries relating to Hazardous Materials
or any Environmental Laws.
5.24. Insurance. Neither the Company nor any Subsidiary has received
notice from any insurer providing insurance coverage for the Company and the
Subsidiaries or agent of such insurer that capital improvements or other
expenditures will have to be made in order to continue present insurance
coverage, except such as could not reasonably be expected, singularly or in the
aggregate, to have a Material Adverse Effect.
5.25. Internal Controls. The Company and the Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (a) transactions are executed in accordance with management's
general or specific authorization; (b) transactions are recorded as necessary
(i) to permit preparation of financial statements in conformity with generally
accepted accounting principles and (ii) to maintain accountability for assets;
(c) access to assets is permitted only in accordance with management's general
or specific authorization; and (d) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any material differences. Any exceptions to this
representation would not render the representation in Section 5.4 incorrect in
any material respect or have a Material Adverse Effect.
5.26. ERISA. Neither the Company nor any of the Subsidiaries has
violated any provisions of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or the rules and regulations promulgated thereunder,
except for such violations which, singly or in the aggregate, would not have a
Material Adverse Effect. If any plan subject to ERISA is adopted, the execution
and delivery of this Agreement and the sale of the Securities will not involve
any non-exempt prohibited transaction within the meaning of Section 406 of ERISA
or Section 4975 of the Internal Revenue Code of 1986, as amended.
5.27. Year 2000 Compliance. With such exceptions as would not have a
Material Adverse Effect, the Company has been advised by its vendors (and has no
reason to believe that such advice is not correct) that as of the date of this
Agreement, all Date Data and Date-Sensitive Systems used by the Company and its
Subsidiaries are Year 2000 Compliant. "Date-Sensitive System" means any
software, microcode or hardware system or component, including any electronic or
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electronically controlled system or component, that uses or processes any Date
Data and that is installed, in development or on order by the Company or any of
its subsidiaries for their internal use or for the use of third parties, or
which the Company or any of its subsidiaries sell, lease, license, assign or
otherwise provide to any third party. "Year 2000 Compliant" means (i) with
respect to Date Data, that such data is in proper format and accurate for all
dates, including for those before, on and after December 31, 1999 and (ii) with
respect to Date-Sensitive Systems, that each such system accurately processes
all Date Data, including for dates before, on and after December 31, 1999,
without loss of any functionality or performance, including but not limited to
calculating, comparing, sequencing, storing and displaying such Date Data
(including all leap year considerations), when used as a stand-alone system or
in combination with other software or hardware.
6. Investment Representations. The Purchasers understand that
neither the Shares nor any Common Stock issuable upon conversion, if any, of the
Shares has been registered under the Securities Act and that the certificates
for the Shares and such Common Stock will bear a legend to that effect. The
Purchasers also understand that the Shares are being offered and sold pursuant
to an exemption from registration contained in the Securities Act, based in part
upon their representations contained in this Agreement. The Purchasers hereby
represent and warrant as follows:
6.1. Acquisition for Own Account. The Purchasers are acquiring the
Shares for their own account for investment and not with a view toward
distribution in a manner which would violate the Securities Act.
6.2. Ability to Protect Own Interests. The Purchasers represent that
by reason of their business or financial experience, or the business and
financial experience of their management, the Purchasers have the capacity to
protect their own interests in connection with the transaction contemplated in
this Agreement. The Purchasers are not a corporation formed for the specific
purpose of consummating this transaction.
6.3. Accredited Investor. The Purchasers represent that they are an
"accredited investor" as that term is defined in Regulation D promulgated under
the Securities Act.
6.4. Access to Information. The Purchasers have been given access to
all Company documents, records, and other information, have received physical
delivery of all those which the Purchasers have requested, and have had adequate
opportunity to ask questions of, and receive answers from, the Company's
officers, employees, agents, accountants, and representatives concerning the
Company's business, operations, financial condition, assets, liabilities, and
all other matters relevant to its investment in the Shares.
14
<PAGE>
6.5. No Brokers. Purchasers represent and warrant to the Company that
no broker's or finder's fees or commissions will be payable by the Purchasers
with respect to the transactions contemplated by this Agreement and the
Collateral Agreements, and the Purchasers hereby jointly and severally indemnify
and hold the Company harmless from any claim, demand or liability for broker's
or finder's fees alleged to have been incurred at the instance of the
Purchasers, their affiliates or agents or any Person acting on behalf of or at
the request of the Purchasers, their affiliates or agents.
6.6. Compliance with Laws. Purchasers and their transferees will
comply with all filing and other reporting obligations under all Requirements of
Law which shall be applicable to Purchasers with respect to the Shares and to
the Common Stock issuable or issued on conversion of the Shares.
7. Affirmative Covenants. The Company covenants that from and after
the date of this Agreement through the Closing and thereafter (provided that the
covenants in Sections 7.1 and 7.2 shall continue only so long as the Purchasers
own at least 25,000 Shares or 1,000,000 shares of Common Stock which have been
acquired upon conversion of any Shares):
7.1. Exchange Act and Securities Act Filings. The Company will
deliver to the Purchasers, within three Business Days of their filing with the
Securities and Exchange Commission, all documents filed by it with the
Securities and Exchange Commission pursuant to the Securities Act or the
Exchange Act, including exhibits thereto.
7.2. Certificates; Other Information. The Company will deliver to the
Purchasers: (a) promptly upon receipt thereof, copies of all final reports
submitted to the Company or any of its Subsidiaries by independent certified
public accountants in connection with each annual or interim audit of the books
of the Company or any of its Subsidiaries made by such accountants, including,
without limitation, any final comment letter submitted by such accountants to
management in connection with their annual audit; (b) promptly upon their
becoming available, copies of all financial statements, reports, notices and
proxy statements sent or made available generally by the Company to all of its
security holders in their capacity as such or by any Subsidiary of the Company
to its security holders; and (c) promptly upon their becoming available, copies
of all financial statements and reports (other than financial information and
reports which the Company reasonably deems confidential) which are sent or made
available by the Company to all of its directors in their capacity as such.
15
<PAGE>
7.3. Books and Records. The Company will, and will cause each of its
Subsidiaries to keep proper books of record and account in which entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities
7.4. Notices. The Company will, within 48 hours of occurrence, give
notice to the Purchasers: (a) of any (i) default or event of default under any
instrument or other agreement of the Company or any of its Subsidiaries which
default or event of default would have a Material Adverse Effect or (ii)
litigation, investigation or proceeding which may exist at any time between the
Company or any of its Subsidiaries and any Governmental Authority, which in any
such case, if adversely determined, could reasonably be expected to have a
Material Adverse Effect; and (b) of any litigation or proceeding affecting the
Company or any of its Subsidiaries (i) in which the amount claimed is $2,000,000
or more and not covered by insurance or covered by reserves on the Company's
balance sheet, or (ii) in which injunctive or similar relief is sought which if
obtained could reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this section 7.4 shall be accompanied by
a statement of the chief executive officer or chief financial officer of the
Company setting forth details of the occurrence referred to therein and stating
what action the Company proposes to take with respect thereto.
7.5. Reservation of Common Stock. The Company will at all times
reserve and keep available, solely for issuance and delivery upon conversion of
the Stock, the number of shares of Common Stock from time to time issuable upon
conversion of all shares of the Stock at the time outstanding. All shares of
Common Stock issuable upon conversion of the Stock shall be duly authorized and,
when issued upon such conversion, shall be validly issued, fully paid and non-
assessable.
7.6. Availability of Information. The Company will comply with the
reporting requirements of Sections 13 and 15(d) of the Exchange Act and will
comply with all other public information reporting requirements of the
Securities and Exchange Commission (including Rule 144 promulgated by the
Securities and Exchange Commission under the Securities Act) from time to time
in effect and relating to the availability of an exemption from the Securities
Act for the sale of any Restricted Securities. The Company will also reasonably
cooperate with each holder of any Restricted Securities in supplying such
information as may be necessary for such holder to complete and file any
information reporting forms presently or hereafter required by the Securities
and Exchange Commission as a condition to the availability of an exemption from
the Securities Act for the sale of any Restricted Securities.
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<PAGE>
7.7. Public Announcements. Attached hereto is the text of the press
releases which the parties shall issue publicly to announce the execution of
this Agreement.
7.8. [omitted]
8. Registration, Transfer and Substitution of Certificates for
Stock.
8.1. Stock Register; Ownership of Stock. (a) The Company will keep at
its principal office a register in which the Company will provide for the
registration of the stock and the registration of transfers or conversion of the
Stock. The Company may treat the Person in whose name any of the Shares or
shares issued upon conversion of any of the Stock are registered on such
register as the owner thereof and the Company shall not be affected by any
notice to the contrary. All references in this Agreement to a "holder" of any
Shares or shares issued upon conversion of any of the Stock shall mean the
Person in whose name such Shares or shares issued upon conversion of any of the
Stock are at the time registered on such register.
(b) Upon the surrender of any certificate for Stock, properly
endorsed, for registration of transfer or for conversion at the office of the
Company maintained pursuant to subdivision (a) of this section 8.1, the Company
at its expense will (subject to compliance with section 8.2 hereof, if
applicable) execute and deliver to or upon the order of the holder thereof (i) a
new certificate or certificates for the same aggregate number of shares of Stock
less the number of shares of Stock being converted, if any, in the name of such
holder or as such holder (upon payment by such holder of any applicable transfer
taxes) may direct, and (ii) a certificate or certificates for the number of
shares of Common Stock to be issued upon conversion of the shares of Stock so
surrendered.
8.2. Replacement of Certificates. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
certificate representing shares of Stock or Common Stock issued upon the
conversion of shares of Stock and, in the case of any such loss, theft or
destruction of any certificate representing shares of Stock or Common Stock
issued upon the conversion of shares of Stock held by a Person other than the
Purchasers, upon delivery of indemnity reasonably satisfactory to the Company in
form and amount or, in the case of any such mutilation, upon surrender of such
certificate representing shares of Stock or Common Stock issued upon the
conversion of shares of Stock for cancellation at the office of the Company
maintained pursuant to subdivision (a) of section 8.1 hereof, the Company at its
expense will execute and deliver, in lieu thereof, a new certificate
representing shares of Stock or Common Stock of like tenor.
17
<PAGE>
8.3. Restrictive Legends. Except as otherwise permitted by this
section 8, each certificate for Stock (including each certificate for Stock
issued upon the transfer of any certificate for Stock) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"The shares represented by this Certificate and any shares
of Common Stock issuable upon conversion of any such shares have
not been registered under the Securities Act of 1933 and may not
be transferred in the absence of such registration or an
exemption therefrom under such Act. Such shares and any such
shares of Common Stock may be transferred only in compliance with
the conditions specified in the Preferred Stock Purchase
Agreement dated July 16, 1999 between United Rentals, Inc. (the
"Company") and the purchasers identified therein. A complete and
correct copy of such Agreement is available for inspection at the
principal office of the Company and will be furnished without
charge to the holder of such shares upon written request."
Except as otherwise permitted by this section 8, each certificate for Common
Stock issued upon the conversion of any of the Stock, and each certificate
issued upon the transfer of any such Common Stock, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be
transferred in the absence of such registration or an exemption
therefrom under such Act. Such shares may be transferred only in
compliance with the conditions specified in the Preferred Stock
Purchase Agreement dated July 16, 1999 between United Rentals,
Inc. (the "Company") and the purchasers identified therein. A
complete and correct copy of such Agreement is available for
inspection at the principal office of the Company and will be
furnished without charge to the holder of such shares upon
written request."
8.4. Notice of Proposed Transfer; Opinions of Counsel. Prior to any
transfer of any Restricted Securities which are not registered under an
effective registration statement under the Securities Act, the holder thereof
will give written notice to the Company of such holder's intention to effect
such transfer and to comply in all other respects with this section 8.4. Each
such notice shall describe the manner and circumstances of the proposed transfer
and shall be accompanied by an opinion of counsel for such holder, which counsel
and opinion shall each be reasonably satisfactory to the Company, that the
proposed transfer may be effected without registration of such shares of
Restricted Securities under the Securities Act. Such
18
<PAGE>
holder shall thereupon be entitled to transfer such shares in accordance with
the terms of the notice delivered by such holder to the Company. Each
certificate representing such shares issued upon or in connection with such
transfer shall bear the restrictive legends required by section 8.3, unless the
related restrictions on transfer shall have ceased and terminated as to such
shares pursuant to section 8.5 hereof.
8.5. Termination of Restrictions. The restrictions imposed by this
section 8 upon the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities when such restrictions are
no longer required in order to insure compliance with the Securities Act.
Whenever such restrictions shall cease and terminate as to any Restricted
Securities, the holder thereof shall be entitled to receive from the Company,
without expense (other than applicable transfer taxes, if any), new certificates
for such securities of like tenor not bearing the applicable legends required by
section 8.3 hereof.
9. Definitions.
9.1. Certain Defined Terms. As used in this Agreement the following
terms have the following respective meanings:
Acquired Companies: The companies United Rentals, Inc. has acquired
------------------
since its formation in September 1997.
Affiliate: With reference to any Person, a spouse of such Person, any
---------
relative (by blood, adoption or marriage) of such Person within the second
degree, any director, officer or employee of such Person, any other Person of
which such Person is a member, director, officer or employee, and any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person.
Business Day: Any day except a Saturday, a Sunday, or any day on
------------
which banking institutions in New York, New York are required or authorized by
law or other governmental action to be closed.
Capital Stock: As defined in section 5.6 of this Agreement.
-------------
Certificate of Designation: As defined in section 1 of this
--------------------------
Agreement.
Closing: As defined in section 3 of this Agreement.
-------
Closing Date: The date of the Closing.
------------
19
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Code: The Internal Revenue Code of 1986, as amended from time to
----
time.
Collateral Agreements: The Registration Rights Agreement and the
---------------------
Certificate of Designation.
Common Stock: As defined in section 1 of this Agreement.
------------
Company: As defined in the introduction to this Agreement.
-------
Exchange Act: At any time, the Securities Exchange Act of 1934 as then
------------
in effect or any similar federal statute then in effect, and any reference to a
particular section of such Act shall be deemed to include a reference to the
comparable section, if any, in any such similar federal statute.
Financial Statements: As defined in section 5.4 of this Agreement.
--------------------
GAAP: Generally accepted accounting principles set forth in the
----
Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants and in statements by the Financial Accounting
Standards Board or in such other statement by such other entity as may be
approved by a significant segment of the accounting profession; and the
requisite that such principles be applied on a consistent basis shall mean that
the accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period.
Governmental Authority: Any nation or government, any state or other
----------------------
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
Indebtedness: With respect to any Person, at a particular time (a)
------------
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property, (b) the face amount of all letters of credit issued for the
account of such Person and, without duplication, all drafts drawn thereunder,
(c) all liabilities secured by any Lien on any property owned by such Person, to
the extent attributable to such Person's interest in such property, even though
such Person has not assumed or become liable for the payment thereof, and (d)
lease obligations of such Person which, in accordance with GAAP, should be
capitalized; but excluding trade and other accounts payable in the ordinary
course of business in accordance with customary trade terms and which are not
overdue for a period of more than 60 days or, if overdue for more than 60 days,
as to which a dispute exists and adequate reserves in conformity with GAAP have
been established on the books of such Person. The term "Indebtedness" shall not
include amounts which have not been drawn under credit facilities,
notwithstanding that such amounts when drawn will automatically be secured by an
existing Lien.
20
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Lien: Any mortgage, pledge, hypothecation, assignment, security
----
interest, lien, charge or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effects as
any of the foregoing, and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction). For the purposes of this Agreement, the Company or one of its
Subsidiaries shall be deemed to be the owner of any property which it has placed
in trust for the benefit of the holders of Indebtedness of the Company or its
Subsidiaries which Indebtedness is deemed to be extinguished under GAAP but for
which the Company or its Subsidiaries remain legally liable, and such trust
shall be deemed to be a Lien.
Majority in Interest: At any time, the holders of a majority, by
--------------------
number of shares, of the outstanding Shares and the outstanding shares of Common
Stock issued upon conversion of any Shares, such majority to be determined by
reference to the number of shares of Common Stock into which all outstanding
Shares are at the time convertible.
Officers' Certificate: As to the Company, a certificate executed on
---------------------
behalf of the Company by its Chief Executive Officer, and any one of its Vice
Chairman, Chief Acquisition Officer, or Chief Financial Officer.
Person: An individual, a partnership, a joint venture, a corporation,
------
a limited liability company, a trust, an unincorporated organization or a
government or any department or agency thereof.
Registration Rights Agreement: As defined in section 4.6 of this
-----------------------------
Agreement.
Repayment Event: Any event or condition which gives the holder of any
---------------
note, debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any of the Subsidiaries.
Requirement of Law: As to any Person, the Certificate of
------------------
Incorporation and by-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
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Restricted Securities: All of the following: (a) any certificates for
---------------------
Stock bearing the applicable legend or legends referred to in section 8.3
hereof, (b) any shares of Common Stock which have been issued upon the
conversion of any of the Stock and which are evidenced by a certificate or
certificates bearing the applicable legend or legends referred to in such
section and (c) unless the context otherwise requires, any shares of Common
Stock which are at the time issuable upon the conversion of Stock and which,
when so issued, will be evidenced by a certificate or certificates bearing the
applicable legend or legends referred to in such section.
Securities Act: At any time, the Securities Act of 1933 as then in
--------------
effect or any similar federal statute then in effect, and any reference to a
particular section of such Act shall be deemed to include a reference to the
comparable section, if any, in any such similar federal statute.
Securities and Exchange Commission: The U.S. Securities and Exchange
----------------------------------
Commission, or any other federal agency at the time administering the Securities
Act or the Exchange Act, whichever is the relevant statute for the particular
purpose.
Shares: As defined in section 1 of this Agreement.
------
Stock: As defined in section 1 of this Agreement.
-----
Subsidiaries: With respect to any Person, any corporation with respect
------------
to which more than 50% of the outstanding shares of stock of each class having
ordinary voting power (other than stock having such power only by reason of the
happening of a contingency) is at the time owned by such Person or by one or
more Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person.
Any of the above-defined terms may, unless the context otherwise
requires, be used in the singular or plural depending on the reference.
9.2. Accounting Terms. As used in this Agreement, and in any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in section 9.1 and accounting terms
partly defined in said section 9.1 to the extent not defined, shall have the
respective meanings given to them under GAAP.
9.3. Other Provisions Regarding Definitions: (1) Unless otherwise
defined therein, all terms defined in this Agreement shall have the defined
meanings when used in any certificate, report or other document made or
delivered pursuant to this Agreement.
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<PAGE>
(1) The words "hereof", "herein", and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
10. Expenses, etc. Whether or not the transactions contemplated by
this Agreement shall be consummated, the Company will pay all of its expenses in
connection with such transactions and in connection with any amendments or
waivers (whether or not the same become effective) under or in respect of this
Agreement or the Shares purchased by the Purchasers hereunder, including,
without limitation: (a) the cost and expenses of reproducing this Agreement and
the Shares purchased by the Purchasers, of furnishing all opinions of counsel
for the Company (including any opinions requested by the Purchasers' special
counsel as to any legal matter arising hereunder) and all certificates on behalf
of the Company, and of the Company's performance of and compliance with all
agreements and conditions contained herein to be performed or complied with by
it; and (b) the cost (other than any applicable stock transfer taxes) of
delivering to their principal office, insured to their satisfaction, the Shares
sold to the Purchasers hereunder and any Shares delivered to the Purchasers upon
any substitution of Shares pursuant to section 8 and of the Purchasers
delivering any Shares, insured to their satisfaction, upon any such
substitution. In addition, if the transactions contemplated hereby have been
consummated, the Company shall pay 50% of the reasonably itemized out-of-pocket
expenses incurred by the Purchasers in connection with such transactions
(including the fees and disbursements of their counsel), provided that the
Company's liability under this sentence shall not exceed $100,000. Reference is
made to Section 5 of this Agreement for certain agreements among the parties
regarding the fees, if any, of brokers and finders.
11. Adjustment of Terms. Notwithstanding the provisions of this
Agreement and the Certificate of Designation for the Series B Preferred Stock,
if the Company shall agree, on or before December 15, 1999, to issue to any
person or persons (other than (a) in connection with the acquisition of a
business or the acquisition of assets to be used in its business or (b) in a
bona fide underwritten public offering) more than $50 million aggregate
liquidation preference of a series of convertible preferred stock, then the
Company shall give to Purchasers not less than 15 business days' prior notice of
such proposed issuance, and the Purchasers shall be entitled at the closing of
such issuance to exchange their shares of Series B Preferred Stock for shares of
the newly issued convertible preferred stock, with the Series B Preferred Stock
valued at its liquidation amount.
12. Survival of Representations and Warranties and Indemnification;
Certain Limitations. The Company's indemnification obligations and all
representations and warranties contained in this Agreement shall survive the
execution and delivery of this Agreement, any investigation at any time made by
the
23
<PAGE>
Purchasers or on their behalf, and the purchase of the Shares by the Purchasers
under this Agreement and any conversion of any of the Stock or any disposition
of any shares of Common Stock issued upon conversion of any of the Stock;
provided that all such representations and warranties (and the indemnities in
respect thereof with respect to claims not made prior to such date) shall expire
120 days after the Closing, provided that the Company's indemnification
obligations relating to the Company's obligations created under Section 11 shall
expire April 15, 2000 after the Closing. No written (except as explicitly stated
therein) or oral statements made by or on behalf of the Company, other than in
this Agreement, the Collateral Agreements and the exhibits hereto and thereto,
shall constitute representations or warranties within the meaning of this
Agreement. In no event shall Purchasers be entitled to the remedy of rescission.
13. Amendments and Waivers. Any term of this Agreement may be
amended or modified and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Company and (a) in the case
of any such action prior to the Closing, the Purchasers; and (b) in the case of
any other such action, a Majority in Interest.
14. Notices, etc. Except as otherwise provided in this Agreement,
notices and other communications under this Agreement shall be in writing and
shall be delivered, or mailed by first-class mail, postage pre-paid, addressed,
(a) if to the Purchasers, at the address set forth at the beginning of this
Agreement, or at such other address as the Purchasers shall have furnished to
the Company in writing, or (b) if to any other holder of any Shares or shares of
Common Stock into which any of the Shares have been converted, at such address
as such other holder shall have furnished to the Company in writing, or, until
any such other holder so furnishes to the Company an address, then to and at the
address of the last holder of such Shares or shares of Common Stock into which
such Shares have been converted who has furnished an address to the Company, or
(c) if to the Company at the address of the Company set forth at the beginning
of this Agreement, to the attention of its President, or at such other address,
or to the attention of such other officer, as the Company shall have furnished
to the Purchasers and each such other holder in writing.
15. Indemnification. (a) The Company shall indemnify, defend and
hold harmless the Purchasers, their affiliates, partners, officers, employees
and agents (each, an "Indemnified Person") from and against any and all losses,
liabilities, damages, judgments, settlements and expenses (including interest
and penalties recovered by a third party with respect thereto and reasonable
attorneys' fees and expenses and reasonable accountants' fees and expenses
incurred in the investigation or defense of any of the same or in asserting,
preserving or enforcing any of rights hereunder), that arise out of:
24
<PAGE>
(i) any breach by the Company of any of its representations,
warranties or covenants contained in this Agreement or in the Registration
Rights Agreement; or
(ii) any litigation, investigation or proceeding instituted by any
Governmental Agency or any other Person with respect to this Agreement or the
collateral Agreements or the transactions contemplated hereby or thereby and
requiring the Purchasers participation or involvement, excluding, however, any
such litigation, investigation or proceeding which arises solely from the acts
or omissions of Purchasers or their affiliates.
(b) The Purchasers shall give the Company prompt notice of any third-party
claim that may give rise to any indemnification obligation under this Section 14
and the Company shall (except as set forth below) have the right to assume and
control the defense (at its expense) and settlement of any such claim through
the Company's own counsel or through other counsel reasonably acceptable to the
Purchasers. The Purchasers may retain additional counsel at their own expense.
If, under applicable standards of professional conduct, a conflict with respect
to any significant issue between the Purchasers and the Company exists in
respect of such third-party claim, the Company shall not assume the defense of
such claim and shall also pay the reasonable fees and expenses of one counsel
selected by Purchasers in respect of such claim. Notwithstanding the foregoing,
without the Purchasers' consent, the Company will not settle any action or
proceeding which does not provide the Purchasers a full, unconditional release
from all liability with respect to such claim by each claimant or plaintiff in a
form acceptable to the Purchasers' counsel, nor will the Company consent to any
injunctive or other non-monetary relief affecting any Indemnified Person.
16. Termination. This Agreement may be terminated (a) by the mutual
written consent of the Purchasers and the Company at any time or (b) by the
Purchasers or the Company if the Closing shall not have been consummated on or
before February 15, 2000; provided, however, that the right to terminate this
Agreement pursuant to (b) of this Section 16 shall not be available to any party
whose failure to perform any of its obligations under this Agreement results in
the failure to consummate the transactions by such time.
17. Miscellaneous. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors and assigns and
affiliates of the parties hereto, whether so expressed or not, and, in
particular, shall inure to the benefit of and be enforceable by any holder or
holders at the time of the Shares or shares of Common Stock into which any of
the Shares have been converted; except as aforesaid, this Agreement shall not
inure to the benefit of any third party. This Agreement embodies the entire
agreement and understanding between the Purchasers and the Company and
supersedes all prior agreements and understandings
25
<PAGE>
relating to the subject matter hereof. This Agreement shall be construed and
enforced in accordance with and governed by the law of the State of New York
without regard to the principles regarding conflicts of laws. The headings in
this Agreement are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
26
<PAGE>
If the Purchasers are in agreement with the foregoing, please sign the
form of agreement on the accompanying counterparts of this letter and return one
of the same to the Company, whereupon this letter shall become a binding
agreement between the Purchasers and the Company.
Very truly yours,
UNITED RENTALS, INC.
By:_______________________
Title:
The foregoing Agreement is hereby
agreed to as of the date thereof.
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners,
its General Partner
By:______________________
Name:
Title: General Partner
xxxvii
<PAGE>
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of ____ ___, 1999, among United
Rentals, Inc., a Delaware corporation (the "Company"), Bradley S. Jacobs and the
other undersigned parties hereto (the "Holders").
1. Introduction. The Company is a party to the Stock Purchase Agreement
------------
(the "Stock Purchase Agreement") set forth in Exhibit A pursuant to which the
Company has agreed, among other things, to issue to the Holders the number of
shares of its Class B-1 Perpetual Convertible Preferred Stock, par value $.01
per share ("B-1 Preferred") and Class B-2 Perpetual Convertible Preferred Stock,
par value $.01 per share ("B-2 Preferred" and collectively with the B-1
Preferred, the "Preferred Stock") which is set forth on such Exhibit. Pursuant
to the terms of the Certificate of Designation with respect to the Preferred
Stock (the "Certificate of Designation"), the Preferred Stock is convertible
into shares of the Company's common stock, par value $.01 per share (the "Common
Stock"). Certain capitalized terms used in this Agreement are defined in section
3 hereof; references to sections shall be to sections of this Agreement.
2. Registration under Securities Act, etc.
---------------------------------------
2.1 Registration on Request.
-----------------------
(a) Request. At any time or from time to time, upon the written
-------
request of one or more Initiating B-2 Holders, requesting that the Company
effect the registration under the Securities Act of all or part of such
Initiating B-2 Holders' Registrable Securities, and specifying the intended
method of disposition thereof, the Company will promptly give written notice of
such requested registration to all registered holders of Registrable Securities,
and thereupon the Company will, subject to the terms of this Agreement, use its
best efforts to effect the registration under the Securities Act of:
(i) the Registrable Securities which the Company has been
so requested to register by such Initiating B-2 Holders for disposition in
accordance with the intended method of disposition stated in such request;
(ii) all other Registrable Securities the holders of which
shall have made a written request to the Company for registration thereof
within 15 days after the giving of such written notice by the Company
(which request shall specify the intended method of disposition of such
Registrable Securities); and
(iii) all shares of Common Stock which the Company or other
holders of the Company's Common Stock having registration rights may
28
<PAGE>
elect to register in connection with the offering of Registrable Securities
pursuant to this section 2.1,
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities and the
additional shares of Common Stock, if any so to be registered; provided, that
--------
the Company shall not be required to effect any registration requested by
Initiating B-2 Holders pursuant to this section 2.1 (x) on more than one
occasion and (y) unless the Holders have requested to sell at least 500,000
shares of Registrable Securities or shares of Registrable Securities to be sold
have a fair market value (based upon the closing price of such Registrable
Securities quoted on the securities exchange or over-the-counter quotation
system on which such Registrable Securities are listed or quoted, as the case
may be, on the trading day immediately preceding any request pursuant to this
section 2.1) of at least $25 million.
(b) Registration Statement Form. Registrations under this
---------------------------
section 2.1 shall be on such appropriate registration form of the Commission as
shall permit the disposition of such Registrable Securities in accordance with
the intended method or methods of disposition specified in their request for
such registration and as shall be permitted under the Securities Act; provided,
--------
that such form shall not indicate that the securities to be registered
thereunder are to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act.
(c) Expenses. The Company will pay all Registration Expenses in
--------
connection with any registration requested pursuant to this section 2.1 by any
Initiating B-2 Holders. All other expenses (including underwriting discounts
and commissions and transfer taxes, if any) in connection with each other
registration requested under this section 2.1 shall be allocated pro rata among
--- ----
all Persons on whose behalf securities of the Company are included in such
registration, on the basis of the respective amounts of the securities then
being registered on their behalf.
(d) Effective Registration Statement. A registration requested
--------------------------------
pursuant to this section 2.1 shall not be deemed to have been effected (i)
-
unless a registration statement with respect thereto has become effective,
provided that a registration which does not become effective after the Company
- --------
has filed a registration statement with respect thereto solely by reason of the
refusal to proceed of the Initiating B-2 Holders (other than a refusal to
proceed based upon the written advice of counsel relating to a matter with
respect to the Company) shall be deemed to have been effected by the Company at
the request of such Initiating B-2 Holders unless the Initiating B-2 Holders
shall have elected to pay all Registration Expenses in connection with such
registration, (ii) if, after it has become effective, such registration becomes
--
subject to any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court for any reason, other than by
reason of some act or
29
<PAGE>
omission by such Initiating B-2 Holders with respect thereto, (iii) if the
---
conditions to closing specified in the purchase agreement or underwriting
agreement entered into in connection with such registration are not satisfied,
other than by reason of some act or omission by such Initiating B-
2 Holders or (iv) if the sale of the securities is not consummated due to the
lack of agreement between the Initiating B-2 Holders and the underwriters with
respect to the underwriting discount on the securities to be sold.
(e) Selection of Underwriters. If a requested registration
-------------------------
pursuant to this section 2.1 involves an underwritten offering, the managing or
lead underwriter shall be selected by the Company and shall be reasonably
acceptable to the holders of at least a majority (by number of shares) of the
Registrable Securities as to which registration has been requested, which shall
not unreasonably withhold its acceptance of any such underwriters, and any co-
managing and co-lead underwriters shall be selected by the Company.
(f) Priority in Requested Registrations. If a requested
registration pursuant to this section 2.1 involves an underwritten offering, and
the managing underwriter shall advise the Company in writing (with a copy to
each holder of Registrable Securities requesting registration) that, in its
opinion, the number of securities requested to be included in such registration
(including Common Stock of the Company or other Persons which are not
Registrable Securities) exceeds the number which can be sold in such offering
within a price range acceptable to the holders of a majority of the Registrable
Securities requested to be included in such registration, the Company will
include in such registration, to the extent of the number which the Company is
so advised can be sold in such offering, (i) first, Registrable Securities
-
requested to be included in such registration by the holder or holders of
Registrable Securities, pro rata among such holders requesting such registration
--- ----
on the basis of the number of such securities requested to be included by such
holders, (ii) second, Common Stock the Company proposes to sell and (iii) third,
-- ---
Common Stock of the Company held by other Persons having registration rights
proposed to be included in such registration by the holders thereof.
Notwithstanding the foregoing, in connection with any requested registration
pursuant to this section 2.1, the Company shall in all events be entitled to
register and sell up to 25% of the total number of shares of Common Stock to be
registered; provided, that if the Company registers and sells in excess of 33.3%
--------
of the total number of shares of Common Stock to be registered, the request for
registration pursuant to this section 2.1 shall not be deemed to have been
effected.
2.2 Incidental Registration.
-----------------------
(a) Right to Include Registrable Securities. If the Company at
---------------------------------------
any time proposes to register any of its securities under the Securities Act
(other than by a registration on Form S-4 or any successor form, Form S-8, or
any successor form thereto,
30
<PAGE>
relating to a stock option plan, stock purchase plan, managing directors' plan,
savings or similar plan and other than pursuant to section 2.1), whether or not
for sale for its own account, it will each such time give prompt written notice
to all holders of Registrable Securities of its intention to do so and of such
holders' rights under this section 2.2. Upon the written request of any such
holder made within 10 Business Days after the receipt of any such notice (which
request shall specify the number of Registrable Securities intended to be
disposed of by such holder and the intended method of disposition thereof), the
Company will, subject to the terms of this Agreement, use its best efforts to
effect the registration under the Securities Act of all Registrable Securities
which the Company has been so requested to register by the holders thereof, to
the extent requisite to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Securities so to be registered,
by inclusion of such Registrable Securities in the registration statement which
covers the securities which the Company proposes to register, provided that if,
--------
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
either not to register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to each holder
of Registrable Securities and, thereupon, (i) in the case of a determination not
-
to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to
pay the Registration Expenses in connection therewith), without prejudice,
however, to the rights of any holder or holders of Registrable Securities
entitled to do so to request that such registration be effected as a
registration under section 2.1, and (ii) in the case of a determination to delay
--
registering, shall be permitted to delay registering any Registrable Securities,
for the same period as the delay in registering such other securities. No
registration effected under this section 2.2 shall relieve the Company of its
obligation to effect any registration upon request under section 2.1, nor shall
any such registration hereunder be deemed to have been effected pursuant to
section 2.1. The Company will pay all Registration Expenses in connection with
each registration of Registrable Securities requested pursuant to this section
2.2.
(b) Priority in Incidental Registrations. If the Company at any
------------------------------------
time proposes to register any of its securities under the Securities Act as
contemplated by this section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any holder
of Registrable Securities use its best efforts to arrange for such underwriters
to include all the Registrable Securities to be offered and sold by such holder
among the securities to be distributed by such underwriters, provided that if
--------
the managing underwriter of such underwritten offering shall inform the holders
of the Registrable Securities requesting such registration and the holders of
any Common Stock of the Company which shall have exercised, in respect of such
underwritten offering, registration rights comparable to the rights under this
section
31
<PAGE>
2.2, by letter of its belief that inclusion in such underwritten distribution of
all or a specified number of such Registrable Securities or of such other
securities of the Company so requested to be included would interfere with the
successful marketing of the securities so being registered (other than such
Registrable Securities and other Common Stock of the Company so requested to be
included) by the underwriters (such writing to state the basis of such belief
and the approximate number of such Registrable Securities and shares of Common
Stock so requested to be included which may be included in such underwritten
offering without such effect), then the Company may, upon written notice to all
holders of such Registrable Securities and of such other shares of Common Stock
of the Company so requested to be included, exclude pro rata from such
--- ----
underwritten offering (if and to the extent stated by such managing underwriter
to be necessary to eliminate such effect) the number of such Registrable
Securities and shares of such other Common Stock so requested to be included the
registration of which shall have been requested by each holder of Registrable
Securities and by the holders of such other Common Stock so that the resultant
aggregate number of such Registrable Securities and of such other shares of
Common Stock so requested to be included which are included in such underwritten
offering shall be equal to the approximate number of shares stated in such
managing underwriter's letter.
2.3 Registration Procedures. If and whenever the Company is required
-----------------------
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in sections 2.1 and 2.2, the Company shall,
as expeditiously as possible:
(i) prepare and (in the case of a registration pursuant to
section 2.1, such filing to be made within 45 days after the initial
request of one or more Initiating B-2 Holders or in any event as soon
thereafter as possible) file with the Commission the requisite registration
statement to effect such registration (including such audited financial
statements as may be required by the Securities Act or the rules and
regulations promulgated thereunder) and thereafter use its best efforts to
cause such registration statement to become and remain effective, provided
--------
however that the Company may discontinue any registration of its securities
which are not Registrable Securities (and, under the circumstances
specified in section 2.2(a), its securities which are Registrable
Securities) at any time prior to the effective date of the registration
statement relating thereto, provided further that before filing such
--------
registration statement or any amendments thereto, the Company will furnish
to the counsel selected by the holders of Registrable Securities which are
to be included in such registration copies of all such documents proposed
to be filed, which documents will be subject to the review, but not the
prior approval, of such counsel;
32
<PAGE>
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement until the earlier of such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement or (i) in the case of a registration pursuant to section 2.1, the
expiration of 180 days after such registration statement becomes effective,
or (ii) in the case of a registration pursuant to section 2.2, the
expiration of 90 days after such registration statement becomes effective;
(iii) furnish to each seller of Registrable Securities
covered by such registration statement and each underwriter, if any, of the
securities being sold by such seller such number of conformed copies of
such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such
seller and underwriter, if any, may reasonably request;
(iv) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such other securities laws or blue sky laws of such
jurisdictions as any seller thereof and any underwriter of the securities
being sold by such seller shall reasonably request, to keep such
registrations or qualifications in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable such seller and underwriter to
consummate the disposition in such jurisdictions of the securities owned by
such seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not but for the requirements of this
subdivision (iv) be obligated to be so qualified, to subject itself to
taxation in any such jurisdiction or to consent to general service of
process in any such jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
33
<PAGE>
(vi) furnish to each seller of Registrable Securities a
signed counterpart, addressed to such seller and the underwriters, if any,
of:
(x) an opinion of counsel for the Company, dated the
effective date of such registration statement (or, if
such registration includes an underwritten public
offering, an opinion dated the date of the closing
under the underwriting agreement), reasonably
satisfactory in form and substance to such seller, and
(y) a "comfort" letter (or, in the case of any such
Person which does not satisfy the conditions for
receipt of a "comfort" letter specified in Statement on
Auditing Standards No. 72, an "agreed upon procedures"
letter), dated the effective date of such registration
statement (and, if such registration includes an
underwritten public offering, a letter of like kind
dated the date of the closing under the underwriting
agreement), signed by the independent public
accountants who have certified the Company's financial
statements included in such registration statement,
covering substantially the same matters with respect to
such registration statement (and the prospectus
included therein) and, with respect to events
subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to the
underwriters in underwritten public offerings of
securities (with, in the case of an "agreed upon
procedures" letter, such modifications or deletions as
may be required under Statement on Auditing Standards
No. 35) and, in the case of the accountants' letter,
such other financial matters, and, in the case of the
legal opinion, such other legal matters, as such seller
(or the underwriters, if any) may reasonably request;
(vii) notify the holders of Registrable Securities and the
managing underwriter or underwriters, if any, promptly and confirm such
advice in writing promptly thereafter:
(a) when the registration statement, the prospectus
or any prospectus supplement related thereto or post-effective
amendment to the registration statement has been filed, and, with
respect
34
<PAGE>
to the registration statement or any post-effective amendment
thereto, when the same has become effective;
(b) of any request by the Commission for amendments
or supplements to the registration statement or the prospectus or for
additional information;
(c) of the issuance by the Commission of any stop
order suspending the effectiveness of the registration statement or
the initiation of any proceedings by any Person for that purpose;
(d) if at any time the representations and
warranties of the Company made as contemplated by section 2.4 below
cease to be true and correct;
(e) of the receipt by the Company of any
notification with respect to the suspension of the qualification of
any Registrable Securities for sale under the securities or blue sky
laws of any jurisdiction or the initiation or threat of any proceeding
for such purpose; and
(viii) notify each seller of Registrable Securities covered
by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon the
discovery that, or upon the happening of any event as a result of which,
the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under
which they were made, and at the request of any such seller promptly
prepare and furnish to such seller and each underwriter, if any, a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made;
(ix) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the registration statement at
the earliest possible moment;
(x) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to
its
35
<PAGE>
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first full calendar month after the effective
date of such registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder, and will furnish to each such seller at least five business
days prior to the filing thereof a copy of any amendment or supplement to
such registration statement or prospectus and shall not file any thereof to
which any such seller shall have reasonably objected on the grounds that
such amendment or supplement does not comply in all material respects with
the requirements of the Securities Act or of the rules or regulations
thereunder;
(xi) subject to the provisions of section 2.5, make
available for inspection by a representative or representatives of the
holders of Registrable Securities to be included in such registration
statement, any underwriter participating in any disposition pursuant to the
registration statement and any attorney or accountant retained by such
selling holders or underwriter (each, an "Inspector"), all financial and
other records, pertinent corporate documents and properties of the Company
(the "Records"), and cause the Company's officers, directors and employees
to supply all information reasonably requested by any such Inspector in
connection with such registration in order to permit a reasonable
investigation within the meaning of Section 11 of the Securities Act;
(xii) provide and cause to be maintained a transfer agent
and registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement;
(xiii) enter into such agreements and take such other
actions as sellers of such Registrable Securities holding 51% of the shares
so to be sold or any underwriter shall reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities,
including, without limitation, causing members of senior management of the
Company to participate in customary "road-show" activities;
(xiv) use its best efforts to list all Registrable
Securities covered by such registration statement on any securities
exchange on which any of the securities of the same class as the
Registrable Securities are then listed; and
36
<PAGE>
(xv) use its best efforts to provide a CUSIP number for
the Registrable Securities, not later than the effective date of the
registration statement.
The Company may require each seller of Registrable Securities as to which
any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing.
The Company will not file any registration statement or amendment thereto
or any prospectus or any supplement thereto (including such documents
incorporated by reference and proposed to be filed after the initial filing of
the registration statement) to which the holders of at least a majority of the
Registrable Securities covered by such registration statement or the underwriter
or underwriters, if any, shall reasonably object, provided that the Company may
--------
file such document in a form required by law or upon the advice of its counsel.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
occurrence of any event of the kind described in subdivision (viii) of this
section 2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (viii) of this
section 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in paragraph (ii) of
this section 2.3 shall be extended by the length of the period from and
including the date when each seller of any Registrable Securities covered by
such registration statement shall have received such notice to the date on which
each such seller has received the copies of the supplemented or amended
prospectus contemplated by paragraph (viii) of this section 2.3.
If any such registration statement refers to any holder of Registrable
Securities by name or otherwise as the holder of any securities of the Company,
then such holder shall have the right to require (i) the insertion therein of
-
language, in form and substance satisfactory to such holder, to the effect that
the holding by such holder of such securities is not to be construed as a
recommendation by such holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such holder
will assist in meeting any future financial requirements of the Company, or (ii)
--
in the event that such reference to such holder by name or otherwise is not
required by the Securities Act or any similar federal statute then in force and
a written opinion
37
<PAGE>
from counsel to the holder to such effect is delivered to the Company, the
deletion of the reference to such holder.
2.4 Underwritten Offerings.
----------------------
(a) Requested Underwritten Offerings. If requested by the
--------------------------------
underwriters for any underwritten offering by holders of Registrable Securities
pursuant to a registration requested under section 2.1, the Company will enter
into an underwriting agreement with such underwriters for such offering, such
agreement to be satisfactory in substance and form to the Company, each such
holder and the underwriters, and to contain such representations and warranties
by the Company and such other terms as are generally prevailing in agreements of
this type, including, without limitation, indemnities at least as broad as those
provided in section 2.6. The holders of the Registrable Securities will
cooperate with the Company in the negotiation of the underwriting agreement and
will give consideration to the reasonable suggestions of the Company regarding
the form thereof, provided that nothing herein contained shall diminish the
--------
foregoing obligations of the Company. The holders of Registrable Securities to
be distributed by such underwriters shall be parties to such underwriting
agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder of Registrable Securities
shall not be required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations and warranties
or agreements regarding such holder, such holder's Registrable Securities and
such holder's intended method of distribution and any other representation
required by law.
(b) Incidental Underwritten Offerings. The holders of
---------------------------------
Registrable Securities to be distributed by such underwriters shall be parties
to the underwriting agreement between the Company and such underwriters and may,
at their option, require that any or all of the representations and warranties
by, and the other agreements on the part of, the Company to and for the benefit
of such underwriters shall also be made to and for the benefit of such holders
of Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. Any such
holder of Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
holder, such holder's Registrable Securities and such holder's intended method
of distribution and any other representation required by law.
38
<PAGE>
(c) Holdback Agreements.
-------------------
(i) So long as a holder of Registrable Securities and its
Affiliates own Common Stock and/or Preferred Stock convertible into Common
Stock exceeding 5% of the Common Stock of the Company outstanding
(including Common Stock issuable upon conversion of the Preferred Stock) or
such holder has designated a member of the board of directors of the
Company pursuant to paragraph 6(ii) of the Certificate of Designation for
the Series A Preferred Stock which director continues to serve on such
board, such holder of Registrable Securities agrees, by acquisition of such
Registrable Securities, (x) if so required by the managing underwriter, not
to sell, make any short sale of, loan, grant any option for the purchase
of, effect any public sale or distribution of or otherwise dispose of any
Common Stock or Registrable Securities not to be sold in an underwritten
offering pursuant to section 2.1 or 2.2, during the 30 days prior to the
anticipated consummation of such underwritten offering and 90 days after
the applicable underwritten registration pursuant to section 2.1 or 2.2 has
become effective, except as part of such underwritten registration and (y)
in connection with any acquisition by or merger with the Company which is
accounted for under generally accepted accounting principles as a pooling
of interest, upon the request of the Company, not to sell, make any short
sale of, loan, grant any option for the purchase of, effect any public sale
or distribution of or otherwise dispose of any Common Stock or Registrable
Securities, for the period commencing 30 days before the effective date of
such acquisition or merger until the publication of the Company's financial
results covering a period of at least 30 days following such acquisition or
merger which is sufficient in accordance with Accounting Series Release No.
135, or such shorter period if consistent with the requirements for pooling
of interests accounting treatment. Notwithstanding clause (x) of the
foregoing sentence and subject to clause (y), during any period described
above, each holder of Registrable Securities subject to the foregoing
sentence shall be entitled to sell securities in a private sale so long as
the purchaser of such securities agrees to be bound by the restrictions set
forth above to the same extent as the seller for the remainder of the
applicable period.
(ii) The Company agrees if so required by the managing
underwriter (x) not to sell, make any short sale of, loan, grant any option
-
for the purchase of, effect any public sale or distribution of or otherwise
dispose of its equity securities or securities convertible into or
exchangeable or exercisable for any of such securities during the 30 days
prior to and the 90 days after any underwritten registration pursuant to
section 2.1 has become effective, except as part of such underwritten
registration and except in connection with (A) a merger or acquisition by
the Company in which securities of the Company are issued
39
<PAGE>
directly to shareholders of the target entity or sellers of assets in
exchange for shares of such target entity or such assets or (B) a stock
option plan, stock purchase plan, managing directors' plan, savings or
similar plan, or an acquisition of a business, merger or exchange of stock
for stock, provided that no such agreement pursuant to this clause (x)
--------
shall prevent the Company from fulfilling its obligations pursuant to
section 2.1 or 2.2, subject to the provisions of section 2.7 and (y) to use
-
its reasonable best efforts to cause each director and executive officer of
the Company and any holder (other than the Holders) of its equity
securities or any securities convertible into or exchangeable or
exercisable for any of such equity securities, in each case purchased from
the Company at any time after the date of this Agreement (other than in a
public offering and other than securities issued to employees who are not
directors or executive officers of the Company pursuant to an employee
benefit plan or similar arrangement) to agree not to sell, make any short
sale of, loan, grant any option for the purchase of, effect any public sale
or distribution of or otherwise dispose of such securities during such
period, it being understood that no action is required by the Company
pursuant to this clause (y) until the managing underwriter requests.
(d) Participation in Underwritten Offerings. No Person (other
---------------------------------------
than the Company, which will be subject to and governed by the other terms and
provisions of this Agreement) may participate in any underwritten offering
hereunder unless such Person (i) agrees to sell such Person's securities on the
-
basis provided in any underwriting arrangements approved, subject to the terms
and conditions hereof, by the holders of a majority of Registrable Securities to
be included in such underwritten offering and (ii) completes and executes all
--
questionnaires, indemnities, underwriting agreements and other documents (other
than powers of attorney) required under the terms of such underwriting
arrangements. Notwithstanding the foregoing, no underwriting agreement (or other
agreement in connection with such offering) shall require any holder of
Registrable Securities to make any representations or warranties to or
agreements with the Company or the underwriters other than representations and
warranties or agreements regarding such holder, such holder's Registrable
Securities and such holder's intended method of distribution and any other
representation required by law.
2.5 Preparation; Reasonable Investigation. In connection with the
-------------------------------------
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, their underwriters, if
any, and their respective counsel and accountants, the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records (collectively, the "Records") and such opportunities to discuss the
business of the Company with its officers and the independent public accountants
who
40
<PAGE>
have certified its financial statements as shall be necessary, in the opinion of
such holders' and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act; provided, that Records
--------
which the Company determines, in good faith, to be confidential and which it
notifies such holder, underwriter, counsel or accountant are confidential shall
not be disclosed by such Person (other than to any holder of Registrable
Securities) unless (a) such Records have become generally available to the
public or (b) the disclosure of such Records may be may be necessary or, in the
case of clause (z) below, appropriate (x) in compliance with any law, rule,
regulation or order applicable to any such holder, underwriter, counsel or
accountant, (y) in response to any subpoena or other legal process or (z) in
connection with any litigation to which such holder, underwriter, counsel or
accountant is a party, and such Person shall sign an agreement to such effect
that shall be customary in form and reasonably acceptable to the Company.
2.6 Indemnification.
---------------
(a) Indemnification by the Company. In the event of any
------------------------------
registration of any securities of the Company under the Securities Act pursuant
to this Agreement, the Company will, and hereby does agree to, indemnify and
hold harmless in the case of any registration statement filed pursuant to
section 2.1 or 2.2, the holder of any Registrable Securities covered by such
registration statement, its directors and officers, each Person, if any, who
controls such holder within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such holder
or any such director or officer or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the case of any preliminary
prospectus, final prospectus or summary prospectus, in light of the
circumstances under which they were made, not misleading, and the Company will
reimburse such holder and each such director, officer, and controlling person
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, liability, action or
proceeding, provided that the Company shall not be liable in any such case to
--------
the extent that any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the
41
<PAGE>
Company by or on behalf of such holder specifically for use therein. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such holder or any such director, officer, underwriter
or controlling person and shall survive the transfer of such securities by such
holder.
(b) Indemnification by the Sellers. As a condition to including
------------------------------
any Registrable Securities in any registration statement filed pursuant to
section 2.3, the Company shall have received from each seller of Registrable
Securities a written undertaking satisfactory to it from the prospective seller
of such Registrable Securities, to indemnify and hold harmless (in the same
manner and to the same extent as set forth in subdivision (a) of this section
2.6) the Company, each director of the Company, each officer of the Company and
each other person, if any, who controls the Company within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such seller
specifically stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Any such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of the Company or
any such director, officer or controlling person and shall survive the transfer
of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
----------------------
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this section 2.6,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action, provided that the failure of any indemnified party to give notice
--------
as provided herein shall not relieve the indemnifying party of its obligations
under the preceding subdivisions of this section 2.6, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice.
In case any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified, to the
extent that the indemnifying party may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof. No indemnifying party shall, without the
consent
42
<PAGE>
of the indemnified party, consent to entry of any judgment or enter into any
settlement of any such action which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation. No
indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party.
(d) Other Indemnification. Indemnification similar to that
---------------------
specified in the preceding subdivisions of this section 2.6 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
securities under any Federal or state law or regulation of any governmental
authority, other than the Securities Act.
(e) Contribution. If the indemnification provided for in the
------------
preceding subdivisions of this section 2.6 is unavailable to an indemnified
party in respect of any expense, loss, claim, damage or liability referred to
therein, then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such expense, loss, claim, damage or liability (i) in such
-
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the holder or other Person, as the case may be, on
the other from the distribution of the Registrable Securities or (ii) if the
--
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and of the holder or other Person, as the case may be, on the other
in connection with the statements or omissions which resulted in such expense,
loss, damage or liability, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the holder or other Person, as the case may be, on the other in connection
with the distribution of the Registrable Securities shall be deemed to be in the
same proportion as the total net proceeds received by the Company from the
initial sale of the Registrable Securities by the Company to the purchasers
pursuant to the Stock Purchase Agreements bear to the gain, if any, realized by
the selling holder or the underwriting discounts and commissions received by the
underwriter, as the case may be. The relative fault of the Company on the one
hand and of the holder or other Person, as the case may be, on the other shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission to state a material fact relates
to information supplied by the Company, by the holder or by the other Person and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission, provided that the foregoing
--------
contribution agreement shall not inure to the benefit of any indemnified party
if indemnification would be unavailable to such indemnified party by reason of
the provisions contained in the first
43
<PAGE>
sentence of subdivision (a) of this section 2.6, and in no event shall the
obligation of any indemnifying party to contribute under this subdivision (e)
exceed the amount that such indemnifying party would have been obligated to pay
by way of indemnification if the indemnification provided for under subdivisions
(a) or (b) of this section 2.6 had been available under the circumstances.
The Company and the holders of Registrable Securities agree that it would
not be just and equitable if contribution pursuant to this subdivision (e) were
determined by pro rata allocation (even if the holders and any underwriters were
--- ----
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages and liabilities referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth in the preceding sentence and subdivision (C) of this
section 2.6, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (e), no holder of
Registrable Securities or underwriter shall be required to contribute any amount
in excess of the amount by which (i) in the case of any such holder, the net
-
proceeds received by such holder from the sale of Registrable Securities or (ii)
--
in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such holder or
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
2.7 Suspension of Registration. Notwithstanding anything to the
--------------------------
contrary contained herein, the Company will not be required to file any
registration statement pursuant to section 2.1(a) or furnish any supplement to a
prospectus pursuant to section 2.3(viii) during any of the following periods:
(i) 30 days prior to the anticipated consummation of a public offering by the
Company of its securities and 90 days subsequent to the consummation of such
public offering where, in the good faith judgment of the managing underwriter or
underwriters thereof, such filing or furnishing of such supplement would have an
adverse effect on such offering, (ii) if such filing or furnishing of such
supplement is prohibited by applicable law, (iii) if the filing of such
registration statement or furnishing of such supplement would require the
Company to disclose a material financing, acquisition or other corporate
development, and the proper officers of the Company shall have determined in
good faith that such disclosure is not in the best interest of the Company or
(iv) during the period described in section 2.4(c)(ii), provided that the
--------
Company may not delay the filing of any registration statement or
44
<PAGE>
furnishing of such supplement pursuant to this section 2.7 for more than an
aggregate of 135 days in any twelve-month period; and provided, further, that
-------- -------
any such delay pursuant to this section 2.7 shall not in the aggregate exceed
135 days in any twelve-month period. Notwithstanding the foregoing, in the case
of a public offering by any holder of the Company's capital stock (the "Selling
Holder") pursuant to rights granted by the Company to such holder similar to
section 2.1, no delay in the filing of a registration statement or the
furnishing of a supplement pursuant to clause (i) of the immediately preceding
sentence shall be for a time period longer than any similar time period for
delay imposed on such Selling Holder pursuant to the agreement with the Company
granting such Selling Holder registration rights. Upon the expiration of the
period described in clause (iii) of the first sentence of this section 2.7, the
Company shall give prompt notice to all holders of Registrable Securities and
shall promptly file any registration statement requested to be filed pursuant to
2.1(a) and furnish any prospectus supplement required to be furnished pursuant
to section 2.3(viii).
2.8 Other Agreements. The Company shall not enter into any agreement
----------------
or instrument which would conflict with or result in a breach or violation of
any of the terms or provisions of this Agreement. In addition, the Company shall
not enter into any agreement or instrument with any Person (other than any
Holder or its Affiliates) which grant such Person rights similar to those in
section 2.1 unless such agreement permits the holders of Registrable Securities
to exercise their rights pursuant to section 2.2 hereof in connection with any
registration statement filed pursuant to which such Person will sell securities
of the Company.
3. Tag-Along Notice. Pursuant to that certain Amended and Restated
----------------
Registration Rights Agreement (the "Amended and Restated Registration Rights
Agreement") dated as of _________, 1999 among the Company, Jacobs and Apollo,
certain Tag-Along Rights (as defined in the Amended and Restated Registration
Rights Agreement) were granted to Apollo. The Holders hereby acknowledge that
they do not have any such Tag-Along Rights. The Company and Jacobs hereby agree
to give copies of all notices sent to Apollo pursuant to Section 3 of the
Amended and Restated Registration Rights Agreement to Chase. Unless otherwise
specified herein, copies of all notices given by Jacobs pursuant to section
3.1(a) and 3.1(b) of the Amended and Restated Registration Rights Agreement
shall be given by facsimile transmission to each of (i) Chris Behrens at (212)
662-3101 and (ii) Christopher Giordano at (212) 408-2420, or in each case such
other facsimile number or to the attention of such other Person as Apollo shall
have furnished to Jacobs.
4. Definitions. As used herein, unless the context otherwise requires,
-----------
the following terms have the following respective meanings:
45
<PAGE>
Affiliate: With respect to any entity, any other entity directly or
---------
indirectly controlling or controlled by, or under direct or indirect
common control with, such specified entity. For purposes of this
definition, the term "control" means (i) the power to direct the
management and policies of an entity, directly or through one or more
intermediaries, whether through the ownership of voting securities, by
contract or otherwise or (ii) without limiting the foregoing, the
beneficial ownership of 50% or more of the voting power of the voting
common equity of such entity (on a fully diluted basis).
Apollo: Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV,
-------
L.P. and their Affiliates, collectively.
Beneficial Ownership or Beneficially Owned: With respect to any
-------------------- ------------------
person, any securities with respect to which such person is deemed to
have "beneficial ownership" as defined in rule 13d-3 under the
Securities Exchange Act of 1934, as amended. For purposes of this
Agreement only, any holder of Preferred Stock shall be deemed to be
the beneficial owner of any shares of Common Stock of the Company
issuable upon conversion of such Preferred Stock.
Business Day: Any day except a Saturday, Sunday or nationally
------------
recognized holiday in the State of New York, United States of America.
Chase: Chase Equity Associates, L.P. and its Affiliates.
-----
Commission: The Securities and Exchange Commission or any other
----------
Federal agency at the time administering the Securities Act.
Common Stock: As defined in section 1.
------------
Company: As defined in the introductory paragraph of this Agreement.
-------
Exchange Act: The Securities Exchange Act of 1934, or any similar
------------
Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Securities Exchange Act of 1934 shall
include a reference to the comparable section, if any, of any such
similar Federal statute.
Holders: As defined in the introductory paragraph of this Agreement.
-------
Holder's Counsel: A single counsel (if any) designated by the holders
----------------
of not less than 25% of the aggregate principal amount of the
Registrable
46
<PAGE>
Securities to be sold pursuant to section 2.1 or 2.2; provided,
--------
however, that if more than one counsel is so designated, the Holder's
-------
Counsel shall be the designee of the holders that are holding the
greater percentage of the Registrable Securities.
Initiating B-2 Holders: Any holder or holders of B-2 Preferred
----------------------
holding at least 50% of the B-2 Preferred issued and outstanding on
the date hereof, and initiating a request pursuant to section 2.1 for
the registration of all or part of such holder's or holders' B-2
Preferred; provided, that any shares of B-2 Preferred converted into
shares of B-1 Preferred shall be deemed to be shares of B-2 Preferred
for purposes of this definition.
Jacobs: Bradley S. Jacobs.
------
Person: A corporation, an association, a partnership, an
------
organization, business, an individual, a governmental or political
subdivision thereof or a governmental agency.
Preferred Stock: As defined in section 1.
---------------
Registrable Securities: The Common Stock or any other securities
----------------------
issuable upon conversion of the Preferred Stock issued pursuant to the
Stock Purchase Agreement and any securities issued or issuable with
respect to any such Common Stock by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise which the
holders thereof are entitled to receive. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (a) a registration statement with respect
-
to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (b) they shall have been
-
distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (c) they shall have been
-
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company
and subsequent disposition of them shall not require registration or
qualification of them under the Securities Act or any similar state
law then in force, or (d) they shall have ceased to be outstanding.
-
Registration Expenses: All expenses incident to the Company's
---------------------
performance of or compliance with section 2, including, without
limitation, (a) all Commission and any NASD registration and filing
fees and expenses, (b) all fees and expenses in connection with the
registration
47
<PAGE>
or qualification of the Registrable Securities for offering and sale
under the State securities and blue sky laws and, in the case of an
underwritten offering, determination of their eligibility for
investment under the laws of such jurisdictions as the managing
underwriter or underwriters may designate, including reasonable fees
and disbursements, if any, of counsel for the underwriters in
connection with such registrations or qualifications and
determination, (c) all expenses relating to the preparation, printing,
distribution and reproduction of the registration statement required
to be filed hereunder, each prospectus included therein or prepared
for distribution pursuant hereto, each amendment or supplement to the
foregoing, the expenses of preparing the Registrable Securities for
delivery and the expenses of printing or producing any underwriting
agreement(s) among underwriters and "Blue Sky" or legal investment
memoranda, any selling agreements and all other documents in
connection with the offering, sale or delivery of Registrable
Securities to be disposed of, (d) messenger, telephone and delivery
expenses of the Company, (e) fees and expenses of any transfer agent
and registrar with respect to the Registrable Securities and any
escrow agent or custodian, (f) internal expenses of the Company
(including, without limitation, all salaries and expenses of the
Company's officers and employees performing legal or accounting
duties), (g) fees, disbursements and expenses of counsel and
independent certified public accountants of the Company (including the
expenses of any opinions or "cold comfort" letters required by or
incident to such performance and compliance), (h) fees, disbursements
and expenses of any "qualified independent underwriter" engaged for
acting in such capacity, (i) fees, expenses and disbursements of any
other persons retained by the Company, including special experts
retained by the Company in connection with such registration, (k) all
fees and expenses incurred in connection with the qualification of the
shares of Common Stock constituting Registrable Securities for
quotation on the Nasdaq National Market, any over-the-counter market,
or the listing of such shares on any securities exchange and (l) in
the case of an underwritten offering, the reasonable fees,
disbursements and expenses of a single counsel retained by the Holders
to represent them in connection with such offering (the selection of
such counsel by such Holders to be made in the same manner as is
provided in the definition of the terms "Holders' Counsel").
Securities Act: The Securities Act of 1933, or any similar Federal
--------------
statute, and the rules and regulations of the Commission thereunder,
all as of the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933 shall include a
reference to the comparable section, if any, of any such similar
Federal statute.
48
<PAGE>
Stock Purchase Agreements: As defined in section 1.
-------------------------
5. Rules 144 and 144A. The Company shall timely file the reports
------------------
required to be filed by it under the Securities Act and the Exchange Act
(including but not limited to the reports under sections 13 and 15(d) of the
Exchange Act referred to in subparagraph (c) of Rule 144 adopted by the
Commission under the Securities Act) and the rules and regulations adopted by
the Commission thereunder (or, if the Company is not required to file such
reports, will, upon the request of any holder of Registrable Securities, make
publicly available other information) and will take such further action as any
holder of Registrable Securities or any broker facilitating such sale may
reasonably request, all to the extent (i) required from time to time to enable
such holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
-
under the Securities Act, as such Rule may be amended from time to time, or (b)
-
any similar rule or regulation hereafter adopted by the Commission. The Company
shall also provide such information and otherwise use all reasonable commercial
efforts to cooperate with any holder of Registrable Securities in connection
with any other sale by such holder pursuant to another exemption under the
Securities Act, in each case to the extent such information or other action by
the Company may be necessary to effect such sale pursuant to the applicable
exemption. Upon the request of any holder of Registrable Securities, the
Company will deliver to such holder any information to be delivered or filed in
connection with the requirements of this Section 5.
6. Amendments and Waivers. This Agreement may be amended and the Company
----------------------
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the holder or
holders of 50% or more of the shares of Registrable Securities and, in the case
of any such amendment, action or omission to act in respect of the first
sentence of Section 5, the written consent of each holder affected thereby.
Each holder of any Registrable Securities at the time or thereafter outstanding
shall be bound by any consent authorized by this section 6, whether or not such
Registrable Securities shall have been marked to indicate such consent.
7. Nominees for Beneficial Owners. In the event that any Registrable
------------------------------
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable Securities
held by any holder or holders of Registrable Securities contemplated by this
Agreement. If the beneficial owner of any Registrable Securities so elects, the
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.
49
<PAGE>
8. Notices. Except as otherwise provided in this Agreement, all notices,
-------
requests and other communications to any Person provided for hereunder shall be
in writing and shall be given to such Person (a) in the case of a party hereto
-
other than the Company, addressed to such party in the manner set forth in the
applicable Stock Purchase Agreement or at such other address as such party shall
have furnished to the Company in writing, or (b) in the case of any other holder
-
of Registrable Securities, at the address that such holder shall have furnished
to the Company in writing, or, until any such other holder so furnishes to the
Company an address, then to and at the address of the last holder of such
Registrable Securities who has furnished an address to the Company, or (c) in
-
the case of the Company or Jacobs, at Four Greenwich Office Park, Greenwich,
Connecticut 06830 to the attention of its Chief Executive Officer, with a copy
to Oscar D. Folger at 521 Fifth Avenue, 24/th/ floor, New York, New York 10175,
or at such other address, or to the attention of such other officer, as the
Company shall have furnished to each holder of Registrable Securities at the
time outstanding. Each such notice, request or other communication shall be
effective (i) if given by mail, 72 hours after such communication is deposited
-
in the mails with first class postage prepaid, addressed as aforesaid or (ii) if
--
given by any other means (including, without limitation, by air courier), when
delivered at the address specified above, provided that any such notice, request
--------
or communication to any holder of Registrable Securities shall not be effective
until received.
9. Assignment. This Agreement shall be binding upon and inure to the
----------
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, the provisions of this Agreement which are
for the benefit of the parties hereto other than the Company shall also be for
the benefit of and enforceable by any subsequent holder of any Registrable
Securities that acknowledges such assignment in writing and agrees to the terms
hereof.
10. Descriptive Headings. The descriptive headings of the several
--------------------
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
-------------
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF
THE STATE OF NEW YORK WITHOUT REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAW
12. Counterparts. This Agreement may be executed simultaneously in any
------------
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
13. Entire Agreement. This Agreement embodies the entire agreement and
----------------
understanding between the Company and each other party hereto relating to the
subject
50
<PAGE>
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter. This Agreement amends and restates the Prior Agreement in
its entirety.
14. SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH
--------------------------
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS AND APPELLATE COURTS FROM ANY THEREOF. THE
COMPANY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF TO THE COMPANY BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN
RECEIPT REQUESTED, TO THE COMPANY AT ITS ADDRESS SPECIFIED IN SECTION 7. THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND THE COMPANY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
----- --- ----------
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN
SUCH RESPECTIVE JURISDICTIONS.
15. Severability. If any provision of this Agreement, or the application
------------
of such provisions to any Person or circumstance, shall be held invalid, the
remainder of this Agreement, or the application of such provision to Persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
51
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
UNITED RENTALS, INC.
By:____________________________
Name: Bradley S. Jacobs
Title: Chief Executive Officer
Holders:
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners,
its general partner
By:__________________________
Name:
Title: General Partner
52
<PAGE>
EXHIBIT 10(d)
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TERM LOAN AGREEMENT
dated as of July 15, 1999
among
UNITED RENTALS, INC.,
UNITED RENTALS (NORTH AMERICA), INC.,
VARIOUS FINANCIAL INSTITUTIONS,
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Syndication Agent,
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
BANC OF AMERICA SECURITIES LLC
Lead Arranger and Book Manager
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TABLE OF CONTENTS
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SECTION 1 DEFINITIONS, ETC.................................................1
1.1 Definitions......................................................1
1.2 Other Interpretive Provisions...................................15
SECTION 2 LOANS; TRANCHES OF LOANS; BORROWING AND CONVERSION
PROCEDURES......................................................16
2.1 Loans...........................................................16
2.1.1 Initial Loans.....................................16
2.1.2 Additional Loans..................................16
2.1.3 Tranches of Loans.................................16
2.2 Borrowing Procedure.............................................16
2.3 Conversion and Continuation Procedures..........................17
2.4 Pro Rata Treatment..............................................18
2.5 Commitments Several.............................................18
SECTION 3 NOTES EVIDENCING LOANS..........................................18
SECTION 4 INTEREST........................................................18
4.1 Interest Rates..................................................18
4.2 Interest Payment Dates..........................................18
4.3 Setting and Notice of Certain Rates.............................18
4.4 Computation of Interest.........................................19
SECTION 5 FEES............................................................19
5.1 Closing Fees....................................................19
5.2 Arrangement and Agent's Fees....................................20
SECTION 6 PREPAYMENTS....................................................20
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.................20
7.1 Making of Payments..............................................20
7.2 Due Date Extension..............................................20
7.3 Setoff..........................................................21
7.4 Proration of Payments...........................................21
7.5 Taxes...........................................................21
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SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR
TRANCHES.............................................................22
8.1 Increased Costs.................................................22
8.2 Basis for Determining Interest Rate Inadequate or Unfair........23
8.3 Changes in Law Rendering Eurodollar Lending Unlawful............24
8.4 Funding Losses..................................................24
8.5 Right of Lenders to Fund through Other Offices..................25
8.6 Discretion of Lenders as to Manner of Funding...................25
8.7 Mitigation of Circumstances; Replacement of Affected Lender.....25
8.8 Conclusiveness of Statements; Survival of Provisions............26
SECTION 9 WARRANTIES.........................................................26
9.1 Organization, etc...............................................26
9.2 Authorization; No Conflict......................................26
9.3 Validity and Binding Nature.....................................27
9.4 Information.....................................................27
9.5 No Material Adverse Change......................................27
9.6 Litigation and Contingent Liabilities...........................27
9.7 Ownership of Properties; Liens..................................28
9.8 Subsidiaries....................................................28
9.9 Pension and Welfare Plans.......................................28
9.10 Investment Company Act.........................................29
9.11 Public Utility Holding Company Act.............................29
9.12 Regulation U...................................................29
9.13 Taxes..........................................................29
9.14 Solvency, etc..................................................29
9.15 Environmental Matters..........................................29
9.16 Year 2000 Problem..............................................29
9.17 Senior Debt....................................................30
SECTION 10 COVENANTS.........................................................30
10.1 Reports, Certificates and Other Information....................30
10.1.1 Audit Report........................................30
10.1.2 Quarterly Reports...................................30
10.1.3 Compliance Certificates.............................30
10.1.4 Reports to SEC and to Shareholders..................31
10.1.5 Notice of Default, Litigation and ERISA Matters.....31
10.1.6 Subsidiaries........................................32
10.1.7 Management Reports..................................32
10.1.8 Projections.........................................32
10.1.9 Other Information...................................32
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10.2 Books, Records and Inspections.................................32
10.3 Insurance......................................................32
10.4 Compliance with Laws; Payment of Taxes and Liabilities.........33
10.5 Maintenance of Existence, etc..................................33
10.6 Financial Covenants............................................33
10.6.1 Maximum Leverage....................................33
10.6.2 Minimum Interest Coverage Ratio.....................33
10.6.3 Funded Debt to Cash Flow Ratio......................33
10.6.4 Senior Debt to Tangible Assets......................33
10.6.5 Senior Debt to Cash Flow Ratio......................33
10.7 Limitations on Debt............................................34
10.8 Liens..........................................................35
10.9 Asset Sales....................................................36
10.10 Restricted Payments...........................................36
10.11 Mergers, Consolidations, Amalgamations, Sales.................37
10.12 Modification of Certain Documents.............................38
10.13 Use of Proceeds...............................................38
10.14 Further Assurances............................................38
10.15 Transactions with Affiliates..................................39
10.16 Employee Benefit Plans........................................39
10.17 Environmental Laws............................................39
10.18 Unconditional Purchase Obligations............................39
10.19 Inconsistent Agreements.......................................39
10.20 Business Activities...........................................39
10.21 Advances and Other Investments................................40
10.22 Location of Assets............................................41
10.23 Activities of Parent..........................................41
SECTION 11 CONDITIONS OF LENDING.............................................41
11.1 Initial Loans..................................................41
11.1.1 Notes...............................................41
11.1.2 Resolutions.........................................42
11.1.3 Consents, etc.......................................42
11.1.4 Incumbency and Signature Certificates...............42
11.1.5 Opinions of Counsel for the Company.................42
11.1.6 Second Amendment to Credit Agreement................42
11.1.7 Second Amendment to Existing Loan Agreement.........42
11.1.8 Confirmation........................................42
11.1.9 Confirmatory Certificate............................42
11.1.10 Other..............................................42
11.2 Additional Loans...............................................42
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11.2.1 Notes...............................................43
11.2.2 Confirmatory Certificate............................43
11.2.3 Other...............................................43
11.3 All Loans......................................................43
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT................................43
12.1 Events of Default..............................................43
12.1.1 Non-Payment of the Loans, etc.......................43
12.1.2 Non-Payment of Other Debt...........................43
12.1.3 Other Material Obligations..........................44
12.1.4 Bankruptcy, Insolvency, etc.........................44
12.1.5 Non-Compliance with Provisions of This Agreement....44
12.1.6 Warranties..........................................44
12.1.7 Pension Plans.......................................44
12.1.8 Judgments...........................................45
12.1.9 Invalidity of U.S. Guaranty, etc....................45
12.1.10 Invalidity of Collateral Documents, etc............45
12.1.11 Change in Control..................................45
12.1.12 Invalidity of Parent Guaranty, etc.................46
12.2 Effect of Event of Default.....................................46
SECTION 13 THE AGENT.........................................................46
13.1 Appointment and Authorization..................................46
13.2 Delegation of Duties...........................................46
13.3 Liability of Agent.............................................46
13.4 Reliance by Agents.............................................47
13.5 Notice of Default..............................................47
13.6 Credit Decision................................................48
13.7 Indemnification................................................48
13.8 Agent in Individual Capacity...................................49
13.9 Successor Agent; Assignment of Agency..........................49
13.10 Withholding Tax...............................................50
SECTION 14 GENERAL...........................................................52
14.1 Waiver; Amendments.............................................52
14.2 Confirmations..................................................52
14.3 Notices........................................................53
14.4 Computations...................................................53
14.5 Regulation U...................................................53
14.6 Costs, Expenses and Taxes......................................53
14.7 Judgment........................................................54
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14.8 Captions.......................................................54
14.9 Assignments; Participations....................................54
14.9.1 Assignments.........................................54
14.9.2 Participations......................................56
14.10 Governing Law.................................................56
14.11 Counterparts..................................................56
14.12 Successors and Assigns........................................57
14.13 Indemnification by the Company................................57
14.14 Forum Selection and Consent to Jurisdiction...................57
14.15 Waiver of Jury Trial..........................................58
14.16 Acknowledgments and Agreements regarding
Intercreditor Agreement....................................58
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SCHEDULE 1.1(A) Initial Lenders and Initial Percentages
SCHEDULE 9.6(a) Litigation and Contingent Liabilities
SCHEDULE 9.6(b) Contingent Payments
SCHEDULE 9.7 Properties
SCHEDULE 9.8 Subsidiaries
SCHEDULE 9.15 Environmental Matters
SCHEDULE 10.7(c) Existing Equipment Debt
SCHEDULE 10.7(g) Other Existing Debt
SCHEDULE 10.8 Existing Liens
SCHEDULE 12.1.11 Key Executives
SCHEDULE 14.3 Addresses for Notices
EXHIBIT A Form of Note (Section 3.1)
EXHIBIT B Form of Compliance Certificate (Section 10.1.4)
EXHIBIT C Copy of Restated U.S. Guaranty (Section 1)
EXHIBIT D Copy of Restated U.S. Security Agreement (Section 1)
EXHIBIT E Copy of Restated Company Pledge Agreement (Section 1)
EXHIBIT F Form of Subsidiary Pledge Agreement (Section 1)
EXHIBIT G Form of Subordination Language (Section 1)
EXHIBIT H Form of Assignment Agreement (Section 14.9)
EXHIBIT I Copy of Intercreditor Agreement (Section 1)
EXHIBIT J Form of Exemption Certificate (Section 13.10)
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EXHIBIT K Copy of Parent Guaranty (Section 1)
EXHIBIT L Copy of Parent Pledge Agreement (Section 1)
EXHIBIT M Form of Request for Additional Loan (Section 2.1.2)
EXHIBIT N Form of Confirmation (Section 11.1.8)
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TERM LOAN AGREEMENT
This TERM LOAN AGREEMENT dated as of July 15, 1999 (this "Agreement")
is entered into among UNITED RENTALS, INC. ("Parent"), UNITED RENTALS (NORTH
AMERICA), INC., a Delaware corporation (the "Company"), the financial
institutions that are or may from time to time become parties hereto (together
with their respective successors and assigns, the "Lenders"), and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (in its individual capacity,
"BofA"), as administrative agent for the Lenders.
WHEREAS, the Lenders have agreed to extend certain term loans to the
Company and may from time to time extend additional loans to the Company.
NOW, THEREFORE, 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.
Additional Loan - see Section 2.1.2.
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 administrative 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.
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Agreement - see the Preamble.
Arranger means Banc of America Securities LLC, a Delaware limited
liability company.
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 Charlotte, 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.
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
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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 initial 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 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, a copy of which is attached as Exhibit E.
Computation Period means each period of four Fiscal Quarters ending on
the last day of a Fiscal Quarter on or after the Closing Date.
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
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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.
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, as amended or
restated from time to time (including any amendment or restatement increasing
the amount available thereunder) and any Successor Credit Agreement as defined
in the Intercreditor Agreement.
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
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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 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, in the case of any Reference Lender, such office or
offices through which such Reference Lender makes any determination for purposes
of calculating 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 1/100th of 1%) determined by the Agent as follows:
Eurodollar Rate = IBOR
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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
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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.
Eurodollar Tranche means any Tranche which bears interest by reference
to the Eurodollar Rate.
Event of Default means any of the events described in Section 12.1.
Exchange Act means the Securities Exchange Act of 1934.
Existing Loan Agreement means the Term Loan Agreement dated as of July
10, 1998 among Parent, the Company (then known as United Rentals, Inc.), various
financial institutions and BofA, as 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 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 1998") refer to the Fiscal Year ending on December 31 of
such calendar year.
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.
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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 (a) all Debt of Parent and its Subsidiaries and (b)
to the extent not included in the definition of Debt, the aggregate outstanding
investment or claim held at such time by purchasers, assignees or other
transferees of (or of interests in) accounts receivable, lease receivables or
other rights to payment of Parent and its Subsidiaries in connection with any
Securitization Transaction (regardless of the accounting treatment of such
Securitization Transaction), but 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.
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
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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 Agent for the lenders under the Existing Loan
Agreement, and BofA, as Collateral Agent, a copy of which is attached as 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 sum, without duplication, of
(a) 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) and (b) consolidated yield
or discount accrued during such period on the aggregate investment or claim held
by purchasers, assignees or other transferees of, or of interests in, accounts
receivable, lease receivables and other rights to payment of Parent and its
Subsidiaries in connection with any Securitization Transaction (regardless of
the accounting treatment of such Securitization Transaction).
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;
(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
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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 Parent 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 means, with respect to any Lender, such Lender's term loan to the
Company hereunder (whether made as part of the initial term loans on the Closing
Date or as an Additional Loan or a combination thereof); and Loans means all of
the term loans made hereunder.
Loan Documents means this Agreement, the Notes, the U.S. Guaranty, the
Collateral Documents and the Parent Guaranty.
Loan Party means Parent, the Company and each Subsidiary of the Company
which is a party to any Loan Document.
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 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.
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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, a copy of which is attached as Exhibit K.
Parent Pledge Agreement means the Restated Parent Pledge Agreement
dated as of September 29, 1998 between Parent and the Collateral Agent, a copy
of which is attached as 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 the
making of Additional Loans pursuant to Section 2.1.2 or 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 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
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organization" is an organization to which a contribution is deductible for
income tax purposes under the Code.
Permitted Senior Secured Debt means any Debt arising under any term
loan agreement among Parent, the Company, various financial institutions and
BofA, as agent (other than this Agreement and the Existing Loan Agreement);
provided that (i) such term loan agreement shall contain covenants and defaults
which are no more restrictive for Parent and its Subsidiaries than the covenants
and defaults contained in this Agreement, (ii) any such Debt shall mature no
earlier than September 30, 2005 and shall have amortization of no more than 20%
of the principal amount thereof prior to July 15, 2005, (iii) any such Debt
shall constitute "Senior Indebtedness" as defined in each Subordinated Note
Indenture and (iv) no such Debt shall have interest spreads greater than (x) if
such Debt matures on or before December 31, 2005, the then-applicable interest
rate spreads under the Existing Loan Agreement or (y) if such Debt matures after
December 31, 2005, the then-applicable interest rate spreads hereunder.
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.
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.
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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 (or such other office in the United States of America as BofA shall
specify from time to time), 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.
SEC means the Securities and Exchange Commission.
Securitization Transaction means any sale, assignment or other transfer
by Parent or any Subsidiary of accounts receivable, lease receivables or other
payment obligations owing to Parent or such Subsidiary or any interest in any of
the foregoing, together in each case with any collections and other proceeds
thereof, any collection or deposit accounts related thereto, and any collateral,
guaranties or other property or claims supporting or securing payment by the
obligor thereon of, or otherwise related to, or subject to leases giving rise
to, any such receivables.
Seller Subordinated Debt means unsecured indebtedness of the Company
that:
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(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(c).
Senior Debt means all Funded Debt of Parent and its Subsidiaries other
than Subordinated Debt.
Special Purpose Vehicle means a trust, bankruptcy remote entity or
other special purpose entity which is a Subsidiary of Parent (or, if not a
Subsidiary, the common equity of which is wholly-owned, directly or indirectly,
by Parent) and which is formed for the purpose of, and engages in no material
business other than, acting as an issuer or a depositor in a Securitization
Transaction (and, in connection therewith, owning accounts receivable, lease
receivables, other rights to payment, leases and related assets and pledging or
transferring any of the foregoing or interests therein).
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) the
U.S.$300,000,000 of 9.25% unsecured senior subordinated notes due 2009 issued by
the Company on December 15, 1998 and the unsecured subordinated guarantees
thereof provided for in the applicable Subordinated Note Indenture, (d) the
U.S.$250,000,000 of 9.0% unsecured senior subordinated notes due 2009 issued by
the Company on March 23, 1999 and the unsecured subordinated guarantees thereof
provided for in the applicable Subordinated Note Indenture, (e) Seller
Subordinated Debt and (f) any other unsecured Debt of the Company and unsecured
guarantees thereof by any Subsidiary 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, 2006 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.
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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, (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, (c) the
Indenture dated as of December 15, 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.$300,000,000 of Subordinated Debt, and (d) the
Indenture dated as of March 23, 1999 among the Company, various Subsidiaries of
the Company and The Bank of New York, as Trustee, pursuant to which the Company
issued U.S.$250,000,000 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.
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.
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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.
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, a copy of
which is attached as 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, a copy of which is
attached as 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 Parent or any Subsidiary in the ordinary course of business,
the terms of which provide for recourse against Parent 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."
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(c) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any statute
or regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting
such statute or regulation.
(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 Agent, the
Company, the Lenders and the other parties thereto and are the products of all
parties. Accordingly, they shall not be construed against the Agent or the
Lenders merely because of the Agent's or Lenders' involvement in their
preparation.
SECTION 2 LOANS; TRANCHES OF LOANS; BORROWING AND CONVERSION
PROCEDURES.
2.1 Loans.
2.1.1 Initial Loans. On and subject to the terms and conditions of this
Agreement, each of the Lenders which is a party hereto on the Closing Date,
severally and for itself alone, agrees to make a term loan to the Company on the
Closing Date in such Lender's Percentage of U.S.$150,000,000.
2.1.2 Additional Loans. The Company may, from time to time prior to
September 29, 2000, by means of a letter addressed to the Agent substantially in
the form of Exhibit M, request that additional term loans ("Additional Loans")
be made hereunder by any existing Lender or, with the prior written consent of
the Agent, any other commercial bank or other Person; provided that (a) the
aggregate amount of Additional Loans made on any day shall not be less than
$5,000,000 and shall be an integral multiple of $1,000,000 and (b) in no event
shall the aggregate principal amount of all Loans made hereunder (whether or not
then outstanding) exceed $750,000,000 without the written consent of all
Lenders. The Agent shall promptly notify the Company and the Lenders of the
making of any Additional Loans and of the aggregate amount of the Loans and the
Percentage of each Lender after giving effect thereto. The Company acknowledges
that, in order to comply with Section 2.4, prepayment of all or portions of
certain Loans may be required on the date of the making of any Additional Loan
(and any such prepayment shall be subject to the provisions of Section 8.4).
2.1.3 Tranches of Loans. Each Loan may be divided into Tranches from
time to time, provided that (i) not more than eight different Groups of
Eurodollar Tranches shall be outstanding at any
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one time and (ii) the aggregate principal amount of each Group of Eurodollar
Tranches shall at all times (including after giving effect to any conversion or
continuation) be at least U.S.$500,000.
2.2 Borrowing Procedure. The Company shall give written notice to the
Agent of any proposed borrowing not later than 10:00 A.M., Chicago time, two
Business Days prior to the proposed date of such borrowing (or such later time
and date as the Agent and all applicable Lenders may agree). Such notice shall
be effective upon receipt by the Agent and shall specify the date (which shall
be a Business Day) of borrowing and, if applicable, the amount of and the
initial Interest Period for each Group of Eurodollar Tranches to be outstanding
after giving effect to such borrowing. Promptly upon receipt of such notice, the
Agent shall advise each Lender thereof. Not later than 1:00 p.m., Chicago time,
on the date of the proposed borrowing, each applicable Lender shall provide the
Agent at the office specified by the Agent with immediately available funds in
the amount of such Lender's pro rata share of such borrowing and, subject to the
satisfaction of the applicable conditions precedent set forth in Section 11, the
Agent shall pay over the proceeds of such borrowing to the Company on such date.
2.3 Conversion and Continuation Procedures. (a) Subject to Section 2.2,
the Company may, upon irrevocable written notice to the Agent in accordance with
clause (b) below:
(i) elect, as of any Business Day, to convert any
Group of Tranches (or any part thereof in an aggregate amount
not less than U.S.$500,000) into Tranches of the other Type;
or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any Group of Eurodollar Tranches
having Interest Periods expiring on such day (or any part
thereof in an aggregate amount not less than U.S.$500,000) for
a new Interest Period.
(b) The Company shall give written or telephonic (followed
immediately by written confirmation thereof) notice to the Agent of
each proposed conversion or continuation not later than (i) in the case
of conversion into Base Rate Tranches, 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 Tranches, 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 the Tranches to be
converted or continued;
(3) the Type of Tranches resulting from the proposed
conversion or continuation; and
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(4) in the case of conversion into, or continuation
of, Eurodollar Tranches, the duration of the requested
Interest Period therefor.
(c) If upon the expiration of any Interest Period applicable
to any Eurodollar Tranche, the Company has failed to select timely a
new Interest Period to be applicable to such Eurodollar Tranche, the
Company shall be deemed to have elected to convert such Eurodollar
Tranche into a Base Rate Tranche effective on the last day of such
Interest Period.
(d) The Agent will promptly notify each Lender of its receipt
of a notice of conversion or continuation pursuant to this Section 2.3
or, if no timely notice is provided by the Company, of the details of
any automatic conversion.
(e) Unless the Required Lenders otherwise consent, during the
existence of an Event of Default or Unmatured Event of Default, the
Company may not elect to have any portion of a Loan converted into or
continued as a Eurodollar Tranche.
2.4 Pro Rata Treatment. Except as otherwise expressly provided herein,
after giving effect to any borrowing, conversion, continuation or repayment,
each Lender will have a pro rata share (according to its then-applicable
Percentage) of all Types and Groups of Tranches.
2.5 Commitments Several. The failure of any Lender to make its pro rata
share of any borrowing available on the requested borrowing date shall not
relieve any other Lender of any obligation it may have to make its pro rata
share of such borrowing available on such date, but no Lender shall be
responsible for the failure of any other Lender to make such other Lender's pro
rata share of such borrowing available on such date.
SECTION 3 NOTES EVIDENCING LOANS. Each Lender's Loan 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 Lender in
quarterly installments on the last day of each calendar quarter beginning on
September 30, 2000 and continuing through June 30, 2006, with the first 23
installments each in an amount equal to 0.25% of the principal amount of such
Lender's Loan and the final installment in an amount equal to 94.25% of the
principal amount of such Lender's Loan.
SECTION 4 INTEREST.
4.1 Interest Rates. The Company promises to pay interest on the unpaid
principal amount of each Tranche of each Loan, as follows:
(a) at all times while such Tranche is a Base Rate Tranche, at
a rate per annum equal to the sum of the Base Rate from time to time in
effect plus 0.625; and
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(b) at all times while such Tranche is a Eurodollar Tranche,
at a rate per annum equal to the sum of the Eurodollar Rate applicable
to each Interest Period for such Tranche plus 2.5%;
provided, however, that at any time an Event of Default exists, the interest
rate applicable to each Tranche shall be increased by 2%.
4.2 Interest Payment Dates. Accrued interest on each Base Rate Tranche
shall be payable in arrears on the last day of each calendar month and at
maturity. Accrued interest on each Eurodollar Tranche shall be payable on the
last day of each Interest Period for such Tranche (and, in the case of a
Eurodollar Tranche 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 Tranches shall be payable on demand.
4.3 Setting and Notice of Certain Rates. The applicable Eurodollar Rate
for each Interest Period shall be determined by the Agent, and notice thereof
shall be given by the Agent promptly to the Company and the Lenders. Each
determination of the applicable Eurodollar Rate by the Agent shall be conclusive
and binding upon the parties hereto, in the absence of demonstrable error. The
Agent shall, upon written request of the Company or any Lender, deliver to the
Company or such Lender a statement showing the computations used by the Agent in
determining any applicable Eurodollar Rate.
4.4 Computation of Interest.
(a) All computations of interest on Base Rate Tranches when
the Base Rate is determined by the Reference Rate 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). Interest shall accrue during each period during
which interest is computed from the first day thereof to the last day thereof.
(b) If for any reason whatsoever a Reference Lender ceases to
be a Lender hereunder, such Reference Lender shall thereupon cease to be a
Reference Lender, and the Eurodollar Rate shall be determined on the basis of
the rates as notified by the remaining Reference Lender(s).
(c) Each of the Reference Lenders shall use its best efforts
to furnish quotations of rates to the Agent as contemplated hereby. If any
Reference Lender fails to supply such rates to the Agent upon its request, the
Eurodollar Rate shall be determined on the basis of the quotations of the
remaining Reference Lender(s).
(d) Anything herein to the contrary notwithstanding, the
obligations of the Company to any Lender hereunder shall be subject to the
limitation that payments of interest
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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 Lender would be contrary to the provisions of any law applicable
to such Lender limiting the highest rate of interest that may be lawfully
contracted for, charged or received by such Lender, and in such event the
Company shall pay such Lender interest at the highest rate permitted by
applicable law.
(e) The applicable interest rate for each Base Rate Tranche
shall change simultaneously with each change in the Base Rate.
SECTION 5 FEES.
5.1 Closing Fees. On the Closing Date, the Company shall pay to the
Agent for the account of each Lender which is a party hereto on such date a
closing fee in the amount previously agreed to by the Company and such Lender.
In addition, on the date of the making of any Additional Loan, the Company shall
pay to each Lender which is increasing the amount of its Loan or becoming a
party hereto a closing fee in the amount agreed to by the Company and such
Lender.
5.2 Arrangement and Agent's Fees. The Company agrees to pay to the
Arranger and the Agent such arrangement and agent's fees as are mutually agreed
to from time to time by the Company, the Arranger and the Agent.
SECTION 6 PREPAYMENTS. The Company may from time to time prepay the
Loans, in whole or in part, without penalty. The Company shall give the Agent
(which shall promptly advise each Lender) notice of any prepayment not later
than 10:00 A.M., Chicago time, on the day of such prepayment, specifying the
Tranches to be prepaid and the date and amount of prepayment. Each partial
prepayment of Loans shall be in a principal amount of at least U.S.$500,000. Any
prepayment of a Eurodollar Tranche on a day other than the last day of an
Interest Period therefor shall be subject to Section 8.4. All prepayments shall
be applied pro rata to the then-remaining installments of the Notes.
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 shall be made by the Company to the Agent in immediately available
funds at the office specified by the Agent not later than noon, Chicago time, on
the date due; and funds received after that hour shall be deemed to have been
received by the Agent on the next following Business Day. The Company hereby
authorizes and instructs the Agent to charge any demand deposit account of the
Company maintained with BofA 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) the Agent agrees to do so, provided that the Agent's failure to so
charge any such account shall in no way affect the obligation of the Company to
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make any such payment. The Agent shall promptly remit to each Lender its share
of all such payments received in collected funds by the Agent for the account of
such Lender.
(b) All payments under Section 8.1 shall be made by the
Company directly to the Lender entitled thereto.
(c) Unless the Agent receives notice from the Company prior to
the date on which any payment is due to the Lenders that the Company will not
make such payment in full as and when required, the Agent may assume that the
Company has made such payment in full to the Agent on such date in immediately
available funds and the Agent may (but shall not be so required), in reliance
upon such assumption, distribute to each Lender on such due date an amount equal
to the amount then due such Lender. If and to the extent the Company has not
made such payment in full to the Agent, each Lender shall repay to the Agent on
demand the amount distributed to such Lender, together with interest thereon at
the Federal Funds Rate for each day from the date such amount is distributed to
such Lender until the date repaid.
7.2 Due Date Extension. If any payment of principal or interest with
respect to any of the Loans 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 Tranche, 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.
7.3 Setoff. The Company agrees that the Agent and each Lender have all
rights of set-off and bankers' lien provided by applicable law, and in addition
thereto, the Company agrees that at any time (a) any payment or other amount
owing by the Company under this Agreement is then due to the Agent or any Lender
or (b) any Unmatured Event of Default under Section 12.1.4 with respect to the
Company or any Event of Default exists, the Agent and each Lender may apply to
the payment of such payment or other amount (or, in the case of clause (b), to
any obligations of the Company hereunder, whether or not then due) any and all
balances, credits, deposits, accounts or moneys of the Company then or
thereafter with the Agent or such Lender.
7.4 Proration of Payments. If any Lender 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 14.9) on account
of principal of or interest on any Note in excess of its pro rata share of
payments and other recoveries obtained by all Lenders on account of principal of
and interest on the applicable Notes then held by them, such Lender shall
purchase from the other Lenders such participation in the applicable Notes held
by them as shall be necessary to cause such purchasing Lender 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
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purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery (but without interest).
7.5 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 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 Company hereunder (including any additional amount or
amounts to be paid under this Section 7.5) is required in respect of any Taxes
pursuant to any applicable law, rule or regulation, then the Company will:
(i) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(ii) promptly forward to the Agent an official receipt or
other documentation satisfactory to the Agent evidencing such payment
to such authority; and
(iii) 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 Company 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 the Company 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 Lender, the required receipts or other required documentary evidence,
the Company shall indemnify such Lender 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 7.5, a distribution hereunder by the Agent
to or for the account of any Lender shall be deemed a payment by the Company.
(c) Upon the request from time to time of the Company or the Agent,
each Lender 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 Agent one or more (as the Company or the Agent may reasonably
request) United States Internal Revenue Service Forms 4224 or Forms 1001 or any
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applicable successor form (including Form W-8ECI or W-8BEN) 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 Lender is exempt from
withholding or deduction of Taxes.
(e) The obligations of the Company under this Section 7.5 (i) are
subject to the limitations set out in Section 14.9.1 and (ii) shall survive
repayment of the Loans, cancellation of the Notes and any termination of this
Agreement.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR
TRANCHES.
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 Lender (or any Eurodollar Office of such Lender) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency
(A) shall subject any Lender (or any Eurodollar Office of such
Lender) to any tax, duty or other charge with respect to its Eurodollar
Tranches, its Note or its obligation to maintain Eurodollar Tranches,
or shall change the basis of taxation of payments to any Lender of the
principal of or interest on its Eurodollar Tranches or any other
amounts due under this Agreement in respect of its Eurodollar Tranches
or its obligation to maintain Eurodollar Tranches (except for changes
in the rate of tax on the overall net income of such Lender or its
Eurodollar Office imposed by the jurisdiction in which such Lender'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 Lender (or any
Eurodollar Office of such Lender); or
(C) shall impose on any Lender (or its Eurodollar Office) any
other condition affecting its Eurodollar Tranches, its Note or its
obligation to maintain Eurodollar Tranches;
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 Lender (or any
Eurodollar Office of such Lender) of making, maintaining or participating in any
Eurodollar Tranche, or to reduce the amount of any sum received or receivable by
such Lender (or its Eurodollar Office) under this Agreement or under its Note
with
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respect thereto, then within 10 days after demand by such Lender (which demand
shall be accompanied by a statement setting forth the basis for such demand, a
copy of which shall be furnished to the Agent), the Company shall pay directly
to such Lender such additional amount as will compensate such Lender for such
increased cost or such reduction.
(b) If any Lender 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 Lender or any
Person controlling such Lender 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 Lender's or such controlling Person's capital as a consequence of
such Lender's obligations hereunder to a level below that which such Lender or
such controlling Person could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such controlling Person's
policies with respect to capital adequacy) by an amount deemed by such Lender or
such controlling Person to be material, then from time to time, within 10 days
after demand by such Lender (which demand shall be accompanied by a statement
setting forth the basis for such demand, a copy of which shall be furnished to
the Agent), the Company shall pay to such Lender such additional amount or
amounts as will compensate such Lender 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) none of the Reference Lenders are being offered deposits
in U.S. Dollars (in the applicable amounts) in the interbank Eurodollar
market for such Interest Period, or the Agent otherwise reasonably
determines (which determination shall be binding and conclusive on the
Company) that by reason of circumstances affecting the interbank
Eurodollar market adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate; or
(b) Lenders having an aggregate Percentage of 30% or more
advise the Agent that the Eurodollar Rate, as determined by the Agent,
will not adequately and fairly reflect the cost to such Lenders of
maintaining or funding their Eurodollar Tranches for such Interest
Period (taking into account any amount to which such Lenders may be
entitled under Section 8.1) or that the maintaining or funding of
Eurodollar Tranches has become impracticable as a result of an event
occurring after the date of this Agreement which in the opinion of such
Lenders materially affects such Tranches;
then the Agent shall promptly notify the Company and the Lenders thereof and, so
long as such circumstances shall continue, (i) no Lender shall be under any
obligation to convert into Eurodollar
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Tranches and (ii) on the last day of the current Interest Period for each
Eurodollar Tranche, such Tranche shall, unless then repaid in full,
automatically convert to a Base Rate Tranche.
8.3 Changes in Law Rendering Eurodollar Lending 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 Lender cause a substantial
question as to whether it is) unlawful for any Lender to make, maintain or fund
any Eurodollar Tranche, then such Lender shall promptly notify the Company and
the Agent and, so long as such circumstances shall continue, (a) such Lender
shall have no obligation to make or convert into Eurodollar Tranches (but shall
make or maintain Base Rate Tranches concurrently with the making of or
conversion into Eurodollar Tranches by the Lenders which are not so affected, in
each case in an amount equal to such Lender's pro rata share of all Eurodollar
Tranches 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 Eurodollar Tranche of such Lender (or, in any event, on such earlier date
as may be required by the relevant law, regulation or interpretation), such
Eurodollar Tranche shall, unless then repaid in full, automatically convert to a
Base Rate Tranche. Each Base Rate Tranche maintained by a Lender which, but for
the circumstances described in the foregoing sentence, would be a Eurodollar
Tranche (an "Affected Tranche") shall remain outstanding for the same period as
the Group of Eurodollar Tranches of which such Affected Tranche would be a part
absent such circumstances.
8.4 Funding Losses. The Company hereby agrees that upon demand by any
Lender (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 Agent),
the Company will indemnify such Lender against any net loss or expense which
such Lender 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 Lender to fund or maintain any Eurodollar Tranche), as reasonably
determined by such Lender, as a result of (a) any payment, prepayment or
conversion of any Eurodollar Tranche of such Lender on a date other than the
last day of an Interest Period for such Tranche (including any conversion
pursuant to Section 8.3) or (b) any failure of the Company to borrow, convert
into, continue or prepay any Eurodollar Tranche on a date specified therefor in
a notice of borrowing, conversion, continuation or prepayment pursuant to this
Agreement. For this purpose, all notices to the Agent pursuant to this Agreement
shall be deemed to be irrevocable.
8.5 Right of Lenders to Fund through Other Offices. Each Lender may, if
it so elects, fulfill its commitment as to any Eurodollar Tranche by causing a
foreign branch or affiliate of such Lender to maintain or fund such Tranche,
provided that in such event for the purposes of this Agreement such Tranche
shall be deemed to have been maintained and funded by such Lender and the
obligation of the Company to repay such Lender's Loan shall nevertheless be to
such Lender and shall be deemed held by it, to the extent of such Loan, for the
account of such branch or affiliate.
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8.6 Discretion of Lenders as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Lender shall be entitled to
fund and maintain its funding of all or any part of its Loan 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 Lender had actually funded
and maintained each Eurodollar Tranche during each Interest Period for such
Tranche through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the IBOR (as defined in
the definition of Eurodollar Rate) for such Interest Period.
8.7 Mitigation of Circumstances; Replacement of Affected Lender.
(a) Each Lender shall promptly notify the Company and the Agent of any
event of which it has knowledge which will result in, and will use reasonable
commercial efforts available to it (and not, in such Lender's good faith
judgment, otherwise disadvantageous to such Lender) to mitigate or avoid, (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, and, if any Lender has given notice of any event described in clause
(i) or (ii) above and thereafter such event ceases to exist, such Lender shall
promptly so notify the Company and the Agent. Without limiting the foregoing,
each Lender will designate a different funding office if such designation will
avoid (or reduce the cost to the Company of) any event described in clause (i)
or (ii) of the preceding sentence and such designation will not, in such
Lender's sole judgment, be otherwise disadvantageous to such Lender.
(b) At any time any Lender is an Affected Lender, the Company may
replace such Affected Lender as a party to this Agreement with one or more other
bank(s) or financial institution(s) reasonably satisfactory to the Agent (and
upon notice from the Company such Affected Lender shall assign pursuant to an
Assignment Agreement, and without recourse or warranty, its Loan, its Note 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 Loan so assigned, all accrued and unpaid interest
thereon, any amounts payable under Section 8.4 as a result of such Lender
receiving payment of any Eurodollar Tranche prior to the end of an Interest
Period therefor and all other obligations owed to such Affected Lender
hereunder).
8.8 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of any Lender pursuant to Section 8.1, 8.2, 8.3 or
8.4 shall be conclusive absent demonstrable error. Lenders 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 and any termination of this Agreement.
SECTION 9 WARRANTIES.
To induce the Agent and the Lenders to enter into this Agreement and to
induce the Lenders to make the Loans hereunder, Parent and the Company warrant
to the Agent and the Lenders 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; each of Parent, the Company and each other Subsidiary is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization; and each of Parent, the Company and each other
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 Parent
and the Company of this Agreement and each other Loan Document to which it is a
party, the borrowings hereunder, the execution and delivery by each other Loan
Party of each Loan Document to which it is a party and the performance by
Parent, the Company and each other Loan Party of its obligations under each Loan
Document to which it is a party are within the corporate powers of Parent, the
Company and each other Loan Party, have been duly authorized by all necessary
corporate action (including any necessary shareholder action) on the part of
Parent, the Company 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 Parent, the Company, 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 Parent, the Company, any other Loan
Party or any other Subsidiary or of any agreement, indenture, instrument or
other document which is binding on Parent, the Company, 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 Parent, the Company, 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; 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 or any Subsidiary to any Lender 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 or any Subsidiary to any Lender pursuant hereto or in
connection herewith will be, true and accurate in every material respect on the
date as of which such information is dated or certified, and none of such
information is or will be incomplete by omitting to state any material fact
necessary to make such information not misleading in light of the circumstances
under which made (it being recognized by the Agent and the Lenders that any
projections and forecasts provided by Parent or any
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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 No Material Adverse Change.
(a) The audited consolidated financial statements of the Company and
its Subsidiaries at December 31, 1998 and the unaudited consolidated financial
statements of the Company and its Subsidiaries at March 31, 1999, copies of each
of which have been delivered to each Lender, have been prepared in accordance
with generally accepted accounting principles (subject, in the case of the
unaudited statements, to the absence of footnotes and to normal year-end
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, 1998, there has been no material adverse change
in the financial condition, operations, assets, business, properties or
prospects of the Company and its Subsidiaries taken as a whole.
9.6 Litigation and Contingent Liabilities.
(a) No litigation (including derivative actions), arbitration
proceeding, labor controversy or governmental investigation or proceeding is
pending or, to 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 Closing Date pursuant to which the Company or any Subsidiary may be
required to pay any Contingent Payment.
9.7 Ownership of Properties; Liens. Except as set forth on Schedule
9.7, each of 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 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. As of the Closing Date, the Company has no
Subsidiaries except those listed in Schedule 9.8.
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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, (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.
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. The Company is not 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.
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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 Closing Date (or, in the case of any Person
which becomes a Loan Party after the Closing Date, on the date such Person
becomes a Loan Party), (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 conducts in the ordinary course of
business a review of the effect of existing Environmental Laws and existing
Environmental Claims on its business, operations and properties, and as a result
thereof 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.
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
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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 Fiscal Year 1999, 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.
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:
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(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
(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.
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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 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
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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
Prior to 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) the sum of Tangible Assets plus the outstanding amount of
accounts receivable, lease receivables and other payment obligations which are
not included on Parent's consolidated balance sheet but would be so included if
not sold pursuant to a Securitization Transaction 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, under the Existing Loan Agreement and under the other
"Loan Documents" as defined in each of the Credit Agreement and the
Existing Loan Agreement;
(b) unsecured Debt of Parent, the Company and Subsidiaries of the
Company (excluding Contingent Payments and Seller Subordinated Debt);
provided that no Subsidiary shall incur any such Debt if, after giving
effect thereto, the aggregate amount of all then-outstanding Debt of
Subsidiaries of the Company permitted solely by this clause (b) would
exceed 10% of Net Worth;
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(c) Debt of Parent 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 Parent 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.$150,000,000;
(d) Debt of Subsidiaries owed to the Company or Parent; provided that
the aggregate amount of all such Debt of Foreign Subsidiaries owed to
the Company and Parent shall not at any time exceed 15% of the
consolidated assets of Parent and its Subsidiaries;
(e) unsecured Debt of the Company to Subsidiaries of the Company, of
Parent to the Company and Subsidiaries of the Company and of any
Special Purpose Vehicle to any Subsidiary of the Company;
(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 (f) 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 sum of the principal of all Loans plus the aggregate principal
amount of all Permitted Senior Secured Debt shall not at any time
exceed U.S.$750,000,000;
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(k) Guarantees by Parent of the obligations of the Company or any
Subsidiary; provided that any such guaranty of Debt 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 Parent or any Subsidiary in
respect of Vendor Financing Arrangements;
(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; and
(n) Debt in connection with Securitization Transactions; provided that
the aggregate principal amount of all such Debt shall not at any time
exceed U.S.$150,000,000.
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
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being financed by such Debt (in the case of other Debt) and the
proceeds (including insurance proceeds) of any disposition or loss of
such property);
(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;
(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; and
(h) Liens arising in connection with Securitization Transactions;
provided that the aggregate investment or claim held at any time by all
purchasers, assignees or other transferees of (or of interests in)
accounts receivable, lease receivables and other rights to payment in
all Securitization Transactions shall not exceed $150,000,000.
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 the taxes and
accounting, legal, payroll, benefits and corporate overhead expenses (including
all SEC and stock exchange fees and expenses) of Parent, any Acquisition
Subsidiary, the QuIPS Trust and any Special Purpose Vehicle 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
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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. Nothing in this Section 10.10 shall prohibit Parent
from permitting the cashless exercise of any options or warrants for stock of
Parent.
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) 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 or merges the acquired company or the Acquisition Subsidiary into the
Company or with or into any wholly-owned Subsidiary of the Company; (d) the
sale, assignment or other transfer of accounts receivable, lease receivables or
other rights to payment pursuant to any Securitization Transaction; provided
that the aggregate investment or claim held at any time by all purchasers,
assignees or other transferees of (or of interests in) such receivables or other
rights to payment shall not exceed $150,000,000; and (e) sales and dispositions
of assets (including the stock of Subsidiaries), in addition to sales and other
dispositions permitted by clause (d), so long as the net book value of all
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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 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 and the Company's interest in any Special
Purpose Vehicle) 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 neither the QuIPS Trust nor any Special Purpose Vehicle shall
have any 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 (other than Parent's interest in the QuIPS Trust or any Special
Purpose Vehicle), and (iii) the obligations of each U.S. Subsidiary (other than
the QuIPS Trust and any Special Purpose Vehicle) under the U.S. Guaranty are
secured by substantially all of the assets (other than real property and such
U.S. Subsidiary's interest in any Special Purpose Vehicle) 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
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than Parent, the Company and Subsidiaries of the Company) which is on terms
which are less favorable than are obtainable from any Person which is not one of
its Affiliates; provided that Parent may enter into transactions with
Acquisition Subsidiaries or the QuIPS Trust, and Parent or any Subsidiary may
enter into transactions with any Special Purpose Vehicle in connection with any
Securitization Transaction, to the extent permitted by the terms of this
Agreement.
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 Parent 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 (other than any Special
Purpose Vehicle) from granting to the Collateral Agent, for the benefit of the
Lenders, a Lien on any of its assets.
10.20 Business Activities. Not, and not permit any Subsidiary (other
than the QuIPS Trust and any Special Purpose Vehicle) 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;
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(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, in Subsidiaries of the
Company and, subject to the provisions of Section 10.11, in Acquisition
Subsidiaries;
(i) other Investments by Parent permitted by Section 10.23;
(j) Cash Equivalent Investments; and
(k) Investments by Parent or any Subsidiary in any Special Purpose
Vehicle; provided that the aggregate amount of all such Investments
made in cash shall not exceed $5,000,000;
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), (g) or (k) 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" 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, the QuIPS Trust and any
Special Purpose Vehicle and activities reasonably
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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 properties to be used by, and services (including management and consulting
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 of Debt 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 and its Subsidiaries, (ii) Investments in
Acquisition Subsidiaries, (iii) Investments in the QuIPS Trust existing on the
date hereof and (iv) Investments in any Special Purpose Vehicle, (c) grant any
Liens on any of its assets (other than pursuant to the U.S. Security Agreement
or as expressly permitted under this 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.
SECTION 11 CONDITIONS OF LENDING.
11.1 Initial Loans. The obligation of the Lenders to make the initial
Loans is (in addition to the conditions precedent set forth in Section 11.3)
subject to the conditions precedent that the Agent shall have received (a) all
amounts which are then due and payable pursuant to Section 5 and (to the extent
billed) Section 14.6 and (b) all of the following, each duly executed and dated
the Closing Date (or such earlier date as shall be satisfactory to the Agent),
in form and substance satisfactory to the 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 Lender:
11.1.1 Notes. A Note for each Lender which is a party hereto on the
Closing Date.
11.1.2 Resolutions. Certified copies of resolutions of the Board of
Directors of each of Parent and the Company authorizing or ratifying the
execution, delivery and performance by such entity of this Agreement and, in the
case of the Company, the Notes.
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 and the Company
of the documents referred to in this Section 11, as applicable.
11.1.4 Incumbency and Signature Certificates. 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
Agreement and, in the case of the Company, the Notes, together with a sample of
the true signature of each such officer (it being understood that the Agent and
each Lender
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may conclusively rely on each such certificate until formally advised by a like
certificate of any changes therein).
11.1.5 Opinions of Counsel for the Company. The opinions of (a) Weil,
Gotshal & Manges LLP, special counsel to Parent and the Company, and (b) Oscar
D. Folger, counsel to Parent and the Company.
11.1.6 Second Amendment to Credit Agreement. A Second Amendment to the
Credit Agreement in form and substance satisfactory to the Agent, executed by
Parent, the Company and the "Required Banks" as defined in the Credit Agreement.
11.1.7 Second Amendment to Existing Loan Agreement. A Second Amendment
to the Existing Loan Agreement in form and substance satisfactory to the Agent,
executed by Parent, the Company and the "Required Lenders" as defined in the
Existing Loan Agreement.
11.1.8 Confirmation. A Confirmation, substantially in the form of
Exhibit N, signed by Parent, the Company and each other Loan Party confirming
the effectiveness of the U.S. Guaranty, the Parent Guaranty and each Collateral
Document and that the Agent and the Lenders are entitled to the benefits of such
documents.
11.1.9 Confirmatory Certificate. A certificate of a duly-authorized
officer of Parent as to the matters set forth in Section 11.3.
11.1.10 Other. Such other documents as the Agent or any Lender may
reasonably request.
11.2 Additional Loans. The right of the Company to borrow any
Additional Loan is (in addition to the conditions precedent set forth in Section
11.3) subject to the conditions precedent that the Agent shall have received all
of the following, each duly executed and dated the date of such Additional Loans
(or such earlier date as shall be satisfactory to the Agent), in form and
substance satisfactory to the Agent, and each (except for any Note, of which
only the original shall be signed) in sufficient number of signed counterparts
to provide one for each Lender which is increasing the amount of its Loan or
becoming a party hereto:
11.2.1 Notes. A Note for each new Lender and a replacement Note for
each existing Lender which is making an Additional Loan.
11.2.2 Confirmatory Certificate. A certificate of a duly-authorized
officer of Parent as to the matters set forth in Section 11.3.
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11.2.3 Other. Such other documents as the Agent or any Lender may
reasonably request (including copies or updates of any of the documents referred
to in Section 11.1.2, 11.1.3, 11.1.4, 11.1.5, or 11.1.8).
11.3 All Loans. The obligation of the Lenders to make the initial Loans
and the right of the Company to borrow any Additional Loans is (in addition to
the conditions precedent set forth in Section 11.1.1 or 11.1.2, as applicable)
subject to the conditions precedent that (a) the representations and warranties
of Parent, the Company and each other Subsidiary set forth in this Agreement and
the other Loan Documents shall be true and correct in all material respects with
the same effect as if then made; and (b) no Event of Default or Unmatured Event
of Default shall have then occurred and be continuing.
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 or other amount payable by the Company
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; or any event of default, default,
liquidation event or similar event shall occur or exist relating to any
Securitization Transaction if the effect of such event is to cause or permit
(subject to any applicable grace period) an aggregate cash amount exceeding a
Dollar Equivalent amount of U.S. $15,000,000 to become immediately due and
payable by Parent or any Subsidiary under such Securitization Transaction.
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
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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 of the Company), 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 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 the Agent or any Lender.
12.1.6 Warranties. Any warranty made or deemed made by the Company
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 the Company to the Agent or any Lender 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 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
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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 U.S. Guaranty, etc. The U.S. 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 U.S. Guaranty, or any
applicable 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 U.S. 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 applicable Subsidiary, Parent, the Company or any applicable
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 applicable 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 Lenders (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 Lenders); (d) any "Change of Control" shall occur under, and as defined
in, any Subordinated Note Indenture; 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 Notes and all other obligations hereunder shall
become immediately due and payable, all without presentment, demand, protest or
notice of any kind; and, if any other Event of Default shall occur and be
continuing, the Agent (upon written request of the Required Lenders) shall
declare all Notes and all other obligations hereunder to be due and payable,
whereupon the Notes and all other obligations hereunder shall become immediately
due and payable, all without presentment, demand, protest or notice of any kind.
The Agent shall promptly advise the Company 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
Lenders, 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
Lenders.
SECTION 13 THE AGENT.
13.1 Appointment and Authorization. Each Lender hereby irrevocably
(subject to Section 13.9) appoints, designates and authorizes the 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, the Agent shall not have any duties or
responsibilities except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent.
13.2 Delegation of Duties. The 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. The Agent shall not 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 Lenders for any recital,
statement, representation or warranty made by the Company or any Subsidiary or
Affiliate of the Company, or any officer thereof, contained in this Agreement or
in any other Loan Document, or in any certificate,
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report, statement or other document referred to or provided for in, or received
by the 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 or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lender 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 or any of the Company's Subsidiaries or Affiliates.
13.4 Reliance by Agents. The 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 the
Company), independent accountants and other experts selected by the Agent. The
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 Lenders (or, if required, all Lenders) as
it deems appropriate and, if it so requests, confirmation from the Lenders of
their obligation to indemnify the 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. The 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 Lenders (or, if required,
all Lenders) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders.
13.5 Notice of Default. The Agent shall not 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 or
fees required to be paid to the Agent for the account of the Lenders, unless the
Agent shall have received written notice from a Lender or the Company 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 the Agent
receives such a notice, the Agent will promptly notify the Lenders of its
receipt thereof. The Agent shall take such action with respect to such Event of
Default or Unmatured Event of Default as may be requested by the Required
Lenders (or, if required, all Lenders) in accordance with Section 12; provided,
however, that unless and until the Agent has received any such request, the
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 Lenders.
13.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereafter taken, including any review of the affairs of the
Company or any Subsidiary or Affiliate of the Company, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender. Each Lender
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represents to the 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 the Company or any Subsidiary or Affiliate of the Company,
and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Company hereunder. Each Lender 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 Company. Except for notices, reports and other documents
expressly herein required to be furnished to the Lenders by the Agent, the Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, prospects, operations, property,
financial or other condition or creditworthiness of the Company or any
Subsidiary or Affiliate of the Company 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 Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata,
from and against any and all Indemnified Liabilities; provided, however, that no
Lender shall be liable for any payment to any Agent-Related Person of any
portion of the Indemnified Liabilities resulting from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing (but
subject to the proviso to the foregoing sentence), each Lender shall reimburse
the Agent upon demand for its ratable share of any costs or out-of-pocket
expenses (including reasonable fees of attorneys for the Agent (including the
allocable costs of internal legal services and all disbursements of internal
counsel)) incurred by the 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
Company. 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 the 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 the 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 the
Agent or the replacement of any Lender) be imposed on, incurred by or asserted
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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 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 any other Loan Document, whether or not
any Agent-Related Person, any Lender 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 Agent, and without
notice to or consent of the Lenders. The Lenders 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 its Loans (if any), BofA and its
Affiliates shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though BofA were not the Agent, and
the term "Lender" includes BofA and its Affiliates, to the extent applicable, in
their individual capacities.
13.9 Successor Agent; Assignment of Agency. The Agent may, and at the
request of the Required Lenders shall, resign as Agent upon 30 days' notice to
the Lenders. If the Agent resigns under this Agreement, the Required Lenders
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
Lenders a successor Agent for the Lenders. If no successor agent is appointed
prior to the effective date of the resignation of the Agent, the Agent may
appoint, after consulting with the Lenders and the Company, a successor agent
from among the Lenders. 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 "Agent" shall mean such successor
agent, and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 13 and Sections 14.6 and 14.13 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Agent under this Agreement. If no successor agent has accepted appointment as
the 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 Lenders shall perform all of the duties of the Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above.
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13.10 Withholding Tax.
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the Code and such Lender claims exemption
from, or a reduction of, U.S. withholding tax under Section 1441 or
1442 of the Code, such Lender agrees to deliver to the Agent:
(i) if such Lender 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 or any applicable successor form (including
Form W-8BEN) 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 Lender 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 Lender, two properly completed and
executed copies of IRS Form 4224 or any applicable successor
form (including Form W-8ECI) before the payment of any
interest is due in the first taxable year of such Lender and
in each succeeding taxable year of such Lender during which
interest may be paid under this Agreement, and IRS Form W-9;
(iii) if such Lender is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and cannot deliver
either IRS Form 1001 or 4224 or any applicable successor form
(including Form W-8BEN or W-8ECI), (A) a certificate
substantially in the form of Exhibit J and (B) two properly
completed and signed copies of IRS Form W-8 certifying that
such Lender is entitled to an exemption from United States
withholding tax with respect to payments of interest to be
made under this Agreement; and
(iv) 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 Lender agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form
1001 or any applicable successor form (including Form W-8BEN) and such
Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the obligations of the Company to
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such Lender, such Lender agrees to notify the Agent of the percentage
amount in which it is no longer the beneficial owner of such
obligations of the Company hereunder. To the extent of such percentage
amount, the Agent will treat such Lender's IRS Form 1001 (or applicable
successor form) as no longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 or any applicable successor
form (including Form W-8ECI) with the Agent grants a participation in
all or part of the obligations of the Company to such Lender hereunder,
such Lender agrees to undertake sole responsibility for complying with
the withholding tax requirements imposed by Sections 1441 and 1442 of
the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to
such Lender 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 Agent, then the Agent may withhold from any interest
payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other governmental authority of the
United States or any other jurisdiction asserts a claim that the Agent
did not properly withhold tax from amounts paid to or for the account
of any Lender (because such Lender failed to notify the Agent of a
change in circumstances which rendered an exemption from, or reduction
of, withholding tax ineffective), such Lender shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax
or otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on any amount payable to the Agent under
this Section, together with all costs and expenses (including
reasonable fees of attorneys for the Agent (including the allocable
costs of internal legal services and all disbursements of internal
counsel)). The obligations of the Lenders 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 the
Agent.
(f) If any Lender claims exemption from, or reduction of,
withholding tax under the Code by providing IRS Form W-8 and a
certificate in the form of Exhibit J and such Lender sells, assigns,
grants a participation in, or otherwise transfers all or part of the
obligations of the Company to such Lender, such Lender agrees to notify
the Agent and the Company of the percentage amount in which it is no
longer the beneficial owner of obligations of the Company to such
Lender. To the extent of such percentage amount, the Agent and the
Company will treat such Lender's IRS Form W-8 and certificate in the
form of Exhibit J as no longer valid.
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13.11 Other Agents. None of the Lenders identified on the signature
pages of this Agreement or otherwise herein, or in any amendment hereof or other
document related hereto, as being the "Syndication Agent", the "Documentation
Agent" or a "Co-Agent" (collectively, the "Other Agents") shall have any right,
power, obligation, liability, responsibility or duty under this Agreement in
such capacity other than those applicable to all Lenders. Each Lender
acknowledges that it has not relied, and will not rely, on any of the Other
Agents in deciding to enter into this Agreement or in taking or refraining from
taking any action hereunder or pursuant hereto.
SECTION 14 GENERAL.
14.1 Waiver; Amendments. No delay on the part of the Agent or any
Lender 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 Lenders 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 Lenders, 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 of any Lender without the consent of such Lender. No
amendment, modification, waiver or consent shall (i) extend the date for payment
of any principal of or interest on the Loans or any fees payable hereunder, (ii)
reduce the principal amount of any Loan, the rate of interest thereon or any
fees payable hereunder, (iii) release the U.S. Guaranty (other than with respect
to a Person which ceases to be a Subsidiary as a result of a transaction
permitted hereunder) or the Parent Guaranty or all or substantially all of the
collateral granted under the Collateral Documents or (iv) reduce the aggregate
Percentage required to effect an amendment, modification, waiver or consent
without, in each case, the consent of all Lenders. No provision of Section 13 or
any other provision of this Agreement affecting the Agent in its capacity as
such shall be amended, modified or waived without the written consent of the
Agent.
14.2 Confirmations. The Company and each Lender 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 Agent) the
aggregate unpaid principal amount of the Loan then outstanding under the
applicable Note.
14.3 Notices. Except as otherwise provided in Section 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 14.3 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
53
<PAGE>
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 Section 2.3, the Agent
shall be entitled to rely on telephonic instructions from any person that the
Agent in good faith believes is an authorized officer or employee of the
Company, and the Company shall hold the Agent and each other Lender harmless
from any loss, cost or expense resulting from any such reliance.
14.4 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 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 Agent notifies Parent that the Required Lenders wish to
amend Section 10 for such purpose), then Parent's compliance with such covenant
shall be determined on the basis of GAAP as 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
Lenders.
14.5 Regulation U. Each Lender 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.
14.6 Costs, Expenses and Taxes. The Company agrees to pay on demand all
reasonable out-of-pocket costs and expenses of the Agent (including the
reasonable fees and charges of counsel for the Agent 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 amendment,
supplement or waiver to any Loan Document), 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 the Agent and
each Lender 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 Agent and the Lenders 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 Agent and the Lenders of their rights pursuant to
Section 10.2. All obligations provided for in this Section 14.6 shall survive
repayment of the Loans, cancellation of the Notes and any termination of this
Agreement.
54
<PAGE>
14.7 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 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 the Company in respect of
any such sum due from it to the Agent or any Lender 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 the
Agent or such Lender of any sum adjudged to be so due in the Judgment Currency,
the Agent or such Lender 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 the Agent
or such Lender in the Agreement Currency, the Company agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify the Agent or such
Lender against such loss. If the amount of the Agreement Currency so purchased
is greater than the sum originally due to the Agent or such Lender in such
currency, the Agent or such Lender agrees to return the amount of any excess to
the Company (or to any other Person who may be entitled thereto under applicable
law).
14.8 Captions. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
14.9 Assignments; Participations.
14.9.1 Assignments. Any Lender may, with the prior written consents of
the Company and the Agent (which consents shall not be unreasonably delayed or
withheld), at any time assign and delegate to one or more Related Funds
(provided that no written consent of the Company or the Agent shall be required
in connection with any assignment and delegation by a Lender to a Related Fund),
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 Lender's Loan in a minimum aggregate amount equal to the lesser of (i)
the amount of the assigning Lender's Loan and (ii) U.S.$1,000,000; provided,
however, that (a) no assignment and delegation may be made to any Person if, at
the time of such assignment and delegation, the Company would be obligated to
pay any greater amount under Section 7.5 or Section 8 to the Assignee than the
Company is then obligated to pay to the assigning Lender under such Sections
(and if any assignment is made in violation of the foregoing, the Company will
not be required to pay the incremental amounts); and (b) the Company and the
Agent shall be entitled to continue to deal solely and directly with such Lender
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
Agent and the assigning Lender 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
55
<PAGE>
Assignee, shall have been given to the Company and the Agent by such
assigning Lender and the Assignee,
(y) the assigning Lender and the Assignee shall have executed
and delivered to the Company and the 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 Agent, and
(z) the assigning Lender or the Assignee shall have paid the
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 Lender hereunder, and (y) the assigning Lender, 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, the Company shall execute and deliver to the
Agent (for delivery to the Assignee and the Assignor, as applicable) a new Note
in the amount of the Assignee's Loan and, if the assigning Lender continues to
have a Loan hereunder, a replacement Note in the amount of the assigning
Lender's Loan. Each such Note shall be dated the effective date of such
assignment. The assigning Lender shall mark the predecessor Note "exchanged" and
deliver such Note to the Company. Any attempted assignment and delegation not
made in accordance with this Section 14.9.1 shall be null and void.
The Company designates the Agent as its agent for maintaining a book
entry record of ownership identifying the Lenders, their respective addresses
and the amount of the respective Loans and Notes which they own. The foregoing
provisions are intended to comply with the registration requirements in Treasury
Regulation Section 5f.103-1 so that the Loans and Notes are considered to be in
"registered form" pursuant to such regulation.
Notwithstanding the foregoing provisions of this Section 14.9.1 or any
other provision of this Agreement, any Lender may at any time assign all or any
portion of its Loan and its Note to a Federal Reserve Bank (but no such
assignment shall release any Lender from any of its obligations hereunder).
14.9.2 Participations. Any Lender may at any time sell to one or more
commercial banks or other Persons participating interests in such Lender's Loan,
the Note held by such Lender or any other interest of such Lender hereunder (any
Person purchasing any such participating interest being called a "Participant").
In the event of a sale by a Lender of a participating interest to a Participant,
(x) such Lender shall remain the holder of its Note for all purposes of this
Agreement, (y) the Company and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights
56
<PAGE>
and obligations hereunder and (z) all amounts payable by the Company shall be
determined as if such Lender had not sold such participation and shall be paid
directly to such Lender. 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 14.1. Each Lender agrees to incorporate the
requirements of the preceding sentence into each participation agreement which
such Lender enters into with any Participant. The Company agrees 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 and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Lender 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 Lenders, and the Lenders
agree to share with each Participant, as provided in Section 7.4. The Company
also agrees that each Participant shall be entitled to the benefits of Section
7.5 and Section 8 as if it were a Lender (provided that no Participant shall
receive any greater compensation pursuant to Section 7.5 or Section 8 than would
have been paid to the participating Lender if no participation had been sold).
Each Lender which sells a participation will maintain a book entry record of
ownership identifying the Participant and the amount of such participation owned
by such Participant. Such book entry record of ownership shall be maintained by
the Lender as agent for the Company and the Agent. This provision is intended to
comply with the registration requirements in Treasury Regulation Section 5f.103-
1 so that the Loans and Notes are considered to be in "registered form" pursuant
to such regulation.
14.10 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 Company and rights of the Agent and the
Lenders expressed herein or in any other Loan Document shall be in addition to
and not in limitation of those provided by applicable law.
14.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same agreement.
14.12 Successors and Assigns. This Agreement shall be binding upon the
Company, the Lenders and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Company, the Lenders and the Agent and the
successors and assigns of the Lenders and the Agent. The Company may not assign
its rights or obligations hereunder without the prior written consent of all
Lenders.
57
<PAGE>
14.13 Indemnification by the Company.
(a) In consideration of the execution and delivery of this Agreement by
the Agent and the Lenders and the agreement to make the Loans hereunder, the
Company hereby agrees to indemnify and exonerate the Agent, each Lender and each
of the officers, directors, investment advisors, trustees, employees, Affiliates
and agents of the Agent and each Lender (each a "Lender Party") against, and
hold each Lender 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 14.13, called the "Indemnified Liabilities"),
incurred by the Lender 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 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 Lender Parties, except for any such Indemnified Liabilities arising on
account of any such Lender 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 Lender Party from any obligation it may have under this Agreement.
(b) All obligations provided for in this Section 14.13 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.
14.14 Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT
58
<PAGE>
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, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE
COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM
THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE
EXTENT THAT THE COMPANY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE COMPANY HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
14.15 Waiver of Jury Trial. THE COMPANY, THE AGENT AND EACH LENDER
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.
14.16 Acknowledgments and Agreements regarding Intercreditor Agreement.
Each Lender hereby acknowledges that (a) in addition to acting as Agent
hereunder, BofA acts as "U.S. Agent" under the Credit Agreement, as "Agent"
under the Existing Loan Agreement and as "Collateral Agent" under the
Intercreditor Agreement; and (b) this Agreement constitutes the "Permitted
Senior Secured Debt Agreement" as defined in the Intercreditor Agreement, the
obligations hereunder constitute "Permitted Senior Secured Debt Obligations" as
defined in the Intercreditor Agreement, each of the Lenders constitutes a
"Permitted Creditor" as defined in the Intercreditor Agreement and the Required
Lenders constitute the "Required Permitted Creditors" as defined in the
Intercreditor Agreement. Each of the Lenders agrees that (i) the Agent may act
on its behalf under the Intercreditor Agreement and may grant any consent, or
take or omit to take any other action, thereunder on behalf of the Lenders at
the direction or with the consent of the Required Lenders (unless, pursuant to
the express terms of this Agreement or the Intercreditor Agreement, such
consent, action or inaction may only be granted or
59
<PAGE>
taken the direction or consent of all Lenders) and (ii) the
Collateral Agent may act on behalf of such Lender as set forth in the
Intercreditor Agreement. Without limiting clause (ii) of the foregoing sentence,
the Lenders irrevocably authorize the Collateral Agent, at its option and in its
discretion, to release any Lien granted to or held by the Collateral Agent under
any Collateral Document (i) upon payment in full of all Loans and all other
obligations of the Company hereunder; (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 14.1, if approved, authorized or ratified
in writing by the Required Lenders. Upon request by the Collateral Agent at any
time, the Lenders will confirm in writing the Collateral Agent's authority to
release particular types or items of collateral pursuant to this Section 14.16.
60
<PAGE>
Delivered at Chicago, Illinois, as of the day and year first above written.
UNITED RENTALS, INC.
By ___________________________________________
Chief Financial Officer
UNITED RENTALS (NORTH AMERICA), INC.
By ___________________________________________
Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative Agent
By ___________________________________________
Title
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Lender
By ___________________________________________
Title
GOLDMAN SACHS CREDIT PARTNERS, L.P.,
as Syndication Agent and as a Lender
<PAGE>
Exhibit 10(e)
FIRST AMENDMENT
THIS FIRST AMENDMENT dated as of August 12, 1999 (this "Amendment") is to
---------
the Term Loan Agreement (the "Term Loan Agreement") dated as of July 15, 1999
-------------------
among UNITED RENTALS (NORTH AMERICA), INC. (the "Company"), UNITED RENTALS, INC.
-------
("Parent"), various financial institutions and BANK OF AMERICA, N.A. (f/k/a Bank
------
of America National Trust and Savings Association), as Administrative Agent (in
such capacity, the "Agent"). Unless otherwise defined herein, capitalized terms
-----
used herein have the respective meanings set forth in the Term Loan Agreement.
WHEREAS, the Company, Parent, the Agent, Bank of America, N.A. ("BofA") and
----
Goldman Sachs Credit Partners L.P. ("Goldman Sachs") have entered into the Term
-------------
Loan Agreement; and
WHEREAS, the parties hereto desire to amend the Term Loan Agreement to (a)
add the parties listed on the signatures hereof under the heading "New Lenders"
(collectively the "New Lenders") as "Lenders" thereunder and (b) make certain
-----------
other changes as hereinafter set forth;
NOW, THEREFORE, 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:
SECTION 1 AMENDMENT. Effective on (and subject to the occurrence of) the
---------
First Amendment Effective Date (as defined below), the Term Loan Agreement shall
be amended as set forth below.
1.1 Section 14.9.1. Section 14.9.1 is amended by (a) inserting the
---------------
following language after the word "withheld" at the end of the first
parenthetical clause therein: "and shall not be required for any assignment and
delegation to (a) another Lender or (B) a Related Fund" and (b) deleting the
second parenthetical therein (which begins with the language "(provided that no
--------
written consent").
1.2 Schedule 1.1(A) Schedule 1.1(A) is amended in its entirety by
---------------
substituting the Schedule 1.1(A) attached hereto therefor.
---------------
<PAGE>
1.3 Schedule 14.3. Schedule 14.3 is amended in its entirety by
-------------
substituting the Schedule 14.3 attached hereto therefor.
-------------
SECTION 2 REPRESENTATIONS AND WARRANTIES. Each of Parent and the Company
------------------------------
represents and warrants to the Agent and the Lenders that (a) the
representations and warranties made in Section 9 of the Term Loan Agreement are
true and correct on and as of the First Amendment Effective Date with the same
effect as if made on and as of the First Amendment Effective Date (except to the
extent such representations and warranties expressly refer to an earlier date,
in which case they were true and correct as of such earlier date); (b) no Event
of Default or Unmatured Event of Default exists or will result from the
execution of this Amendment; (c) no event or circumstance has occurred since the
Closing Date that has resulted, or would reasonably be expected to result, in a
Material Adverse Effect; (d) the execution and delivery by Parent and the
Company of this Amendment, the execution and delivery by the Company of the New
Notes (as defined below), the performance by Parent and the Company of their
respective obligations under the Term Loan Agreement as amended hereby (as so
amended, the "Amended Agreement") and the performance by the Company of the New
-----------------
Notes (i) are within the corporate 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 approval and (iv) do
not and will not contravene or conflict with any provision of law or of the
charter or by-laws of Parent or the Company or of any indenture, loan agreement
or other contract, or any order or decree, which is binding upon Parent or the
Company; and (e) each of the Amended Agreement and each New Note 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 applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability.
SECTION 3 EFFECTIVENESS. The amendments set forth in Section 1 above shall
------------- ---------
become effective, as of the day and year first above written, on such date (the
"First Amendment Effective Date") when the Agent shall have received, (a) a
------------------------------
counterpart of this Amendment executed by each of the parties
-2-
<PAGE>
hereto (or, in the case of any party from which the Agent has not received a
counterpart hereof, facsimile confirmation of the execution of a counterpart
hereof by such party) and (b) each of the following documents, each in form and
substance satisfactory to the Agent:
3.1 Notes. New Notes, substantially in the form of Exhibit A to the Term
-----
Loan Agreement, payable to the order of each of the Lenders (collectively, the
"New Notes").
- ----------
3.2 Other Documents. Such other documents as the Agent or any Lender may
---------------
reasonably request in connection with Parent's and the Company's authorization,
execution and delivery of this Amendment.
SECTION 4 ADDITION OF LENDERS. On the First Amendment Effective Date,
-------------------
each New Lender shall become a "Lender" under and for all purposes of the
Amended Agreement, shall be bound by the Amended Agreement, and shall be
entitled to the benefits of the Amended Agreement and each other Loan Document,
and each Lender (including BofA and Goldman Sachs) shall have a Term Loan in the
amount, and a Percentage, as set forth on Schedule 1.1(A) hereto. To facilitate
---------------
the foregoing, each New Lender agrees that on the First Amendment Effective
Date, it will remit to the Agent funds in an amount equal to its Term Loan, and
the Agent agrees to immediately (i) remit a portion of such funds to BofA and
Goldman Sachs, in such amounts as are necessary to reduce the Term Loans of BofA
and Goldman Sachs to the amounts set forth opposite their names on Schedule
--------
1.1(A) hereto and (ii) to remit the balance of such funds to the Company. Each
- ------
New Lender agrees that all interest and fees accrued under the Term Loan
Agreement prior to the First Amendment Effective Date are the property of BofA
and Goldman Sachs. By their signatures below each of BofA and Goldman Sachs
confirms that it has not sold or otherwise encumbered its rights under the Term
Loan Agreement or its interest in any Loans prior to the syndication thereof
pursuant to this Amendment.
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 First Amendment Effective Date, all
references in the Term
-3-
<PAGE>
Loan Agreement, the Notes, each other Loan Document and any similar document 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 Amendment.
5.3 Expenses. The Company agrees to pay the reasonable costs and expenses
--------
of the Agent (including attorney costs) in connection with the preparation,
execution and delivery of this Amendment.
5.4 Governing Law. This Amendment shall be a contract made under and
-------------
governed by the internal laws of the State of Illinois.
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 successors and assigns of the Lenders and the Agent.
-4-
<PAGE>
Delivered at New York, New York, as of the day and year first above
written.
UNITED RENTALS, INC.
By__________________________
Title_____________________
UNITED RENTALS (NORTH AMERICA), INC.
By__________________________
Title_____________________
BANK OF AMERICA, N.A., as
Administrative Agent
By__________________________
Title_____________________
BANK OF AMERICA, N.A., as a Lender
By_________________________
Title____________________
GOLDMAN SACHS CREDIT PARTNERS,
L.P., as Syndication Agent and as
a Lender
-5-
<PAGE>
By_________________________
Title____________________
"NEW LENDERS":
-----------
DEUTSCHE BANK AG, New York and/or
Cayman Islands Branch
By_________________________
Title____________________
NORTH AMERICAN SENIOR FLOATING
RATE FUND
By:CypressTree Investment Company,
Inc., as Portfolio Manager
By_________________________
Title____________________
CYPRESSTREE SENIOR FLOATING RATE
FUND
By:
CypressTree Investment Management
Company, Inc., as Portfolio Manager
By_________________________
Title____________________
-6-
<PAGE>
KZH CYPRESSTREE - 1 LLC
By_________________________
Title____________________
-7-
<PAGE>
CYPRESSTREE INSTITUTIONAL FUND,
LLC
By:CypressTree Investment Management
Company, Inc., as Portfolio
Manager
By_________________________
Title____________________
FLOATING RATE PORTFOLIO
By_________________________
Title____________________
GENERAL ELECTRIC CAPITAL CORPORATION
By_________________________
Title____________________
HARRIS TRUST AND SAVINGS BANK
By_________________________
Title____________________
-8-
<PAGE>
IKB DEUTSCHE INDUSTRIEBANK AG
LUXEMBOURG BRANCH
By_________________________
Title____________________
METROPOLITAN LIFE INSURANCE
COMPANY
By_________________________
Title____________________
MONY LIFE INSURANCE COMPANY
By_________________________
Title____________________
PARIBAS CAPITAL FUNDING LLC
By_________________________
Title____________________
-9-
<PAGE>
JACKSON NATIONAL LIFE INSURANCE
COMPANY
By_________________________
Title____________________
TYLER TRADING, INC.
By_________________________
Title____________________
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By_________________________
Title____________________
UNION BANK OF CALIFORNIA, N.A.
By_________________________
Title____________________
-10-
<PAGE>
COMERICA BANK
By_________________________
Title____________________
BANK OF NOVA SCOTIA
By_________________________
Title____________________
THE FUJI BANK, LIMITED
By_________________________
Title____________________
HELLER FINANCIAL INC.
By_________________________
Title____________________
-11-
<PAGE>
FREMONT INVESTMENT AND LOAN
By_________________________
Title____________________
CONTINENTAL ASSURANCE COMPANY
Separate Account (E)
By:
TCW Asset Management Company as
Attorney-in-Fact
By_________________________
Title____________________
By_________________________
Title____________________
UNITED OF OMAHA LIFE INSURANCE
COMPANY
By:TCW Asset Management Company, its
Investment Advisor
By_________________________
Title____________________
By_________________________
Title____________________
-12-
<PAGE>
SEQUILS I, LTD.
By_________________________
Title____________________
By_________________________
Title____________________
KZH CRESCENT-2 LLC
By_________________________
Title____________________
KZH CRESCENT LLC
By_________________________
Title____________________
-13-
<PAGE>
Exhibit 10(f)
SECOND AMENDMENT TO TERM LOAN AGREEMENT
---------------------------------------
THIS SECOND AMENDMENT TO TERM LOAN AGREEMENT dated as of July 14, 1999
(this "Amendment") amends the Term Loan Agreement dated as of July 10, 1998 (as
---------
previously amended, the "Term Loan Agreement") among United Rentals, Inc.
-------------------
("Parent"), United Rentals (North America), 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 as set forth in this Section 1.
---------
1.1 Deletion of Definitions. The definitions of "Fixed Rate Margin" and
-----------------------
"Floating Rate Margin" are deleted from Section 1.1.
1.2 Definition of Business Day. The definition of "Business Day" in
--------------------------
Section 1.1 is amended by inserting "Charlotte," immediately before "Chicago"
therein.
1.3 Definition of Credit Agreement. The definition of Credit Agreement in
------------------------------
Section 1.1 is amended in its entirety to read as follows:
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, as
amended or restated from time to time (including any amendment or
restatement increasing the amount available thereunder) and any Successor
Credit Agreement as defined in the Intercreditor Agreement.
1.4 Definition of Eurodollar Office. The definition of "Eurodollar
-------------------------------
Office" in Section 1.1 is amended in its entirety to read as follows:
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, in the case of any Reference Lender,
such office or offices through which
<PAGE>
such Reference Lender makes any determination for purposes of calculating
the Eurodollar Rate. A Eurodollar Office of any Lender may be, at the
option of such Lender, either a domestic or foreign office.
1.5 Definition of Funded Debt. The definition of "Funded Debt" in Section
-------------------------
1.1 is amended in its entirety to read as follows:
Funded Debt means (a) all Debt of Parent and its Subsidiaries and
-----------
(b) to the extent not included in the definition of Debt, the aggregate
outstanding investment or claim held at such time by purchasers, assignees
or other transferees of (or of interests in) accounts receivable, lease
receivables or other rights to payment of Parent and its Subsidiaries in
connection with any Securitization Transaction (regardless of the
accounting treatment of such Securitization Transaction), but 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.
1.6 Definition of Interest Expense. The definition of "Interest Expense"
------------------------------
in Section 1.1 is amended in its entirety to read as follows:
Interest Expense means for any period the sum, without duplication, of
----------------
(a) 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) and (b)
consolidated yield or discount accrued during such period on the aggregate
investment or claim held by purchasers, assignees or other transferees of,
or of interests in, accounts receivable, lease receivables and other rights
to payment of Parent and its Subsidiaries in connection with any
Securitization Transaction (regardless of the accounting treatment of such
Securitization Transaction).
1.7 Definition of Investment. The definition of "Investment" in Section
------------------------
1.1 is amended by deleting "the Company" therein and substituting "Parent"
therefor.
1.8 Definition of Permitted Senior Secured Debt. The definition of
-------------------------------------------
"Permitted Senior Secured Debt" in Section 1.1 is amended in its entirety to
read as follows:
2
<PAGE>
Permitted Senior Secured Debt means any Debt arising under (a) the
-----------------------------
Term Loan Agreement dated as of July 15, 1999 among Parent, the Company,
various financial institutions and BofA, as Agent; and (b) any other term
loan agreement (other than this Agreement) among Parent, the Company,
various financial institutions and BofA, as agent; provided that (i) any
--------
such other term loan agreement shall contain covenants and defaults which
are no more restrictive for Parent and its Subsidiaries than the covenants
and defaults contained in this Agreement, (ii) any such Debt shall mature
no earlier than September 30, 2005 and shall have amortization of no more
than 20% of the principal amount thereof prior to July 15, 2005, (iii) any
such Debt shall constitute "Senior Indebtedness" as defined in each
Subordinated Note Indenture and (iv) no Debt under any such other term loan
agreement shall have interest rate spreads greater than (x) if such Debt
matures on or before December 31, 2005, the then-applicable interest rate
spreads under this Agreement, or (y) if such Debt matures after December
31, 2005, the then-applicable interest rate spreads under the Term Loan
Agreement referred to in clause (a) above.
----------
1.9 Definition of Reference Rate. The definition of "Reference Rate" in
----------------------------
Section 1.1 is amended by inserting the following immediately after "California"
in the second line thereof: "(or such other office in the United States of
America as BofA shall specify from time to time)".
1.10 Definition of Seller Subordinated Debt. The definition of "Seller
--------------------------------------
Subordinated Debt" in Section 1.1 is amended by deleting the reference to
"Section 10.11(d)" therein and substituting "Section 10.11(c)" therefor.
- ----------------- ----------------
1.11 Definition of Subordinated Debt. The definition of "Subordinated
-------------------------------
Debt" in Section 1.1 is amended in its entirety to read as follows:
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) the U.S.$300,000,000 of 9.25% unsecured senior
subordinated notes due 2009 issued by the Company on December 15, 1998 and
the unsecured subordinated guarantees thereof provided for in the
applicable Subordinated Note Indenture, (d) the U.S.$250,000,000 of 9.0%
unsecured senior subordinated notes due 2009 issued by the Company on March
23, 1999 and the unsecured subordinated guarantees thereof provided for in
the applicable Subordinated Note Indenture, (e) Seller Subordinated Debt
and (f) any other unsecured Debt of the Company and unsecured guarantees
thereof by any Subsidiary of the Company which (i) is owed to Persons other
than officers,
3
<PAGE>
employees, directors or Affiliates of the Company, (ii) has no amortization
prior to December 31, 2006 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.
1.12 Definition of Subordinated Note Indenture. The definition of
-----------------------------------------
"Subordinated Note Indenture" in Section 1.1 is amended in its entirety to read
as follows:
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, (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, (c) the Indenture dated as of
December 15, 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.$300,000,000 of Subordinated Debt, and (d) the Indenture
dated as of March 23, 1999 among the Company, various Subsidiaries of the
Company and The Bank of New York, as Trustee, pursuant to which the Company
issued U.S.$250,000,000 of Subordinated Debt.
1.13 Definition of Vendor Financing Arrangement. The definition of
------------------------------------------
"Vendor Financing Arrangement" in Section 1.1 is amended by deleting the
references to "the Company" therein and substituting "Parent" therefor.
1.14 Addition of Definitions. The following definitions are added to
-----------------------
Section 1.1 in appropriate alphabetical sequence:
Securitization Transaction means any sale, assignment or other
--------------------------
transfer by Parent or any Subsidiary of accounts receivable, lease
receivables or other payment obligations owing to Parent or such Subsidiary
or any interest in any of the foregoing, together in each case with any
collections and other proceeds thereof, any collection or deposit accounts
related thereto, and any collateral, guaranties or other property or claims
supporting or securing payment by the obligor thereon of, or otherwise
related to, or subject to leases giving rise to, any such receivables.
Special Purpose Vehicle means a trust, bankruptcy remote entity or
-----------------------
other special purpose entity which is a Subsidiary of Parent (or, if not a
Subsidiary, the common equity of which is wholly-owned, directly or
indirectly, by Parent) and which is formed for the
4
<PAGE>
purpose of, and engages in no material business other than, acting as an
issuer or a depositor in a Securitization Transaction (and, in connection
therewith, owning accounts receivable, lease receivables, other rights to
payment, leases and related assets and pledging or transferring any of the
foregoing or interests therein).
1.15 Amendment of Interest Rates. Section 4.1 is amended by (a) deleting
---------------------------
the language "the Floating Rate Margin from time to time in effect" from clause
(a) thereof and substituting "0.375%" therefor; and (b) deleting the language
"the Fixed Rate Margin from time to time in effect" from clause (b) thereof and
substituting "2.25%" therefor.
1.16 Amendment to Section 8.2. Clause (a) of Section 8.2 is amended by
------------------------
inserting "U.S." immediately before "Dollars" in the first line thereof.
1.17 Amendment to Section 10.6.4. Section 10.6.4 is amended in its
---------------------------
entirety to read as follows:
10.6.4 Senior Debt to Tangible Assets. Not permit the ratio of (i)
------------------------------
Senior Debt to (ii) the sum of Tangible Assets plus the outstanding amount
of accounts receivable, lease receivables and other payment obligations
which are not included on Parent's consolidated balance sheet but would be
so included if not sold pursuant to a Securitization Transaction to exceed
1.0 to 1.0 at any time.
1.18 Amendment to Section 10.7. Section 10.7 is amended in its entirety to
-------------------------
read as follows:
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;
(b) unsecured Debt of Parent, the Company and Subsidiaries of the
Company (excluding Contingent Payments and Seller Subordinated Debt);
provided that no Subsidiary shall incur any such Debt if, after giving
--------
effect thereto, the aggregate amount of all then-outstanding Debt of
Subsidiaries of the Company permitted solely by this clause (b) would
----------
exceed 10% of Net Worth;
(c) Debt of Parent 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,
-----
5
<PAGE>
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 Parent 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.$150,000,000;
(d) Debt of Subsidiaries owed to the Company or Parent; provided that
--------
the aggregate amount of all such Debt of Foreign Subsidiaries owed to
the Company and Parent shall not at any time exceed 15% of the
consolidated assets of Parent and its Subsidiaries;
(e) unsecured Debt of the Company to Subsidiaries of the Company, of
Parent to the Company and Subsidiaries of the Company and of any
Special Purpose Vehicle to any Subsidiary of the Company;
(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 (f) 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;
6
<PAGE>
(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.$750,000,000;
(k) Guarantees by Parent of the obligations of the Company or any
Subsidiary; provided that any such guaranty of Debt 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 Parent or any Subsidiary in
respect of Vendor Financing Arrangements;
(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; and
(n) Debt in connection with Securitization Transactions; provided that
--------
the aggregate principal amount of all such Debt shall not at any time
exceed U.S.$150,000,000.
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.
1.19 Amendment to Section 10.8. Section 10.8 is amended by (a) immediately
-------------------------
following the last reference to "Debt" in clause (d) thereof adding the
following "and the proceeds (including insurance proceeds) of any disposition or
loss of such property", (b) deleting the word "and" immediately after the
semicolon in clause (f) thereof, (c) deleting the period at the end of clause
(g) thereof and substituting a semicolon and the word "and" therefor and (d)
adding the following new clause (h):
(h) Liens arising in connection with Securitization Transactions;
provided that the aggregate investment or claim held at any time by
--------
all purchasers, assignees or other transferees of (or of interests in)
accounts
7
<PAGE>
receivable, lease receivables and other rights to payment in
all Securitization Transactions shall not exceed $150,000,000.
1.20 Amendment to Section 10.10. Section 10.10 is amended by (a) deleting
--------------------------
the word "its" in clause (f)(ii) thereof and substituting the word "the"
therefor, (b) adding the following immediately after the parenthetical in clause
(f)(ii) thereof: "of Parent, any Acquisition Subsidiary, the QuIPS Trust and
any Special Purpose Vehicle" and (c) adding the following sentence to the end of
such section: "Nothing in this Section 10.10 shall prohibit Parent from
permitting the cashless exercise of any options or warrants for stock of
Parent."
1.21 Amendment to Section 10.11. Section 10.11 is amended in its entirety
--------------------------
to read as follows:
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) 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
or merges the acquired company or the Acquisition Subsidiary into the
Company or with or into any wholly-owned Subsidiary of the Company; (d)
the sale, assignment or other transfer of accounts receivable, lease
receivables or other
8
<PAGE>
rights to payment pursuant to any Securitization Transaction; provided that
--------
the aggregate investment or claim held at any time by all purchasers,
assignees or other transferees of (or of interests in) such receivables or
other rights to payment shall not exceed $150,000,000; and (e) sales and
dispositions of assets (including the stock of Subsidiaries), in addition
to sales and other dispositions permitted by clause (d), 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.
1.22 Amendment to Section 10.14. Section 10.14 is amended in its entirety
--------------------------
to read as follows:
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 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 and
the Company's interest in any Special Purpose Vehicle) 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 neither the
QuIPS Trust nor any Special Purpose Vehicle shall have any 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 (other
than Parent's interest in the QuIPS Trust or any Special Purpose Vehicle),
and (iii) the obligations of each U.S. Subsidiary (other than the QuIPS
Trust and any Special Purpose Vehicle) under the U.S. Guaranty are secured
by substantially all of the assets (other than real property and such U.S.
Subsidiary's interest in any Special Purpose Vehicle) 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
9
<PAGE>
any time thereafter when no Event of Default or Unmatured Event of Default
exists, such guaranties and collateral security shall be released).
1.23 Amendment to Section 10.15. Section 10.15 is amended in its entirety
--------------------------
to read as follows:
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 Parent, the Company and Subsidiaries of the Company) which is
on terms which are less favorable than are obtainable from any Person which
is not one of its Affiliates; provided that Parent may enter into
transactions with Acquisition Subsidiaries or the QuIPS Trust, and Parent
or any Subsidiary may enter into transactions with any Special Purpose
Vehicle in connection with any Securitization Transaction, to the extent
permitted by the terms of this Agreement.
1.24 Amendment to Section 10.18. Section 10.18 is amended by deleting the
--------------------------
reference to "the Company" therein and substituting "Parent" therefor.
1.25 Amendment to Section 10.19. Section 10.19 is amended by adding
--------------------------
"(other than any Special Purpose Vehicle)" immediately after the second
reference to "the Company" in clause (b) thereof.
1.26 Amendment to Section 10.20. Section 10.20 is amended by adding
--------------------------
"(other than the QuIPS Trust and any Special Purpose Vehicle)" immediately after
the reference to "Subsidiary" therein.
1.27 Amendment to Section 10.21. Section 10.21 is amended by (a) inserting
--------------------------
", in Subsidiaries of the Company" immediately after the reference to "Company"
in clause (h) thereof, (b) deleting the word "and" at the end of clause (i)
thereof, (c) adding the word "and" at the end of clause (j) thereof, (c) adding
the following new clause (k):
(k) Investments by Parent or any Subsidiary in any Special Purpose
Vehicle; provided that the aggregate amount of all such Investments
--------
made in cash shall not exceed $5,000,000;
and (d) deleting the language "or (g)" in clause (y) of the proviso thereto and
-
substituting ", (g) or (k)" therefor.
- -
1.28 Amendment to Section 10.23. Section 10.23 is amended in its entirety
--------------------------
to read as follows:
10
<PAGE>
10.23 Activities of Parent. Not engage in any business other than
--------------------
ownership of the Company, Acquisition Subsidiaries, the QuIPS Trust and any
Special Purpose Vehicle 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
properties to be used by, and services (including management and consulting
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 of Debt 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 and its Subsidiaries, (ii) Investments in Acquisition
Subsidiaries, (iii) Investments in the QuIPS Trust existing on the date
hereof and (iv) Investments in any Special Purpose Vehicle, (c) grant any
Liens on any of its assets (other than pursuant to the U.S. Security
Agreement or as permitted under this 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.
1.29 Amendment to Section 12.1.2. Section 12.1.2 is amended by adding the
----------------------------
following immediately before the period at the end thereof:
; or any event of default, default, liquidation event or similar event
shall occur or exist relating to any Securitization Transaction if the
effect of such event is to cause or permit (subject to any applicable grace
period) an aggregate cash amount exceeding a Dollar Equivalent amount of
U.S. $15,000,000 to become immediately due and payable by Parent or any
Subsidiary under such Securitization Transaction
1.30 Amendment to Section 12.1.11. Section 12.1.11 is amended by deleting
----------------------------
the word "either" in clause (d) thereof and substituting the word "any"
therefor.
1.31 Tax Forms. The parenthetical clause "(or any applicable
---------
successor form)" is added in the following places: (a) after "Forms 1001 and W-
8" in subsection 13.10(a)(i); (b) after "Form 4224" in subsection 13.10(a)(ii);
(c) after "Form 1001 or 4224" in subsection 13.10(a)(iii); (d) after "Form 1001"
twice in subsection 13.10(b); and (e) after "Form 4224" in Section 13.10(c).
11
<PAGE>
1.32 Deletion of Schedule 1.1(B). Schedule 1.1(B) is deleted in its
---------------------------
entirety.
SECTION 2 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 (excluding Section
-------
9.8) 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 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 other
Subsidiary of Parent, (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 and (d) no
Event of Default or Unmatured Event of Default has occurred or is continuing.
SECTION 3 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 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.
(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.
12
<PAGE>
(iv) The opinions of (a) Weil, Gotshal & Manges LLP, special counsel to
Parent and the Company, and (b) Oscar D. Folger, counsel to Parent and the
Company.
(v) A Confirmation substantially in the form of Exhibit A signed by each
---------
Loan Party.
SECTION 4 Miscellaneous.
-------------
4.1 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.
4.2 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.
4.3 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.
4.4 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.
4.5 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.
13
<PAGE>
Delivered at Chicago, Illinois, as of the day and year first above written.
UNITED RENTALS, INC.
By___________________________
Chief Financial Officer
UNITED RENTALS (NORTH AMERICA),
INC.
By___________________________
Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By______________________________
Title___________________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Lender
By______________________________
Title___________________________
ALLSTATE INSURANCE COMPANY
By______________________________
Title___________________________
By______________________________
S-1
<PAGE>
Title___________________________
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___________________________
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 INVESTMENT PARTNERS II, LTD.
By: CypressTree Investment Management Company,
Inc., as its Portfolio Manager
By______________________________
Title___________________________
DEUTSCHE BANK AG, New York Branch
and/or Cayman Islands Branch
S-3
<PAGE>
By______________________________
Title___________________________
ALLFIRST BANK
By______________________________
Title___________________________
KZH CNC LLC
By______________________________
Title___________________________
KZH ING-2 LLC
By______________________________
Title___________________________
METROPOLITAN LIFE INSURANCE
COMPANY
By______________________________
Title___________________________
MORGAN STANLEY DEAN WITTER PRIME
INCOME TRUST
By______________________________
Title___________________________
S-4
<PAGE>
THE TRAVELERS INSURANCE COMPANY
By______________________________
Title___________________________
CANADIAN IMPERIAL BANK OF
COMMERCE
By______________________________
Title___________________________
SENIOR DEBT PORTFOLIO
By: Boston Management and Research, as
Investment Advisor
By______________________________
Title___________________________
S-5
<PAGE>
OXFORD STRATEGIC INCOME FUND
By: Eaton Vance Management, as Investment
Advisor
By______________________________
Title___________________________
EATON VANCE SENIOR INCOME TRUST
By: Eaton Vance Management, as Investment
Advisor
By______________________________
Title___________________________
TORONTO DOMINION (TEXAS), INC.
By______________________________
Title___________________________
S-6
<PAGE>
FIRST DOMINION FUNDING I
By______________________________
Title___________________________
S-7
<PAGE>
Exhibit 10(g)
SECOND AMENDMENT
----------------
THIS SECOND AMENDMENT dated as of July 14, 1999 (this "Amendment") amends
the Credit Agreement dated as of September 29, 1998 (as previously amended, the
"Credit Agreement") among United Rentals (North America), Inc. (the "Company"),
United Rentals, Inc. ("Parent"), 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. Terms defined in
the Credit Agreement are, unless otherwise defined herein or the context
otherwise requires, used herein as defined therein.
WHEREAS, the parties hereto desire to amend the Credit 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 Credit Agreement shall be
amended as set forth in this Section 1.
---------
1.1 Definition of Business Day. The definition of "Business Day" in
--------------------------
Section 1.1 is amended by inserting "Charlotte," immediately before "Chicago"
therein.
1.2 Definition of Funded Debt. The definition of "Funded Debt" in Section
-------------------------
1.1 is amended in its entirety to read as follows:
Funded Debt means (a) all Debt of Parent and its Subsidiaries and
-----------
(b) to the extent not included in the definition of Debt, the aggregate
outstanding investment or claim held at such time by purchasers, assignees
or other transferees of (or of interests in) receivables or other rights to
payment of Parent and its Subsidiaries in connection with any
Securitization Transaction (regardless of the accounting treatment of such
Securitization Transaction), but 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.
1.3 Definition of Interest Expense. The definition of "Interest
------------------------------
Expense" in Section 1.1 is amended in its entirety to read as follows:
Interest Expense means for any period the sum, without duplication, of
----------------
(a) the consolidated interest expense of Parent and its Subsidiaries for
such period (including,
<PAGE>
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) and (b) consolidated
yield or discount accrued during such period on the aggregate investment or
claim held by purchasers, assignees or other transferees of, or of
interests in, accounts receivable, lease receivables and other rights to
payment of Parent and its Subsidiaries in connection with any
Securitization Transaction (regardless of the accounting treatment of such
Securitization Transaction).
1.4 Definition of Investment. The definition of "Investment" in Section
------------------------
1.1 is amended by deleting "the Company" therein and substituting "Parent"
therefor.
1.5 Definition of Permitted Senior Secured Debt. The definition of
-------------------------------------------
"Permitted Senior Secured Debt" in Section 1.1 is amended in its entirety to
read as follows:
Permitted Senior Secured Debt means any Debt arising under (a) the
-----------------------------
Term Loan Agreement dated as of July 15, 1999 among Parent, the Company,
various financial institutions and BofA, as Agent; and (b) any other term
loan agreement (other than the Term Loan Agreement as defined herein) among
Parent, the Company, various financial institutions and BofA, as agent;
provided that (i) any such other term loan agreement shall contain
--------
covenants and defaults which are no more restrictive for Parent and its
Subsidiaries than the covenants and defaults contained in this Agreement,
(ii) any such Debt shall mature no earlier than September 30, 2005 and
shall have amortization of no more than 20% of the principal amount thereof
prior to July 15, 2005, (iii) any such Debt shall constitute "Senior
Indebtedness" as defined in each Subordinated Note Indenture and (iv) no
Debt under any such other term loan agreement shall have interest rate
spreads greater than (x) if such Debt matures on or before December 31,
2005, the then-applicable interest rate spreads under the Term Loan
Agreement (as defined herein) or (y) if such Debt matures after December
31, 2005, the then-applicable interest rate spreads under the Term Loan
Agreement referred to in clause (a) above.
----------
1.6 Definition of Reference Rate. The definition of "Reference Rate" in
----------------------------
Section 1.1 is amended by inserting the following immediately after "California"
in the second line thereof: "(or such other office in the United States of
America as BofA shall specify from time to time)".
1.7 Definition of Seller Subordinated Debt. The definition of "Seller
--------------------------------------
Subordinated Debt" in Section 1.1 is amended by deleting the reference to
"Section 10.11(d)" therein and substituting "Section 10.11(c)" therefor.
- ----------------- ----------------
1.8 Definition of Subordinated Debt. The definition of "Subordinated
-------------------------------
Debt" in Section 1.1 is amended in its entirety to read as follows:
2
<PAGE>
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) the U.S.$300,000,000 of 9.25% unsecured senior
subordinated notes due 2009 issued by the Company on December 15, 1998 and
the unsecured subordinated guarantees thereof provided for in the
applicable Subordinated Note Indenture, (d) the U.S.$250,000,000 of 9.0%
unsecured senior subordinated notes due 2009 issued by the Company on March
23, 1999 and the unsecured subordinated guarantees thereof provided for in
the applicable Subordinated Note Indenture, (e) Seller Subordinated Debt
and (f) any other unsecured Debt of the Company and unsecured guarantees
thereof by any Subsidiary 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, 2006 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.
1.9 Definition of Subordinated Note Indenture. The definition of
-----------------------------------------
"Subordinated Note Indenture" in Section 1.1 is amended in its entirety to read
as follows:
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, (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, (c) the Indenture dated as of
December 15, 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.$300,000,000 of Subordinated Debt, and (d) the Indenture
dated as of March 23, 1999 among the Company, various Subsidiaries of the
Company and The Bank of New York, as Trustee, pursuant to which the Company
issued U.S.$250,000,000 of Subordinated Debt.
1.10 Definition of Vendor Financing Arrangement. The definition of "Vendor
------------------------------------------
Financing Arrangement" in Section 1.1 is amended by deleting the references to
"the Company" therein and substituting "Parent" therefor.
3
<PAGE>
1.11 Addition of Definitions. The following definitions are added to
-----------------------
Section 1.1 in appropriate alphabetical sequence:
Securitization Transaction means any sale, assignment or other
--------------------------
transfer by Parent or any Subsidiary of accounts receivable, lease
receivables or other payment obligations owing to Parent or such Subsidiary
or any interest in any of the foregoing, together in each case with any
collections and other proceeds thereof, any collection or deposit accounts
related thereto, and any collateral, guaranties or other property or claims
supporting or securing payment by the obligor thereon of, or otherwise
related to, or subject to leases giving rise to, any such receivables.
Special Purpose Vehicle means a trust, bankruptcy remote entity or
-----------------------
other special purpose entity which is a Subsidiary of Parent (or, if not a
Subsidiary, the common equity of which is wholly-owned, directly or
indirectly, by Parent) and which is formed for the purpose of, and engages
in no material business other than, acting as an issuer or a depositor in a
Securitization Transaction (and, in connection therewith, owning accounts
receivable, lease receivables, other rights to payment, leases and related
assets and pledging or transferring any of the foregoing or interests
therein).
1.12 Amendment to Section 10.6.4. Section 10.6.4 is amended in its
---------------------------
entirety to read as follows:
10.6.4 Senior Debt to Tangible Assets. Not permit the ratio of (i)
------------------------------
Senior Debt to (ii) the sum of Tangible Assets plus the outstanding amount
of accounts receivable, lease receivables and other payment obligations
which are not included on Parent's consolidated balance sheet but would be
so included if not sold pursuant to a Securitization Transaction to exceed
1.0 to 1.0 at any time.
1.13 Amendment to Section 10.7. Section 10.7 is amended in its entirety to
-------------------------
read as follows:
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 Parent, the Company and Subsidiaries of the
Company (excluding Contingent Payments and Seller Subordinated Debt);
provided that no Subsidiary shall incur any such Debt if, after giving
--------
effect thereto, the aggregate amount of all then-outstanding Debt of
Subsidiaries
4
<PAGE>
of the Company permitted solely by this clause (b) would
----------
exceed 10% of Net Worth;
(c) Debt of Parent 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 Parent 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.$150,000,000;
(d) Debt of Subsidiaries owed to the Company or Parent; provided that
--------
the aggregate amount of all such Debt of Foreign Subsidiaries owed to
the Company and Parent shall not at any time exceed 15% of the
consolidated assets of Parent and its Subsidiaries;
(e) unsecured Debt of the Company to Subsidiaries of the Company, of
Parent to the Company and Subsidiaries of the Company and of any
Special Purpose Vehicle to any Subsidiary of the Company;
(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 (f) 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);
----------------
5
<PAGE>
(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.$750,000,000;
(k) Guarantees by Parent of the obligations of the Company or any
Subsidiary; provided that any such guaranty of Debt 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 Parent or any Subsidiary in
respect of Vendor Financing Arrangements;
(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; and
(n) Debt in connection with Securitization Transactions; provided that
--------
the aggregate principal amount of all such Debt shall not at any time
exceed U.S.$150,000,000.
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.
1.14 Amendment to Section 10.8. Section 10.8 is amended by (a) immediately
-------------------------
following the last reference to "Debt" in clause (d) thereof adding the
following "and the proceeds (including insurance proceeds) of any disposition or
loss of such property", (b) deleting the word "and" immediately after the
semicolon in clause (f) thereof, (c) deleting the period at the end of
6
<PAGE>
clause (g) thereof and substituting a semicolon and the word "and" therefor and
(d) adding the following new clause (h):
(h) Liens arising in connection with Securitization Transactions;
provided that the aggregate investment or claim held at any time by
--------
all purchasers, assignees or other transferees of (or of interests in)
accounts receivable, lease receivables and other rights to payment in
all Securitization Transactions shall not exceed $150,000,000.
1.15 Amendment to Section 10.10. Section 10.10 is amended by (a) deleting
--------------------------
the word "its" in clause (f)(ii) thereof and substituting the word "the"
therefor, (b) adding the following immediately after the parenthetical in clause
(f)(ii) thereof: "of Parent, any Acquisition Subsidiary, the QuIPS Trust and
any Special Purpose Vehicle" and (c) adding the following sentence to the end of
such section: "Nothing in this Section 10.10 shall prohibit Parent from
permitting the cashless exercise of any options or warrants for stock of
Parent."
1.16 Amendment to Section 10.11. Section 10.11 is amended in its entirety
--------------------------
to read as follows:
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) 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
7
<PAGE>
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 to the Company or merges the acquired company or the Acquisition
Subsidiary into the Company or with or into any wholly-owned Subsidiary of
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; (d) the sale, assignment or other transfer of
accounts receivable, lease receivables or other rights to payment pursuant
to any Securitization Transaction; provided that the aggregate investment
or claim held at any time by all purchasers, assignees or other transferees
of (or of interests in) such receivables or other rights to payment shall
not exceed $150,000,000; and (e) sales and dispositions of assets
(including the stock of Subsidiaries), in addition to sales and other
dispositions permitted by clause (d), 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.
1.17 Amendment to Section 10.14. Section 10.14 is amended in its entirety
--------------------------
to read as follows:
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 and
the Company's interest in any Special Purpose Vehicle) 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 neither the
QuIPS Trust nor any Special Purpose Vehicle shall have any obligation to
execute the
8
<PAGE>
U.S. Guaranty), (ii) the obligations of Parent under the Parent Guaranty
are secured by substantially all of the assets of Parent (other than
Parent's interest in the QuIPS Trust or any Special Purpose Vehicle), (iii)
the obligations of each U.S. Subsidiary (other than the QuIPS Trust and any
Special Purpose Vehicle) under the U.S. Guaranty are secured by
substantially all of the assets (other than real property and such U.S.
Subsidiary's interest in any Special Purpose Vehicle) 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 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).
1.18 Amendment to Section 10.15. Section 10.15 is amended in its entirety
--------------------------
to read as follows:
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 Parent, the Company and Subsidiaries of the Company) which is
on terms which are less favorable than are obtainable from any Person which
is not one of its Affiliates; provided that Parent may enter into
transactions with Acquisition Subsidiaries or the QuIPS Trust, and Parent
or any Subsidiary may enter into transactions with any Special Purpose
Vehicle in connection with any Securitization Transaction, to the extent
permitted by the terms of this Agreement.
1.19 Amendment to Section 10.18. Section 10.18 is amended by deleting the
--------------------------
reference to "the Company" therein and substituting "Parent" therefor.
9
<PAGE>
1.20 Amendment to Section 10.19. Section 10.19 is amended by adding
--------------------------
"(other than any Special Purpose Vehicle)" immediately after the second
reference to "the Company" in clause (b) thereof.
1.21 Amendment to Section 10.20. Section 10.20 is amended by adding
--------------------------
"(other than the QuIPS Trust and any Special Purpose Vehicle)" immediately after
the reference to "Subsidiary" therein.
1.22 Amendment to Section 10.21. Section 10.21 is amended by (a) inserting
--------------------------
", in Subsidiaries of the Company" immediately after the reference to "Company"
in clause (h) thereof, (b) deleting the word "and" at the end of clause (i)
thereof, (c) adding the word "and" at the end of clause (j) thereof, (c) adding
the following new clause (k):
(k) Investments by Parent or any Subsidiary in any Special Purpose
Vehicle; provided that the aggregate amount of all such Investments
--------
made in cash shall not exceed $5,000,000;
and (d) deleting the language "or (g)" in clause (y) of the proviso thereto and
-
substituting ", (g) or (k)" therefor.
- -
1.23 Amendment to Section 10.23. Section 10.23 is amended in its entirety
--------------------------
to read as follows:
10.23 Activities of Parent. Not engage in any business other than
--------------------
ownership of the Company, Acquisition Subsidiaries, the QuIPS Trust and any
Special Purpose Vehicle 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
properties to be used by, and services (including management and consulting
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 of Debt 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 and its Subsidiaries, (ii) Investments in Acquisition Subsidiaries,
(iii) Investments in the QuIPS Trust existing on the date hereof and (iv)
Investments in any Special Purpose Vehicle, (c) grant any Liens on any of
its assets (other than pursuant to
10
<PAGE>
the U.S. Security Agreement or as permitted under this 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.
1.24 Amendment to Section 12.1.2. Section 12.1.2 is amended by adding the
----------------------------
following immediately before the period at the end thereof:
; or any event of default, default, liquidation event or similar event
shall occur or exist relating to any Securitization Transaction if the
effect of such event is to cause or permit (subject to any applicable grace
period) an aggregate cash amount exceeding a Dollar Equivalent amount of
U.S. $15,000,000 to become immediately due and payable by Parent or any
Subsidiary under such Securitization Transaction
1.25 Amendment to Section 12.1.11. Section 12.1.11 is amended by deleting
----------------------------
the word "either" in clause (d) thereof and substituting the word "any"
therefor.
1.26 Tax Forms. The parenthetical clause "(or any applicable successor
---------
form)" is added in the following places: (a) after "Forms 1001 and W-8" in
subsection 13.10(a)(i); (b) after "Form 4224" in subsection 13.10(a)(ii); (c)
after "Form 1001" twice in subsection 13.10(b); and (d) after "Form 4224" in
Section 13.10(c).
SECTION 2 Representations and Warranties. Parent and the Company
------------------------------
represent and warrant to the Agents and the Banks that (a) each of the
representations and warranties made by Parent and the Company in Section 9
(excluding Section 9.8) of the Credit 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
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 other Subsidiary of Parent, (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 and (d) no Event of Default or Unmatured Event of Default
has occurred or is continuing.
11
<PAGE>
SECTION 3 Effectiveness. The amendments set forth in Section 1 above
------------- ---------
shall become effective on the date (the "Amendment Effective Date") when the
U.S. Agent shall have received (a) for the account of each U.S. Bank which
delivers to the U.S. Agent an executed signature page hereto not later than 3:00
p.m. (Chicago time) on July 14, 1999, the amendment fee in the amount previously
agreed to between the Company and such Bank and (b) all of the following, in
form and substance satisfactory to the U.S. Agent:
(i) Counterparts hereof executed by the Company, Parent, the Required
Banks and the U.S. 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.
(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) The opinions of (a) Weil, Gotshal & Manges LLP, special counsel to
Parent and the Company, and (b) Oscar D. Folger, counsel to Parent and the
Company.
(v) A Confirmation substantially in the form of Exhibit A signed by each
---------
Loan Party.
SECTION 4 Miscellaneous.
-------------
4.1 Continuing Effectiveness, etc. As herein amended, the Credit 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 Credit
Agreement and the other Loan Documents to the "Credit Agreement" or similar
terms shall refer to the Amended Agreement.
4.2 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.
4.3 Expenses. The Company agrees to pay all reasonable expenses of the
--------
U.S. Agent, including reasonable fees and charges of counsel for the U.S. Agent,
in connection with the preparation, execution and delivery of this Amendment.
12
<PAGE>
4.4 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.
4.5 Successors and Assigns. This Amendment shall be binding upon Parent,
----------------------
the Company, the Banks and the Agents and their respective successors and
assigns, and shall inure to the benefit of Parent, the Company, the Banks and
the Agents and the respective successors and assigns of the Banks and the
Agents.
13
<PAGE>
Delivered at Chicago, Illinois, as of the day and year first above written.
UNITED RENTALS, INC.
By_____________________________
Chief Financial Officer
UNITED RENTALS (NORTH AMERICA),
INC.
By_____________________________
Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as U.S.
Agent
By_____________________________
Title__________________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a U.S.
Bank, as Issuing Bank and as Swing Line Bank
By_____________________________
Title__________________________
THE BANK OF NEW YORK, as a U.S. Bank
By_____________________________
Title__________________________
S-1
<PAGE>
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__________________________
ALLFIRST BANK, as a U.S. Bank
By_____________________________
Title__________________________
SUMMIT BANK, as a U.S. Bank
By_____________________________
Title__________________________
NATIONAL CITY BANK, as a U.S. Bank
By_____________________________
Title__________________________
S-2
<PAGE>
BANKBOSTON, N.A., as a U.S. Bank
By_____________________________
Title__________________________
COMERICA BANK, as a U.S. Bank
By_____________________________
Title__________________________
FLEET BANK, N.A., as a U.S. Bank
By_____________________________
Title__________________________
HARRIS TRUST AND SAVINGS BANK,
as a U.S. Bank
By_____________________________
Title__________________________
THE BANK OF NOVA SCOTIA, as a U.S. Bank
By_____________________________
Title__________________________
UNION BANK OF CALIFORNIA, N.A., as a
U.S. Bank
By_____________________________
S-3
<PAGE>
Title_____________________________
CIBC INC., as a U.S. Bank
By_____________________________
Title__________________________
LASALLE BANK NATIONAL
ASSOCIATION, 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__________________________
FUJI BANK, LIMITED, as a U.S. Bank
By_____________________________
Title__________________________
BANKERS TRUST COMPANY, as a U.S. Bank
By_____________________________
Title__________________________
S-5
<PAGE>
WELLS FARGO BANK, N.A., as a U.S. Bank
By_____________________________
Title__________________________
S-6
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<NAME> UNITED RENTALS INC
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
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<RECEIVABLES> 400373
<ALLOWANCES> 44781
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300000
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<COMMON> 716
<OTHER-SE> 1141023
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<INCOME-TAX> 29283
<INCOME-CONTINUING> 42111
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<EXTRAORDINARY> 0
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<NET-INCOME> 42111
<EPS-BASIC> 0.60
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</TABLE>
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<PAGE>
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<CIK> 0001047166
<NAME> UNITED RENTALS (NORTH AMERICA) INC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 37309
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0
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<INCOME-PRETAX> 83049
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